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Exhibit 10.1    
  

     RUSS BERRIE AND COMPANY, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN  

Effective January 1, 2001 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	Page

	ARTICLE I- PURPOSE AND EFFECTIVE DATE	 	1
	

ARTICLE II- DEFINITIONS	
 	

1
	 	2.1	 	Account	 	1
	 	2.2	 	Administrative Committee	 	1
	 	2.3	 	Beneficiary	 	1
	 	2.4	 	Board	 	1
	 	2.5	 	Bonus	 	1
	 	2.6	 	Change in Control	 	1
	 	2.7	 	Code	 	2
	 	2.8	 	Commissions	 	2
	 	2.9	 	Company	 	2
	 	2.10	 	Company Matching Contribution	 	3
	 	2.11	 	Compensation	 	3
	 	2.12	 	Deferral Commitment	 	3
	 	2.13	 	Deferral Period	 	3
	 	2.14	 	Deferred Compensation Account	 	3
	 	2.15	 	Determination Date	 	3
	 	2.16	 	Director Fees	 	3
	 	2.17	 	Disability	 	3
	 	2.18	 	Effective Date	 	3
	 	2.19	 	Elective Deferred Compensation	 	3
	 	2.20	 	Employer	 	3
	 	2.21	 	Enhanced Death Benefit	 	3
	 	2.22	 	401(k) Plan	 	4
	 	2.23	 	Investment Index	 	4
	 	2.24	 	Matching Contributions Account	 	4
	 	2.25	 	Participant	 	4
	 	2.26	 	Participation Agreement	 	4
	 	2.27	 	Plan	 	4
	 	2.28	 	Policy	 	4
	 	2.29	 	Rate of Return	 	4
	 	2.30	 	Retirement	 	4
	 	2.31	 	Salary	 	5
	 	2.32	 	Unforeseen Emergency	 	5
	

ARTICLE III- PARTICIPATION AND DEFERRAL COMMITMENTS	
 	

5
	 	3.1	 	Eligibility and Participation	 	5
	 	3.2	 	Form of Deferral	 	5
	 	3.3	 	Limitations on Deferral Commitments	 	6
	 	3.4	 	Commitment Limited by Termination	 	6
	 	3.5	 	Irrevocable Deferral Commitment	 	6
	

ARTICLE IV- DEFERRED COMPENSATION ACCOUNTS	
 	

6
	 	4.1	 	Accounts	 	6
	 	4.2	 	Elective Deferred Compensation	 	7
	 	4.3	 	Matching Contribution	 	7
	 	4.4	 	Withholding	 	7
	 	4.5	 	Allocation of Elective Deferred Compensation	 	7

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	 	4.6	 	Adjustment of Accounts	 	7
	 	4.7	 	Vesting of Accounts	 	8
	 	4.8	 	Statement of Accounts	 	8
	

ARTICLE V- PLAN BENEFITS	
 	

9
	 	5.1	 	Distributions Prior to Termination of Employment	 	9
	 	5.2	 	Distributions Following Termination of Employment	 	9
	 	5.3	 	Medium of Payment	 	10
	 	5.4	 	Accelerated Distribution	 	10
	 	5.5	 	Deferred Payment of Benefit	 	10
	 	5.6	 	Withholding for Taxes	 	11
	 	5.7	 	Valuation and Settlement	 	11
	 	5.8	 	Payment to Guardian	 	11
	 	5.9	 	Inability to Locate	 	11
	

ARTICLE VI- BENEFICIARY DESIGNATION	
 	

11
	 	6.1	 	Beneficiary Designation	 	11
	 	6.2	 	Changing Beneficiary	 	11
	 	6.3	 	No Beneficiary Designation	 	12
	 	6.4	 	Effect of Payment	 	12
	

ARTICLE VII- ADMINISTRATION	
 	

12
	 	7.1	 	Committee; Duties	 	12
	 	7.2	 	Agents	 	12
	 	7.3	 	Binding Effect of Decisions	 	12
	 	7.4	 	Indemnity	 	12
	

ARTICLE VIII- CLAIMS PROCEDURE	
 	

13
	 	8.1	 	Claim	 	13
	 	8.2	 	Denial of Claim	 	13
	 	8.3	 	Review of Claim	 	13
	 	8.4	 	Final Decision	 	13
	

ARTICLE IX- AMENDMENT AND TERMINATION OF PLAN	
 	

13
	 	9.1	 	Amendment	 	13
	 	9.2	 	Company's Right to Terminate	 	14
	ARTICLE X- MISCELLANEOUS	 	14
	 	10.1	 	Unfunded Plan	 	14
	 	10.2	 	Unsecured General Creditor	 	15
	 	10.3	 	Rabbi Trust	 	15
	 	10.4	 	Nonassignability	 	15
	 	10.5	 	Not a Contract of Employment	 	15
	 	10.6	 	Protective Provisions	 	15
	 	10.7	 	Governing Law	 	16
	 	10.8	 	Validity	 	16
	 	10.9	 	Notice	 	16
	 	10.10	 	Successors	 	16

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RUSS BERRIE AND COMPANY, INC.
  
    EXECUTIVE DEFERRED COMPENSATION PLAN    
  

 
 

ARTICLE I-PURPOSE AND EFFECTIVE DATE    
  

    The purpose of this Executive Deferred Compensation Plan is to provide a select group of highly compensated executives and other highly compensated employees,
as well as members of the Board of Directors, with a capital accumulation opportunity by deferring compensation on a pre-tax basis, and to provide the Company with a method of attracting, recruiting,
rewarding and retaining such individuals. The Plan is effective as of January 1, 2001. 

 
 

ARTICLE II-DEFINITIONS    
  

    For the purposes of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise: 

	2.1
	Account 

    "Account"
means the device used to measure and determine the amounts to be paid to a Participant under the Plan. Separate subaccounts may be maintained to properly reflect the
Participant's balance. A Participant's Account shall not constitute or be treated as a trust fund of any kind. 

	2.2
	Administrative
Committee 

    "Administrative
Committee" means the Chief Executive Officer, Chief Financial Officer, and Vice President of Corporate Affairs of the Company (provided, that in the event of any
vacancy in any such
office, the other members of the Administrative Committee may act as such until such vacancy is filled), and such additional members, if any, who may be appointed from time to time by the Board, to
serve at the pleasure of the Board. 

	2.3
	Beneficiary

    "Beneficiary"
means the person, persons or entity entitled under Article VI to receive any Plan benefits payable after a Participant's death. 

	2.4
	Board

    "Board"
means the Board of Directors of the Company. 

	2.5
	Bonus 

    "Bonus"
means any incentive compensation (excluding Commissions) that is payable to a Participant in addition to the Participant's Salary based on an annual or semiannual evaluation
of the performance of the Participant and/or of the Company, but shall not include a Christmas bonus, any referral bonus or other payment under a special reward program ("Excludable Reward"), or any
other form of compensation such as (but not limited to) the value of restricted stock or proceeds from the exercise of or sale of stock received pursuant to stock options, stock purchase plans, or
stock appreciation rights ("Stock Compensation"); severance payments; payment or reimbursement of relocation, automobile, travel, or other expenses ("Expense Reimbursement") or any other special
allowance. 

	2.6
	Change
in Control 

    A
"Change in Control" means a change in control of a nature that would be required to be reported (assuming such event has not been "previously reported") in response to Item
1(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the 

1

 

Securities Exchange Act of 1934, as amended (the "Exchange Act") or any successor thereto; provided that, without limitation, such a Change in Control shall be deemed to have occurred at such time as: 

    (a) Any
person or group of related persons for purposes of Section 13(d) of the Exchange Act (a "Group"), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of shares representing thirty percent (30%) or more of the combined voting power of the Company's issued and outstanding voting
securities, determined by disregarding any such shares owned by a Permitted Holder as Permitted Holders; 

    (b) The
first day on which a majority of the members of the Board are not directors who (i) were members of the Board on the Effective Date or (ii) were
nominated for election or elected to the Board with, or whose election to such Board was approved by, the affirmative vote of a majority of the directors who met the requirements of this clause
(ii) or the preceding clause (i) at the time of such nomination or election; 

    (c) The
sale by the Company in one transaction or a series of related transactions of all or substantially all of its assets (other than cash or receivables) to any
person or Group; or 

    (d) A
merger or consolidation involving the Company or a direct or indirect subsidiary of the Company in which the Company's shareholders immediately prior to such
merger or consolidation do not in the aggregate own at least a majority equity interest and a majority of the voting capital stock or interests in the surviving entity (if the Company is a constituent
corporation in such merger or consolidation) or in the Company (if the Company is not a constituent corporation in such merger or consolidation), as the case may be, immediately following the
consummation of such merger or consolidation. 

    Notwithstanding
anything in the foregoing to the contrary, no Change in Control shall be deemed to have occurred by virtue of any transaction which results in a Participant, or group
of Participants, acquiring, directly or indirectly, forty percent (40%) or more of the combined voting power of the Company's issued and outstanding voting securities, or so long as Permitted Holders
own shares representing more than 50% of the combined voting power of the Company's issued and outstanding voting securities. 

    For
purposes of the foregoing "Permitted Holder" means any of the following: Russ Berrie or his spouse, parent, sibling, child, stepchild, grandchild or other lineal descendent, or a
trust which is for the benefit of any of the foregoing, or a charitable trust or foundation created by or on behalf of any of the foregoing, or an Affiliate (as defined below) of any of the foregoing.
An "Affiliate" of a person means a person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract
or otherwise. 

	2.7
	Code

    "Code"
means the Internal Revenue Code of 1986, as amended, and section references to the Code shall include corresponding provisions of any successor Internal Revenue Code that may
be adopted. 

	2.8
	Commissions

    "Commissions"
means sales commissions that are payable to a Participant. 

	2.9
	Company 

    "Company"
means Russ Berrie and Company, Inc., a New Jersey corporation, or any successor thereof, by merger, consolidation, purchase of substantially all of its business and
assets, or otherwise. 

2

 
	2.10
	Company
Matching Contribution 

    "Company
Matching Contribution" means an amount credited to a Participant pursuant to Section 4.3 of the Plan. 

	2.11
	Compensation

    "Compensation"
means the Director Fees, Salary, Bonuses, and/or Commissions that a Participant earns for services rendered to the Employer. 

	2.12
	Deferral
Commitment 

    "Deferral
Commitment" means an election to defer Compensation made by a Participant pursuant to Article III and for which a separate Participation Agreement has been submitted
by the Participant to the Administrative Committee. 

	2.13
	Deferral
Period 

    "Deferral
Period" means a calendar year. 

	2.14
	Deferred
Compensation Account 

    "Deferred
Compensation Account" means the portion of a Participant's Account attributable to amounts that the Participant has deferred pursuant to a Deferral Commitment, as adjusted
to reflect the Rate of Return. 

	2.15
	Determination
Date 

    "Determination
Date" means the last day or last business day of each calendar month, as the Administrative Committee shall determine. 

	2.16
	Director
Fees 

    "Director
Fees" means all Board and committee meeting fees payable to a Participant (before reduction for amounts deferred under the Plan). Director Fees do not include expense
reimbursements, incentive stock awards or any form of noncash compensation or benefits. 

	2.17
	Disability 

    "Disability"
means a physical or mental condition which, in the opinion of the Administrative Committee, prevents the Participant from satisfactorily performing the Participant's
usual duties for the Employer. The Administrative Committee's decision as to Disability will be based upon medical reports and/or other evidence satisfactory to the Administrative Committee, and will
be final and binding on all parties. 

	2.18
	Effective
Date 

    "Effective
Date" means January 1, 2001. 

	2.19
	Elective
Deferred Compensation 

    "Elective
Deferred Compensation" means the amount of Compensation that a Participant elects to defer pursuant to a Deferral Commitment. 

	2.20
	Employer

    "Employer"
means the Company or any successor to the business thereof, Russ Berrie and Company West, Inc., Russ Berrie and Company Properties, Incorporated, Bright of
America, Inc., and any other affiliated or subsidiary corporations of the Company designated by the Administrative Committee. 

	2.21
	Enhanced
Death Benefit 

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    "Enhanced
Death Benefit" means an amount equal to the lesser of two hundred fifty thousand dollars ($250,000) or ten (10) times the Participant's average Deferral Commitment
for the four most recent Deferral Periods, including that in which the Participant's death occurs. In determining the Participant's Deferral Commitment (if any) for the year of death, it shall be
assumed (a) that he would have continued to receive the same Salary (including Christmas bonus) through the end of the year that was in effect at the date of death and (b) that any Bonus
or Commissions earned prior to death and not yet paid, would have been paid (i.e., that the Participant had survived and continued employed to the scheduled date of payment). Any other Bonus or
Commissions shall be taken into account only to the extent actually paid. If a Participant has been eligible to participate in the Plan for less than four (4) years, the average shall be over
the actual calendar years that the Participant has been eligible to participate. 

	2.22
	401(k)
Plan 

    "401(k)
Plan" means the Russ Berrie and Company, Inc. 401(k) Plan. 

	2.23
	Investment
Index 

    "Investment
Index" shall mean a portfolio or fund made available by the Administrative Committee and elected by the Participant to be used as an index in determining the adjustment to
be made in the Participant's Account each month reflecting the investment performance, positive or negative, of such fund, including any such portfolio or fund included as part of a variable life
insurance product. 

	2.24
	Matching
Contributions Account 

    "Matching
Contributions Account" means the portion of a Participant's Account attributable to Company Matching Contributions, as adjusted to reflect the Rate of Return. 

	2.25
	Participant

    "Participant"
means any eligible individual who has elected to defer Compensation under this Plan. 

	2.26
	Participation
Agreement 

    "Participation
Agreement" means the agreement submitted by a Participant to the Administrative Committee prior to the beginning of the Deferral Period, with respect to a Deferral
Commitment made for such Deferral Period. 

	2.27
	Plan

    "Plan"
means this Russ Berrie and Company, Inc. Executive Deferred Compensation Plan, as amended from time to time. 

	2.28
	Policy

    "Policy"
means the insurance policy or policies employed by the Administrative Committee in association with the Investment Indices available under the Plan. 

	2.29
	Rate
of Return 

    "Rate
of Return" means the investment performance, positive or negative, used to determine the periodic adjustment to a Participant's Account in accordance with Section 4.6. 

	2.30
	Retirement

    "Retirement"
means a Participant's termination of employment with the Employer, or termination of Board service (as the case may be), on or after the Participant's attainment of age
fifty (50) or within three (3) years after a Change in Control. 

4

 
	2.31
	Salary

    "Salary"
means the Employee's regular base salary for the Plan Year and Christmas bonus (if any). Salary excludes any other form of compensation such as (but not limited to) any
Bonus, Excludable Reward, Stock Compensation or Expense Reimbursement as defined in Section 2.5, severance payments, or any other special allowance. 

	2.32
	Unforeseen
Emergency 

    "Unforeseen
Emergency" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined
in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant (and excluding, without limitation, the need to send a child to college or desire to purchase a home). The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each case, but in any case, payment may not be made to the extent that such hardship is or may be relieved: 

    (a) Through
reimbursement or compensation by insurance or otherwise, 

    (b) By
liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or 

    (c) By
cessation of deferrals under the Plan. 

    Usage.  The masculine when used herein shall include the feminine, and the single shall include the plural, and vice
versa, where the context so requires. 

 
 

ARTICLE III-PARTICIPATION AND DEFERRAL COMMITMENTS    
  

	3.1
	Eligibility
and Participation 

    (a) Eligibility.  Eligibility to participate in the Plan is limited to (i) Board members, and
(ii) employees who are members of a select group of "management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") and who are selected for eligibility by the Administrative Committee in this Plan. 

    (b) Participation.  Eligible employees and Board members may elect to participate in the Plan with respect to any
Deferral Period by submitting a Participation Agreement to the Administrative Committee by December 31 of the calendar year immediately preceding the Deferral Period, and submitting (unless
previously submitted for a prior Deferral Period), such consent form as the Administrative Committee may require in order to obtain insurance coverage for the individual under the Policy. 

    (c) Part-Year Participation.  If, as determined by the Administrative Committee in its discretion, an individual first
becomes eligible to defer Compensation during a Deferral Period (such as a new employee admitted to eligibility by the Administrative Committee upon hire, a new Director, or if the Administrative
Committee shall so determine, an employee promoted to a position that first qualifies him for eligibility, or an employee returning from leave of absence), a Participation Agreement must be submitted
to the Administrative Committee no later than thirty (30) days following notification to the employee of eligibility to defer, and such Participation Agreement shall be effective only prospectively
with regard to Compensation earned and payable following the submission of the Participation Agreement to the Administrative Committee. 

	3.2
	Form of
Deferral 

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    A
Participant may elect Deferral Commitments in the Participation Agreement as follows: 

    (a) Salary Deferral Commitment.  A Salary Deferral Commitment shall be related to the Salary otherwise payable by
Employer to a Participant during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount. 

    (b)  Bonus Deferral Commitment.  A Bonus Deferral Commitment shall be related to any Bonus otherwise payable to the
Participant during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount. 

    (c) Commission Deferral Commitment.  A Commission Deferral Commitment shall be related to any Commission otherwise
payable to the Participant during the Deferral Period. The amount to be deferred shall be stated as a flat percentage or dollar amount. 

    (d) Director Fees Deferral Commitment.  A Deferral Commitment by a member of the Board of Directors of the Company shall
relate to the Director Fees otherwise payable by the Company to a Participant during the Deferral Period. 

    In
each case, the amount to be deferred shall be stated as a flat percentage or dollar amount, and shall be computed before taking into account any reduction in taxable income by
compensation reduction under Section 125, 132(f) or 401(k) of the Code, or under this Plan. 

	3.3
	Limitations
on Deferral Commitments 

    The
following limitations shall apply to Deferral Commitments: 

    (a) Minimum.  The minimum Salary deferral in any Deferral Period shall be an amount that, when added to the amount (if
any) that the Administrative Committee may estimate as the amount of Bonus
or Commissions to be deferred in that Deferral Period pursuant to the elections made by the Participant, is no less than two thousand dollars ($2,000). 

    (b) Maximum.  The maximum deferral amount shall be, respectively, ninety percent (90%) of Salary; with respect to Bonus
and Commissions, one hundred percent less applicable withholding; and with respect to Director Fees, 100%. 

    (c) Changes in Minimum or Maximum.  The Administrative Committee may change the minimum or maximum deferral amounts from
time to time by giving written notice to all Participants. No such change may affect a Deferral Commitment made prior to the Administrative Committee's action. 

	3.4
	Commitment
Limited by Termination 

    If
a Participant terminates employment with Employer or Board service, as the case may be, prior to the end of the Deferral Period, the Deferral Period and the Deferral Commitment
shall end at the date of termination. 

	3.5
	Irrevocable
Deferral Commitment 

    A
Participant's Deferral Commitments shall be irrevocable after the commencement of the Deferral Period to which it relates, subject to Section 5.1(b) and Article IX. 

 
 

ARTICLE IV-DEFERRED COMPENSATION ACCOUNTS    
  

	4.1
	Accounts

    For
recordkeeping purposes only, an Account shall be maintained for each Participant, which shall include a Deferred Compensation Account and Matching Contributions Account. Separate
subaccounts shall be maintained to the extent necessary to properly reflect the Participant's election of Investment Indices, and of early withdrawal dates under Section 5.1(a). The Account
shall be a bookkeeping device 

6

 

utilized for the sole purpose of determining the benefits payable under the Plan and shall not constitute a separate fund of assets. 

	4.2
	Elective
Deferred Compensation 

    A
Participant's Elective Deferred Compensation shall be credited to the Participant's Account at such times, not less frequently than quarterly, as the Administrative Committee shall
determine. 

	4.3
	Matching
Contribution 

    If
the Participant remains employed by Employer through the end of a Deferral Period, the Employer shall credit a matching contribution to the Participant's Account on or before
March 15 of the following calendar year, in an amount equal to any matching contribution which would have been made for the Participant's under the 401(k) Plan but for the Participant's
participation in this Plan, determined on the assumption that the Participant's elective 401(k) contributions to that plan are at the rate of 6% of compensation eligible for such contributions
thereunder (or, if applicable, any lower percentage fixed as the maximum permitted for highly compensated employees under the 401(k) Plan for such year). 

	4.4
	Withholding

    Any
taxes or other amounts with respect to Elective Deferred Compensation, Matching Contributions, or the Participant's Matching Contributions Account, which is required by federal,
state, or local law shall be withheld from the Participant's nondeferred compensation to the maximum extent possible with any excess reducing the amount to be credited to the Participant's Account
under Sections 4.2 and 4.3. 

	4.5
	Allocation
of Elective Deferred Compensation 

    (a) Initial Election.  At the time a Participant completes a Deferral Commitment for a Deferral Period, the Participant
shall also select the Investment Index or Indices in which the Participant wishes to have the deferrals and related Company Matching Contributions (if any) deemed invested. The Participant may select
any combination of Investment Indices as long as at least five percent (5%), in whole percentages, is credited to each of the Investment Indices selected. 

    (b) Election Changes.  An election under Section 4.5(a) shall apply to Company Matching Contributions
credited after the effective date thereof, and to future Deferral Commitments and Deferral Periods, until changed in accordance with this Section 4.5(b). A Participant may change the allocation
among Investment Indices on the first day of any calendar month, provided that the Participant submitted notice of the change at least ten (10) days before the first day of such calendar month.
The change may apply only to deferrals and Company Matching Contributions to be credited on or after such day, to current Account balances, or to both. 

    (c) Changes in Reallocation Rules.  The Administrative Committee may change the notice requirement and frequency by
which Participants can reallocate their Accounts from time to time by giving written notice to all Participants. 

	4.6
	Adjustment
of Accounts 

    Each
Participant's Account, and each subaccount thereunder, shall be adjusted as of each Determination Date to reflect the Rate of Return, whether positive or negative, attributable
to the Investment Indices elected by the Participant and in effect for the month ending on such Determination Date. Such adjustment shall be made through the end of the month in which payment of the
amount subject to such adjustment is made. In the event that payment with respect to a Participant's Account is made at more than one time, the Administrative Committee or its delegee shall 

7

 

adjust the balance of the Participant's Account as it deems appropriate in order to reflect such partial payments. 

	4.7
	Vesting
of Accounts 

    Each
Participant shall be one hundred percent (100%) vested at all times in the Participant's Deferred Compensation Account. A Participant's Matching Contributions Account shall vest
pursuant to the vesting schedule for matching contributions under the 401(k) Plan. All amounts in the Participant's Matching Contribution Account that are not vested at the time of the termination of
the Participant's employment with the Employer shall be forfeited, and the Participant shall have no rights with respect thereto. 

	4.8
	Statement
of Accounts 

    Each
Participant shall receive a statement setting forth the balances in the Participant's Account on a quarterly basis. 

8

  

 
 

ARTICLE V-PLAN BENEFITS    
  

	5.1
	Distributions
Prior to Termination of Employment 

    A
Participant's Account may be distributed to the Participant prior to his termination of employment with Employer as follows: 

    (a)  Scheduled Early Withdrawals.  A Participant may elect in a Participation Agreement to withdraw all or any portion
of the amount deferred thereunder, as adjusted pursuant to Section 4.6, in from two (2) to five (5) substantially equal annual installments or a single lump sum, commencing the first
January 1 and (if applicable) on each subsequent January 1 following the date specified in the election. A different commencement date may be specified in a Participation Agreement with
respect to a subsequent Deferral Period, but in no event shall the date specified in any Participation Agreement be sooner than five (5) years after the date the Deferral Period subject to that
Participation Agreement commences. 

    (b)  Unforeseen Emergency.  Upon a finding that a Participant has suffered an Unforeseen Emergency, the Administrative
Committee may, in its sole discretion, make distributions from the Participant's vested Account. The amount of such a withdrawal shall be limited to the amount the Administrative Committee determines
to be reasonably necessary to meet the Participant's needs resulting from the Unforeseen Emergency. If any payment is made due to Unforeseen Emergency, any existing Deferral Commitment shall be null
and void and the Participant shall not be permitted to make any Deferral Commitment for the calendar year of the withdrawal and the following calendar year. Any such withdrawal shall be payable in a
single lump sum within thirty (30) days after the Administrative Committee approves such payment. 

	5.2
	Distributions
Following Termination of Employment 

    (a) Retirement or Disability Benefit.

	(i)
	 Benefit Amount.  If a Participant terminates employment with his Employer due to Retirement or
Disability, the Employer shall pay to the Participant a benefit equal to the vested balance in the Participant's Account.

	(ii)
	 Form of Benefit.  Benefits under this Section 5.2(a) shall be paid in a single
lump-sum payment, or in substantially equal annual installments over a period of five (5), ten (10) or fifteen (15) years, as the Participant may elect in accordance with paragraph
(iv) below. Benefits shall be paid or commence as soon as practical after such termination and in any event within 60 days thereafter, unless the Participant shall have previously elected in
accordance with paragraph (iv) to postpone payment to the month of January of the calendar year following termination. In all events, installment payments after the first shall be paid
in January. As of each January 1, the amount to be distributed in installment payments for that year shall be determined by dividing the vested Participant's Account balance as of the preceding
December 31 by the remaining number of installment payments.

	(iii)
	 Small Accounts.  Notwithstanding Section 5.2(a)(ii), if a Participant's vested Account is
less than ten thousand dollars ($10,000) on the Determination Date coincident with or next following such termination, the Administrative Committee, in its sole discretion, may pay the benefit under
Section 5.2(a)(i) in a lump sum.

	(iv)
	 Election of Form of Payment.  A Participant's election of his form of payment under this
Section 5.2(a) shall initially be made in his first Participation Agreement. Thereafter, the Participant may change such designation by filing with the Administrative Committee either a
subsequent Participation Agreement, or a change of payment designation in a form provided by the Administrative Committee, provided that any such change shall be 

9

 

effective
only if (A) the change is filed at least thirteen (13) calendar months prior to the year of termination, or (B) the change is filed prior to a Change in Control and the
Participant's termination of employment occurs on or after the Change in Control. The last election so filed shall apply to the Participant's entire vested Account. 

    (b)  Death Benefit.

	(i)
	 Preretirement.  If a Participant terminates employment with his Employer or service on the Board
due to death, the Employer shall pay to the Participant's Beneficiary the Participant's Account balance plus, provided that no valid defense to payment thereof exists under the Policy, the Enhanced
Death Benefit. Payment of amounts due under this paragraph (i) shall be made or commence as soon as practicable after death in a single sum or in annual installment over two (2) to
fifteen (15) years, in substantially equal amounts subject to adjustment under Section 4.6 through the end of the month immediately preceding the final payment, as the Participant may elect.
Such election shall initially be
made in the Participant's first Participation Agreement, but may be changed by the Participant at any time thereafter, either in a subsequent Participation Agreement or on a change form provided by
the Administrative Committee, provided that such change is filed with the Administrative Committee prior to death.

	(ii)
	 Postretirement.  If a Participant dies following the Participant's Retirement or Disability, the
Employer shall continue to pay any remaining benefit payments to the Participant's Beneficiary in the form previously elected by the Participant for Retirement or Disability benefits. 

    (c)  Termination Benefit.  If a Participant terminates employment with his Employer for any reason other than
Retirement, Disability, or death, the Employer shall pay to the Participant a lump-sum benefit equal to the vested balance in the Participant's Account. Benefits shall be paid or commence as soon as
practical after termination but in no case more than sixty (60) days after termination. In the event that the Participant dies before such payment is made, payment of the Participant's vested balance
shall be made to the Participant's Beneficiary in a single lump sum. 

    (d)  Transferred Employees.  A Participant shall not be treated as terminating employment for purposes of this Plan as a
result of a transfer between Employers or to employment with a subsidiary of the Company that is not an Employer. Such a Participant shall be treated as terminating employment only when he is employed
neither by an Employer or any subsidiary of the Company. 

	5.3
	Medium
of Payment. 

    All
benefits hereunder shall be paid in cash. 

	5.4
	Accelerated
Distribution 

    Notwithstanding
any other provision of the Plan, at any time and for any reason, a Participant shall be entitled to receive, upon written request to the Administrative Committee, a
lump-sum distribution equal to ninety percent (90%) of the vested Account balance as of the first Determination Date that is at least ten (10) days' after the date the Administrative Committee
receives the written request. The amount payable under this Section shall be paid in a lump sum as soon as practical after such Determination Date and not more than thirty (30) days thereafter.
The remaining balance of the vested Account shall be forfeited by the Participant. Such Participant shall not be eligible to participate in the Plan for a period of remainder of the calendar year of
distribution and the following calendar year. 

	5.5
	Deferred
Payment of Benefit 

10

 

    If
part of a Participant's compensation is not deductible under Section 162(m) of the Code, the Company may require the Participant to defer payment of benefits under this
Article to avoid the limitation set forth in Section 162(m). Any deferred benefits under this Section shall be distributed to the Participant in the first calendar year such
amounts would not exceed the limitation as set out in Section 162(m). 

	5.6
	Withholding
for Taxes 

    To
the extent required by the law in effect at the time payments are made, the Employer shall withhold from payments made hereunder any taxes required to be withheld by any federal,
state or local government, including any amounts which the Employer determines are reasonably necessary to pay any generation-skipping transfer tax which is or may become due. 

	5.7
	Valuation
and Settlement 

    The
amount of a lump-sum payment and the initial installment payment shall be based on the value of the Participant's vested Account on the Determination Date immediately proceeding
the lump-sum payment or commencement of installment payments. 

	5.8
	Payment
to Guardian 

    The
Administrative Committee may direct payment to the duly appointed guardian, conservator, or other similar legal representative of a Participant or Beneficiary to whom payment is
due. In the absence of such a legal representative, the Administrative Committee may, in it sole and absolute discretion, direct payment to a person having the care and custody of a minor, incompetent
or person incapable of handling the disposition of property upon proof satisfactory to the Administrative Committee of incompetency, minority, or incapacity. Such distribution shall completely
discharge the Employer, the Company and the Administrative Committee from all liability with respect to such benefit. 

	5.9
	Inability
to Locate. 

    In
the event that the Administrative Committee is unable to locate a Participant within two years following the date any payment is due to him under the Plan, all amounts allocated to
the Participant's Account shall thereupon be forfeited. If the Participant later claims such benefit within six years after such forfeiture, the amount forfeited shall be reinstated, without interest
or any adjustment under Section 4.6. In the absence of any such timely claim, the forfeiture shall be irrevocable. 

 
 

ARTICLE VI-BENEFICIARY DESIGNATION    
  

	6.1
	Beneficiary
Designation 

    Each
Participant shall have the right, at any time, to designate a Beneficiary (both primary as well as contingent) to whom benefits under this Plan shall be paid if a Participant
dies prior to complete distribution to the Participant of the benefits due under the Plan. However, if a Participant has a surviving spouse upon his death, the spouse shall be the sole Beneficiary
unless the Participant had previously designated another Beneficiary with the written consent of such spouse witnessed by (a) a notary public, or (b) a Plan representative expressly
authorized in writing by the Administrative Committee to witness such consent. Each Beneficiary designation shall be in a written form prescribed by the Administrative Committee, and will be effective
only when filed with the Administrative Committee during the Participant's lifetime. 

	6.2
	Changing
Beneficiary 

    Any
Beneficiary designation may be changed by a Participant by the filing of a new Beneficiary designation with the Administrative Committee. Any change in a Participant's Beneficiary
designation which has the effect of naming a person other than the surviving spouse as sole primary Beneficiary 

11

 

requires the written consent of the spouse, notarized or witnessed in the manner described in Section 6.1, but no consent of any previously named Beneficiary shall be otherwise required. The
filing of a new Beneficiary designation shall cancel all Beneficiary designations previously filed. If a Participant's interest in the Plan is community property, in whole or in part, any Beneficiary
Designation shall be valid or effective only as permitted under applicable law. 

	6.3
	No
Beneficiary Designation 

    In
the absence of an effective Beneficiary Designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's
benefits, the Participant's designated Beneficiary shall be deemed to be the Participant's surviving spouse, if any, and otherwise a Participant's estate. 

	6.4
	Effect
of Payment 

    If
distribution in respect of a Participant's Account is made to a person reasonably believed by the Administrative Committee or its delegee (taking into account any document
purporting to be a valid consent of the Participant's spouse, or any representation by the Participant that he is not married) to properly qualify as the Participant's Beneficiary under the foregoing
provisions of this Article VI, the Plan shall have no further liability with respect to such Account or portion thereof distributed. 

 
 

ARTICLE VII-ADMINISTRATION    
  

	7.1
	Committee;
Duties 

    The
Plan shall be administered by the Administrative Committee, and by its delegees, including those members of certain specified departments of the Company whose job responsibilities
include administration of Company compensation and benefit plans. The Administrative Committee shall have the power and discretion to adopt, interpret and enforce all appropriate rules and
regulations for the administration of the Plan and decide or resolve any and all questions, including determination of eligibility and interpretations of the Plan, as may arise in such administration.
If the Administrative Committee shall have more than one member, a majority vote of the Administrative Committee members in office at the time of the vote shall control any decision. The required
majority action may be taken either by a vote at a meeting or without a meeting by a signed memorandum, or be evidenced by written material distributed to Participants or prospective Participants.
Meetings may be conducted by telephone conference call. The Administrative Committee may, by majority action, delegate to one or more of its members the authority to execute and deliver in the name of
the Administrative Committee all communications and documents which the Administrative Committee is required or authorized to provide under this Plan. Any party shall accept and rely upon any document
executed in the name of the Administrative Committee. Members of the Administrative Committee may be Participants under this Plan. 

	7.2
	Agents 

    The
Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who
may be counsel to the Company. 

	7.3
	Binding
Effect of Decisions 

    The
decision or action of the Administrative Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan
and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan. 

	7.4
	Indemnity

12

 

    The
Company shall indemnify and save harmless, to the extent permitted by applicable law, each member of the Administrative Committee, and each employee, director or officer of the
Company or of any of its subsidiaries, from and against any and all loss, liability, claim, damage, cost and expense which may arise by reason of, or be based upon, any matter connected with or
related to the administration of the Plan (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced
or threatened, or in settlement of any such claim whatsoever), unless such person shall have acted in bad faith or been guilty of willful misconduct in respect of his duties, actions or omissions in
respect of the Plan. 

 
 

ARTICLE VIII-CLAIMS PROCEDURE    
  

	8.1
	Claim 

    Any
person claiming a benefit under the Plan shall present the request in writing to the Administrative Committee which shall respond in writing within thirty (30) days. 

	8.2
	Denial
of Claim 

    If
the claim or request is denied, the written notice of denial shall state: 

    (a) The
specific reason for denial, with specific reference to the Plan provisions on which the denial is based. 

    (b) A
description of any additional material or information required and an explanation of why it is necessary. 

    (c) An
explanation of the Plan's claim review procedure and the time limits applicable thereof, including a statement of the claimant's right to bring a civil suit
under Section 502(a) of ERISA following an adverse determination on review. 

	8.3
	Review
of Claim 

    (a) Any
person whose claim or request is denied or who has not received a response within thirty (30) days may request review by notice given in writing to the
Administrative Committee. The claim or request shall be reviewed by the Administrative Committee which may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have
representation, review and receive free copies of all relevant documents, including documents created or received by the Administrative Committee during the review process, and submit issues, comments
and documents in writing. 

    (b) A
notice requesting review shall be given within the lesser of ninety (90) days of notice of denial or one hundred twenty (120) days of the original written claim. 

	8.4
	Final
Decision 

    The
decision on review shall normally be made within sixty (60) days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be so
notified and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and contain (i) the specific reasons for the decision, (ii) specific reference to the
provisions of the Plan on which the decision is based, (iii) a statement that the claimant is entitled to review and receive free copies of all documents, records and other information relevant
to the claim, and (iv) a statement of the claimant's right to bring an action under Section 502(a) of ERISA. Except as required by law, all decisions on review shall be final and
binding on all parties concerned. 

 
 

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN    
  

	9.1
	Amendment 

13

 

    (a) The
Company may amend the Plan at any time and from time to time by written instrument. Except as provided in (b) below, the power to amend may be executed
only by the Board or an appropriate Committee thereof. 

    (b) The
Administrative Committee may adopt any technical, clerical, conforming or clarifying amendment or other change, provided: 

    (i)  The
Administrative Committee deems it necessary or advisable to: 

    (A) Correct
any defect, supply any omission or reconcile any inconsistency in order to carry out the intent and purposes of the Plan; 

    (B) Maintain
the Plan's status as a "top-hat" plan for purposes of ERISA; or 

    (C) Facilitate
the administration of the Plan; 

    (ii) The
amendment or change does not, without the consent of the Board, materially increase the cost to Employer of maintaining the Plan; and 

    (iii) Any
amendment adopted by the Administrative Committee shall be in writing, signed by a member of the Committee and reported to the Board at its next regularly
scheduled meeting. 

    (c) To
the extent permitted under subsection (e) below, amendments may have an immediate, prospective or retroactive effective date. 

    (d) Amendments
do not require the consent of any Participant or Beneficiary. 

    (e) Amendments
are subject to the following limitations: 

    (i)   Preservation of Account Balance.  No amendment shall reduce the amount credited to any Account as of the date of
the amendment is adopted. 

    (ii)  Changes in Earnings Rate.  If the Plan is amended so that an Investment Index is not used to calculate the
adjustment under Section 4.6, the rate of earnings to be credited to the Participant's Account shall not be less than a reasonable rate of interest. The rate of return on the stable value fixed income
fund of the 401(k) Plan, or any comparable rate, shall be deemed a reasonable rate of return for this purpose. 

	9.2
	Company's
Right to Terminate 

    The
Board may at any time completely terminate the Plan. In the event of termination of the Plan, the Board may, in its discretion (and without limitation of the Board's right to make
other provisions pursuant to its right to amend) direct that all amounts credited to the Account of a Participant (a) be distributed in a lump sum to the Participant or, in the event of his death, to
his Beneficiary within thirty (30) days following the date of termination of the Plan, (b) be paid or continue to be paid under the terms of any payment arrangement already in effect,
(c) be paid as if each Participant had terminated employment on the date of Plan termination, taking into account any election of form of distribution on Retirement filed with the Committee at
any time prior to the Plan termination, or (d) be distributed in any combination of the foregoing; provided, however, that no amounts not yet vested shall be distributed prior to the date of
vesting. 

 
 

ARTICLE X-MISCELLANEOUS    
  

	10.1
	Unfunded
Plan 

    It
is intended that this Plan be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated employees"
within the meaning of Sections 201, 301 and 401 of ERISA (in addition to its availability to members of the 

14

 

Board), and as such exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA, and be unfunded for tax purposes. 

	10.2
	Unsecured
General Creditor 

    Participants
and Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of the Company or any other Employer or any other party for
payment of benefits under this Plan. Any life insurance policies, annuity contracts or other property purchased by the Employer in connection with this Plan shall remain its general, unpledged and
unrestricted assets. The Employer's obligations under the Plan shall be unfunded and unsecured promises to pay money in the future. The Company and any subsidiary employing a Participant shall be
jointly and severally liable for the payment of all amounts hereunder attributable to employment by the subsidiary. In any other case, the Company shall be solely responsible for payment of all
amounts hereunder. 

	10.3
	Rabbi
Trust. 

    The
Company may, in its discretion, establish a trust to hold and invest amounts for the purpose of assisting the Company and each other Employer in meeting its liabilities under the
Plan, and contribute thereto such amounts as the Company deems advisable. Although the principal of such a trust and any earnings thereon shall be held separate and apart from other funds of Company
and other Employers, and while so held shall be used exclusively for providing benefits to Participants and their Beneficiaries (and for reasonable expenses of administering the Plan and trust),
assets of the trust in excess of liabilities of the Plan shall revert to the Company upon termination of the Plan after all liabilities under the Plan have been satisfied, and such an excess over both
current liabilities and the additional liabilities that would arise assuming full vesting may be returned to the Company in its discretion prior to such termination. Neither the Participants nor their
Beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the trust, prior to the time such assets are paid to the Participants or Beneficiaries as benefits, and
all rights created under this Plan shall be unsecured contractual rights of Plan Participants and Beneficiaries against the Company and, if the Participant was employed by an Employer other than the
Company, such Employer. Any assets held in the trust will be subject to the claims of Company's general creditors under federal and state law in the event of insolvency as defined in the applicable
trust agreement and, if the Participant was employed by an Employer other than the Company, general creditors of such Employer. 

	10.4
	Nonassignability

    Neither
a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey
in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 

	10.5
	Not
a Contract of Employment 

    This
Plan shall not constitute nor be deemed a contract of employment between the Employer and the Participant. Nothing in this Plan shall give a Participant the right to be retained
in the service of Employer or to interfere with the right of the Employer to discipline or discharge a Participant at any time. 

	10.6
	Protective
Provisions 

    A
Participant will cooperate with the Employer by furnishing any and all information requested by the Employer in order to facilitate the payment of benefits hereunder, and by taking
such physical 

15

 

examinations as the Employer may deem necessary and taking such other action as may be requested by the Employer. 

	10.7
	Governing
Law 

    The
provisions of this Plan shall be construed, interpreted and enforced according to the laws of the State of New Jersey without regard to the principles of conflict of laws, except
as preempted by ERISA or other federal law. 

	10.8
	Validity

    In
case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal and invalid provision had never been inserted herein. 

	10.9
	Notice 

    Any
notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed as given as
of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Administrative Committee shall be
directed to the Company's address to the attention of the Administrative Committee of the Executive Deferred Compensation Plan. Mailed notice to a Participant or Beneficiary shall be directed to the
individual's last known address in Employer's records. 

	10.10 Successors

    The
provisions of this Plan shall bind and inure to the benefit of the Company and each other Employer and their successors and assigns. The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of Employer, and
successors of any such corporation or other business entity. 

    Approved and Adopted effective as of January 1, 2001 by Unanimous Written Consent of the Executive Committee of the Board of Directors of Russ Berrie and
Company, Inc. on the 20th day of April, 2001.  

16

QuickLinks

Exhibit 10.1

TABLE OF CONTENTS

RUSS BERRIE AND COMPANY, INC. EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I-PURPOSE AND EFFECTIVE DATE

ARTICLE II-DEFINITIONS

ARTICLE III-PARTICIPATION AND DEFERRAL COMMITMENTS

ARTICLE IV-DEFERRED COMPENSATION ACCOUNTS

ARTICLE V-PLAN BENEFITS

ARTICLE VI-BENEFICIARY DESIGNATION

ARTICLE VII-ADMINISTRATION

ARTICLE VIII-CLAIMS PROCEDURE

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN

ARTICLE X-MISCELLANEOUSPrepared by MERRILL CORPORATION

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.2    
  

[RUSS LOGO]  

 Russ Berrie and Company, Inc.  

 Executive Deferred Compensation Plan  

2002 Overview/Prospectus 

 

 

 This Plan is not qualified under Section 401(a) of the Internal Revenue Code. 

prepared
by 

MCG  

 
 

TABLE OF CONTENTS    
  

	 
	 	Page

	INTRODUCTION	 	 
	
The Executive Deferred Compensation Plan	
 	

 
	

Eligibility	
 	

1
	Deferrals	 	1
	Benefits	 	1
	Security	 	1
	
DEFERRAL ADVANTAGES	
 	

 
	
Under This Plan	
 	

 
	

Reduced Taxable Income	
 	

1
	More Investment Dollars	 	1
	Pretax Investment Growth	 	1
	Assumptions	 	1
	Example	 	1
	
HOW THE PLAN WORKS	
 	

 
	
Election to Defer	
 	

 
	

Deferrals	
 	

2
	Deferral Period	 	2
	Minimums and Maximums	 	2
	Enrollment	 	2
	Hardship Waiver	 	2
	Account Selection	 	2
	Your Account	 	2
	Crediting Deferrals	 	2
	Earnings Indexes	 	2
	Investment Risk	 	3
	Earnings Indexes Investment Objectives	 	3
	Changing Indexes	 	3
	401(k) Makeup Match	 	3
	Other Risk/Unsecured Creditor	 	3
	No Assignment	 	4
	FICA Tax	 	4
	
DISTRIBUTIONS	
 	

 
	
Payable Events	
 	

5
	
Electing Distribution Time and Form	
 	

 
	

Distribution Election Requirement	
 	

5
	
Retirement	
 	

 
	

Payout Options	
 	

5
	Commencement Option	 	5
	
Termination	
 	

5
	
Scheduled In-Service Withdrawal	
 	

 
	

Preselected Date	
 	

5
	Example	 	5

	Payout	 	5
	No Penalty	 	5
	Additional Contributions	 	5
	
Hardship Withdrawal	
 	

6
	
Accelerated Distribution	
 	

 
	

Insolvency/Bankruptcy	
 	

6
	Request for Distribution	 	6
	Withdrawal Penalty	 	6
	Suspension From Plan	 	6
	Preference Period	 	6
	Example	 	6
	
Death	
 	

 
	

Preretirement	
 	

6
	Postretirement	 	7
	Your Beneficiary	 	7
	Beneficiary Changes	 	7
	
Disability	
 	

7
	
PARTICIPANT SECURITY	
 	

 
	
Rabbi Trust	
 	

 
	

Unsecured General Creditor	
 	

8
	Protects From: Change of Heart Change in Control	 	8
	Trust Assets	 	8
	Independent Trustee	 	8
	
Change in Control	
 	

8
	
OTHER INFORMATION	
 	

 
	

Plan Administration	
 	

9
	Plan Document Governs	 	9
	Not an Employment Contract	 	9
	Right to Amend	 	9
	Nonqualified Unfunded Plan Under ERISA	 	9
	Consult Your Tax Advisor	 	10
	Insurance Purchases	 	10
	
QUESTIONS AND ANSWERS	
 	

 
	

Taxation	
 	

11
	Distribution	 	12
	Security	 	12
	Impact on Other Plans	 	12
	Administration	 	12
	
GENERAL PLAN INFORMATION	
 	

14
	
APPENDIX A	
 	

 
	

Investment Fund Performance	
 	

17
	
APPENDIX B	
 	

 
	

Investment Fund Performance—Last Three Years	
 	

18

  

	INTRODUCTION	 	 	 	 	 	 
	

 	
 	

The Executive Deferred Compensation Plan is designed to provide an opportunity for Members of the Board of Directors (the "Directors") and employees who are members of a select group of "management or highly compensated employees" to defer income and
have it accumulate on a tax-deferred basis.	
 
	

 	
 	
The Executive Deferred Compensation Plan	
 
	
Eligibility	
 	

•	

Employees with total compensation in excess of $100,000, excluding stock incentive plans, travel and entertainment allowances, and relocation reimbursements. Sales people earning commissions (whose base salary is less than $100,000) may qualify under
a look-back rule.	
 
	

 	
 	

•	

Members of the Board of Directors.	
 
	
Deferrals	
 	

Provides an opportunity to defer Directors' fees and employees' salaries, commissions and bonuses.	
 
	
Benefits	
 	

Enables tax planning and financial independence. With a pretax yield and tax deferral, the funds you defer will accumulate more quickly, supplementing your retirement and survivor income. In addition, the Plan provides a preretirement death benefit
enhancement equal to 10 times your average deferral over the last four years with a maximum of $250,000.	
 
	
Security	
 	

Enhanced security through a funded rabbi trust and a call provision.	
 
	
DEFERRAL ADVANTAGES	
 	

 	

 	
 	

 	
 
	

 	
 	
Under This Plan	
 
	
Reduced Taxable Income	
 	

Your current taxable income is reduced by the amount you elect to defer.	
 
	
More Investment Dollars	
 	

You can invest more than you can in most outside investments because the deferral is made from pretax income.	
 
	
Pretax Investment Growth	
 	

Pretax investment, tax-deferred accumulation, and market-based investment results provide potentially greater effective returns than if you invested taxable compensation in an outside plan.	
 
	

 	
 	

[ACCOUNT BALANCE GRAPHIC]	
 
	
Assumptions	
 	

One-Time Deferral	
 	

$10,000	
 
	 	 	Pretax Investment	 	$10,000	 
	 	 	Plan Tax Bracket	 	40	%
	 	 	Outside Investment Tax Bracket	 	40	%
	 	 	Outside Investments	 	9	%
	 	 	Russ Berrie and Company, Inc. Plan	 	9	%
	
Example	
 	

For each $1 of compensation:	
 
	

 	
 	

[GRAPHIC]	
 

1

 

	
HOW THE PLAN WORKS	
 	

 	

 	
 	

 	
 
	

 	
 	
Election to Defer	
 
	
Deferrals	
 	

You may elect each year to defer receipt of a portion of your compensation. All deferrals are pretax; therefore your current income tax is reduced.	
 
	
Deferral Period	
 	

A new deferral period begins each calendar year. Before the end of each year, you will have the opportunity to make a new deferral election for the following year.	
 
	
Minimums and Maximums	
 	

The minimum deferral amount is $2,000 annually. The maximum deferrals are:	
 
	

 	
 	
Compensation	
 	

Maximum

Deferral	
 
	 	 	Base Salary	 	90%	*
	 	 	Commission	 	100%	*
	 	 	Bonuses	 	100%	*
	 	 	Directors' Fees	 	100%	 
	 	 	
	 	 	 
	 	 	* Less required FICA/Medicare tax.	 
	
Enrollment	
 	

Your election must be made by December 28, 2001.	
 
	
Hardship Waiver	
 	

The Administrative Committee may waive or modify the remainder of any deferral commitment upon evidence of severe financial hardship.	
 
	
Account Selection	
 	

When you make your deferral election you will also need to elect what percentage of your deferral you want to allocate to your Retirement Account and what percentage to your In-Service Withdrawal Account.	
 
	
Your Account	
 	

The Company credits an "Account" in your name, with your deferral.	
 
	
Crediting Deferrals	
 	

Your Account is credited each pay date with your deferrals. Deferrals will be credited with rates of return which can be positive or negative based on the investment index allocation you elected.	
 
	
Earnings Indexes	
 	

Your Account will be credited with earnings which mirror the investment results of the indexes you select. The indexes are:	
 
	

 	
 	

•	

Prudential Money Market Portfolio	
 
	 	 	•	SP PIMCO Total Return Portfolio	 
	 	 	•	MFS Emerging Growth Series Portfolio	 
	 	 	•	Janus Aspen Series Aggressive Growth Portfolio	 
	 	 	•	AIM V.I. Value Fund	 
	 	 	•	Franklin Small Cap Fund	 
	 	 	•	Janus Aspen Series Balanced Portfolio	 
	 	 	•	Janus Aspen Series International Growth Portfolio	 
	

 	
 	

You may choose any combination of portfolios. Your allocation must be stated in whole percentages.	
 

2

 

	
Investment Risk	
 	

Your Account is subject to investment risk. As in any investment, if there is a positive return, the account balance will grow; if there is a negative return, the account balance will be reduced. The specific funds are described in the prospectus for
each fund, which you need to review prior to making your election. You should carefully review the fund descriptions.	
 
	
Earnings Indexes Investment Objectives	
 	
Prudential Money Market Portfolio: Maximum current income, stability of capital and maintenance of liquidity through investment in high quality short-term debt instruments.	
 
	

 	
 	
SP PIMCO Total Return Portfolio: This portfolio seeks to maximize current income and price appreciation, consistent with preservation of capital and prudent risk-taking, by investing primarily
in investment-grade debt securities, including those of non-U.S. issuers.	
 
	

 	
 	
MFS Emerging Growth Series Portfolio: Seeks long-term growth of capital. Dividend and interest income from portfolio securities, if any, is incidental to the Series' investment objective of
long-term growth of capital.	
 
	

 	
 	
Janus Aspen Series Aggressive Growth Portfolio: Seeks long-term growth of capital.	
 
	

 	
 	
AIM V.I. Value Fund: A diversified portfolio that seeks to achieve long-term growth of capital by investing primarily in equity securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the securities, or relative to current market values of assets owned by the companies issuing the securities, or relative to the equity markets generally.	
 
	

 	
 	
Franklin Small Cap Fund: Seeks long-term capital growth.	
 
	

 	
 	
Janus Aspen Series Balanced Portfolio: Seeks long-term capital growth, consistent with preservation of capital and balanced by current income.	
 
	

 	
 	
Janus Aspen Series International Growth Portfolio: Seeks long-term growth of capital.	
 
	
Changing Indexes	
 	

Your investment allocation may be changed monthly, effective on the first day of the month. This includes the opportunity to change the investment of existing account balances. In order for new elections to become effective, a written notice must be
filed at least 10 days before the first day of the month. If no new election is filed, your investment allocation will remain as last elected.	
 
	
401(k) Makeup Match	
 	

If as a result of participating in this Plan your Company's 401(k) match is reduced, the Company will credit to this Plan any lost match.	
 
	
Other Risk/Unsecured Creditor	
 	

You will be at all times an unsecured general creditor of Russ Berrie and Company, Inc. You will have no ownership interest in the investments indexing your Account.	
 

3

 

	
No Assignment	
 	

The Plan provides that you may not pledge, assign, sell or otherwise transfer or encumber any amount credited to you under the Plan. Whether or not your interest under the Plan may be subject to seizure or encumbrance by a creditor may be affected by
applicable state law. Participants under the Plan do not enjoy the same federal law protections against creditors as the participants under the Company's 401(k) Plan.	
 
	
FICA Tax	
 	

For employees, FICA tax will be applied to your gross income prior to the deduction of your deferrals.	
 
	

 	
 	

For Directors, self-employment taxes will be payable upon distribution of benefits.	
 

4

  

	DISTRIBUTIONS	 	 	 	 	 	 
	

 	
 	
Payable Events	
 	

 	
 
	

 	
 	

Your benefits are payable under the following circumstances:	
 
	

 	
 	

•	

Retirement	
 
	 	 	•	Termination	 
	 	 	•	In-Service Withdrawal	 
	 	 	•	Hardship Withdrawal	 
	 	 	•	Accelerated Distribution	 
	 	 	•	Death	 
	

 	
 	

Special rules apply to each.	
 
	

 	
 	
Electing Distribution Time and Form	
 
	
Distribution Election Requirement	
 	

You select the time and form of distribution when you complete your Participation Agreement each year. This election may be changed prior to 13 months before you terminate employment.	
 
	

 	
 	
Retirement	
 
	

 	
 	

Retirement for purposes of the Executive Deferred Compensation Plan is defined as termination after change in control or age 50.	
 
	
Payout Options	
 	

•	

Lump sum	
 
	 	 	•	2-15 annual installments, or	 
	 	 	•	A combination of the above	 
	
Commencement Option	
 	

You may elect to commence your benefit within 90 days of your retirement or January following your retirement.	
 
	

 	
 	

If your Account is less than $10,000, your benefit will be paid in a lump sum.	
 
	

 	
 	
Termination	
 
	

 	
 	

If you terminate prior to being eligible for retirement, your Account will be paid in a lump sum.	
 
	

 	
 	
Scheduled In-Service Withdrawal	
 
	
Preselected Date	
 	

Payment commences on the date you selected when you made your deferral election. That date cannot be earlier than five years after your deferral election.	
 
	
Example	
 	

[CHART]	
 
	
Payout	
 	

You may elect to have your Account paid in one to five annual installments.	
 
	
No Penalty	
 	

In-Service Withdrawals are not subject to any penalty.	
 
	
Additional Contributions	
 	

Each year you may add to your In-Service Withdrawal Account. The Account, along with all annual additions, will be distributed on the date you select.	
 

5

 

	

 	
 	
Hardship Withdrawal	
 
	

 	
 	

The deferral commitment is irrevocable. However, the Committee may waive or modify the remainder of any deferral commitment if you have a Hardship Withdrawal. If payment is made due to a Hardship Withdrawal, deferrals shall cease for the remainder of
the calendar year and for the entire year after that.	
 
	

 	
 	
Accelerated Distribution	
 
	

 	
 	

The Accelerated Distribution provision option provides a method to get 90% of your Account balance for purposes that do not qualify as a hardship withdrawal.	
 
	
Insolvency/Bankruptcy	
 	

In the case of either insolvency or bankruptcy, the assets in the trust will be subject to disposition by the Federal Bankruptcy Court. This limitation on your security is necessary to avoid taxation of your benefits before receipt.	
 
	
Request for Distribution	
 	

You may request an Accelerated Distribution of your Account balance at any time.	
 
	
Withdrawal Penalty	
 	

If you request a distribution, the amount distributed to you will be 10% less than the amount charged to your Account. By including this forfeiture in the Accelerated Distribution provision, there should be no constructive receipt, i.e., the value of
your account should not be taxed to you before you receive it.	
 
	

 	
 	

Your Account will be valued as of the last day of the month immediately preceding the date on which the request is received by the Committee and paid to you in a lump sum within 30 days.	
 
	
Suspension From Plan	
 	

You will not be allowed to participate in the Plan for 12 calendar months once this provision has been exercised.	
 
	
Preference Period	
 	

The Accelerated Distribution provision will not be effective if exercised within the preference period before bankruptcy. This preference period is 90 days in most cases, but is one year for participants deemed "insiders."	
 
	
Example	
 	

Amount of Lump-Sum Deferral	
 	

$50,000	
 
	 	 	Account Balance 10 Years Later at Time of Request for Distribution	 	118,368	*
	 	 	10% Penalty	 	(11,837)	 
	

 	
 	
Net Lump-Sum Distribution	
 	
$106,531	
 
	

 	
 	

Effective Crediting Rate for Period	
 	

7.86	
%
	 	 	
* Assuming 9% earnings rate.	 	 	 
	

 	
 	
Death	
 	

 	
 
	
Preretirement	
 	

If you die while employed or a Director of Russ Berrie and Company, Inc., this Plan provides an Enhanced Death Benefit* equal to 10 times your average Deferral Commitment for the last four years, up to a maximum of $250,000. This Enhanced Death
benefit and your Account balance will be paid as you elect.	
 

6

 

	
Postretirement	
 	

If you die after you retire, your benefit will be your remaining Account balance which will continue to be paid as you originally elected.	
 
	
Your Beneficiary	
 	

The benefit is payable to the beneficiary you named on the Beneficiary Designation form.	
 
	
Beneficiary Changes	
 	

You may change your beneficiary designation at any time by contacting the Committee and completing a new Beneficiary Designation form.	
 
	

 	
 	
Disability	
 
	

 	
 	

If you terminate as a result of a Total Disability, your benefit will be distributed as you elected.	
 
	

 	
 	
* Please note, the Enhanced Death Benefit is not payable if you die within 24 months after your deferrals commence as a result of suicide or you provide false information on your Consent to Insure.	
 

7

  

	PARTICIPANT SECURITY	 	 	 	 	 
	

 	
 	
Rabbi Trust
	
Unsecured General Creditor	
 	

Your deferral account is subject to the claims of general creditors of Russ Berrie and Company, Inc. in the event of bankruptcy or insolvency.
	
Protects From:

    Change of Heart

    Change in Control	
 	

To increase the security of your benefits, Russ Berrie and Company, Inc. has established a specially designed irrevocable trust, commonly called a rabbi trust. The Trust protects you from a change in Russ Berrie and Company, Inc.'s intentions to pay
your benefits and from a change in control.
	
Trust Assets	
 	

Assets held by the Trust are variable life insurance contracts. Since the cash value of life insurance is not taxable, this enables Russ Berrie and Company, Inc. to give you a better crediting rate on your account.
	

 	
 	

These assets are available to pay benefits to participants if Russ Berrie and Company, Inc. refuses or is unable to pay benefits for any reason other than bankruptcy or insolvency (i.e., change of heart or change of control).
	

 	
 	

The insurance proceeds are payable to the Trust. Except in the case of insolvency, the assets can only be used to pay benefits. The participants have no right to either the policies or policy proceeds.
	
Independent Trustee	
 	

The trustee is an independent third party.
	

 	
 	
Change in Control
	

 	
 	

If you terminate after a change in control your benefit will be paid as if you had retired. The Company may not change the way it calculates the rates of return on your Account following a change in control.

8

 

	
OTHER INFORMATION	
 	

 	

 	
 	

 
	
Plan Administration	
 	

The Plan is administered by an Administrative Committee consisting of three (3) members as may be appointed from time to time by the Board. The Administrative Committee interprets and enforces all appropriate rules and regulations for administration
of the Plan and decides or resolves any and all questions, including determination of eligibility and interpretations of the Plan, as may arise in such administration. A majority vote of the Administrative Committee members in office at the time of
the vote controls any decision. The required majority action may be taken either by a vote at a meeting or without a meeting by a signed memorandum. Meetings may be conducted by telephone conference call. The Administrative Committee may, by majority
action, delegate to one or more of its members the authority to execute and deliver in the name of the Administrative Committee all communications and documents which the Administrative Committee is required or authorized to provide under this Plan.
Any party shall accept and rely upon any document executed in the name of the Administrative Committee. Members of the Administrative Committee may be Participants under this Plan. Additional information about the Plan and its administrators may be
obtained from the Administrative Committee, in care of Michael Genzink, Finance Department, Russ Berrie and Company, Inc., 111 Bauer Drive, Oakland, New Jersey 07436. Telephone: (201) 405-7323.
	
Plan Document Governs	
 	

This booklet has been prepared to give you a better understanding of the benefits and features of this Plan. Each participant's benefits and rights under this Plan are at all times governed by the text of the Executive Deferred Compensation Plan
document and are in no way altered or modified by the contents of this booklet.
	
Not an Employment Contract	
 	

This Plan does not constitute a contract of employment between you and Russ Berrie and Company, Inc.
	
Right to Amend	
 	

Russ Berrie and Company, Inc. reserves the right to amend or terminate this Plan, in whole or in part, at any time. Such amendment or termination may not alter the amounts already credited to your Account balance. Distributions will occur according
to the Plan document.
	
Nonqualified Unfunded Plan Under ERISA	
 	

As to employees, although the Plan is an "employee pension benefit plan" as defined by the Employee Retirement Income Security Act of 1974 (ERISA), the Plan is exempt from most ERISA requirements and protections because it is unfunded and maintained
by The Company primarily for the purpose of providing deferred compensation for a select group of highly compensated employees. As to Directors, this Plan is not subject to ERISA because Directors are not employees.

9

 

	

 	
 	

The Plan is required to provide adequate written notice to any participant or beneficiary whose claim for benefits under the Plan has been denied (and the specific reasons for the denial) and afford a reasonable opportunity for full and fair review
of the denied claim. The Plan has established procedures for notices about claims and review of denied claims. You may obtain information about the procedures from the Administrative Committee.
	
Consult Your Tax Advisor	
 	

You should consult a personal tax advisor for detailed information and guidance regarding participation in this Plan.
	
Insurance Purchases	
 	

The Company or the Trust may acquire insurance on the lives of the Plan participants.
	

 	
 	

This insurance is designed to generate tax-deferred earnings for the Trust and The Company. It is anticipated that over time the insurance asset will meet or exceed the Plan liability and generate gains to offset the costs of the Plan while providing
an asset from which the Trust could pay benefits, if necessary.
	

 	
 	

Neither you nor your beneficiary will have any right or interest in this insurance.

10

  

	QUESTIONS AND ANSWERS	 	 	 	 	 
	

 	
 	
Taxation
	

 	
 	
Note: The following is not intended to be tax advice. If any specific tax question arises, you should seek the advice of your tax advisor.
	
Am I taxed on deferred compensation or earnings before I receive them?	
 	

No. As long as your deferral election is filed before you earn compensation that you defer, you will not be deemed to be in constructive receipt of the amount deferred or the earnings on the amount deferred. You will not be taxed until you actually
receive this money.
	
How do my deferrals affect the withholding on my paychecks?	
 	

For employees, your federal W-2 earnings exclude deferred compensation. Most state and local laws also exclude deferred compensation from earnings. Thus, taxes withheld will be reduced.
	

 	
 	

For Directors, your deferrals will be excluded from your 1099.
	
Is my deferral included in the Social Security Wage Base?	
 	

For employees, yes. Deferrals are subject to withholding for FICA and Medicare taxes in the year of deferral until the annual FICA taxable wage base under the Social Security provision is reached; however, there is no limitation on the Medicare
tax.
	
Will I pay Social Security taxes when I take my distribution?	
 	

For employees, no. Because the deferrals were included in the wage base at the time of deferral, the amounts are not subject to Social Security taxes when paid.
	
How will deferrals affect Director's self-employment taxes?	
 	

Directors are not subject to self-employment taxes until they actually receive their benefits.
	
Will the payout affect my Social Security benefits after I retire?	
 	

For both Directors and employees, no. Payments made from the deferral plan will not affect your Social Security benefit. For purposes of Social Security, these payments are considered "earned" when they are credited to your account. They do not
constitute earned income under the earnings test when they are distributed to you.
	
How are my deferred amounts plus earnings taxed when they are distributed to me?	
 	

They are taxed as ordinary income when distributed to you and are subject to income tax withholding. Special income tax averaging is not available.
	
Is the death benefit payable under the Plan taxable income to my beneficiary?	
 	

Yes. The death benefit (account balance plus enhanced death benefit, if applicable) payable to your beneficiary is taxable as income.
	
Will the death benefits paid to my beneficiaries be includible in my gross estate for federal estate tax purposes?	
 	

Yes. The account balance (plus enhanced death benefit, if applicable) at the time of your death is includible in your gross estate. If, however, your beneficiary is your spouse and the benefit qualifies for the estate tax marital deduction, there
will be no federal estate tax.

11

 

	

 	
 	
Distribution
	
Can I withdraw my account before I leave the employment of Russ Berrie and Company, Inc.?	
 	

Yes. You may either request a Hardship Withdrawal distribution, elect an In-Service Withdrawal at the time of deferral or exercise the Accelerated Distribution provision.
	
What is a Hardship Withdrawal?	
 	

A Hardship Withdrawal is a serious financial setback that is unanticipated and beyond your control. For purposes of this Plan, the education of a child or the purchase of a home will not constitute a Hardship Withdrawal.
	
Why must I elect a Scheduled In-Service Withdrawal at least five years before I receive it?	
 	

To avoid the adverse tax consequences of constructive receipt (i.e. taxation of your benefit before receipt), the Plan must impose a restriction on Scheduled In-Service Withdrawals.
	
Why is there a penalty for exercising the Accelerated Distribution provision?	
 	

Ordinarily, the unrestricted right to withdraw your deferral account would create taxable income to you currently, even if you do not elect a withdrawal. This penalty is designed to prevent your being taxed on the value of your account before you
actually receive it.
	

 	
 	
Security
	
What happens to my deferrals if Russ Berrie and Company, Inc. becomes insolvent?	
 	

In the unlikely event that Russ Berrie and Company, Inc. becomes insolvent, you will be an unsecured general creditor of Russ Berrie and Company, Inc. Your claim against the assets of Russ Berrie and Company, Inc. will be considered with the claims
of other general creditors in the event of bankruptcy.
	

 	
 	

The Accelerated Distribution provision affords you some protection by giving you the opportunity to withdraw your funds net of a 10% penalty if you feel there is a threat to Russ Berrie and Company, Inc.'s solvency, subject to preference period
rules.
	

 	
 	
Impact on Other Plans
	
Can any of the payments under this Plan be "rolled over" into a qualified plan or IRA?	
 	

No. Amounts deferred are not eligible to be "rolled over" into a qualified plan or IRA. Deferral plan distributions are subject to income tax as soon as the amounts are actually or constructively received. Once you have the right to receive the funds,
 there is no vehicle available to allow you to further shelter these amounts from taxation.
	
Should I stop or reduce my 401(k) deferrals in order to defer into this Plan?	
 	

Your deferrals into this Plan can be in addition to the maximum amount you can defer into the 401(k). Please consult your financial advisor regarding your decision.
	

 	
 	
Administration
	
How can I find out the status of my account and its balance?	
 	

You will receive statements showing the status of your account each quarter within 60 days following the end of the quarter.
	
When will I receive my election forms?	
 	

Election forms will be distributed during the annual open enrollment period each year in which you are eligible to participate in this Plan. The forms must be returned by the close of open enrollment for deferrals to be made in the following calendar
year.

12

 

	
Who administers the Plan?	
 	

The Company has established an Administrative Committee that is in charge of overseeing the administration of the Plan, as well as interpreting the Plan provisions. The Committee also administers the ERISA claims procedures applicable to the
Plan.

13

  

	GENERAL PLAN INFORMATION	 	 	 	 	 
	

 	
 	

Members of the Board Directors (the "Directors") and employees who are members of a select group of "management or highly compensated employees" of Russ Berrie and Company, Inc. ("The Company") (or affiliated or subsidiary corporations of The
Company) and who are selected for eligibility by the Administrative Committee of this Plan, are being offered the opportunity to defer income as participants in the Russ Berrie and Company, Inc. Executive Compensation Plan (the
"Plan").
	

 	
 	

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.
	

 	
 	

This Plan is an unsecured promise of The Company to make future payments with respect to compensation deferred by Plan participants. If The Company becomes insolvent, the Trust fund in which Plan funds are held must be applied to pay The Company's
obligations to its general creditors (including Plan participants), and there may be insufficient funds to pay any or all of Plan participants' benefits. Accordingly, in contrast to benefits under The Company's 401(k) Plan,
benefits under the Plan are dependent on the long-term financial stability of The Company.
	

 	
 	

Russ Berrie and Company, Inc. ("The Company"), a New Jersey corporation, is the issuer of deferred compensation obligations offered pursuant to the Plan. The address of the principal executive office of The Company is 111 Bauer Drive, Oakland,
New Jersey 07436. The Company's telephone number is (201) 337-9000.
	

 	
 	

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files periodic reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Reports, proxy statements and other information concerning The Company may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street NW, Room 1204, Washington, DC 20549, and
at the following SEC regional offices: 233 Broadway, New York, NY 10279, e-mail: newyork@sec.gov; 73 Tremont Street, Suite 600, Boston, MA 02108-3912, e-mail: boston@sec.gov; and The Curtis Center, Suite 1120E, 601 Walnut Street, Philadelphia, PA
19106-3322, e-mail: philadelphia@sec.gov. Copies of these materials can be obtained at prescribed rates from the SEC's Public Reference Section at 450 Fifth Street, NW, Washington, DC 20549.
	

 	
 	

Copies of any documents or portions of documents incorporated by reference in this Plan Overview/Prospectus may be obtained without charge by making written or oral request to Michael Genzink, Finance Department, Russ Berrie and Company, Inc.
111 Bauer Drive, Oakland, New Jersey 07436. Telephone: (201) 405-7323.

14

 

	

 	
 	

Additional updating information with respect to the securities and Plan covered in this Plan Overview/Prospectus may be provided in the future to Plan participants by means of appendices to the Plan Overview/Prospectus.
	

 	
 	

The Company will deliver to each person to whom this Plan Overview/Prospectus is given a copy of The Company's Annual Report to Shareholders for its most recent fiscal year, unless such individual has otherwise received a copy of the report. The
Company will promptly furnish, without charge, another copy of the report on written or oral request of any such individual.
	

 	
 	

No person has been authorized to give any information or to make any representations in connection with this offering other than those contained in this Plan Overview/Prospectus. This Plan Overview/Prospectus does not constitute an offering in any
jurisdiction in which such offering may not lawfully be made.
	
Incorporation of Certain Documents by Reference	
 	

The following documents filed with the SEC are incorporated herein by reference:
	

 	
 	

    (a) The Company's latest annual report filed pursuant to Section 13(a) or 15(d) of the Exchange Act or the latest prospectus filed pursuant to Rule 424(b) under the Securities Act that contains audited consolidated
financial statements for The Company's latest fiscal year for which such statements have been filed.
	

 	
 	

    (b) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report or prospectus referred to in (a) above.
	

 	
 	

    (c) The description of the authorized capital stock of The Company contained in The Company's registration statement filed under Section 12 of the Exchange Act, including any amendment or report filed for the purpose of
updating the description.
	

 	
 	

All reports and other documents subsequently filed by The Company pursuant to Sections 13(a) and (c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold
or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the dates of the filing of such reports and documents.
	

 	
 	

The consolidated financial statements incorporated in this Plan Overview/Prospectus by reference have been so incorporated in reliance on the reports of Arthur Anderson LLP, independent accountants, given upon their authority as experts in accounting
and auditing.

15

 

	

 	
 	
NOTE: The information provided on these pages presents general information. Not all Plan/policy provisions, limitations, and exclusions are included. In the event of any conflicts, the Plan Document, amendments, and
established Company practices will govern. The Company reserves the right to terminate or modify benefit programs or policies at any time. The offer of benefits does not imply a contract with employees.

16

  

 
 

APPENDIX A    
  

 
  Investment Fund Performance    
    Prudential Pru Select III    
    Annualized Rate of Return for Periods Ending September 30, 2001    
  

	Fund Name
 
	 	YTD*
	 	1 Year
	 	3 Year
	 	5 Year
	 	10 Year
	 	Since

Inception
	 	Inception

Date**

	Prudential Money Market Portfolio	 	3.26	%	4.84	%	5.11	%	5.14	%	4.65	%	6.01	%	6/2/1983
	 	Lipper VIP Money Market average	 	3.20	 	4.79	 	5.06	 	5.10	 	4.62	 	N/A	 	 
	SP PIMCO Total Return Portfolio	 	8.76	 	14.09	 	N/A	 	N/A	 	N/A	 	13.99	 	9/22/2000
	 	Lehman Bros. Aggregate Bond Index	 	8.39	 	12.95	 	N/A	 	N/A	 	N/A	 	N/A	 	 
	MFS Emerging Growth Series Portfolio	 	(45.55	)	(55.98	)	(0.73	)	4.28	 	N/A	 	9.17	 	7/24/1995
	 	S&P 500	 	(20.38	)	(26.61	)	2.03	 	10.23	 	N/A	 	N/A	 	 
	Janus Aspen Series Aggressive Growth Portfolio: Service Shares***	 	(46.90	)	(63.57	)	(2.46	)	0.19	 	N/A	 	8.19	 	9/13/1993
	 	S&P Midcap 400	 	(15.76	)	(19.00	)	13.33	 	13.67	 	N/A	 	N/A	 	 
	AIM V.I. Value	 	(20.73	)	(27.65	)	3.58	 	8.89	 	N/A	 	12.20	 	6/1/1993
	 	S&P 500	 	(20.38	)	(26.61	)	2.03	 	10.23	 	N/A	 	N/A	 	 
	Franklin Small Cap Fund Class 2	 	(31.68	)	(45.65	)	9.25	 	2.52	 	N/A	 	6.87	 	11/29/1995
	 	Russell 2500 Growth Index	 	(29.18	)	(42.88	)	5.02	 	1.99	 	N/A	 	N/A	 	 
	Janus Aspen Series Balanced Portfolio: Service Shares***	 	(9.41	)	(12.13	)	5.94	 	9.17	 	N/A	 	10.46	 	9/13/1993
	 	S&P 500	 	(20.38	)	(26.61	)	2.03	 	10.23	 	N/A	 	N/A	 	 
	Janus Aspen Series International Growth Portfolio: Service Shares***	 	(32.89	)	(41.70	)	3.90	 	6.76	 	N/A	 	10.01	 	5/2/1994
	 	MSCI EAFE Index	 	(26.56	)	(28.53	)	(1.16	)	(0.14	)	N/A	 	N/A	 	 

Past
Performance is not indicative of future results. 

	*
	YTD returns are actual.

 
	**
	 Inception date is the date the portfolio was first made available to the public through life insurance and annuity contracts. Pruselectsm III was first
offered in
November 1999.

	***
	The returns shown for the Service Shares of the Janus Aspen Series Portfolios reflect the historical performance of a different class of shares (the
Institutional Shares) prior to December 31, 1999. Performance of the Service Shares after its inception on December 31, 1999, reflect the Service Shares higher annual fees and expenses
resulting from the fund's rule 12b-1 fees of 0.25%.

Please read the prospectus of the investment fund before selecting the fund as an investment index.

17

  

 
 

APPENDIX B    
  

 
  Investment Fund Performance—Last Three Years    
    Prudential Pru Select III    
    Annualized Rate of Return for Periods Ending September 30    
  

	Fund Name
 
	 	2001
	 	2000
	 	1999
	 
	Prudential Money Market Portfolio	 	4.84	%	5.79	%	4.70	%
	SP PIMCO Total Return Portfolio*	 	14.09	 	N/A	 	N/A	 
	MFS Emerging Growth Series Portfolio	 	(55.98	)	53.78	 	44.51	 
	Janus Aspen Series Aggressive Growth Portfolio: Service Shares**	 	(63.57	)	(12.33	)	N/A	 
	AIM V.I. Value	 	(27.65	)	9.82	 	39.87	 
	Franklin Small Cap Fund Class 2***	 	(45.65	)	45.77	 	N/A	 
	Janus Aspen Series Balanced Portfolio: Service Shares**	 	(12.13	)	(8.12	)	N/A	 
	Janus Aspen Series International Growth Portfolio: Service Shares**	 	(41.70	)	(8.98	)	N/A	 

Past
Performance is not indicative of future results. 

	*
	Inception date for this fund was September 22, 2000.

 
	**
	 Inception date for service shares was December 31, 1999. Returns for 2000 are for nine months and are actual returns.

	***
	Fund return data for 1999 unavailable.  

Please read the prospectus of the investment fund before selecting the fund as an investment index.

18

QuickLinks

Exhibit 10.2

TABLE OF CONTENTS

APPENDIX A

Investment Fund Performance Prudential Pru Select III Annualized Rate of Return for Periods Ending September 30, 2001

APPENDIX B

Investment Fund Performance—Last Three Years Prudential Pru Select III Annualized Rate of Return for Periods Ending September 30

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