THIS EMPLOYMENT
AGREEMENT (the “ Agreement ”) is made and
entered into as of the 2 nd day of April, 2008, by and between LaJobi, Inc.
a Delaware corporation (the “ Employer ”), and
LAWRENCE BIVONA (the “ Executive
”).
A. The
Employer desires that the Executive provide services for the
benefit of the Employer and certain of its affiliates, and Russ
Berrie and Company, Inc. (“ Parent ”), pursuant
to the terms and conditions set forth herein, and the Executive
desires to accept such employment with the Employer.
B. The
Employer and the Executive acknowledge that the Executive will be a
member of the senior management team and the Board of Directors of
the Employer and, as such, will participate in implementing the
Employer’s business plan and the overall business plan of
Parent.
C. In the
course of his employment with the Employer, the Executive will have
access to certain confidential information that relates to or will
relate to the business of the Employer, Parent and their
affiliates.
D. The
Employer desires that any such information not be disclosed to
other parties or otherwise used for unauthorized
purposes.
NOW, THEREFORE, in
consideration of the above premises and the following mutual
covenants and conditions, the parties agree as follows:
1.
Employment. The Employer shall employ the Executive as its
President and shall appoint, and shall cause Parent, as
Employer’s sole stockholder, to appoint Executive as a member
of the Board of Directors of Employer, and the Executive hereby
accepts such employment and appointment on the following terms and
conditions. The Executive understands and agrees that he is an
at-will employee, and the Executive and the Employer can, and shall
have the right to, terminate the employment relationship at any
time for any or no reason, with or without cause, in accordance
with the termination provisions contained in Paragraph 6, but
subject to the payment provisions contained in Paragraph 7 of
this Agreement. Nothing contained in this Agreement or any other
agreement shall alter such at-will relationship. In the event that
the Executive ceases to be employed by the Employer for any reason
and conditioned upon payment to Executive of any compensation
payments required pursuant to Paragraph 7, the Executive shall
tender his resignation from all officer and director positions, if
any, that he holds with the Employer, and each affiliate of
Employer, effective on the date his employment is
terminated.
A.
Subject to the provisions of the last sentence of this paragraph 2,
the Executive shall work for the Employer in a full-time capacity.
Prior to the termination of
Executive’s employment hereunder, the
Executive shall have the duties, responsibilities, powers, and
authority customarily associated with the position of President and
a member of the board of directors of a Delaware corporation. In
the Executive’s capacity as President, the Executive shall
report to, and follow the direction of, the Chief Executive Officer
of Parent. The Executive shall diligently, competently, and
faithfully perform all duties, and shall devote his entire business
time, energy, attention and skill to the performance of duties for
the Employer or its affiliates and will use his best efforts to
promote the interests of the Employer, as Executive typically
devoted himself to the business of LaJobi Industries, Inc. (“
LaJobi Industries ”) prior to entering into this
Agreement. It shall not be considered a violation of the foregoing
for the Executive to serve on industry, civic, religious or
charitable boards or committees, so long as such service does not
individually or in the aggregate significantly interfere with the
performance of the Executive’s responsibilities as an
employee of the Employer in accordance with this Agreement. In
addition, Executive may, until December 31, 2008, provide
services to each of L&J Industries, Ltd. (“
L&J ”) and LBI Distributors, Inc. (“
LBI ”) relating to their respective business
operations and in connection with the sale or liquidation of the
Executive’s ownership interest in either company, if
applicable, provided that such services do not unreasonably
interfere with Executive’s duties hereunder.
B.
It is understood that the Executive shall not be expected by the
Employer to travel on behalf of the Employer, in the aggregate, for
a number of days that is materially higher than the Executive
traveled in 2007 on behalf of LaJobi Industries and L&J
(“ Excessive Travel” ), and that the
Executive’s refusal to travel on behalf of the Employer for a
materially higher number of days shall not permit the Employer to
either provide written notice as contemplated under Paragraphs
6C(ii) or 6C(iii) or to terminate the Executive’s employment
based on any such refusal.
3.
Executive Loyalty . Without limiting the generality of the
provisions in Paragraph 8 hereof, it is agreed that the Employer
shall be entitled to all benefits and profits arising from or
incident to any and all work or services performed for, and advice
provided to, the Employer by Executive pursuant to this Agreement
and in accordance with the terms and conditions contained
herein.
A.
The Employer shall pay the Executive an annual base salary of THREE
HUNDRED THOUSAND DOLLARS AND NO/100 ($300,000) (the “ Base
Salary ”), payable in substantially equal installments in
accordance with the Employer’s payroll policy from time to
time in effect. The Base Salary shall be subject to any payroll or
other deductions as may be required to be made pursuant to law,
government order or by agreement with, or consent of, the
Executive. Increases to the Base Salary, as adjusted, may be made
following an annual salary review, the first of which shall take
place on or around January 1, 2009, and all subsequent reviews
shall occur in or around January 1st of each year
thereafter.
B.
Commencing on the effective date of this Agreement, the Executive
shall participate in the Parent’s Incentive Compensation
Program, as amended from time to time by the Compensation Committee
of the Board of Directors of Parent (the “ IC Program
”), on the
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terms and
conditions set forth therein. Capitalized terms used but undefined
in this Paragraph shall have the meanings ascribed to them in the
IC Program. The Executive will have an Applicable Percentage of
50%. Executive’s participation shall be per the terms set
forth on Addendum I hereto. Amounts achieved for results in
between (i) the Minimum Target and the Target, and
(ii) the Target and the Maximum Target, will in each case be
determined by a straight line interpolation. No amounts will be
paid for achievement of results below the Minimum Target, and no
additional amounts will be paid for achievement of results in
excess of the Maximum Target.
C.
In connection with the execution and delivery of this Agreement,
the Parent will (i) grant the Executive 28,000 stock options
under the Parent’s 2004 Stock Option, Restricted and
Non-Restricted Stock Plan (the “ Plan ”) and
(ii) issue to the Executive 4,300 restricted shares of Parent,
in each case of the foregoing clauses (i) and (ii) of
this Paragraph 4C , at the closing market price on the
second business day immediately following the effective date of
this Agreement. In addition, the Employer shall grant the
Executive, during each of 2009 and 2010 (provided that the
Executive is then a full-time employee of the Employer or any other
subsidiary of Parent), additional stock options under the Plan
and/or restricted shares of Parent, in each case, priced at the
closing market price on the date of grant, which the Compensation
Committee of Parent values the aggregate value of such stock
options and/or restricted shares granted on such date of grant, in
accordance with its regularly utilized methodology, at $50,000;
provided , that such stock options and/or restricted shares
granted pursuant to this sentence shall neither preclude nor be in
lieu of additional stock options and/or restricted stock that the
Board of Directors of Parent might consider granting to the
Executive on an annual basis. Any and all stock options granted
under this Paragraph 4(C) shall be evidenced by stock option
agreements in the form of Exhibit A hereto.
(i) include
the Executive in any life insurance, disability insurance, medical,
dental or health insurance, savings, pension and retirement plans
and other similar benefit plans or programs (including, if
applicable, any excess benefit or supplemental executive retirement
plans) maintained by the Parent for the benefit of its key
executives;
(ii) provide
to Executive any other perquisites generally provided to all other
senior executives of the Parent, on terms no less favorable than
those provided by the Parent, to any other such
executive;
(iii) provide
the Executive with four (4) weeks paid vacation per annum and
holiday leave per the terms of Employer’s employee policies
manual in effect from time to time;
(iv) reimburse
the Executive for the cost of leasing and operating an automobile
selected by the Executive, and also bear or reimburse the Executive
for the cost of insurance and maintenance for that automobile,
subject to a maximum reimbursement (and/or incurred cost) of $1,000
per month;
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(v) while
the Executive is employed by the Employer, to include Executive
under any director’s and officer’s liability insurance
policy maintained by Employer or Parent on terms and conditions
(including scope, deductibles, etc.) no less favorable to the
Executive than those applicable to any person who is solely an
officer and/or director of a subsidiary of Parent. The Executive
shall also be entitled to prompt indemnification, and prompt
advancement of expenses, with respect to any claim that arises out
of, or relates to, his employment by (or services as an employee or
officer on behalf of) Employer or Parent, or their respective
affiliates, in each case to the fullest extent permissible under
applicable law; and
(vi) pay
the Executive an additional amount (the “ Gross Up
Payment ”) if any action of the Employer (or the terms or
provisions of any plan or program of the Employer or Parent in
which the Executive is a participant) causes any payment made to
the Executive pursuant hereto or pursuant to any plan or program of
Parent or the Employer in which the Executive is a participant to
be subject to the excess tax provided for in Section 409A of
the Code (a “ 409A Violation ”). The Gross Up
Payment shall equal an amount such that after the Executive’s
payment of all taxes, interest, and penalties imposed on the Gross
Up Payment, the Executive retains an amount of the Gross Up Payment
equal to the sum of (A) the interest under
Section 409A(a)(1)(B)(i)(I) of the Code resulting from the
409A Violation; (B) the additional tax under
Section 409A(a)(1)(B)(i)(II) of the Code resulting from such
409A Violation; (C) any penalties resulting from such 409A
Violation; and (D) if the Executive recognizes income prior to
the taxable year that the income would have been included in the
Executive’s gross income in the absence of such 409A
Violation, the amount of the taxes on the income recognized other
than the additional tax under subclause (B). The Employer shall pay
the Gross Up Payment within thirty (30) days after the
Executive remits any amount under clauses (A), (B), (C), or
(D) to the tax authorities. The Employer shall also indemnify
the Executive for all costs, expenses, and reasonable
attorney’s and paralegal’s fees incurred by the
Executive as a result of any audit by any tax authorities to the
extent the same relates to the tax consequences of such 409A
Violation (the “ Indemnified Amount ”). The
Employer shall pay the Indemnified Amount within thirty
(30) days after the Executive incurs the Indemnified
Amount.
5.
Expenses . The Employer shall promptly reimburse the
Executive for all reasonable and approved business expenses,
provided the Executive submits paid receipts or other documentation
acceptable to the Employer and as required by the Internal Revenue
Service to qualify as ordinary and necessary business expenses
under the Internal Revenue Code of 1986, as amended.
6.
Termination . The Executive’s employment hereunder
shall terminate upon the first to occur of the following
events:
A.
Upon the Executive’s date of death.
B.
Upon a reasonable determination by Employer that Executive is
disabled. For purposes of this Agreement, the Executive shall be
deemed to be disabled if the Executive, as a result of illness or
incapacity, shall be unable to perform substantially his required
duties for a period of four (4) consecutive months or for any
aggregate period of six (6) months in any twelve
(12) month period. A termination of the Executive’s
employment by the Employer for
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disability
shall be communicated to the Executive by written notice and shall
be effective on the tenth (10th) business day after receipt of such
notice by the Executive, unless the Executive returns to full-time
performance of his duties before such tenth (10th) business
day.
C.
On the date the Employer provides the Executive with written notice
that he is being terminated for “cause.” For purposes
of this Agreement, and as reasonably determined by the Employer,
the Executive shall be deemed terminated for cause if the Employer
terminates the Executive after the Executive:
(i) shall
have committed any felony or any other act involving fraud, theft
or embezzlement;
(ii) shall
have committed intentional acts that materially impair the goodwill
or business of the Employer or cause material damage to its
property, goodwill, or business, provided , however ,
that Executive shall have twenty (20) days from the date that
written notice of such action is given by Employer to the Executive
to cure such conduct (to the extent cure is reasonably possible);
or
(iii) shall
have refused to, or willfully failed to, perform his material
duties hereunder, provided , however , that Employer
shall, prior to terminating the Executive pursuant to this
Paragraph 6C(iii), with respect to the first instance of each
refusal or willful failure to perform a specific material duty,
have provided the Executive written notice that any repeated
failure or refusal to perform such specific duty shall constitute a
basis for immediate termination without additional warning or
notice.
Any
determination by Employer that “cause” exists shall be
subject to de novo review in any arbitration pursuant to
Paragraph 17B below.
D.
On the date the Employer terminates the Executive’s
employment for any reason, other than a reason otherwise set forth
in Paragraph 6A, 6B or 6C, provided that the Employer shall
give the Executive thirty (30) days written notice (or
continued payment of Base Salary in lieu thereof) prior to such
date of its intention to terminate such employment.
E.
On the date the Executive provides the Employer with written notice
that he is terminating his employment for “good
reason.” For purposes of this Agreement, the Executive shall
be deemed to have terminated his employment for “good
reason” if any of the following events is effected by the
Employer or the Parent, or any of their respective affiliates,
without the consent of the Executive: (i) a material
detrimental change in the Executive’s job title or position
with the Employer; (ii) a material diminution or reduction in
the Executive’s authority or responsibility; provided
, however , that Parent’s future consolidation and/or
centralization of the Specified Employer Functions (as defined
hereinafer) with itself or its other subsidiaries shall not be
deemed to be “a material diminution or reduction” in
the Executive’s authority or responsibility even if none of
such functions report to Executive; (iii) a reduction in the
Executive’s Base Salary; (iv) a relocation of the
Executive’s principal place of employment by more than fifty
(50) miles from 21 Sentry Court, Basking Ridge, New Jersey;
(v) Executive is required to perform Excessive Travel;
provided , that “good reason” under this clause
(v) shall arise only upon the Employer’s insistence that
the Executive continue to undertake Excessive
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Travel after
the Executive has delivered to the Employer a written objection to
such Excessive Travel; or (vi) any material breach of this
Agreement by the Employer not cured (to the extent cure is
reasonably possible) within twenty (20) days after written
notice of such breach is given by Executive to Employer. For
purposes of clause (ii) above, “Specified Employer
Functions” means the Employer’s accounts receivable /
accounts payable, information technology, finance / treasury, human
resources, facility management, and warehousing
functions.
F.
On the date the Executive terminates his employment for any reason,
other than a reason otherwise set forth in
Paragraph 6E.
7.
Compensation Upon Termination .
A.
If the Executive’s employment is terminated pursuant to
Paragraph 6A, 6B, 6C or 6F, the Executive shall be entitled to
his salary through his final day of active employment, any
unreimbursed expenses and any accrued but unused vacation pay. The
Executive also shall be entitled to any benefits mandated under the
Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) or required under the terms of any death, insurance or
retirement plan, program or agreement provided by the Employer and
to which the Executive is a party or in which the Executive is a
participant, including, but not limited to, any short-term or
long-term disability plan or program, if applicable.
B.
Except as otherwise provided in this Paragraph 7B, if the
Executive’s employment is terminated pursuant to
Paragraph 6D or 6E, the Executive shall be entitled to:
(i) his salary through his final date of active employment,
any unreimbursed expenses and any accrued but unused vacation pay;
and (ii) as severance, twelve (12) months of
(a) Base Salary continuation, payable at the regular payroll
periods of Employer and (b) continuation of those benefits
provided in Paragraph 4D(i). As a condition to receiving such
severance amount, the Executive must execute a release in the form
attached hereto as Exhibit B within twenty-one
(21) days after the date of termination. The Executive will
not have the obligat
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