EXHIBIT 10.6
AMERICAN GREETINGS CORPORATION EXECUTIVE THIRD PARTY OPTION AGREEMENT
     THIS AGREEMENT, effective as of the ___day of ___, ___(the “Award Date”),
is between American Greetings Corporation (hereinafter referred to as the
“Company”), and ___(hereinafter referred to as the “Participant”).
WITNESSETH:
     WHEREAS, the Company has adopted the American Greetings Corporate Executive
Third Party Option Plan (the “Plan”), which was adopted by the Company (“Board”)
on ___, 2002, pursuant to an amendment of the American Greetings Corporation
Executive Deferred Compensation Plan, and which provides for the grant of
options to certain employees of the Company to purchase shares of mutual funds
(the “Shares”) as listed in Appendix A as attached hereto;
     WHEREAS, the Participant has been selected by the Board to participate in
the Plan, in accordance with the provisions thereof;
     WHEREAS, the Participant has been awarded an option on the Award Date; and
     WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the option.
     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained and as an inducement to Participant to
continue as an employee of the Company, the parties hereto hereby agree as
follows:

  1.   The Company awards to Participant on the Award Date this option
(“Option”) to purchase from the Company, on the terms and conditions set forth
herein and in the Plan, all or any part of the number of Shares listed in
Appendix A (attached hereto) at the option price per Share equal to fifty
percent (50%) of the fair market value of the underlying Share at the Award
Date. The option exercise price thereafter shall adjust to 50 percent (50%) of
the fair market value of the shares as of the closing price each business day.
Notwithstanding, the Option Price shall not at any time be lower than 25 percent
(25%) of the fair market value of a Share on the date of grant of the Option.
The grant of this Option is effective on the Award Date.

 

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  2.   The Option shall vest immediately upon grant. If this Option Agreement
covers base salary, then it shall govern all option awards with respect to base
salary for the calendar year.     3.   This Option may be substituted in full or
in part or may be exercised in full during the term of this Option. An Option
shall be exercisable or may be substituted at any time during the plan year, but
limited to once monthly. For each such exercise, the Participant must exercise
that portion of the Option that is not less than one hundred percent (100%) of
the fair market value of the underlying Shares at the date of exercise. For each
such substitution, the Participant may substitute that portion of the Option
that is equivalent to the fair market value of the underlying Shares at the date
of substitution in ten percent (10%) increments. The term of the option will be
___years from the date of grant. Upon the Participant’s separation from service
with the Company without cause or due to retirement, death or disability, or
voluntary resignation, the exercise period generally will end on the tenth
anniversary of the termination of employment or the full original term of the
option, whichever occurs first. Should the Participant’s employment be
terminated by the Company with cause, then the exercise period will end on the
first anniversary of the termination of employment, or the full original term of
the option, whichever occurs first.     4.   Change in Control. In the event of
a Change in Control as defined in the Company’s Employee Stock Option Plan, the
executive’s options shall remain exercisable for the remaining term of the
option.     5.   In order to exercise this Option, or to substitute other
Options for this Option as provided in Paragraph 17 of the Plan, the Participant
must deliver written notice to the Company of her/his intent to exercise or
substitute seven (7) days prior to the desired date of exercise or substitution.
The written notice must be addressed to                  at One American Road,
Cleveland, OH, 44144, and will be deemed delivered to the Company on the date of
postmark by first class U.S. Mail. The Company will process the exercise or
substitution as soon as practicable. In no event shall any transfer,
substitution, or payment due to the participant from the sale of shares
otherwise deliverable be made later than ten (10) days after the desired date of
exercise.     6.   Upon exercise, the option price is payable either in cash or,
at the election of the Participant, in Shares otherwise due to the Participant
by

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      exercise of this Option. Upon exercise of this Option in full, the Option
Agreement shall be surrendered to the Company for cancellation. Upon payment of
the option price, the Company shall deliver the Shares or cash to the
Participant as soon as administratively feasible.     7.   The Company may make
such provisions and take such steps as it may deem necessary or appropriate for
the withholding of any taxes which are required by any law or regulation of any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Option, including, but not limited to, the
withholding of the issuance of all or any portion of such Shares until the
Participant reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, canceling any portion of such issuance in
an amount sufficient to reimburse itself for the amount it is required to so
withhold, or taking any other action reasonably required to satisfy the
Company’s withholding obligation.     8.   This Option and the rights and
privileges conferred herewith shall not be sold, transferred, encumbered,
hypothecated or otherwise anticipated by the Participant other than by will or
the laws of descent and distribution. This Option is not liable for or subject
to, in whole or in part, the debts, contracts, liabilities, or torts of the
Participant, nor shall it be subject to garnishment, attachment, execution, levy
or other legal or equitable process.     9.   The Participant (or his executor,
administrator or beneficiary, should the Participant be deceased) may transfer
at any time all or any of the shares acquired pursuant to the exercise of the
Option (whether or not the Participant is then employed by the Company).     10.
  Subject to the limitations on the transferability of this Option, this
agreement shall be binding upon and inure to the benefit of the heirs, legal
representative, successors and assigns of the parties hereto.     11.   The
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of Ohio.     12.   The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect.

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  13.   The Participant accepts this Option subject to all the provisions of the
Plan, which are incorporated herein, including the provisions that authorize the
Board to administer and interpret the Plan and that provide that the Board’s
decisions, determinations, and interpretations with respect to the Plan are
final and conclusive on all persons affected thereby.

     IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.

              AMERICAN GREETINGS CORPORATION
 
       
 
  By:    
 
       
 
       
 
  Title:    
 
       
 
                  Participant

 
            Address:
 
             
 
             
 
             

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APPENDIX A
Shares Subject to Option
Date of Grant _________________

                                                                               
      Net Value         Percentage   Number     Description     Exercise Price
of     Fair Market Value     of Shares     Vesting   of Award   of Shares     of
Shares     Shares at Grant     of Shares at Grant     at Grant     Date  
 
                                               

 

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Request For Award of Options in Lieu of Current Deferred Compensation Plan
Balance
American Greetings Corporation Executive Third Party Option Plan
This form is being submitted as written notice requesting a substitution of the
balance currently attributable to the employee under the American Greetings
Corporation Executive Deferred Compensation Plan (“the Deferral Plan”), into
options under the American Greetings Corporation Executive Third Party Option
Plan (“the Plan”). Pursuant to the Plan once you have substituted the balance
from the Deferral Plan, you may not substitute the option for a credit to
Deferral Plan.
Full Balance of Deferral to which this substitution relates: $
                     or                     %

      Identify the name of mutual fund(s) currently   Amount of Deferral to in
the Deferral Plan which you wish to convert from   be converted to Options
1.
   
2.
   
3.
   

              Invest the following   Identify the name of mutual fund(s) you
wish to   percentage of value   to be converted into   converted into this fund
 
1.
    %  
2.
    %  
3.
    %  
Total percent (must equal 100%)
       

The Deferral Amounts described above should be converted into an Option to
acquire Shares in the new mutual fund(s) as of the close of trading on the
following date (or the next business day if the date specified is a holiday):
                      
By signing this form, I represent that I have fully read and understand the
terms and conditions of the Plan, Deferral Plan and the related agreement as
well as the prospectus of each mutual fund into which I am converting amounts
under the above referenced Deferral and Option Plans. I acknowledge that my
employer is in no way responsible for the investment results of the above option
allocation.

         
 
       
Signature of Optionee
  Print Name   Date

 

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Request For Substitution of Option
American Greetings Corporation
Executive Third Party Option Plan
Pursuant to Section 17 of the above referenced Plan, this form is being
submitted as written notice requesting a substitution of part or all of the
Shares awarded under the Option Agreement identified below into other
permissible Shares.
Date of Option Agreement to which this substitution relates:
                    
               (Specify only one agreement per form)

          Identify the name of mutual fund(s) currently specified   Number or %
of Shares   in the Option which you wish to converted from   Option to be
converted  
 
  (Minimum of 10%)
1.
       
2.
       
3.
       

              Invest the following   Identify the name of mutual fund(s) you
wish to   percentage of value   to be converted into   converted into this fund
 
1.
    %  
2.
    %  
3.
    %  
 
       
Total percent (must equal 100%)
       

The Optioned Shares described above should be converted into an Option to
acquire Shares in the new mutual fund(s) as of the close of trading on the
following date (or the next business day if the date specified is a
holiday):                    
By signing this form, I represent that I have fully read and understand the
terms and conditions of the Plan and the related agreement as well as the
prospectus of each mutual fund into which I am converting Shares under the above
referenced Option. I acknowledge that my employer is in no way responsible for
the investment results of the above option allocation.

         
 
       
Signature of Optionee
  Print Name   Date

 

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American Greetings Corporation Executive Third Party Option Plan
Instructions for completing form for Request For Substitution of Option.
The plan documents for both the American Greetings Corporation Executive Third
Party Option Plan (“Plan”) and the related Option Agreement under which your
option was granted include specific provisions which control the substitution of
one type of mutual fund shares into one or more other types of mutual fund
shares subject to the Option. Accordingly, you should review those provisions
carefully before completing this form.
American Greetings Corporation and its related entities (the “Employer”) are in
no way providing you with any investment advice in connection with your
decisions related to selecting mutual fund shares under any Option Agreement.
You are responsible for all investment decisions made in connection with your
selection of Shares under any Option Agreement, notwithstanding any other oral
or written comments (direct or implied) by any employee of the Employer. It is
highly recommended that you carefully read the prospectus for any mutual fund
associated with the Option Plan before you elect to allocate any portion of your
Options into such funds.
To assist you in completing this form, the following excerpts from the Plan
document and the standard Option Agreement are set forth below. However, you are
responsible for having read the entire Plan document and Option Agreement before
completing this form.
Section 17 of the Plan document for the American Greetings Corporation Executive
Third Party Option Plan (the “Plan”) provides as follows:
Substitution of Option. If a Participant has been granted an Option to purchase
Shares under an Option Agreement, then except as limited by the terms of the
Option Agreement, the Participant may direct that the Option be converted into
an Option to purchase other Shares as listed in Appendix A. Such substitution
shall only be allowed to the extent that, immediately following the
substitution, the difference between the fair market value of the Shares subject
to the substituted Option and the exercise price of the substituted Option is no
greater than the difference which existed immediately prior to the substitution
between the fair market value of the Shares subject to the original Option and
the exercise price of the original Option. In no event shall a participant make
substitutions more often than the frequency set forth in the Option Agreement or
administrative procedures adopted by the Board from time to time.

 

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Section 5 of the American Greetings Corporation Option Agreement provides:
In order to exercise this Option, or to substitute other Options for this Option
as provided in Paragraph 17 of the Plan, the Participant must deliver written
notice to the Company of her/his intent to exercise or substitute seven (7) days
prior to the desired date of exercise or substitution. The written notice must
be addressed to                 at One American Road, Cleveland, OH, 44144, and
will be deemed delivered to the Company on the date of postmark by first class
U.S. Mail. The Company will process the exercise or substitution as soon as
practicable. In no event shall any transfer, substitution, or payment due to the
participant from the sale of shares otherwise deliverable be made later than ten
(10) days after the desired date of exercise.