EX-10.110



 





EXHIBIT 10.110




EXECUTION COPY




AGREEMENT




     Agreement, dated as of December 4, 2007, between Russ Berrie and Company, Inc. (together with
its successors and assigns, the “Company”) and Bruce Crain (the “Executive” and, together with the
Company, the “Parties”).



     Effective as of December 4, 2007 (the “Commencement Date”), the Executive shall be employed by
the Company as its President and Chief Executive Officer, on the terms and conditions set forth
herein. His employment by the Company shall be on an “at will” basis and shall be subject to
termination by the Company, with or without Cause (as defined below), or the Executive, with or
without Good Reason (as defined below), with the consequences provided in this Agreement.



     The Parties intending to be legally bound hereby agree as follows:



     1. POSITION; DUTIES



     The Executive shall be employed as President and Chief Executive Officer of the Company,
commencing as of the Commencement Date. He shall have the authorities and responsibilities
customarily associated with such status in a company of the size and structure of the Company. He
shall report directly to the Board of Directors of the Company (the “Board”) and shall have
ultimate responsibility for all the Company’s current and future operations in the U.S. and abroad,
which currently include:




	 	•	 	Russ North America
	 
	 	•	 	Russ International
	 
	 	•	 	Russ Far East
	 
	 	•	 	Sassy
	 
	 	•	 	Kids Line




Promptly following the Commencement Date, the Executive shall be appointed to the Board. At the
Company’s request, upon termination of the Executive’s employment for any reason, the Executive
shall promptly resign from the Board and from all other positions that the Executive then holds
with the Company or any affiliate and promptly execute all documentation for such resignations.




     The Executive shall devote substantially all of his business time, effort and energies to the
business of the Company; provided, however, that notwithstanding the foregoing, he may (a) serve on
the board of directors of a reasonable number of trade associations and/or charitable
organizations, (b) engage in charitable activities and community affairs, (c) accept and fulfill a
reasonable number of speaking engagements and (d) manage his personal investments and affairs, as
long as such activities do not individually or in the aggregate interfere with the proper
performance of his duties and responsibilities for the Company in any material respect; provided
further, that he may serve on the board of directors of any for-profit business entity, but only
with the prior written consent of the Chairman of the Board or



 









 







the Chairman of the Executive Committee of the Board, which consent will not be unreasonably
withheld or delayed if the Chairman of the Board or the Chairman of the Executive Committee of the
Board, as applicable, concludes in his discretion that such service will not interfere with the
proper performance of the Executive’s duties hereunder. The Company recognizes that Executive is
currently and intends to keep performing services for Kahn Lancaster Lucas, Inc. and that his
continued performance of those services is not prohibited under this Agreement, provided that the
Chairman of the Board or the Chairman of the Executive Committee of the Board of the Company may
require the Executive to cease performing such services in the future after 60 days prior written
notice to the Executive from the Chairman of the Board or the Chairman of the Executive Committee
of the Board.



     2. COMPENSATION AND BENEFITS



     Subject in each case to the provisions of Section 3 of this Agreement in the event that his
employment hereunder terminates, the Executive shall be entitled to the following compensation and
benefits with respect to the period during which he is employed hereunder:



          (A) Base Salary.




     The Company shall pay the Executive a base salary at an annual rate of $550,000 (“Base
Salary”), payable in accordance with the Company’s usual payroll practices. The Compensation
Committee of the Board shall consider an increase of Base Salary annually in its discretion. The
Base Salary shall not be decreased at any time or for any purpose during the Executive’s employment
hereunder.



          (B) Incentive Compensation.




     The Executive shall be entitled to an annual incentive compensation opportunity as determined
by the Compensation Committee of the Board commencing in 2008. The Executive’s annual bonus
opportunity shall not be less than 75% of salary at target and 130% at maximum. The Executive’s
performance goals will not be established at levels that are more difficult to achieve than for
other bonus participants who have identical performance measures (e.g., consolidated corporate
goals rather than segment or regional goals). Performance goals will be established by the
Compensation Committee of the Board of Directors of the Company by no later than March 31 of each
year and the Executive shall have the opportunity to consult on the performance goals. Earned
bonuses shall be paid to the Executive at the same time as paid to other officers after the
completion of the audit of the Company’s financial statements for the year and the determination by
the Compensation Committee of the achievement of the performance goals, but no later than March 15.



          (C) Stock Options and Restricted Stock Units.




     On the Commencement Date, or as soon thereafter as the Compensation Committee of the Board
shall approve, the Compensation Committee will grant the Executive (i) a stock option under the
Company’s 2004 Stock Option, Restricted and Non-Restricted Stock Plan (the “2004 Plan”) to purchase
20,000 shares of Company stock, (ii) a stock option to purchase 100,000 shares of Company stock (of
which stock options to purchase 80,000 shares shall be granted under the 2004 Plan and stock
options to purchase 20,000 shares shall be granted



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outside of the 2004 Plan), and (iii) 85,000 shares of Company restricted stock under the 2004
Plan. The stock options described in clause (i) of the preceding sentence shall become fully
exercisable on the six month anniversary of the Commencement Date and shall expire on the tenth
anniversary of the Commencement Date subject to earlier expiration as set forth herein or in the
grant agreement; the stock options described in clause (ii) of the preceding sentence shall become
exercisable and nonforfeitable at the rate of 20% per year on each of the first five anniversaries
of the Commencement Date and shall expire on the tenth anniversary of the Commencement Date subject
to earlier expiration as set forth herein or in the grant, and the restricted stock grants
described in clause (iii) of the preceding sentence shall become vested at the rate of 25% per year
on each of the first four anniversaries of the Commencement Date. In addition, as soon as
practicable in 2008, the Compensation Committee will grant the Executive a stock option under the
2004 Plan to purchase 100,000 shares of Company stock which shall become exercisable and
nonforfeitable at the rate of 20% per year on each of the first five anniversaries of the
Commencement Date and which shall expire on the tenth anniversary of the Commencement Date subject
to earlier expiration as set forth herein or in the grant agreement. The stock option and
restricted stock grants shall be evidenced by stock option agreements and a restricted stock award
agreement in the forms attached hereto. The exercise price of each stock option shall be the
closing price of the Company stock on the New York Stock Exchange on the date of grant. Additional
stock option grants will be considered by the Compensation Committee of the Board annually, in its
discretion, which shall give consideration to the Company’s sales and EBITDA targets in determining
the amount of option grant.



          (D) Expense Reimbursement.




     The Company shall reimburse the Executive for business expenses reasonably incurred by him in
the performance of his duties with the Company, in accordance with the Company’s usual practices.



          (E) Other Benefits.




     The Executive will be entitled to participate in the Company’s employee benefit plans and
programs applicable to senior executives generally and on a basis no less favorable than those
provided to other senior executives. During his employment by the Company, the Executive shall be
entitled to life insurance coverage of not less than 200% of his Base Salary, but shall be entitled
to the life insurance benefit under the Company’s life insurance program for senior executives
generally if it would provide for a higher level of life insurance coverage. If the Executive
becomes disabled during employment and entitled to long-term disability benefits under the
Company’s long-term disability plan, the Company shall provide the Executive during the period of
disability with long-term disability benefits equal to 50% of his salary (prior to offsets provided
in the Company’s long-term disability plan) through the Company’s long-term disability plan and a
supplemental disability program. The Company agrees to cooperate with Executive and use
commercially reasonable best efforts in order that a supplemental program can be obtained so that
all or part of the supplemental disability benefit will be provided to Executive on a non-taxable
basis. The Company will also pay for an annual physical examination for the Executive by the
physician or institution chosen by the Executive. The Executive shall be entitled to be reimbursed
for tax preparation and financial



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planning services and advice not to exceed $5,000 annually. The reimbursement of the annual
physical examination and tax preparation and financial planning services are subject to the
following: (i) no such reimbursement will be made by the Company later than the end of the year
following the year in which the underlying expense is incurred, (ii) any such benefit provided by
the Company in any year will not be affected by the amount of such benefit provided by the Company
in any other year, and (iii) under no circumstances will the Executive be permitted to liquidate or
exchange any such benefit for cash or any other benefit.



          (F) Vacation.




     The Executive will be entitled to three weeks vacation annually (or such greater amount
provided in applicable Company policies) to be taken at times determined by the Executive which do
not unreasonably interfere with the performance of his duties hereunder. Any vacation time not
taken during any year may not be carried over to subsequent years.



          (G) Director’s and Officer’s Insurance and Indemnification.





     (i) The Company agrees that (a) if the Executive is made a party, or is threatened to
be made a party, to any legal proceeding by reason of the fact that he is or was a director,
officer, employee, agent, manager, consultant, or representative of the Company or any
affiliates or subsidiaries thereof, or (b) if any legal claim is made, or threatened to be
made, that arises out of or relates to the Executive’s service in any of the foregoing
capacities, then the Executive shall promptly be indemnified and held harmless by the
Company to the fullest extent legally permitted, against any and all costs, expenses,
liabilities, and losses (including, without limitation, attorney’s fees, judgments,
interest, expenses of investigation, penalties, fines, ERISA excise taxes or penalties, and
amounts paid or to be paid in settlement) incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the Executive even if he
has ceased to be a director, member, employee, agent, manager, consultant or representative
of the Company and shall inure to the benefit of the Executive’s heirs, executors, and
administrators. The Company shall advance to the Executive all costs and expenses incurred
by him in connection with any such legal proceeding or legal claim within 15 days after
receiving written notice requesting such an advance. Such notice shall include an
undertaking by the Executive to repay the amount advanced if he is ultimately determined not
be entitled to indemnification against such costs and expenses.




     (ii) Neither the failure of the Company to have made a determination in connection with
any request for indemnification or advancement under this Section that the Executive has
satisfied any applicable standard of conduct nor a determination by the Company that the
Executive has not met any applicable standard of conduct, shall create a presumption that
the Executive has not met an applicable standard of conduct.




     (iii) During the term of employment and for a period of six years thereafter, the
Company shall keep in place a directors and officers’ liability insurance policy (or
policies) providing comprehensive coverage to the Executive equal to at least the greater of
(1) $5,000,000 per year and (2) the coverage that the Company provides for any other present
or former senior executive or director of the Company.



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          (H) Exclusion of Other Benefits.




     The terms of this Agreement are intended to be in lieu of, and not in addition to, the
following benefits which the Company has made available to other executives, and accordingly, the
Executive shall not be entitled to (i) participate in the Company’s Change in Control Severance
Plan, or (ii) participate in the Company’s general severance policy applicable to domestic vice
presidents and above.



     3. CONSEQUENCES OF TERMINATION



          (A) Termination by Company for Cause or Termination by Executive without Good Reason.




     If the Executive’s employment under this Agreement is at any time terminated by the Company
for Cause (as defined below), or by the Executive without Good Reason (as defined below), the
Executive will be entitled to receive the following (promptly following such termination in the
case of clause (i) and at the time specified in Section 2(B) in the case of clause (ii) below):




     (i) Base Salary earned through the date that the Executive’s employment hereunder
terminates (the “Termination Date”);




     (ii) Bonus amounts earned for any prior completed calendar year and not yet paid;




     (iii) Other amounts and benefits, if any, in accordance with the applicable terms of
any applicable plan, program, corporate governance document, policy, agreement or
arrangement of the Company other than additional benefits provided to the Executive under
the terms of this Agreement (collectively, “Company Arrangements”).



     In addition, any unvested portion of the stock options and restricted stock award specified in
Section 2(C) shall immediately terminate and any unexercised, vested portion of the options shall
remain exercisable for the shorter of 90 days and the remainder of the term of such option.



     “Cause” shall mean: (A) wrongful refusal, or repeated willful failure, by the Executive to
perform his duties hereunder as an employee of the Company; (B) in carrying out his duties, the
Executive engages in conduct that constitutes willful gross neglect, willful gross misconduct or
willful fraud with regard to the Company or its assets; or (C) the Executive’s conviction of, or
plea of guilty or nolo contendere to, a felony. No termination of the Executive’s employment shall
be treated as for “Cause” unless, prior to such termination: (i) the Executive has been provided
written notice from the Board or the Executive Committee of the Board setting forth in reasonable
detail the basis on which the Board is considering terminating his employment for “Cause” (a “Cause
Notice”); (ii) the Executive has failed to cure the basis on which the Board is considering
terminating his employment within 10 days of notice thereof except that no notice need be provided
to the extent that the act or omission is not curable; (iii) the Executive has been afforded a
review by the Board, including a hearing before the Board within 14 days following his receipt of
such Cause Notice, provided, that the



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Executive requests such hearing within 7 days of receipt of such Cause Notice; and (iv) within
10 days after the later of such review and such hearing (if any), the Board confirms, by
affirmative vote of a majority of its members and on written notice to the Executive, that “Cause”
exists. Any determination that “Cause” exists shall be subject to de novo review in arbitration
pursuant to Section 10(B) below.



     As of the Termination Date, except as set forth above, the rights of the Executive to the
accrual, payment and/or receipt of any other compensation or benefits described under Section 2 of
this Agreement, including, but not limited to, any award to be earned for the year in which the
Termination Date occurs, shall immediately cease.



          (B) Termination by the Company without Cause or Termination by Executive for Good
Reason.




     If the Executive’s employment under this Agreement is terminated by the Company without Cause
or by the Executive for Good Reason, the Executive shall be entitled to receive the following:




     (i) Base Salary earned through the Termination Date;




     (ii) Bonus amounts earned for any prior year or period and not yet paid;




     (iii) Base Salary at the rate in effect at the Termination Date for a period of six
months after the Termination Date;




     (iv) Coverage under the Company’s life insurance programs (including the life insurance
coverage set forth in Section 2(E)) during the six months following the Termination Date;




     (v) Coverage under the Company’s medical, and dental if any, programs during the twelve
month period following the Termination Date; and




     (vi) If the Company terminates the Executive’s employment without Cause, but not if the
Executive terminates his employment for Good Reason, a bonus for the year in which the
Termination Date occurs based on actual performance for the year but prorated for the period
of the Executive’s employment through the Termination Date.


Any amounts payable pursuant to clause (i) of this paragraph (B) shall be paid promptly after the
Termination Date; any amounts payable pursuant to clauses (ii) or (vi) of this paragraph (B) shall
be paid within the time specified in Section 2(B); any amounts payable under clause (iii) of this
paragraph (B) shall be paid commencing on the first day of the month following the Termination Date
and payable on the first day of each of the next five months thereafter; provided, however, that
any payment(s) that would be made under such schedule after March 15 of the year following the
Termination Date shall instead be paid on March 1 of the year following the Termination Date;
coverage under clause (iv) of this paragraph (B) shall continue for six months following the
Termination Date; and coverage under clause (v) of this paragraph (B) shall continue for twelve
months following the Termination Date. Notwithstanding the foregoing, if necessary to prevent the
Executive from being subject to adverse tax consequences under Section




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409A of the Internal Revenue Code, the amounts payable pursuant to clause (iii) of this paragraph
(B) shall not be paid until, and shall be paid in a single sum payment on, the first day after the
six month anniversary of the Termination Date and the amount payable pursuant to clause (vi) shall
be paid in a single sum payment on the later of the first day after the six month anniversary of
the Termination Date or the date that the bonus would be paid in accordance with its terms. In
order to receive any payments or benefits under Sections 3(B)(iii), (iv) or (v) and Sections 3(E)
and 3(F)of this Agreement and the accelerated vesting of stock options and restricted stock set
forth in the following paragraph, the Executive must execute and deliver to the Company a release
provided by the Company in substantially the form of Exhibit A hereto. At the end of the twelve
month period during which medical, and dental if any, coverage continues under clause (v) above of
this paragraph (B), Executive may elect COBRA continuation medical coverage at his own expense.
All amounts payable under this Agreement shall be without interest if paid when due.




     If the Executive’s employment under this Agreement is terminated by the Company without Cause
or by the Executive for Good Reason, the 220,000 shares of the Company’s stock covered by stock
options and the 85,000 shares of restricted stock specified in Section 2(C) shall become
immediately vested and nonforfeitable on the Termination Date to the same extent as if the
Executive had completed an additional two years of service after the Termination Date and such
stock options shall remain exercisable for 90 days following the Termination Date or until the
expiration date of the option in accordance with its terms, whichever is earlier.



     As of the Termination Date, except as set forth above, the rights of the Executive to the
accrual, payment and/or receipt of any other compensation or benefits described under Section 2 of
this Agreement shall immediately cease.



     “Good Reason” shall mean the occurrence of any of the following events without the Executive’s
express written consent and without full cure by the Company on 30 days’ written notice from the
Executive describing the “Good Reason” event he believes has occurred and requesting cure (provided
that, for the avoidance of doubt, if full cure is made by the Company within 15 days of such
notice, a “Good Reason” event shall be deemed not to have occurred): (i) removal of the Executive
from his position as Chief Executive Officer or other material diminution of his duties or
authority, provided that the effect of any sale or other transfer by the Company of a business
segment or substantial portion of its assets outside the ordinary course of business or a change in
business strategy shall not be deemed to be a material diminution of the Executive’s duties or
authority; (ii) failure to maintain the Executive’s salary at the amount specified in Section 2(A)
or the Executive’s bonus opportunity specified in Section 2(B); (iii) the Company’s failure to make
the equity grants described in Section 2(C) within 90 days of the Commencement Date (unless the
equity grants may not be made within such period because of securities law blackout restrictions,
in which case the equity grants shall be made as soon as practicable after the securities law
blackout restriction no longer applies) or failure to make other material payments hereunder when
due; (iv) the Company’s requiring the Executive to relocate the Executive’s office outside of the
Northern New Jersey suburbs; or the New York metropolitan area, i.e., New York City, Westchester
and Fairfield Counties and Long Island; (v) failure to nominate the Executive to be a member of the
Board; or (vi) any failure promptly to obtain the assumption of this



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Agreement by any successor to the Company by way of merger of consolidation. A termination
for “Good Reason” shall be effected by the Executive giving at least 30 days’ written notice of
such termination after a Good Reason event has occurred.



          (C) Termination by Disability or Death.




     In the event that the employment of the Executive terminates by reason of Disability (as
defined below), the Executive shall be entitled to the payments set forth in clauses (i), (ii) and
(iii) of Section 3(A) as well as the long-term disability benefit specified in Section 2(E). In
the event that the employment of the Executive terminates by death, the amounts set forth in
clauses (i) (ii) and (iii) of Section 3(A) shall be paid to his estate and the life insurance
benefit specified in Section 2(E) shall be paid to his designated beneficiary, or estate in the
absence of designated beneficiary. In addition, the Executive shall be entitled to a bonus for the
year in which the Executive’s employment terminates by reason of death or Disability at the time
specified in Section 2(B) based on actual performance for the year but prorated for the period of
the Executive’s employment for the year and which shall be paid to his designated beneficiary, or
estate in the absence of a designated beneficiary, in the event of death.



     In addition, in the event that the employment of the Executive terminates by death or
Disability, the stock option grants covering 220,000 shares of the Company’s stock and the 85,000
shares of restricted stock specified in Section 2(C) shall become nonforfeitable to the same extent
as if the Executive had completed an additional two years of service after the date of death or
termination for Disability and such stock options shall remain exercisable for a period of one year
following such death or termination for Disability or the expiration of the option in accordance
with its terms, whichever is earlier.



     “Disability” shall mean the Executive’s inability, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under this Agreement for 120 days (which need
not be consecutive) in any 360 day period, as determined by an approved medical doctor. For this
purpose an approved medical doctor shall mean a medical doctor selected by the parties. If the
parties cannot agree on a medical doctor, each party shall select a medical doctor and the two
doctors shall select a third who shall be the approved medical doctor for this purposes.



          (D) Change in Control.




     Upon the occurrence of a Change in Control, whether or not the employment of the Executive is
terminated, the stock option grants covering 220,000 shares of the Company’s stock and the 85,000
shares of restricted stock specified in Section 2(C) shall immediately vest to the extent such
stock options and/or restricted shares were scheduled to vest within three years of the date of
such Change in Control, and the vesting dates of such stock options or restricted shares that were
not scheduled to vest within three years of the date of such Change in Control shall be accelerated
by three years. In the event that the Company terminates the Executive’s employment without Cause
and a Change in Control occurs within six months following the Termination Date, the aforesaid
stock options and restricted shares that were scheduled to vest within three years of the
Termination Date (and which did not vest



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on the Termination Date pursuant to Section 3(B)) shall become vested and exercisable on the
date of such Change in Control.



     “Change in Control” shall mean the occurrence of any of the following: (i) any “person” (as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
or “group” (as described in Rule 13d-5 under the Exchange Act), other than any beneficial owner of
in excess of 5% of the Company’s voting securities on the date of this Agreement, becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company
representing more than 25% of the total combined voting power of the Company’s then outstanding
securities, excluding, however, the following: (a) any acquisition of securities directly from the
Company, (b) any acquisition of securities by the Company, (c) any acquisition of securities by an
employee benefit plan (or related trust) sponsored or maintained by the Company or entirely
controlled by the Company, or (d) an event that does not constitute a Change in Control under
clauses (iii) and (iv) below; (ii) as a result of any proxy solicitation made otherwise than on
behalf of the Board of Directors of the Company, Continuing Directors cease to be a majority of the
Board (a “Continuing Director” is any member of the Board who (a) was a member of the Board on
November 1, 2007 or (b) first became a member of the Board as a result of or following his election
or nomination for election by the Board at a time that Continuing Directors form a majority of the
Board and with the approval of a majority of such Continuing Directors); (iii) the merger,
consolidation, or other business combination of or by the Company (a “Transaction”), other than a
Transaction immediately following which the stockholders of the Company immediately prior to the
Transaction continue to be the beneficial owners of securities of the Company or other resulting
entity representing more than a majority of the voting power in the Company or other resulting
entity in substantially the same proportions as their ownership of Company securities immediately
prior to the Transaction, or (iv) the sale of all or substantially all of the Company’s assets,
other than a sale immediately following which the stockholders of the Company immediately prior to
the sale are the beneficial owners of securities of the purchasing entity in substantially the same
proportions as their ownership of Company securities immediately prior to the sale. Except as
provided in clause (iv) above, the sale or other transfer by the Company of a business segment or
substantial portion of its assets outside the ordinary course of business or a change in business
strategy shall not constitute a “Change in Control.”



          (E) Parachute Payment Excise Tax.




     Notwithstanding anything herein to the contrary, if the Executive determines that any amounts
due to him under this Agreement and any other plan or program of the Company constitute a
“parachute payment,” as such term is defined in Section 280G(b) (2) of the Code, and the amount of
the parachute payment, reduced by all federal, state and local taxes applicable thereto, including
the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount that the
Executive would receive if he were paid three times his “base amount,” as defined in Section
280G(b) (3) of the Code, less $1.00, reduced by all federal, state and local taxes applicable
thereto, then at the Executive’s request the Company shall reduce the aggregate of the amounts
constituting the parachute payment to an amount that will equal three times the Executive’s base
amount less $1.00. The Executive shall have the right



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to specify the portion of such reduction, if any, that will be made under this Agreement and
each plan or program of the Company.



          (F) Outplacement.




     In the event that the Company terminates the employment of the Executive without Cause or the
Executive terminates his employment for Good Reason, the Executive shall be entitled to
outplacement services for a period of six months following the Termination Date for which the
Company will reimburse the Executive in an amount not to exceed $10,000.



          (G) No Mitigation; No Offset.




     In the event of any termination of the employment of the Executive hereunder, the Executive
shall be under no obligation to seek other employment, and there shall be no offset against any
amounts due him (other than as expressly provided herein) on account of any remuneration
attributable to any subsequent employment that he may obtain or any claims the Company or any of
its affiliates may have against him.



          4. CONFIDENTIALITY




     The Executive shall, during and after his employment by the Company and except in connection
with performing services on behalf of (or for the benefit of) the Company or any of its affiliates,
keep secret and retain in the strictest confidence all confidential, proprietary and non-public
matters, tangible or intangible, of or related to the Company, its stockholders, subsidiaries,
affiliates, successors, assigns, officers, directors, attorneys, fiduciaries, representatives,
employees, licensees and agents including, without limitation, trade secrets, business strategies
and operations, customer lists, manufacturers, material suppliers, financial information, personnel
information, legal advice and counsel obtained from counsel, information regarding litigation,
actual, pending or threatened, research and development, identities and habits of employees and
agents and business relationships, and shall not disclose them to any person, entity or any
federal, state or local agency or authority, except as may be required by law. Notwithstanding the
foregoing, nothing in this Agreement or elsewhere shall prohibit the Executive from making any
statement or disclosure (i) to the extent required by law; (ii) to the extent required by subpoena
or other legal process (upon receipt of which the Executive shall immediately give the Company
written notice thereof in order to afford the Company an opportunity to contest such disclosure);
(iii) with the Company’s prior written consent; or (iv) in confidence to an attorney for the
purpose of obtaining legal advice.



     Upon termination of his employment with the Company, the Executive shall return to the Company
all confidential, proprietary and non-public materials, and any other property of the Company, in
his possession. The personal property of the Executive, including his rolodex, documents relating
to his benefits, compensation, tax liabilities, personal obligations (e.g., restrictive covenants),
and the like, shall not be subject to return pursuant to the preceding sentence.




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     5. NON-COMPETE; NONSOLICITATION 



     The Executive agrees that during his employment by the Company and for one year thereafter, he
shall not, directly or indirectly, engage or be interested in (as owner, partner, stockholder,
employee, director, officer, agent, fiduciary, consultant or otherwise), with or without
compensation, any business engaged in the manufacture, distribution, promotion, design, marketing,
merchandising or sale of infant bedding and accessories, infant feeding utensils and bowls,
pacifiers, bibs and bottles, infant developmental toys, soft toys and plush products or any other
product providing more than 10% of the revenues of the Company for the prior fiscal year. The
Executive also agrees that for two years after his termination of employment, he shall not,
directly or indirectly, solicit the employment or retention of (or attempt, directly or indirectly,
to solicit the employment or retention of or participate in or arrange the solicitation of the
employment or retention of) any person who is to his knowledge then employed or retained by the
Company, or by any of its subsidiaries or affiliates. Notwithstanding the foregoing, nothing in
this Section 5 shall prohibit the Executive from (i) performing services, with or without
compensation, for, or engaging or being interested in, any business or entity, that does not
directly relate to business activities that compete directly and materially with a material
business of the Company or its subsidiaries or (ii) acquiring or holding not more than five percent
of any class of publicly-traded securities of any business. A business or entity that realized
less than 20% of its revenues during its most recently completed fiscal year from sales of the
aggregate of the following products shall not be deemed to compete directly and materially with a
material business of the Company or its subsidiaries: infant bedding and accessories; infant
feeding utensils and bowls, pacifiers, bibs and bottles, infant developmental toys, soft toys and
plush products and any other product providing more than 10% of the revenues of the Company for the
prior fiscal year.



     6. NONDISPARAGEMENT



     The Executive shall, after his employment with the Company has terminated, refrain from any
action that could reasonably be expected to harm the reputation or goodwill of the Company, its
subsidiaries, affiliates and any shareholder holding more than 5% of the Company’s voting
securities, including, without limitation, making derogatory comments about the character or
ability of the Company or its directors, officers, employees, shareholders, agents or
representatives.



     The Company shall, after the employment of the Executive with the Company has terminated,
refrain from any action that could reasonably be expected to harm the reputation of the Executive,
including, without limitation, making derogatory comments about the character or ability of the
Executive.



     7. REMEDY FOR BREACH AND MODIFICATION



     The Executive acknowledges that the provisions of this Agreement are reasonable and necessary
for the protection of the Company and that the Company may be irreparably damaged if these
provisions are not specifically enforced. Accordingly, the Executive agrees that, in addition to
any other relief or remedies available to the Company, the Company shall be



11









 




entitled to seek appropriate temporary, preliminary and permanent injunctive or other
equitable relief for the purposes of restraining the Executive from any actual or threatened breach
of or otherwise enforcing these provisions and no bond or security will be required in connection
therewith. In addition, notwithstanding any provision in this Agreement to the contrary, if the
Executive breaches any of the provisions of Sections 4, 5 or 6 of this Agreement at any time and
such breach is either (x) willful and not inconsequential or (y) in a material respect and not
cured promptly after notice from the Company, he shall not thereafter be entitled to any payments
or benefits under this Agreement.




     8. SEVERABILITY



     If any provision of this Agreement is deemed invalid or unenforceable, such provision shall be
deemed modified and limited to the extent necessary to make it valid and enforceable.



     9. COUNTERPARTS; FACSIMILES



     This Agreement may be executed in two or more counterparts, each of which shall be considered
an original, but all of which together shall constitute the same instrument. Signatures delivered
by facsimile shall be effective for all purposes.



     10. GOVERNING LAW; JURISDICTION; ARBITRATION



          (A) This Agreement shall be governed by, and construed and interpreted in accordance with its
express terms, and otherwise in accordance with the laws of the State of New Jersey, without regard
to conflicts of laws principles.




          (B) Any claim or dispute arising out of or relating to this Agreement, or the breach,
termination or validity of this Agreement, or the Executive’s employment with the Company or the
termination thereof (a “Dispute”), shall, except to the extent otherwise provided in Section 10(C)
below with respect to certain claims for injunctive relief, be submitted for de novo review in
arbitration in accordance with the procedures set forth in this Section 11(B). A party that wishes
to initiate the arbitration of a Dispute (the “Initiating Party”) shall give notice of its demand
for arbitration to the other party (or parties); that notice must include a description of the
Dispute in reasonable detail and a specific description of the relief sought by the Initiating
Party, including a proposed form of award by the arbitrator. Within ten days after that notice is
given, the other party or parties (each, a “Responding Party”) shall give notice to the Initiating
Party including a statement as to whether it wishes to submit to the arbitration a Dispute that
varies from, or is in addition to, the Dispute described in the Initiating Party’s notice and a
specific description of the relief sought by the Responding Party, including a proposed form of
award by the arbitrator. If a Responding Party’s notice describes a Dispute that varies from, or is
in addition to, the Dispute described in the Initiating Party’s notice, the Initiating Party may,
by notice to the Responding Party within five days after the Responding Party’s notice is given,
modify the description of its requested relief, including the proposed form of award by the
arbitrator, to take account of the Dispute as described in the Responding Party’s notice. The
arbitration shall be conducted in New Jersey before a single arbitrator in accordance with the
rules of the




12









 







American Arbitration Association (at the offices of the American Arbitration Association
nearest to the principal executive offices of the Company). Each party shall bear its own fees and
expenses of arbitration hereunder, including the fees and expenses of its lawyers, representatives,
and witnesses, and shall share equally with the other party all other costs of the arbitration,
including the fees and expenses of the arbitrators; provided, however, that the arbitrators shall
have the power to award recovery of any or all costs of arbitration (including fees and expenses of
the arbitrators, costs of assistance required by the tribunal, fees of the American Arbitration
Association and reasonable attorneys’ and other experts’ fees) to the prevailing party.




          (C) Notwithstanding the foregoing, either Party may seek to enforce, through injunctive or
similar relief, any provision of Sections 4, 5 or 6 of this Agreement in the courts of the State of
New Jersey, or if it has or can acquire jurisdiction, in the United States District Court for the
District of New Jersey, and each of the Parties hereby consents to the jurisdiction of such courts
(and the appropriate appellate courts) and waives any objection to venue laid therein. Process in
any action or proceeding referred to in the preceding sentence may be served on either Party
anywhere in the world, whether within or without the State of New Jersey.




     11. NOTICES 



     Any notice or other communication made or given in connection with this Agreement may be given
by counsel, shall be in writing, and, if to a Party, shall be deemed to have been duly given when
(a) delivered to the appropriate address by hand or by nationally recognized overnight courier
service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the
transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail,
return receipt requested, in each case to a Party at his or its address or facsimile number set
forth below or at such other address or facsimile number as a Party may specify by notice to the
other Party:



	 	 	 
	 

	 	To the Executive, at his principal residence as reflected in

the records of the Company, with a copy to him at his

principal business office during his employment with the

Company:
	 
	 	 
	 

	 	with a simultaneous copy to:

	 
	 	 
	 

	 	Gary L. Schoenbrun, Esq.

Dickstein Shapiro LLP

1177 Avenue of the Americas

New York NY 10036

Fax No.: 212-277-6501
	 
	 	 
	 

	 	To the Company:
	 
	 	 
	 

	 	111 Bauer Drive

Oakland, NJ 07436

Attention: Marc S. Goldfarb, Esq. General Counsel

Fax No.: 201-405-7377






13









 






	 	 	 
	 

	 	With a simultaneous copy to:
	 
	 	 
	 

	 	Edward P. Smith, Esq.

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

Fax No.: 212-541-5369






     12. ENTIRE AGREEMENT; AMENDMENT



     This Agreement supersedes all prior agreements between the Parties with respect to its subject
matter, is intended (with the documents referred to herein) as a complete and exclusive statement
of the terms of the agreement between the Parties with respect thereto, and cannot be changed or
terminated orally. Any conflict between the provisions of this Agreement (including all
attachments) and the provisions of any other present or future Company Arrangement shall be
resolved in favor of this Agreement, unless the Parties otherwise agree in a signed writing that
specifically identifies the provision(s) of this Agreement (including all attachments) that are
intended to be affected.



     13. WAIVER



     The failure of any Party or person to insist upon strict adherence to any term of this
Agreement (including all attachments) on any occasion shall not be considered a waiver or deprive
that Party or person of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement (including all attachments). Any waiver must be in writing and must
specifically identify the provision(s) of this Agreement (including all attachments) being
affected.



     14. ASSIGNMENT



     Except as otherwise provided in this Section 14, this Agreement shall inure to the benefit of
and be binding upon the Parties and their respective heirs, representatives, successors and
assigns. This Agreement shall not be assignable by the Executive, and shall be assignable by the
Company only to any corporation or other entity that succeeds to all, or substantially all, of the
Company’s business or assets, and that expressly assumes (or assumes by operation of law in any
merger or consolidation) the Company’s obligations hereunder. In the event of the Executive’s death
or a judicial determination of his incapacity, references in this Agreement (including its
attachments) to the “Executive” shall be deemed to include, as appropriate, his estate, heirs
and/or legal representatives.



     15. AUTHORITY 



     The Company represents and warrants that it has the power, authority and right to enter into
this Agreement and to carry out and perform the terms, covenants and conditions hereof. The
Executive represents and warrants that he is not subject to any contractual or other commitment
(including commitments relating to notice of resignation) that he has not



14









 




disclosed to the Company and that would be breached by the Executive by his performance of
this Agreement or that would restrict the performance of his obligations hereunder.




     16. CODES 



     The Board has adopted a Code of Business Conduct and Ethics and a Code of Ethics for Principal
Executive Officer and Senior Financial Officers. The Executive is expected to require compliance
with those codes by the employees covered thereby and to comply himself.



     17. DEDUCTIONS 



     The Company may deduct from the compensation described herein any applicable Federal, state
and/or city withholding taxes, any applicable social security contributions, and any other amounts
which may be required to be deducted or withheld by the Company pursuant to any Federal, state or
city laws, rules or regulations or any election he shall have made.



     18. CONSULTING AGREEMENT



     The provisions of the Consulting Agreement between Executive and the Company dated February
28, 2007 for the compensation of the Executive for providing consulting services to the Company
shall terminate on the Commencement Date.



     19. EXPENSES OF PREPARATION OF AGREEMENT



     Each of the Company and the Executive shall bear its own expenses for the preparation and
negotiation of this Agreement, provided that the Company shall reimburse the Executive for his
legal fees with respect to this Agreement and a Consulting Agreement with the Company to a maximum
of $25,000.



15









 





     20. CAPTIONS 



     The captions in this Agreement are for convenience of reference only and shall not be given
any effect in the interpretation of this Agreement.



     IN WITNESS WHEREOF, the Executive and the Company have signed this Agreement as of the date
first set forth above.



RUSS BERRIE AND COMPANY, INC.




	 	 	 
	By:

	 	/s/ Marc S. Goldfarb
	 

	 	 
	 

	 	Name: Marc S. Goldfarb
	 

	 	Title: Senior Vice President and
	 

	 	            General Counsel






THE EXECUTIVE




/s/ Bruce Crain          

Bruce Crain




16









 





Exhibit A




GENERAL RELEASE




     1. GENERAL RELEASE OF ALL CLAIMS



     The undersigned individual (the “Executive”) hereby irrevocably releases and forever
discharges any and all known and unknown liabilities, debts, obligations, causes of action,
demands, covenants, contracts, liens, controversies and any other claim of whatsoever kind or
nature that the Executive ever had, now has or may have in the future against Russ Berrie and
Company, Inc. (the “Company”), its stockholders, subsidiaries, affiliates, successors, assigns,
officers, directors, attorneys, fiduciaries, representatives, employees, licensees, agents and
assigns (the “Releasees”), to the extent arising out of or related to the performance of any
services to or on behalf of the Company or the termination of those services and other than claims
for payments, benefits or entitlements preserved by Section 3, and claims for indemnification and
advancement of expenses under Section 2(G), of the Employment Agreement dated as of December 4,
2007, between the Company and the Executive (the “Employment Agreement”), including without
limitation: (i) any such claims arising out of or related to any federal, state and/or local labor
or civil rights laws including, without limitation, the federal Civil Rights Acts of 1866, 1871,
1964, the Equal Pay Act, the Older Workers Benefit Protection Act, the Rehabilitation Act, the Jury
Systems Improvement Act, the Uniformed Services Employment and Reemployment Rights Act, the Vietnam
Era Veterans Readjustment Assistance Act, the National Labor Relations Act, the Worker Adjustment
and Retraining Notification Act, the Family and Medical Leave Act of 1993, the Employee Retirement
Income Security Act of 1974, the Age Discrimination in Employment Act, the Americans with
Disabilities Act of 1990, the Fair Labor Standards Act of 1938, the New York Human Rights Law, the
New Jersey Law Against Discrimination, the New Jersey wage and hour laws, and the New Jersey
Conscientious Employee Protection Act, the California Fair Employment and Housing Act, the
California Labor Code; (ii) any and all other such claims arising out of or related to any
contract, any and all other federal, state or local constitutions, statutes, rules, regulations or
executive orders; or (iii) any and all such claims arising from any common law right of any kind
whatsoever, including, without limitation, any claims for any kind of tortious conduct, promissory
or equitable estoppel, defamation, breach of the Company’s policies, rules, regulations, handbooks
or manuals, breach of express or implied contract or covenants of good faith, wrongful discharge or
dismissal, and/or failure to pay, in whole or part, any compensation of any kind whatsoever
(collectively, “Executive’s Claims”).



     Execution of this Release by the Executive operates as a complete bar and defense against any
and all of the Executive’s Claims against the Company and/or the other Releasees. If the Executive
should hereafter assert any Executive’s Claims in any action or proceeding against the Company or
any of the Releasees, as applicable, in any forum, this Release may be raised as and shall
constitute a complete bar to any such action or proceeding and the Company and/or the Releasees
shall be entitled to recover from the Executive all costs incurred, including attorneys’ fees, in
defending against any such Executive’s Claims.



17









 





     Executive further waives and relinquishes any rights and benefits which he has or may have
under California Civil Code § 1542 to the fullest extent that he may lawfully waive all such rights
and benefits pertaining to the subject matter of this Release. Civil Code § 1542 provides that a
general release does not extend to claims which the creditor does not know or suspect to exist in
his favor at the time of executing the release, which if known by him must have materially affected
his settlement with the debtor. Executive acknowledges that he is aware that he may later discover
facts in addition to or different from those which he now knows or believes to be true with respect
to the subject matter of this Release, but it is his intention to fully and finally forever settle
and release any and all claims, matters, disputes, and differences, known or unknown, suspected and
unsuspected, which now exist, may later exist or may previously have existed between the parties to
the extent set forth in the first paragraph hereof, and that in furtherance of this intention this
Release shall be and remain in effect as a full and complete general release to the extent set
forth in the first paragraph herein, notwithstanding discovery or existence of any such additional
or different facts.



     2. OPPORTUNITY FOR REVIEW



     The Executive acknowledges that he has had a reasonable opportunity to review and consider the
terms of this Release for a period of at least 21 days, that he understands and has had the
opportunity to receive counsel regarding his/ her respective rights, obligations and liabilities
under this Release and that to the extent that the Executive has taken less than 21 days to
consider this Release, the Executive acknowledges that he has had sufficient time to consider this
Release and to consult with counsel and that he does not desire additional time to consider this
Release. As long as the Executive signs and delivers this Release within such 21 day time period,
he will have seven days after such delivery to revoke his decision by delivering written notice of
such revocation to the Company. If the Executive does not revoke his decision during that
seven-day period, then this Release shall become effective on the eighth day after being delivered
by the Executive.



     3. BINDING EFFECT



     This Release is binding on the Executive’s heirs and personal representative.



18









 





     4. GOVERNING LAW; ARBITRATION; MISCELLANEOUS



     The provisions of Sections 8, 9, 10(A), 11, 13, 15, and 19 of the Employment Agreement shall
be deemed incorporated into this Release as if fully set forth herein. Any claim or dispute arising
under or relating to this Release, or the breach, termination or validity of this Release, shall be
deemed a “Dispute” subject to Section 10(B) of the Employment Agreement.



	 	 	 	 	 
	 	 	RUSS BERRIE AND COMPANY, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 

	 	 	 	 
	 

	 	 	 	Bruce Crain






19









 






RUSS BERRIE AND COMPANY, INC.

RESTRICTED STOCK AGREEMENT




Date of Grant: December   , 2007




     Russ Berrie and Company, Inc., a New Jersey corporation (the “Company”), does hereby grant to
Bruce G. Crain (the “Executive”), as of the date set forth above, pursuant to the 2004 Russ Berrie
and Company, Inc. Stock Option, Restricted and Non-Restricted Stock Plan (the “2004 Plan”), which
is incorporated herein by reference, 85,000 shares of its Common Stock (stated value $.10) (the
“Restricted Stock”), upon the following terms and conditions. This grant is being made pursuant to
the terms of the Employment Agreement dated as of December 4, 2007 between the Company and the
Executive (the “Employment Agreement”). Capitalized terms used but undefined herein shall have the
meanings ascribed to them in the Employment Agreement. This is the Restricted Stock Agreement
referred to in Section 6.9 of the 2004 Plan.



     1. The Restricted Stock shall be registered in the name of the Executive and held by the
Company until the restrictions on such Restricted Stock lapse and such Restricted Stock is no
longer subject to forfeiture in accordance with the terms hereof. As the restrictions on the
Restricted Stock lapse (unless such stock is earlier forfeited in accordance with the terms
hereof), the Company shall deliver to the Executive certificates representing such stock, free and
clear of all restrictions other than those arising under federal and/or state securities laws.



     2. (a) Subject to the provisions of Sections 3 and 7 hereof, the Restricted Stock shall vest
ratably over four years (25% per year) from December 4, 2007 (“Employment Commencement Date”), and
upon vesting, shall not be subject to any further restrictions hereunder.



          (b) Except as provided in Section 3 hereof, and subject to the provisions of Section 7 hereof
in the event of a Business Combination, any non-vested Restricted Stock shall be immediately
forfeited and all rights of the Executive to such forfeited Restricted Stock shall terminate
without payment of consideration by the Company upon termination of the Executive’s employment by
the Company for Cause or termination of employment by the Executive without Good Reason.




     3. (a) In the event that the employment of the Executive is terminated prior to the vesting
of all or part of the Restricted Stock, and such termination is by the Company without Cause or by
the Executive for Good Reason, or by reason of the




 









 







Executive’s death or Disability, the Executive shall be credited with an additional two years
of service after his Termination Date for purposes of determining vesting and nonforfeitability of
the Restricted Stock.




          (b) Upon the occurrence of a Change in Control (as defined in the Employment Agreement),
whether or not the employment of the Executive has terminated, the shares of Restricted Stock that
were scheduled to vest within three years of the date of such Change in Control shall vest on the
date of such Change in Control and vesting of the shares of Restricted Stock that were not
scheduled to vest within three years of such Change in Control shall be accelerated by three years.
In addition, in the event that the Company terminates the Executive’s employment without Cause and
a Change in Control occurs within six months following the Termination Date, the shares of
Restricted Stock that were scheduled to vest within three years of the Termination Date (and which
did not vest on the Termination Date pursuant to Section 3(a)) shall vest on the date of the Change
in Control.




          (c) The Committee (as defined in the 2004 Plan) may at any time, in its sole discretion,
accelerate the time at which any or all of the Restricted Stock will vest or remove any or all of
such restrictions with respect to the Restricted Stock.




     4. None of the Restricted Stock may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during the period in which the Restricted Stock has not become
nonforfeitable.



     5. Subject to the restrictions set forth in this Agreement, the Executive shall have all of
the rights of a shareholder with respect to the Restricted Stock, including the right to receive
all dividends thereon.



     6. An appropriate legend shall be placed on the stock certificate representing the Restricted
Stock with respect to the restrictions imposed thereon.



     7. The award of Restricted Stock hereunder shall be subject to adjustment as follows:



          (a) In the event of any change in the outstanding Common Stock by reason of a 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
shall adjust the aggregate number of shares of Common Stock available for awards of Restricted
Stock




2









 







and any or all other matters deemed appropriate by the Committee, including, without
limitation, accelerating the vesting period pertaining to the Restricted Stock.




          (b) In connection with a Business Combination (as defined in the 2004 Plan), the Committee,
in its sole discretion, may provide for (i) the continuation of the Plan and/or the assumption of
the awards granted thereunder by a successor corporation (or a parent or subsidiary thereof), or
(ii) the substitution for such awards 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. In the event of any continuation, assumption or substitution contemplated by the foregoing
clauses, the award of Restricted Stock shall continue in the manner and under the terms so
provided.




          (c) If, by reason of a change in capitalization described above, Executive shall be entitled
to new, additional or different shares of stock or securities of the Company or any other
corporation in respect of his Restricted Stock, in the event that the 2004 Plan continues, such
new, additional or different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the Restricted Stock prior to such
change in capitalization.




     8. Subject to the limitations set forth in the 2004 Plan, the Committee is vested with
absolute discretion and authority to interpret the 2004 Plan and make all determinations necessary
or advisable for the administration thereof. Any good faith determination of the Committee in the
administration of the 2004 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, any adjustments pursuant to Section 7 hereof.



     9. Nothing contained in the 2004 Plan or this Agreement shall confer upon the Executive any
right with respect to continuance of employment by the Company nor limit in any way the right of
the Company to terminate or modify his employment at any time, with or without Cause.



     10. If the Company is for any reason required to withhold any amount under the laws and
regulations of the United States, any jurisdiction thereof or local government with respect to the
issuance of Restricted Stock hereunder, or the lapse of restrictions with respect thereto
(“Withholding Taxes”), the Executive or other person receiving such stock shall be required to pay
the Company the amount of any such Withholding Taxes. The Company shall have the right to require
the payment of any such Withholding Taxes before issuing any Restricted Stock hereunder or removing
the restrictions with respect thereto. In lieu of all or any part of a cash payment regarding such
Withholding Taxes, the Committee will permit the Executive to cover all or any part of the
Withholding Taxes, through a reduction in the number of shares of stock delivered to such person or
a



3









 




delivery or tender to the Company of shares of Common Stock held by such person, in each case
valued in the same manner as used in computing the Withholding Taxes under applicable laws.




     11. The Company shall not be required to issue or deliver a certificate for shares of
Restricted Stock hereunder unless the issuance 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 1933, 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.



     12. Notwithstanding anything contained in the 2004 Plan or herein to the contrary, in the
event that the disposition of shares of Restricted Stock acquired pursuant to the 2004 Plan is not
covered by a then current registration statement under the Securities Act, and is not otherwise
exempt from such registration, such 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 shares shall be appropriately amended or have an appropriate legend placed
thereon to reflect their status as restricted securities as aforesaid.



     13. To the extent that federal laws of the United States do not otherwise control, this
Agreement shall be governed by the laws of New Jersey, without giving effect to principles of
conflicts of laws, and shall be construed accordingly.



     14. In the event any provision of this Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and
this Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included.



     15. This Agreement shall be binding upon and inure to the benefit of the successors (including
by way of merger), assigns and heirs of the respective parties.



     16. The Executive acknowledges and agrees that a violation of Section 4 of this Agreement will
cause the Company irreparable injury for which adequate remedy at law is not available.
Accordingly, the Executive agrees that the Company shall be



4









 




entitled to an injunction, restraining order or other equitable relief, without the posting of any
bond, to prevent the breach of such Section and to enforce the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in addition to any other
remedy to which it may be entitled at law or equity.




	 	 	 	 	 
	 	 	RUSS BERRIE AND COMPANY, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 





AGREED TO AND ACCEPTED AS OF THE

DATE OF GRANT SET FORTH ABOVE:




	 	 	 
	 

SIGNATURE-EXECUTIVE

	 	 







5











 





[100,000 Shares]

[2008 Option]




RUSS BERRIE AND COMPANY, INC.

STOCK OPTION AGREEMENT




Date of Grant: January   , 2008




     In accordance with the Employment Agreement (the ”Employment Agreement”) dated as of December
4, 2007, between Russ Berrie and Company, Inc, a New Jersey corporation (together with its
successors and assigns, the “Company”) and Bruce G. Crain (the “Executive”), the Company does
hereby grant to the Executive, as of the grant date set forth above, a stock option (the “Option”)
to purchase an aggregate of 100,000 shares of its Common Stock (stated value $.10 per share)
(“Shares”) at the price of $[   ] per share (the “Option Price”), upon the following terms and
conditions. Capitalized terms used but undefined herein shall have the meanings ascribed to them
in the Employment Agreement.



     1. (a) This Option is intended to be a non-qualified stock option and is granted under the
Company’s 2004 Stock Option, Restricted and Non-Restricted Stock Plan (the “2004 Plan”).



          (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 December 4, 2007 the (“Employment
Commencement Date”) and have a term of ten years from the Employment Commencement Date, provided,
however, the term of exercisability of a vested portion of the Option shall be subject to the
provisions of Sections 2 and 4 below.




     2. (a) If the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, any outstanding unexercisable portion of this Option shall be deemed to
be exercisable to the same extent as if the Executive had completed an additional two years of
service after his Termination Date and the exercisable portion of this Option shall remain
exercisable for 90 days following the Termination Date or until the ten year expiration date of
this Option, whichever is earlier.



          (b) In the event the Executive’s employment terminates by death or Disability, any outstanding
unexercisable portion of this Option shall be deemed to be exercisable to the same extent as if the
Executive had completed an additional two years of service after the date of death or termination
for Disability and the exercisable portion of this Option shall remain exercisable for a period of
one year following such death or termination for Disability or until the ten year expiration date
of this Option, whichever is earlier.




          (c) Upon the occurrence of a Change in Control, whether or not the employment of the Executive
is terminated, any outstanding unexercisable of portion of this




 









 




Option that was scheduled to become exercisable within three years of the date of such Change
in Control shall become exercisable, and the exercisability of any portion of this Option that was
not scheduled to become exercisable within three years of the date of such Change in Control shall
be accelerated by three years. In the event that the Company terminated the Executive’s employment
without Cause and a Change in Control occurs within six months following the Termination Date, any
outstanding unexercisable portion of this Option that was scheduled to vest within three years of
the Termination Date (and which did not vest on the Termination Date pursuant to 2(a) above) shall
become exercisable on the date of such Change in Control and shall remain exercisable for 90 days
following the date of the Change in Control or until the ten year expiration date of this Option,
whichever is earlier.




          (d) In the event that the Executive terminates his employment without Good Reason or the
Company terminates the employment of the Executive for Cause, any unexercised portion of this
Option that is not exercisable on the Termination Date will be cancelled and deemed terminated on
the Termination Date and any outstanding exercisable portion of this Option shall remain
exercisable for 90 days following the Termination Date or until the ten year expiration date of
this Option, whichever is earlier.




     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). 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




2









 




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 (as defined in the 2004 Plan) shall make
equitable adjustments to the Option as is applicable under the circumstances. Such adjustment
shall include, as applicable, changes in the number of Shares subject to the Option and Option
exercise price and any other adjustments deemed appropriate by the Committee.




          (b) In connection with a Business Combination (as defined in the 2004 Plan), the Committee (as
defined in the 2004 Plan), in its sole discretion, may provide for (i) 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, provided that the
Executive’s Options shall not be cancelled unless all other outstanding unexercisable Options are
cancelled as a result of the Business Combination. 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.




3









 








     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 (as defined under the 2004 Plan), 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. Nothing contained in this Agreement shall confer upon the Executive any right with respect
to continuance of employment by the Company nor limit in any way the right of the Company to
terminate or modify his employment at any time, with or without Cause.



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



     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.



     10. Notwithstanding anything contained 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
regulation 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 Executive acknowledges and agrees that a violation of Section 5 of this Agreement will
cause the Company irreparable injury for which adequate remedy at law is not available.
Accordingly, the Executive agrees that the Company shall be entitled to an injunction, restraining
order or other equitable relief, without the posting of any bond, to prevent the breach of Section
5, and to enforce the terms and provisions hereof in any court of competent jurisdiction in the
United States or any state thereof, in addition to any other remedy to which it may be entitled at
law or equity.



4









 





     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. “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 reasonably in good faith by the Committee).



	 	 	 	 	 
	 	RUSS BERRIE AND COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 



AGREED TO AND ACCEPTED AS OF THE

DATE OF GRANT SET FORTH ABOVE:

                      






5









 








20,000 Share]

[2007 Option]




RUSS BERRIE AND COMPANY, INC.

STOCK OPTION AGREEMENT




Date of Grant: December   , 2007





     In accordance with the Employment Agreement (the ”Employment Agreement”) dated as of December
4, 2007, between Russ Berrie and Company, Inc, a New Jersey corporation (together with its
successors and assigns, the “Company”) and Bruce G. Crain (the “Executive”), the Company does
hereby grant to the Executive, as of the grant date set forth above, a stock option (the “Option”)
to purchase an aggregate of 20,000 shares of its Common Stock (stated value $.10 per share)
(“Shares”) at the price of $[   ] per share (the “Option Price”), upon the following terms and
conditions. Capitalized terms used but undefined herein shall have the meanings ascribed to them
in the Employment Agreement.



     1. (a) This Option is intended to be a non-qualified stock option and is granted under the
Company’s 2004 Stock Option, Restricted and Non-Restricted Stock Plan (the “2004 Plan”).



          (b) Except as provided in Sections 2 and 4 below, this Option shall fully vest and become
exercisable on the six month anniversary of December 4, 2007 (“Employment Commencement Date”) and
have a term of ten years from the Employment Commencement Date, provided, however, the term of
exercisability of the Option shall be subject to the provisions of Sections 2 and 4 below.




     2. (a) If the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, this Option shall be exercisable in full and shall remain exercisable
for 90 days following the Termination Date or until the ten year expiration date of this Option,
whichever is earlier.



          (b) In the event the Executive’s employment terminates by death or Disability, this Option
shall be exercisable in full and shall remain exercisable for a period of one year following such
death or termination for Disability or until the ten year expiration date of this Option, whichever
is earlier.




          (c) Upon the occurrence of a Change in Control, whether or not the employment of the
Executive is terminated, this Option shall become exercisable in full.




          (d) In the event that the Executive terminates his employment without Good Reason or the
Company terminates the employment of the Executive for Cause, any unexercised portion of this
Option that is not exercisable on the Termination Date will be cancelled and deemed terminated on
the Termination Date and any outstanding exercisable




 









 




portion of this Option shall remain exercisable for 90 days following the Termination Date or
until the five year expiration date of this Option, whichever is earlier.




     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). 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,




2









 




reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split,
stock combination, rights offering, spin-off or other relevant change, the Committee (as defined in
the 2004 Plan) shall make equitable adjustments to the Option as is applicable under the
circumstances. Such adjustment shall include, as applicable, changes in the number of Shares
subject to the Option and Option exercise price and any other adjustments deemed appropriate by the
Committee.




          (b) In connection with a Business Combination (as defined in the 2004 Plan), the Committee
(as defined in the 2004 Plan), in its sole discretion, may provide for (i) 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, provided that the
Executive’s Options shall not be cancelled unless all other outstanding unexercisable Options are
cancelled as a result of the Business Combination. 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 (as defined under the 2004 Plan), 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. Nothing contained in this Agreement shall confer upon the Executive any right with respect
to continuance of employment by the Company nor limit in any way the right of the Company to
terminate or modify his employment at any time, with or without Cause.



     7. Any determination of the Committee as to any adjustments pursuant to



3









 




Section 4 hereof shall be final, conclusive and binding upon the Executive and any person
claiming under or through the Executive, to the extent made by the Committee in good faith.




     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.



     10. Notwithstanding anything contained 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
regulation 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 Executive acknowledges and agrees that a violation of Section 5 of this Agreement will
cause the Company irreparable injury for which adequate remedy at law is not available.
Accordingly, the Executive agrees that the Company shall be entitled to an injunction, restraining
order or other equitable relief, without the posting of any bond, to prevent the breach of Section
5, and to enforce the terms and provisions hereof in any court of competent jurisdiction in the
United States or any state thereof, in addition to any other remedy to which it may be entitled at
law or equity.



     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. “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



4









 







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 reasonably in good faith by the
Committee).



	 	 	 	 	 
	 	RUSS BERRIE AND COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 



AGREED TO AND ACCEPTED AS OF THE

DATE OF GRANT SET FORTH ABOVE:
                      





5









 





[100,000 Shares]

[2007 Option]




RUSS BERRIE AND COMPANY, INC.

STOCK OPTION AGREEMENT




Date of Grant: December   , 2007




     In accordance with the Employment Agreement (the ”Employment Agreement”) dated as of December
4, 2007, between Russ Berrie and Company, Inc, a New Jersey corporation (together with its
successors and assigns, the “Company”) and Bruce G. Crain (the “Executive”), the Company does
hereby grant to the Executive, as of the grant date set forth above, a stock option (the “Option”)
to purchase an aggregate of 100,000 shares of its Common Stock (stated value $.10 per share)
(“Shares”) at the price of $[   ] per share (the “Option Price”), upon the following terms and
conditions. Capitalized terms used but undefined herein shall have the meanings ascribed to them
in the Employment Agreement.



     1. (a) This Option is intended to be a non-qualified stock option. Of the Shares covered by
this Option, 80,000 Shares are granted under the Company’s 2004 Stock Option, Restricted and
Non-Restricted Stock Plan (the “2004 Plan”) and 20,000 Shares are granted outside the 2004 Plan.



          (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 December 4, 2007 the (“Employment
Commencement Date”) and have a term of ten years from the Employment Commencement Date, provided,
however, the term of exercisability of a vested portion of the Option shall be subject to the
provisions of Sections 2 and 4 below.




     2. (a) If the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, any outstanding unexercisable portion of this Option shall be deemed to
be exercisable to the same extent as if the Executive had completed an additional two years of
service after his Termination Date and the exercisable portion of this Option shall remain
exercisable for 90 days following the Termination Date or until the ten year expiration date of
this Option, whichever is earlier.



          (b) In the event the Executive’s employment terminates by death or Disability, any
outstanding unexercisable portion of this Option shall be deemed to be exercisable to the same
extent as if the Executive had completed an additional two years of service after the date of death
or termination for Disability and the exercisable portion of this Option shall remain exercisable
for a period of one year following such death or termination for Disability or until the ten year
expiration date of this Option, whichever is earlier.




          (c) Upon the occurrence of a Change in Control, whether or not the




 









 




employment of the Executive is terminated, any outstanding unexercisable portion of this
Option that was scheduled to become exercisable within three years of the date of such Change in
Control shall become exercisable, and the exercisability of any portion of this Option that was not
scheduled to become exercisable within three years of the date of such Change in Control shall be
accelerated by three years. In the event that the Company terminated the Executive’s employment
without Cause and a Change in Control occurs within six months following the Termination Date, any
outstanding unexercisable portion of this Option that was scheduled to vest within three years of
the Termination Date (and which did not vest on the Termination Date pursuant to 2(a) above) shall
become exercisable on the date of such Change in Control and shall remain exercisable for 90 days
following the date of the Change in Control or until the ten year expiration date of the Option,
whichever is earlier.




          (d) In the event that the Executive terminates his employment without Good Reason or the
Company terminates the employment of the Executive for Cause, any unexercised portion of this
Option that is not exercisable on the Termination Date will be cancelled and deemed terminated on
the Termination Date and any outstanding exercisable portion of this Option shall remain
exercisable for 90 days following the Termination Date or until the ten year expiration date of
this Option, whichever is earlier.




     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). 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




2









 




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 (as defined in the 2004 Plan) shall make
equitable adjustments to the Option as is applicable under the circumstances. Such adjustment
shall include, as applicable, changes in the number of Shares subject to the Option and Option
exercise price and any other adjustments deemed appropriate by the Committee.




          (b) In connection with a Business Combination (as defined in the 2004 Plan), the Committee
(as defined in the 2004 Plan), in its sole discretion, may provide for (i) 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, provided that the
Executive’s Options shall not be cancelled unless all other outstanding unexercisable Options are
cancelled as a result of the Business Combination. 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.




3









 





     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 (as defined under the 2004 Plan), 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. Nothing contained in this Agreement shall confer upon the Executive any right with respect
to continuance of employment by the Company nor limit in any way the right of the Company to
terminate or modify his employment at any time, with or without Cause.



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



     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.



     10. Notwithstanding anything contained 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
regulation 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 Executive acknowledges and agrees that a violation of Section 5 of this Agreement will
cause the Company irreparable injury for which adequate remedy at law is not available.
Accordingly, the Executive agrees that the Company shall be entitled to an injunction, restraining
order or other equitable relief, without the posting of any bond, to prevent the breach of Section
5, and to enforce the terms and provisions hereof in any court of



4









 







competent jurisdiction in the United States or any state thereof, in addition to any other
remedy to which it may be entitled at law or equity.



     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. “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 reasonably in good faith by the Committee).



	 	 	 	 	 
	 	RUSS BERRIE AND COMPANY, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 



AGREED TO AND ACCEPTED AS OF THE

DATE OF GRANT SET FORTH ABOVE:



                      




5