CYNTHIA PASSMORE-MCLAUGHLIN

 

                         EXECUTIVE EMPLOYMENT AGREEMENT

 

         THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered

into as of this 14th day of September, 2004, by and between Enesco Group, Inc.

(the "Company"), and CYNTHIA PASSMORE-MCLAUGHLIN, an individual residing at the

address set forth below her name on the signature page of this Agreement

("Executive").

 

                                    RECITALS

 

 

         WHEREAS, the Company is engaged in a business which, among other

things, produces fine gifts, collectibles, and home decor accessories; and

 

         WHEREAS, the parties acknowledge that the Executive's abilities and

services are unique and essential to the prospects of the Company; and

 

         WHEREAS, the Company desires to employ the Executive as President of

the Company and the Executive desires to be so employed, pursuant to the terms

and conditions of this Agreement.

 

         NOW THEREFORE, in consideration of the premises and of the mutual

covenants and agreements hereinafter set forth, the parties hereto acknowledge

and agree as follows:

 

                                    PART ONE

                          NATURE AND TERM OF EMPLOYMENT

 

         1.01 Employment. The Company hereby agrees to employ the Executive, and

the Executive hereby accepts such employment, as the President of the Company.

 

         1.02 Term. Unless earlier terminated or unless extended pursuant to the

provisions hereof, the term of this Agreement shall begin on October 1, 2004

(the "Start Date") and shall continue until December 31, 2005. The term of this

Agreement shall be automatically extended for additional one (1) year periods,

unless at least 60 days prior to the end of any Term either party gives notice

of its election to terminate this Agreement. The period during which this

Agreement remains in effect is hereinafter referred to as the "Term".

 

         1.03 Duties and Authority. The duties and authority of the Executive

shall be as determined by the Board of Directors of the Company (the "Board")

and shall be comparable with the executive duties and authority of presidents of

similar businesses of similar size in the United States. Executive will devote

substantially all of her business time to the Company. Executive may participate

in civic, charitable, industry organizations which do not materially interfere

with her duties. Executive shall be elected to the Board of Directors when

appointed CEO. After the first anniversary of the Start Date executive may serve

on board of directors of up to two non-competing for-profit businesses which do

not materially interfere with her duties with the approval of the Chairman of

the Board and the Chair of the Governance Committee.

 

 

<PAGE>

 

         1.04 Place of Performance. Executive shall be located at, and shall

perform her duties from, the Company's Chicago, Illinois area corporate offices,

subject to reasonable travel necessary to perform Executive's duties.

 

                                    PART TWO

                            COMPENSATION AND BENEFITS

 

         2.01 Base Annual Salary. For the services rendered by Executive while

employed by the Company, the Company shall pay the Executive at an initial

annual base salary rate of $400,000 (as the same may be increased from time to

time, the "Base Annual Salary"). Executive's Base Annual Salary shall continue

when named CEO at the foregoing amount and until January 1, 2006. Following such

date and thereafter at least annually, Executive's Base Annual Salary shall be

reviewed and shall be subject to increase by the Board of Directors in its

discretion at the time executive officer compensation is reviewed, normally

March of each year. Any increase shall be paid retroactively to January of such

year. The Base Annual Salary shall be payable to Executive in substantially

equal installments in accordance with the Company's regular payroll practices.

 

         2.02 Bonus. Executive shall be entitled to receive an annual cash bonus

for the achievement of performance goals previously approved by the Board of

Directors. Such performance goals will be mutually developed in advance by the

Board and Executive. The target bonus opportunity payable to Executive in the

event of achievement of the applicable performance goals shall be 60% of Base

Annual Salary (the "Target Bonus"), with a maximum of 100% of Base Annual Salary

for extraordinary performance. Notwithstanding the foregoing, Executive will

receive a bonus for performance through December 2005 at the larger of the

actual earned bonus for 2005 or a minimum of 40% of Base Annual Salary even if

the performance goals are not met. Payment of any such bonus to Executive will

occur when bonuses are normally paid by the Company.

 

         2.03 Sign-On Bonus. Executive shall be granted a cash sign-on bonus in

the amount of $35,400 payable within thirty (30) days of the Start Date. This

amount will be grossed up for tax purposes.

 

         2.04 Equity Grants. Executive shall be granted stock options to

purchase 100,000 shares of Company common stock, with an exercise strike price

determined by the market price at close of the Company's shares on the Start

Date. Such stock options shall vest in accordance with the terms of the Enesco

Stock Option Plan (25% per year beginning on the first anniversary of grant) and

shall have a ten (10) year exercise period. In addition, on the Start Date,

Executive shall be granted 25,000 restricted shares vesting at one third (1/3)

per year beginning on anniversary date. Each year, the Board shall consider the

issuance of additional option and restricted share grants to Executive.

 

         2.05 General Employee Benefits. Executive shall be entitled to begin

immediate participation in Company's current and future general benefits

plans/programs/policies, including without limitation health insurance for

Executive and Executive's immediate family, to the extent maintained by the

Company for salaried employees generally, provided that the Executive (or, as

applicable, Executive's immediate family member) is eligible for participation

under the terms of such plans, programs and arrangements.

 

                                      -2-

<PAGE>

 

         2.06 Relocation. The Company shall pay or provide Executive level

relocation benefits under the Company's Relocation Plan.

 

         2.07 Other Executive Benefits. Executive also shall be entitled to:

 

                  (a) immediate participation in all current and future

         executive benefits plans, programs, policies and perquisites on a basis

         no less favorable than any other senior executive of the Company;

 

                  (b) four (4) weeks paid vacation;

 

                  (c) an automobile allowance of $1,200.00 per month;

 

                  (d) payment by the Company for legal fees incurred in the

         development, preparation and negotiation of this Agreement;

 

                  (e) all costs associated with an executive annual physical at

         a medical facility mutually agreed upon;

 

                  (f) term life insurance in the amount of two (2) times Base

         Annual Salary up to a maximum of $500,000 and the ability to purchase

         additional coverage up to another $500,000; and

 

                  (g) expense reimbursement in accordance with the Company's

         expense reimbursement policy.

 

                                   PART Three

                       NONCOMPETITION AND CONFIDENTIALITY

 

         3.01 Noncompetition. In consideration of Executive's employment

hereunder, Executive hereby agrees that during the initial or any renewal term

of the Agreement and for a period of one year thereafter, she will not, singly,

jointly, or as a member, employee, or agent of any partnership or as an officer,

agent, employee, director or stockholder, or inventor of any other corporation

or entity, or in any other capacity, directly or indirectly:

 

                  (i)    own, manage, operate, participate in, perform services

                         for or otherwise carry on, assist or be connected with

                         a Competing Business doing business anywhere within the

                         respective territories in which the Company's business

                         is then carried on (provided that the foregoing shall

                         not apply to any corporation, partnership or other

                         entity in which Executive (and/or her spouse and/or

                         children) only owns an ownership interest of one

                         percent (1%) or less and exercises not more than one

                         percent (1%) of the voting control);

 

                  (ii)   solicit or contact (or assist in any solicitation or

                         contact of) any customer of the Company with a view

                         toward inducing the purchase of a Competing Product or

                         otherwise diverting business from the Company;

 

                                      -3-

<PAGE>

 

                  (iii)  induce or attempt to persuade any employee or agent of

                         the Company to terminate such employment or agency

                         relationship or violate the terms of any agreement with

                         the Company; or

 

                  (iv)   induce or attempt to persuade any customer or supplier

                         of the Company to terminate or materially change such

                         relationship;

 

For purposes of this Agreement.

 

         "Competing Products" means products, processes or services of any

person or organization other than the Company, in existence or under

development, which are substantially the same as or which perform the same

function or otherwise compete with any products, processes, or services

developed, manufactured or sold by the Company during the time of the

Executive's employment with the Company or about which Executive acquires

Confidential Information through her relationship with the Company, including,

but not limited to, the creation, manufacturing, marketing and distribution of

giftware, collectibles and home decor product.

 

         "Competing Business" means any person or organization engaged in, or

planning to become engaged in, research, development, production, distribution,

marketing, providing or selling of a Competing Product.

 

         3.02 Confidentiality. Executive acknowledges that preservation of a

continuing business relationship between the Company and its subsidiaries and

its respective customers, representatives and employees is of critical

importance to the continued business success of the Company, that it is the

policy of the Company and its subsidiaries to guard as confidential the

Confidential Information defined below, and that as Chief Executive Officer

Executive will acquire Confidential Information and personal relationships with

customers and prospective customers, which relationships may constitute the

Company's primary relationships with such customers and prospective customers.

In view of the foregoing, Executive agrees that, except as required or the

performance of her duties under this Agreement, she will not during the initial

or any renewal term of the Agreement and thereafter, without the prior written,

consent of the Company, use for the benefit of herself or any third party or

disclose to any third party any Confidential Information. Executive further

agrees that if her employment by the Company is terminated for any reason, she

will not take with her but will leave with the Company all records and papers

and all matter of whatever nature which contains Confidential Information. For

purposes of this Agreement, "Confidential Information" means any information,

including any plan, drawing, specification, pattern, procedure, design, device,

list or compilation, which relates to the present or planned business of the

Company which has not been disclosed publicly by authorized representatives of

the Company. Confidential Information may include, for example, inventions,

marketing and sales plans or programs; customer and supplier information and

lists; financial data; purchasing and pricing information; product engineering

information; technological know-how; designs, plans or specifications regarding

products and materials; manufacturing processes and techniques; regulatory

approval strategies; computer programs, data, formulae and compositions; service

techniques and protocols; and new product strategies, plans and designs.

Confidential information also includes all information received by Company under

an obligation to a third party.

 

                                      -4-

<PAGE>

 

                                    PART FOUR

                                   TERMINATION

 

         4.01 Death or Disability. Upon the death or Disability of the Executive

this Agreement shall automatically terminate. For the purposes of this

Agreement, "Disability" is defined as the inability of the Executive to perform

her material duties for the eligibility waiting period under the terms of

Company's long term disability insurance policy.

 

         4.02 Termination by Company For Cause. Company may terminate this

Agreement for "cause" immediately upon written notice to the Executive. For the

purposes of this Agreement, "cause" shall be deemed to exist if Executive: (i)

is convicted of, or pleads guilty or no contest to, a felony; (ii) engages in

conduct that constitutes fraud, gross negligence or gross misconduct that

results in material harm to the Company; (iii) materially breaches the terms of

this Agreement, which breach is not cured within thirty (30) days after written

notice to Executive; (iv) engages in intentional and willful misconduct that

could subject the Company to criminal or civil liability; (v) disregards Company

policies and procedures.

 

         4.03 Termination by Executive. Executive may terminate her employment

under this Agreement by giving the Company sixty (60) days advance written

notice. Executive may terminate this Agreement for "good reason" within 30 days

upon written notice to the Company. For purposes of this Agreement, "good

reason" shall be deemed to exist if the Company: (i) materially breaches the

terms of this Agreement, which breach is not cured within thirty (30) days after

written notice to the Company; (ii) without Executive's consent, diminishes

Executive's title, reporting relationship, material duties or authority, assigns

duties that are materially inconsistent with Executive's duties as of the Start

Date, requires that Executive relocate her principal residence after relocating

to Chicago, Illinois area, fails to retain Executive as a member of the Board

after election, reduces Executive's salary, fails to elect Executive as Chief

Executive Officer of the Company within six (6) months of the Start Date, or

fails to renew this Agreement on substantially similar terms.

 

         4.04 Payments on Termination.

 

              (a) General. Upon any termination of this Agreement in accordance

with this Part Four, Executive shall receive: (i) Base Annual Salary through the

termination date; (ii) the balance of any earned but as yet unpaid annual cash

bonus or other incentive award for a prior year; (iii) accrued but unused

vacation; (iv) vested benefits under Company benefit plans; and (v) benefit

continuation/conversion rights as provided under Company benefit plans.

 

              (b) Death or Disability. In the event that termination of this

Agreement results from Executive's death or Disability, in addition to the

foregoing general payments, Executive shall receive an amount equal to the

Target Bonus.

 

              (c) Termination by Company Without Cause or Resignation by

Executive For Good Reason. In the event that termination of this Agreement is by

the Company without "cause" or by Executive for "good reason," in addition to

the foregoing general payments, Executive shall receive (i) an amount determined

by prorating the Target Bonus for the year in which termination occurs through

the date of termination, which amount shall be payable when executive bonuses

are normally paid; (ii) an additional amount equal to the Base Annual Salary

 

 

 

                                      -5-

<PAGE>

 

plus the Target Bonus for twelve (12) months following termination at the rate

in effect prior to termination, payable in substantially monthly installments,

which amount will increase after the first anniversary of the Start Date by one

(1) month for each additional quarter worked, to a maximum of 18 months; (iii)

medical and life insurance benefits for Executive and her eligible dependents

for twelve (12) months concurrently at active employee contribution rates, which

shall increase after the first anniversary of Start Date by one month for each

additional quarter worked to a maximum of 18 months.; (iv) executive level

career transition assistance services by a firm mutually agreed upon; and (v)

full relocation back to Connecticut or comparable destination under the same

relocation terms and conditions in effect for relocation to Illinois if

Executive is not named Chief Executive Officer of the Company within six (6)

months of the Start Date.

 

                                    PART FIVE

                                  MISCELLANEOUS

 

         5.01 Assignment. The Executive and Company acknowledge and agree that

the covenants, terms and provisions contained in this Agreement constitute a

personal employment contract and the rights and duties of the parties hereunder

cannot be transferred, sold, assigned, pledged or hypothecated.

 

         5.02 Entire Agreement. This Agreement contains the entire agreement

between the parties relating to the subject matter hereof and shall not be

modified except in writing by the parties hereto. Furthermore, the parties

hereto specifically agree that all prior agreements, whether written or oral,

relating to the Executive's employment by the Company shall be of no further

force or effect from and after the date hereof.

 

         5.03 Severability. If any phrase, clause or provision of this Agreement

is declared invalid or unenforceable by a court or arbitrator of competent

jurisdiction, such phrase, clause or provision shall be deemed severed from this

Agreement, but will not affect any other provisions of this Agreement, which

shall otherwise remain in full force and effect. If any restriction or

limitation in this Agreement is deemed to be unreasonable, onerous and unduly

restrictive by a court or arbitrator of competent jurisdiction, it shall not be

stricken in its entirety and held totally void and unenforceable, but shall

remain effective to the maximum extent permissible within reasonable bounds.

 

         5.04 Notices. Any notice, request or other communication required to be

given pursuant to the provisions hereof shall be in writing and shall be deemed

to have been given when delivered in person or three (3) days after being

deposited in the United States mail, certified or registered, postage prepaid,

return receipt requested and addressed to the party at its or her last known

address. The address of any party may be changed by written notice to the other

party duly served in accordance herewith.

 

         5.05 Amendment or Waiver. No amendment, modification or waiver of any

term, condition, right or remedy hereunder shall be effective for any purpose

unless specifically set forth in a writing signed by the party to be bound

thereby. The waiver by the Company or the Executive of any breach of any term or

condition of this Agreement shall not be deemed to constitute the waiver of any

other breach of the same or any other term or condition hereof.

 

 

                                      -6-

<PAGE>

 

         5.06 Indemnification. For such purposes, the Company shall maintain a

commercially reasonable amount of directors and officers liability insurance

coverage which shall be effective during Executive's employment and thereafter.

 

         5.07 Governing Law. This Agreement and the enforcement thereof shall be

governed and controlled in all respects by the internal laws of the State of

Illinois, without application of conflicts of law principles.

 

         5.08 Arbitration. Any controversy or claim arising out of, or relating

to, this Agreement or the breach thereof shall be settled by binding arbitration

in accordance with the American Arbitration Association National Rules for

Resolution of Employment Disputes then in effect in the State of Illinois and

judgment upon any arbitration award may be entered into in any court having

jurisdiction thereof. The arbitration shall be held in Chicago, Illinois. The

cost of the arbitration and the related costs and expenses (including reasonable

attorneys' fees and expenses) of the party that prevails, as determined by the

arbitrator, shall be paid or reimbursed by the other party.

 

         5.09 Binding Agreement. This Agreement shall be binding upon and inure

to the benefit of the parties hereto and their heirs, legatees, personal

representatives, successors, and permitted assigns.

 

         5.10 Headings/Counterparts. The headings of the parts and sections of

this Agreement are inserted for convenience of reference only and shall not be

deemed a part of, or affect the construction or interpretation of, any provision

hereof. This Agreement may be executed in two or more counterparts, each of

which shall be deemed to be an original, and all such counterparts together

shall constitute one and the same instrument.

 

 

 

 

 

         SIGNATURES FOLLOW

                                      -7-

<PAGE>

 

 

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

duly executed as of the date first herein above written.

 

EXECUTIVE:

 

/s/ Cynthia Passmore-McLaughlin

-------------------------------

Cynthia Passmore-McLaughlin

 

 

COMPANY:

 

ENESCO GROUP, INC.

 

/s/ Anne-Lee Verville

-------------------------------

Anne-Lee Verville

Chairman of the Board

 

 

 

</TEXT>

</DOCUMENT>

 

FIRST AMENDMENT

to the

EXECUTIVE EMPLOYMENT AGREEMENT

between

ENESCO GROUP, INC.

and

CYNTHIA L. PASSMORE

THIS FIRST AMENDMENT to the Executive Employment Agreement dated September 14, 2004 (“Agreement”) by and between Enesco Group, Inc. (the “Company”) and Cynthia L. Passmore (the “Executive”) is hereby made and entered into on January 16, 2006, and is effective as of January 1, 2006.

W I T N E S S E T H:

WHEREAS, the Company and the Executive heretofore entered into the Agreement; and

WHEREAS, Section 5.05 of the Agreement provides that the Agreement may be amended in writing signed by the parties; and

WHEREAS, the Company and the Executive mutually desire to amend the Agreement;

NOW, THEREFORE, the Agreement is hereby amended effective January 1, 2006 as follows:

1. Section 2.02 of the Agreement shall be amended in its entirety for fiscal year 2006 and thereafter to read as follows:

2.02. Bonus. Executive shall be entitled to receive an annual cash bonus for the achievement of performance goals previously approved by the Board of Directors. Such performance goals will be mutually developed in advance by the Board and Executive. The target bonus (the “Target Bonus”) opportunity payable to Executive in the event of achievement of the applicable performance goals shall be the greater of 60% of Base Annual Salary or the percentage amount of Base Annual Salary established each year under the Company’s Management Incentive Program (or such successor plan, program or policy howsoever named). Payment of any such bonus to Executive shall occur when bonuses are normally paid by the Company.

2. Section 2.07(b) of the Agreement shall be amended in its entirety to read as follows:

(b) five (5) weeks paid vacation.

3. For reasons of personal privacy and safety, the Executive’s address for purposes of this Agreement shall be the address of the Company.

4. Section 2.04 of the Agreement shall be amended in its entirety to read as follows:

Each year, the Board shall consider the issuance of additional option and restricted share grants to Executive.

FURTHER, the Agreement also shall be amended such that the following provisions are no longer applicable effective January 1, 2006:

 

1.

 

Section 2.03; and

 

 

 

2.

 

Section 2.06.

 

NOW, THEREFORE, the Company, by its Chairman of the Board, and the Executive hereby enter into this First Amendment, effective January 1, 2006.

ENESCO GROUP, INC.

By /s/ Anne-Lee Verville

 

 

 

Anne-Lee Verville

Chairman of the Board

/s/ Cynthia L. Passmore

 

 

 

Cynthia L. Passmore