Document:

Exhibit 10.5

 

EXHIBIT 10.5

Participant Name: «First» «Last»

AGREEMENT FOR

DEFERRED COMPENSATION BENEFITS

American Greetings Corporation (the “Employer”) has established the American Greetings Corporation
Executive Deferred Compensation Plan (together with any amendments thereto, the “Plan”), under
which the Employer and <<NAME>> (the “Participant”) may negotiate the portion of such
Participant’s annual Compensation (as defined under the Plan) to be paid as Deferred Compensation
Benefits (as defined by the Plan) pursuant to the terms of the Plan. To defer a portion of such
Compensation (as defined under the Plan) consisting of all or a portion of any incentive award the
Participant qualifies to receive under the Employer’s annual performance bonus program (the
“Incentive”), the Participant and the Employer hereby enter into this Agreement for Deferred
Compensation Benefits (the “Agreement”). In consideration of the mutual covenants contained within
this Agreement and subject to the terms of the Plan, the Employer and the undersigned Participant
hereby agree as follows:

Section 1 — Deferred Amount

The Participant hereby elects to defer an amount equal to ___% or $___of his or her
Incentive for the fiscal year ending
               . In so doing, the Participant understands that if no
Incentive is otherwise payable, no deferral will occur; and that if a fixed amount is elected, the
lesser of the fixed amount or the actual amount of Incentive award (if any) will be deferred. Any
deferral made under this Agreement will be credited to an account bearing the Participant’s name
(hereinafter referred to as the “Account”), net of all required payroll deductions.

Section 2 — Deferral Period

The Participant’s Deferred Compensation Benefits shall be deferred until:

	 	 	 	 	 
	 

	 	 	 	One (1) year from the ending date set forth in Section 1.*
	 

	 	                                    	 	 
	 

	 	 	 	Three (3) years from the ending date set forth in Section 1.
	 

	 	                                    	 	 
	 

	 	 	 	Five (5) years from the ending date set forth in Section 1.
	 

	 	                                    	 	 
	 

	 	 	 	Participant’s Separation from Service (as defined by Internal Revenue Code Section 409A and related regulations).**
	 

	 	                                    	 	 

 

 

* Note: A Participant may not re-defer a one-year deferral.

**If Separation from Service is not elected by the Participant, the Plan may require the
Participant to wait to receive his or her Deferred Compensation Benefits until the date
selected above.

 

 

Section 3 — Form of Benefits Payment

Upon Separation from Service, the Participant’s Deferred Compensation Benefits will be paid to the
Participant in either a lump sum payment, five annual installments, or ten annual installments.
(See Attachment 1). Please indicate below your choice of the Form of Benefits Payment upon
Separation from Service.

	 	 	 	 	 
	 

	 	 	 	Lump Sum Payment.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Payment over five (5) years, as outlined in Attachment 1.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Payment over ten (10) years, as outlined in Attachment 1.
	 

	 	 	 	 

Except as provided for under Section 1 above, the Participant has the option of either re-deferring
his/her compensation (subject to the federal and state laws and regulations governing re-deferral),
or receiving payment of the Deferred Amount, plus any investment earnings paid in a lump sum at the
end of the Deferral Period selected in Section 2.

Section 4 — Amendments

This Agreement may not be amended or modified by either party, except by a written document signed
by both parties in accordance with the terms of the Plan.

Section 5 — Term of Agreement

The term of this Agreement shall be from the last date set forth below until all amounts in the
Participant’s Account have been paid out.

Section 6 — Rights and Obligations 

The Participant’s right to Deferred Compensation Benefits and the Employer’s obligations to pay
such Deferred Compensation Benefits shall be governed by the Plan to the extent not addressed in
this Agreement. In the event of a conflict between the terms of this Agreement and the Plan, the
Plan shall govern.

By signing this Agreement, the Participant acknowledges that: this election is based on guidance
currently available for determining the requirements imposed on the Plan by the American Jobs
Creation Act of 2004 (the “Act”), determined as of the date of this Agreement; and that the
Employer expects to amend the Plan to bring the Plan into compliance with new guidance expected to
be promulgated under the Act. Employer will operate the Plan during 2005 based on its
understanding of the Act’s rules.

	 	 	 
	AGREED TO BY:
	 	 
	 
	 	 
	 

	 	 
	«First» «Last»

	 	Employer Signature
	 
	 	 
	 

	 	 
	Date

	 	Date

2

 

Attachment 1

Form of Benefits Payment Options.

Upon Separation from Service, the Participant’s Deferred Compensation Benefits will be paid as
follows:

Option 1. Lump Sum Distribution paid within 30 days after the date that occurs six (6)
months after Separation from Service.

Option 2. Five annual installments according to the following schedule.

	 	 	 	 	 
	 	 	Payment Date	 	Payment Amount
	Payment Number 1

	 	within 30 days after the
date that occurs six (6)
months after Separation
from Service
	 	20% of the then current
balance
	 
	 	 	 	 
	Payment Number 2

	 	January 15 of the
calendar year following
the calendar year of
Payment Number 1
	 	25% of the then current
balance
	 
	 	 	 	 
	Payment Number 3

	 	Twelve (12) months after
the date of Payment
Number 2
	 	33% of the then current
balance
	 
	 	 	 	 
	Payment Number 4

	 	Twelve (12) months after
the date of Payment
Number 3
	 	50% of the then current
balance
	 
	 	 	 	 
	Payment Number 5

	 	Twelve (12) months after
the date of Payment
Number 4
	 	current balance

Option 3. Ten annual installments according to the following schedule.

	 	 	 	 	 
	 	 	Payment Date	 	Payment Amount
	Payment No. 1

	 	1st Anniversary of Separation from Service
	 	1/10 of Account Balance
	Payment No. 2

	 	2nd Anniversary of Separation from Service
	 	1/9 of Account Balance
	Payment No. 3

	 	3rd Anniversary of Separation from Service
	 	1/8 of Account Balance
	Payment No. 4

	 	4th Anniversary of Separation from Service
	 	1/7 of Account Balance
	Payment No. 5

	 	5th Anniversary of Separation from Service
	 	1/6 of Account Balance
	Payment No. 6

	 	6thAnniversary of Separation from Service
	 	1/5 of Account Balance
	Payment No. 7

	 	7thAnniversary of Separation from Service
	 	1/4 of Account Balance
	Payment No. 8

	 	8thAnniversary of Separation from Service
	 	1/3 of Account Balance
	Payment No. 9

	 	9thAnniversary of Separation from Service
	 	1/2 of Account Balance
	Payment No. 10

	 	10thAnniversary of Separation from
Service
	 	Entire Account Balance

3

 

CONFIDENTIAL

	 	 	 
	Date:
	 	 
	To:

	 	«Name»
	From:
	 	 
	Subject:

	 	Executive Deferred Compensation Plan

The Executive Deferred Compensation Plan allows participants to defer various elements of their
compensation for one year, three years, five years, or until separation from American Greetings.
Six months prior to the end of the deferral periods, the participant has three choices. Elect to:

	 	1.	 	Receive a lump sum distribution including investment earnings
(losses) at the end of the deferral period,
	 
	 	2.	 	re-defer the balance, or
	 
	 	3.	 	Receive discounted options pursuant to the American Greetings
Corporation Executive Third Party Option Plan in lieu of deferred compensation
at the end of the deferral period

We are approaching the deadline to elect one of the choices above for the following previously
deferred item(s):

«Item_Deferred»

If you wish to re-defer these items or receive discounted options in lieu of your deferred
compensation account, please indicate your choices on the attached Amendment to Agreement for
Deferred Compensation Benefits.

If you wish to receive payment of any of these items, please indicate below.

Pay Now ___«Item_Deferred»

If you choose not to re-defer, the deferred income, plus investment earnings, will be paid to you
in accordance with your Agreement.

If your election is not received by ___, I will assume you have chosen to
re-defer all of the above for the same period of time as the original deferral period, to be
reviewed again at the expiration of that period.

Feel free to call me on extension ___if you have any questions.

	 	 	 
	 

	 	 
	 

	 	Participant Signature

4Exhibit 10.6

 

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.

 

 

	 	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

2

 

	 	 	 	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.

3

 

	 	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:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 

4

 

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	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

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

 

 

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

 

 

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.

 

 

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.

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