Document:

Exhibit
10.88

 

Russ
Berrie and Company, Inc.

111 Bauer Drive, Oakland, NJ
07436

(201) 337-9000   (800) 631-8465

 

December 30,
2004

 

Mr. Ricky
Chan

45 Great
Hills Terrace

Short
Hills, NJ  07078

 

Dear Ricky:

 

This letter serves to confirm the severance
arrangement between Russ Berrie and Company, Inc. (the “Company”) and you.  In
recognition and appreciation of your service and contribution to the Company,
the severance package consists of the following:

 

1.              Final Paycheck.  You will be paid your final paycheck in the
usual manner.  Your last day of work will
be December 30, 2004 and you will be paid through December 31, 2004

 

2.              Severance Payments.  The Company will pay you severance for a
period of 12 months pursuant to the Company’s Severance Policy for Domestic
Vice Presidents (and Above).  Severance
will be paid at the salary rate (base pay not including bonuses or commissions)
in effect on the termination date.  The
severance will be paid over the course of the severance period in accordance
with the Company’s normal pay schedule (not in a lump sum).  The severance pay will continue even if you
secure other employment during the severance
payment period (but subject to the terms of the Release Agreement referenced
below).  As a condition to receiving the
severance package, you must sign and deliver to the Company the Company’s
form of Release Agreement (a copy of which is attached hereto).

 

3.              Benefit Continuation.  If
you presently have medical (or medical and dental) coverage, are
entitled to remain on the Company’s medical and dental insurance plans for a
period of 12 months.  This coverage is
paid entirely by the Company.  In other
words, the Company will pay your premium for the medical and dental coverage in
which you were enrolled on the date of your termination of employment.  The
benefit continuation will continue even if you secure other employment during
the period of benefit continuation (but subject to the terms of the Release
Agreement).  Our records indicate
that you are currently enrolled in family medical and family dental
coverage.  As a condition to receiving the new benefit continuation coverage, you
must sign and deliver to the Company the Company’s form of Release Agreement
(as stated above in paragraph 2 above).

 

4.              COBRA.  After the expiration of the benefit
continuation coverage described in paragraph 3 above, you will be entitled to
continue your benefits, at your

 

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expense, pursuant to the provisions of COBRA.   You will receive more information (including
the cost) about COBRA directly from the Company’s COBRA administrator (PayFlex
Systems USA, Inc).

 

5.              2004 Vacation.  You will be paid for all 2004 accrued and
unused vacation time (and carry-over vacation time).  You will also be paid for 2004 vacation time
that has not yet accrued but will accrue by the end of this year. Our records
indicate that you have (and will accrue) a total of 15 vacation days.  Your vacation pay will be included in your final
paycheck and the amount paid for vacation days is listed on your pay stub.

 

6.              401(k) Plan.  If you are a participant in the Company’s
401(k) Plan, you will receive a letter explaining the various alternatives
regarding the monies you have in your account. 
Our records indicate that you participate in the 401(k) Plan.

 

7.              Executive Deferred Compensation Plan.  Our records indicate that you have monies in
the Executive Deferred Compensation Plan. 
The options you have with regard to monies in that plan depend upon,
among other things, the options you previously elected.  Information regarding these options will be
sent to you under separate cover.

 

8.              Stock Options and
Restricted Stock.  Our records
indicate that you currently have no stock options, either vested or
unvested.  Our records further indicate
that you currently have 6,023 shares of restricted stock, none of which are vested
(you previously sold all of your vested shares).   Under the terms of the Company’s 1999 stock
option and restricted stock plan, pursuant to which your restricted shares were
issued, any non-vested restricted stock is immediately forfeited upon
termination of employment.  Please be
reminded that as a former officer of the Company, you possess material
information about the Company and its securities.  Please also be reminded that federal and
state securities laws prohibit the purchase or sale of securities while in
possession of material, non-public information. 
As you know, the Company has imposed a “blackout”, which is currently in
effect, upon all of its officers, among others, due to the existence of
material, non-public information.   Until
the date of your termination of employment, you were an as an executive officer
of the Company and were subject to the Company’s “blackout” periods.  As a former executive officer of the Company
who is in possession of material, non-public information, you remain subject to
the requirements of federal and state securities laws described above.  

 

9.              Company Automobile.    For a period of 12 months following your
termination date, you are entitled to receive a monthly car allowance of
$1,100.  This allowance will be included
in severance paychecks.

 

10.       Severance Bonus.   In appreciation of your many years of
dedicated service and in recognition of the significant role you played in the
Company, the Company

 

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will pay you an
additional $55,000 as a severance bonus. 
This bonus will be paid to you in your final paycheck.

 

11.       Life and Accident Insurance Coverage.  Prior to your termination date, the Company
paid for life and accident insurance for you. 
Enclosed please find a letter explaining your options (and the cost)
with respect to converting this coverage to personal policies.

 

12.       Life Insurance Policy.  The Company shall provide your designated
beneficiary with a life insurance benefit in the amount of One Million Dollars
($1,000,000) if you die before age 80.  

 

13.       Company Property.   On
your date of termination you are required to return all Company property and
documents (including, without limitation, your Company cell phone(s) and
Company laptop computer).

 

14.       Unemployment Benefits.  You may be entitled to file for unemployment
compensation providing that you meet your State’s criteria.  You should file for benefits immediately.

 

This severance arrangement supercedes all
other severance, termination and all other provisions contained in any other
Company policies relating thereto (including, without limitation, the Company’s
Severance Policy for Domestic Vice Presidents (and above)) and in any
agreements between the Company and you (including, without limitation, the
employment agreement between the Company and you, the stock option agreements and
restricted stock agreements between the Company and you, and the supplemental
benefits agreement between the Company and you ).

 

Ricky, I wish you all the best in your future
endeavors.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  /s/ Andrew R. Gatto

  	
   

  
	
   

  	
  Andrew R. Gatto

  
	
   

  	
  President and Chief Executive Officer

  

 

cc:  E. Goldenberg

 

3Exhibit
10.89

 

RUSS
BERRIE AND COMPANY, INC.

STOCK OPTION AGREEMENT

 

Date of
Grant:  December 15, 2004

 

Russ Berrie and Company, Inc., a New Jersey
corporation (the “Company”), does hereby grant to Joanne Levin (the “Optionee”),
as of the date set forth above, a stock option (the “Option”) to purchase an
aggregate of 100,000 shares of its Common Stock (stated value $.10) (the “Stock”)
at the price of $22.21 per share (the “Option Price”), upon the following terms
and conditions.

 

1.                                       (a)                                  Subject to Sections 2 and 4 below, this Option
shall vest and become exercisable ratably over three years (33 1/3% per year)
from the Date of Grant.  In no event may
a vested portion of the Option be exercised later than 10 years from the Date
of Grant, however, the term of exercisability of a vested portion of the Option
shall be subject to the provisions of Section 2 below.

 

(b)                                 The
Compensation Committee of the Board of Directors of the Company (the “Compensation
Committee”) may at any time, in its sole discretion, limit the number of shares
of Stock that the Optionee may purchase by the exercise of this Option on any
particular date or in any year.

 

2.                                      (a)                                   If the Optionee retires after reaching his Normal
Retirement Date (as defined on the date of his retirement under the Russ Berrie
and Company, Inc. 401(k) Plan), any outstanding unexercised portion of this
Option, whether or not vested and/or exercisable on the date he/she retires,
shall be deemed fully vested and exercisable and may be exercised for up to one
(1) year after his retirement or the stated term of the Option, whichever
period is shorter.]

 

(b)                                 If
the Optionee becomes Disabled (as defined in the Employment Agreement dated as
of December 15, 2004 between the Optionee and the Company), any
outstanding unexercised portion of this Option, whether or not vested and/or
exercisable on the date he/she became Disabled (as determined by the Board of
Directors of the Company in good faith), shall be deemed fully vested and
exercisable, and may be exercised by the Optionee or his/her legal
representative or permitted transferee for up to one (1) year from the date he
became Disabled, or the stated term of the Option, whichever period is shorter.

 

(c)                                  In
the event of the death of the Optionee while he/she is employed by the Company,
[or within the one year period provided in paragraph 2(a),] any outstanding
unexercised portion of this Option existing on the date such Optionee’s
employment terminated, whether or not vested and/or exercisable on the date his/her
employment is terminated, shall be deemed fully vested and exercisable, and may
be exercised by his estate or his legatee(s) for up to one (1) year after his/her
death or the stated term of the Option, whichever is shorter.

 

 

(d)                                 Subject
to the last sentence of this paragraph (d), if the Optionee’s employment with
the Company is terminated for any reason other than death, Disability or
retirement, any outstanding unexercised portion of this Option (whether vested
or not) will be cancelled and deemed terminated as of the date of his
termination; provided, however, that if the Optionee’s employment is
terminated by the Company for reasons other than Cause (as defined in the
Employment Agreement dated as of December 15, 2004), any outstanding
unexercised portion of this Option, whether or not vested and/or exercisable on
the date of termination, may be exercised for up to 6 months after the
termination date or the stated term of the Option, whichever period is
shorter.  If the Optionee is also a
Participant under the Company’s Change-in-Control Severance Plan (the “Severance
Plan”), and the terms of this paragraph conflict with the terms of the
Severance Plan, such conflict shall be resolved in accordance with the
provisions of Section 6.7(b) of the Severance Plan.

 

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)
which shall specify the number of shares of Stock to be purchased and which
shall be accompanied by payment in full of the purchase price in cash.

 

4.                                       The number of shares of Stock subject to this
Option and the price to be paid therefore, shall be subject to adjustment as
follows:

 

(a)                                  In
the event of any change in the outstanding 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
entity 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 Compensation Committee may adjust the Option Price or the number of
shares of Stock subject thereto, and any or all other matters deemed
appropriate by the Compensation Committee, including, without limitation,
accelerating the vesting and/or exercise period pertaining to such grant.

 

(b)                                 In
the event of the consummation of a reorganization, merger, share exchange or
consolidation if, in each case following such consummation, the outstanding
shares of Stock are converted into cash, property or securities of any issuer
other than the Company (a “Business Combination”), the Compensation Committee,
in its sole discretion, may provide for (i) the substitution for such 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, (ii) the acceleration of the vesting and/or
exercise period

 

2

 

pertaining to the Option
or (iii) (1) the cancellation of any portion of this 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 Option 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 (2) the cancellation of any portion of the
Option that is not then exercisable.  In
the event of any substitution contemplated by the foregoing clauses, the Option
shall continue in the manner and under the terms so provided.

 

(c)                                  Notwithstanding
the foregoing, in the event that any decision of the Compensation Committee
conflicts with the provisions of the Severance Plan in a manner which adversely
affects the rights of the Optionee, such conflict shall be resolved in
accordance with the provisions of Section 6.7(b) of the Severance Plan.

 

(d)                                 If,
by reason of a change in capitalization described above, Optionee shall be
entitled to new, additional or different shares of stock or securities of the
Company or any other entity in respect of this Option, such new, additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria, if any, which were applicable to the
shares of Stock subject to the Option prior to such change in capitalization.

 

5.                                       This Option shall not be assignable or
transferable except by will or by the laws of descent or distribution provided,
however, that the Optionee may transfer all or any portion of this
Option to a member of his Immediate Family(1), a trust for the benefit of the
Optionee or any member of his Immediate Family, partnerships in which the
Optionee 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”). 
This Option shall be exercisable only by the Optionee or his permitted
assignee or transferee.

 

6.                                       Nothing contained in this Agreement shall confer
upon the Optionee 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.                                       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

 

(1)                                  For
the purposes of this Agreement, “Immediate Family” shall mean, whether natural,
adopted or step (where applicable), the Optionee’s spouse, parents, children,
siblings, mothers and fathers-in-law, sons and daughters-in-law, and anyone
(other than employees) who shares such person’s home.

 

3

 

to
the transfer of Stock upon exercise of the Option (“Withholding Taxes”), the
Optionee 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 Stock
hereunder.  In lieu of all or any part of
a cash payment regarding such Withholding Taxes, the Company may permit a
person 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 delivery or
tender to the Company of shares of Stock held by such person, in each case
valued in the same manner as used in computing the Withholding Taxes under
applicable laws.

 

8.                                       The Company shall not be required to issue or
deliver a certificate for shares of 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 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.

 

9.                                       Notwithstanding anything contained herein to the
contrary, in the event that the disposition of shares of Stock acquired
hereunder 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.

 

10.                                 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.

 

11.                                 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.

 

12.                                 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.

 

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

 

14.                                 The Optionee
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

 

4

 

available. 
Accordingly, the Optionee 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 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:

  	
  /s/ John D. Wille

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John D. Wille

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED AS OF THE

  DATE OF GRANT SET FORTH ABOVE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Joanne Levin

  	
   

  	
   

  
	
  SIGNATURE - OPTIONEE

  	
   

  
	
  Date: March 24, 2005

  	
   

  
						

 

5

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