Document:

Exhibit 10.3

 

EXHIBIT 10.3

Amendment Number Four to the American Greetings Corporation

Executive Deferred Compensation Plan

and

Amendment Number One to the American Greetings Corporation

Executive Third Party Option Plan

     WHEREAS, the American Greetings Corporation (the “Company”) currently maintains the
American Greetings Corporation Executive Deferred Compensation Plan (the “Plan”), which was adopted
effective October 26, 1993; and

     WHEREAS, the Plan was amended thrice, the third time to establish the American Greetings
Corporation Executive Third Party Option Plan (the “Option Plan”; both the Option Plan and the Plan
are hereinafter collectively referred to as the “Plans”) and to segregate the Option Plan into a
separate amendment to the Plan; and

     WHEREAS, the Company desires to amend the Plan and the Option Plan to update their provisions
in accordance with the American Jobs Creation Act of 2004, the applicable requirements of which are
set forth in Internal Revenue Code (the “Code”) Section 409A, by virtue of specific amendments to
the Plan; and

     WHEREAS, the Company wishes to freeze the Option Plan, effective January 1, 2005, to prohibit
the further issuance of options thereunder, but to permit those options earned and vested as of
December 31, 2004, to remain subject to the Plans’ terms in effect at that time, while subjecting
any options not earned and vested as of that date to the rules established by Code Section 409A,
which are incorporated into the Plans by virtue of this Amendment Number Four; and

     WHEREAS, Section 10.1 of the Plan and Section 20 of the Option Plan permit the Company to
amend the Plan and the Option Plan at any time at the Board of Director’s discretion;

     NOW, THEREFORE, the Plan and the Option Plan are hereby amended as set forth below. Unless
otherwise noted, all provisions of this amendment are effective January 1, 2005.

	A.	 	Amendments to the Plan

	 	1.	 	Section 2.1, Definitions, is hereby amended by deleting the definitions of
“Disability,” “Employer,” and “Unforeseeable Emergency” and replacing them in their
entirety with the following:
	 
	 	 	 	“‘Disability,’ or ‘Disabled’ means the following, in the following
contexts and circumstances:

(i) With respect to Participants’ Deferred Compensation Benefits and Restoration
Benefits that are earned and vested prior to December 31, 2004, a physical or

 

 

mental condition of a Participant resulting from a bodily injury, disease, or mental
disorder which renders him incapable of continuing in the employment of the
Employer, as determined by the Administrator based upon appropriate medical advice
and examination; and

(ii) With respect to Participants’ Deferred Compensation Benefits and Restoration
Benefits that are earned or vest after December 31, 2004, a Participant’s absence
from employment with the Employer due to: (A) his inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which either can be expected to result in death or can be expected
to last for a continuous period of not less than twelve (12) months; or (B) a
medically determinable physical or mental impairment which can be expected to result
in death or last for a continuous period of not less than twelve (12) months, for
which such Participant is scheduled to receive income replacement benefits for a
period of not less than three (3) months under an accident and health plan covering
the employees of such Employer.”

“‘Employer’ means American Greetings Corporation, an Ohio corporation
(“AGCo”) and its controlled subsidiaries and affiliates; provided, that for
Plan Years commencing after December 31, 2004, such term shall also include (to the
extent not previously included in the preceding definition) any corporation, limited
liability company, partnership, or other business organization which is part of a
“controlled group of corporations” that includes AGCo (within the meaning of Code
Section 414(b) and related regulations), or is “under common control” with AGCo
(within the meaning of Code Section 414(c) and related regulations).”

“‘Unforeseeable Emergency’ means:

(i) With respect to Participants’ Deferred Compensation Benefits and Restoration
Benefits that are earned and vested prior to December 31, 2004, an unanticipated
emergency that is caused by an event beyond the control of the Participant and that
would result in severe financial hardship to the individual if early withdrawal were
not permitted; and

(ii) With respect to Participants’ Deferred Compensation Benefits and Restoration
Benefits that are earned or vest after December 31, 2004, any of the following:

(A) a severe financial hardship to the Participant, resulting from an
illness or accident of the Participant, the Participant’s spouse or the
Participant’s dependent (as defined under Code Section 152(a));

(B) loss of the Participant’s property due to casualty; or

(C) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the Participant’s control.”

2

 

2. Section 2.1, Definitions, is hereby amended by adding the following definitions thereto in the
proper alphabetical sequence:

“‘Specified Employee’ means any individual employed by the Employer for whom
both (i) and (ii) apply:

(i) at any time during the twelve (12) month period ending on the December 31st
preceding the Plan Year under consideration, such individual:

(A) is one of the top fifty (50) compensated officers of AGCo and has annual
“W-2” compensation of at least $130,000; or

(B) owns more than five percent (5%) of AGCo’s stock; or

(C) owns more than one percent (1%) of AGCo’s stock and has annual “W-2”
compensation in excess of One Hundred Fifty Thousand Dollars ($150,000); and

(ii) AGCo’s stock is publicly-traded on the date such individual Separates from
Service.

In making the above determinations, the foregoing compensation amounts shall be
adjusted from time to time in accordance with the cost-of-living adjustments under
Code Section 416(i), and an individual who qualifies as a Specified Employee under
part (i) hereof shall be treated as a Specified Employee for the twelve (12) month
period beginning on the April 1st next following the date he so qualifies.”

“‘Separation from Service’ or ‘Separates from Service’ shall mean a
Participant’s termination from employment with the Employer on account of such
Participant’s death, permanent and total disability, retirement, or other such
termination of employment. A Participant will not be deemed to have experienced a
Separation from Service if such Participant is on military leave, sick leave, or
other bona fide leave of absence, to the extent such leave does not exceed a period
of six (6) months or, if longer, such longer period of time as is protected by
either statute or contract. A Participant will not be deemed to have experienced a
Separation from Service if such Participant continues to provide “significant
services” to the Employer. For purposes of the preceding sentence, a Participant
will be considered to provide “significant services” if such Participant provides
continuing services that average at least twenty percent (20%) of the services
provided by such Participant to the Employer during the immediately preceding three
(3) full calendar year of employment and the annual remuneration paid for such
services is at least twenty percent (20%) of the average annual compensation earned
during the final three (3) full calendar years of employment (or, if less, the
period of employment).”

3

 

3. Section 3.3(d), Agreement Procedure, is hereby deleted in its entirety and replaced with the
following:

	 	 	 	“(d) The deferral period provided for under a prior Agreement (the
‘Prior Deferral Election’) may be extended in accordance with rules established
by the Administrator in compliance with the requirements of Code Section 409A
and related regulations. Notwithstanding the foregoing, in no event shall a
change in a Prior Deferral Election:

     (i) take effect until at least twelve (12) months after the date on
which such Election is made;

     (ii) permit payment due on account of Separation from Service, or
payable in accordance with a specified time or fixed schedule (as set forth
in such Agreement), or payable in connection with a Change in Control, to
commence earlier than five (5) years from the date such payment otherwise
would have commenced in the absence of such extension, and

     (iii) permit payment to commence in accordance with a specified time or
fixed schedule set forth in the Prior Deferral Election less than twelve
(12) months prior to the date of the first payment scheduled under such
Prior Deferral Election.

For purposes of this paragraph (d), any payments to be made to a Participant
under a prior Agreement that consists of installments, or is to be paid
other than in lump sum form, shall be treated as a single payment, and the
date of the first payment in any such series of installments shall be
treated as the date of payment.

4. Section 4.4, Matching Contributions, is hereby amended by adding the following provision to the
end thereto:

“Notwithstanding the foregoing, effective January 1, 2005, no Employer Matching
Contribution shall be credited to any Participant who is otherwise eligible to
receive an Employer Matching Contribution, to the extent such Employer Matching
Contribution corresponds to changes made by such Participant to his or her elective
deferrals in the American Greetings Corporation Employees’ Profit Sharing Plan and
such changes to his or elective deferrals exceeds the Code Section 402(g) limit.”

5. Section 5.3, Restoration Contributions, is hereby deleted in its entirety and replaced with the
following:

“An amount determined by the Board, in its sole discretion, may be credited to a
Participant’s Account for each Plan Year in which the Participant is a participant

4

 

in the American Greetings Corporation Employees’ Retirement Profit Sharing Plan, and
contributions allocated to such Participant’s account(s) thereunder, if any, are
restricted due to the limitations imposed under Code Sections 401(a)(17) and 415.”

6. Section 6.1, Commencement of Benefit Payments, is hereby deleted in its entirety and replaced
with the following:

	 	 	 	“6.1
 Commencement of Benefit Payments. With respect to
Participants’ Deferred Compensation Benefits and Restoration Benefits that are
earned and vested prior to December 31, 2004, and except as provided in Section
10.8, the payment of a Participant’s Deferred Compensation Benefit and
Restoration Benefit shall commence within thirty (30) days after the date on
which the earlier of the following events occur, as applicable:

	 	(a)	 	The expiration of the deferral period provided
under such Participant’s Agreement;
	 
	 	(b)	 	Such Participant incurs an Unforeseeable
Emergency (as determined by the Administrator in accordance with the
Plan), provided, that a payment made in accordance with this
provision (b) shall in any event be limited to the amount necessary to
satisfy such emergency;
	 
	 	(c)	 	Such Participant terminates service with the
Employer for any reason; or
	 
	 	(d)	 	Such Participant’s service is terminated by the
Employer for any reason.

With respect to Deferred Compensation Benefits and Restoration Benefits
earned or vesting after December 31, 2004, and except as provided in Section
10.8, a Participant’s Deferred Compensation Benefit and Restoration Benefit
shall commence after the date on which the earliest of the following events
occur, as applicable:

	 	(a)	 	The expiration of the deferral period provided
under such Participant’s Agreement,
	 
	 	(b)	 	Such Participant incurs an Unforeseeable
Emergency (as determined by the Administrator in accordance with the
Plan), provided, that a payment made in accordance with this
provision (b) shall in any event be limited to the amount necessary to
satisfy such emergency; or
	 
	 	(c)	 	Such Participant incurs a Separation from
Service.

5

 

Notwithstanding the foregoing, in the case of any distribution payable on
account of a Separation from Service to any Participant who qualifies as a
Specified Employee (determined as of such Separation from Service), any such
distribution shall commence no earlier than six (6) months from the date of
such Separation from Service (or if earlier, the date of such Specified
Employee’s death).”

7. Section 6.2, Form of Benefit Payments, is hereby amended by deleting the last paragraph in its
entirety and by deleting the second to last paragraph in its entirety, but replacing it with the
following:

“Except as provided in Article VII, the Participant’s Restoration Benefit shall be
paid in a single lump sum unless a periodic payment is elected by the Participant
under procedures established by the Administrator. For Restoration Benefits
credited or vesting after December 31, 2004, any election to receive a periodic
payment under this Section 6.2 shall be made no later than: (i) the last day of the
Plan Year preceding the Plan Year to which such Restoration Benefit is first
credited; or (ii) in the case of the first year in which a Participant becomes
eligible to participate in the Plan, not later than thirty (30) days from the date
that such Participant first becomes eligible to participate in the Plan.”

8. Section 10.3, No Assignment, is hereby amended by adding the following paragraph to the end
thereto:

“Notwithstanding the foregoing, a Participant’s Deferred Compensation Benefit shall
be subject to division and partition in accordance with the terms of a domestic
relations order satisfying the requirements of a “qualified domestic relations
order” (“QDRO”), as defined in Code Section 414(p) and related regulations;
provided, that (i) a separate benefit shall be recognized and maintained for any
spouse or former spouse determined to have an interest in the Plan as a result of a
QDRO; and (ii) all costs and expenses incurred by the Company or the Administrator
in connection with such QDRO shall be charged against such Participant’s Deferred
Compensation Benefit, as an offset in accordance with the provisions of subsection
(c) hereof, prior to effecting any such division or partition.”

9. Article 10, Miscellaneous Provisions, is hereby amended by adding Section 10.12 to the end
thereto, which shall provide as follows:

“Section 10.12 Tax Liability; Compliance.

(a) Where and to the extent a Participant’s Deferred Compensation Benefit,
including any payment or distribution thereunder, results in a
federal, state or local tax withholding obligation being imposed upon the
Company or the Administrator, or any entity qualifying as an “Employer”

6

 

hereunder, the Company (or such Employer) shall have the right to withhold
such amounts from any Plan benefit(s) due or becoming due and payable to
such Participant.

(b) The Administrator may treat as paid, and then withhold and remit, a
portion of a Participant’s Deferred Compensation Benefit reasonably
determined to be necessary to satisfy any federal, state, or local tax
obligation imposed in connection with such Participant’s Deferred
Compensation Benefit; provided, however, that any amount treated as paid to
a Participant and so applied shall not exceed the amount of such obligation.

(c) The Plan is intended to be operated in compliance with the provisions of
Code Section 409A (including any rulings or regulations promulgated
thereunder). In the event that any provision of the Plan fails to satisfy
the provisions of Code Section 409A, then such provision shall be void and
shall not apply to a Participant’s Deferred Compensation Benefit, to the
extent practicable. In the event that it is determined to not be feasible
to so void a Plan provision as it applies to a Participant’s Deferred
Compensation Benefit, such Plan provision shall be construed in a manner so
as to comply with the requirements of Code Section 409A.”

B. Amendments to the Option Plan

1. Section 2, Provision to Amend Deferral Plan, is hereby amended by deleting the section in its
entirety and replacing it with the following:

	 	 	“2. 	Provision to Amend Deferral Plan. In accordance with §10.1 of
the Deferral Plan, Participants who otherwise have an opportunity to extend the
deferral period for amounts deferred under rules adopted pursuant to §3.3(d) of
the Deferral Plan may elect instead to receive an award of discounted options
hereunder (“Option Agreement”) in full satisfaction of such amounts due under
the Deferral Plan. As a condition to such Option Agreement, any Participant
who becomes a party thereto shall consent and agree that he or she no longer
has any right to such amounts under the Deferral Plan. The Options awarded in
substitution of the Deferred Compensation Benefit shall be governed by the
terms of this Plan, except with respect to the timing of the Options’
elections, which at all times shall be governed by §3.3(d) of the Deferral
Plan.
	 
	 	 	 	The Board of Directors (or the Compensation & Management Development
Committee, to the extent delegated), shall have sole discretion to provide
Participants in the Deferral Plan the opportunity to substitute their rights
to receive deferred compensation under the Deferral
Plan for the right to enter into an Option Agreement pursuant to this Plan,

7

 

	 	 	 	provided the participant makes his or her election prior to the beginning of
the Deferral Period.

Notwithstanding the foregoing, effective January 1, 2005, Participants shall
no longer be eligible to enter into Option Agreements hereunder, or to amend
or modify any existing Option Agreements. Further, any Option Agreements
executed prior to October 4, 2004, shall be subject to the terms of the
Deferral Plan in effect prior to that date. Any Option Agreements executed
on or after October 4, 2004, shall be subject to the terms of the Deferral
Plan, as thereafter amended and in effect.”

2. Section 4, Definitions, is hereby amended by adding the definition of Deferral Period thereto
and replacing the current definition “Termination of Employment” with the following:

“‘Deferral Period’ shall mean the period for which a Participant’s compensation is
deferred under the Deferral Plan. The Deferral Period will be measured against the
Deferral Plan’s Plan Year.”

“‘Termination of Employment’ shall mean, with respect to Employee terminations
occurring prior to January 1, 2005, the date on which the Employee ceases to perform
services for the Company. Effective for Employee’s terminations occurring after
December 31, 2004, ‘Termination of Employment’ shall mean the date of an Employee’s
Separation from Service as defined under the Deferral Plan.”

3. Section 7, Eligibility, is hereby amended by replacing the section in its entirety with the
following:

“All Employees of the Company who are both in the group of Employees determined by
the Board to be part of the select group of management or highly compensated
Employees and are also designated as Participants by the Board are eligible to
receive Options under the Plan. Notwithstanding the foregoing, no Option Agreement
shall be entered into under this Plan after December 31, 2004.”

4. Section 8, Grant of Options, is hereby amended by adding the following provision to the end
thereto:

“No Option Agreement shall be entered into under this Plan after December 31, 2004.”

5. Section 11 is hereby amended by deleting the section in its entirety and replacing it with the
following:

“Exercise. Except as otherwise specifically provided in the Option
Agreement, all Options granted under the Plan will vest at grant and may be
exercisable

8

 

immediately; provided, however, that such Options shall be exercised in accordance
with the applicable Option Agreement.

The Option may be exercised, as provided in the Option Agreement, in full or in part
from the date of the grant at increments of no less than 100% of each grant.
However, in no event shall any option be exercised more than 20 years after the date
of grant, with the option to extend the exercise period at the discretion of the
Board; provided, however, that no extensions shall be permitted after December 31,
2004.

Reinvested dividends shall be attributed proportionally to the property subject to
the Option awards and will be purchased when the underlying award is exercised. For
example, if an original grant of an Option to purchase 400 shares (after the payment
of the exercise price) generated 100 additional shares on such 400 shares from
reinvested dividends, an exercise of one-fourth of the originally granted options
will result in the purchase (after the payment of the exercise price) of 125 shares
in order to proportionally include the resulting reinvested dividends.

In addition, all Options granted under the Plan may only be exercised subject to the
terms specified in the Option Agreement. If such terms conflict with the terms of
this Plan, the terms of this Plan Document shall control.”

6. Section 16, Modification of Option or Plan, shall be amended by adding the following provision
to the end thereto:

“Effective January 1, 2005, the Board shall not modify, extend, or renew any
outstanding Option or the Plan, except as may be required to bring such Option
Agreement or the Plan into compliance with applicable federal, state, or local law.”

     IN WITNESS HEREOF, the Company, by actions of its Board of Directors, has caused this
Amendment Number Four to the Plan and this Amendment Number One to the Option Plan to be executed
on this 14th day of December, 2005.

	 	 	 	 	 
	 	AMERICAN GREETINGS CORPORATION

 	 
	 	By:  	/s/ Brian T. McGrath
 	 
	 	Name: Brian T. McGrath  	 
	 	Title: Vice President, Human Resources  	 
	 

9Exhibit 10.4

 

EXHIBIT 10.4

AMERICAN GREETINGS CORPORATION

OUTSIDE DIRECTORS’ DEFERRED COMPENSATION PLAN

 

 

AMERICAN GREETINGS CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I INTRODUCTION
	 	 	1	 
	Section 1.1 Name of Plan
	 	 	1	 
	Section 1.2 Effective Date
	 	 	1	 
	Section 1.3 Purpose
	 	 	1	 
	ARTICLE II DEFINITIONS AND USAGE
	 	 	1	 
	Section 2.1 Definitions
	 	 	1	 
	Section 2.2 Usage
	 	 	3	 
	ARTICLE III ELIGIBILITY AND PARTICIPATION
	 	 	3	 
	Section 3.1 Eligibility
	 	 	3	 
	Section 3.2 Participation
	 	 	3	 
	Section 3.3 Agreement Procedure
	 	 	3	 
	Section 3.4 Deferral Period
	 	 	4	 
	Section 3.5 Termination of Suspension of Participation; Renewed Participation
	 	 	4	 
	ARTICLE IV DEFERRED COMPENSATION BENEFIT
	 	 	4	 
	Section 4.1 Deferred Compensation Benefit
	 	 	4	 
	Section 4.2 Accounts
	 	 	4	 
	Section 4.3 Director’s Contributions
	 	 	5	 
	Section 4.4 Investments
	 	 	5	 
	Section 4.5 Valuation of Accounts
	 	 	5	 
	ARTICLE V PAYMENT OF BENEFIT PRIOR TO DEATH OR DISABILITY
	 	 	5	 
	Section 5.1 Commencement of Benefit Payments
	 	 	5	 
	Section 5.2 Form of Benefit Payments
	 	 	5	 
	Section 5.3 In-Kind Payments
	 	 	6	 
	ARTICLE VI PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY
	 	 	6	 
	Section 6.1 Commencement of Benefit Payments
	 	 	6	 
	Section 6.2 Designation of Beneficiary
	 	 	6	 
	Section 6.3 Disability Determinations
	 	 	6	 

-i-

 

AMERICAN GREETINGS CORPORATION

DIRECTORS’ DEFERRED COMPENSATION PLAN

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE VII ADMINISTRATION
	 	 	6	 
	Section 7.1 General
	 	 	6	 
	Section 7.2 Administrative Rules
	 	 	6	 
	Section 7.3 Duties
	 	 	7	 
	Section 7.4 Fees
	 	 	7	 
	ARTICLE VIII MISCELLANEOUS PROVISIONS
	 	 	7	 
	Section 8.1 Amendment
	 	 	7	 
	Section 8.2 Termination
	 	 	7	 
	Section 8.3 No Assignment
	 	 	8	 
	Section 8.4 Successors
	 	 	8	 
	Section 8.5 Governing Law
	 	 	8	 
	Section 8.6 No Guarantee of Position
	 	 	8	 
	Section 8.7 Severability
	 	 	8	 
	Section 8.8 Code Section 409A Compliance
	 	 	8	 

ii

 

 

AMERICAN GREETINGS CORPORATION OUTSIDE DIRECTORS’ DEFERRED

COMPENSATION PLAN

ARTICLE I

INTRODUCTION

Section 1.1 Name of Plan. This plan shall be known as the American Greetings Corporation
Outside Directors’ Deferred Compensation Plan (hereinafter referred to as the “Plan”).

Section 1.2 Effective Date. The Plan’s effective date is January 1, 2005.

Section 1.3 Purpose. American Greetings Corporation has established the Plan to provide
certain members of that company’s board of directors the option of deferring the receipt of fees
earned while serving in such capacity.

ARTICLE II

DEFINITIONS AND USAGE

Section 2.1 Definitions. For purposes of this Plan, capitalized terms have the meanings set
forth below:

“Account” means the individual account or accounts established on behalf of a Participant
in accordance with Section 4.2.

“Administrator” means the person or persons described in Article VII.

“Affiliate” means any limited liability company, general partnership, limited partnership,
business trust, or other non-corporate organization with respect to which American Greetings
Corporation directly or indirectly owns at least fifty percent (50%) of either the capital or
profits interest therein, and directly or indirectly has the power and authority to select and
appoint, and where applicable remove, such organization’s managers, general partner(s) and/or
trustees (as applicable).

“Agreement” means an Agreement for Deferred Compensation Benefits entered into between the
Company and a Director who is eligible to participate in the Plan.

“Board” means the Board of Directors of American Greetings Corporation; provided that, if
such Board, by resolution, designates a person or a committee to act specifically on matters
relevant to the Plan, such person or committee shall act (and have the power and authority to act)
as the Board with respect to such matters.

“Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of
the Code shall include any regulations or rulings promulgated thereunder.

“Company” means American Greetings Corporation, an Ohio corporation (“AGCo”), together with
any corporation, limited liability company, partnership, or other business organization which is
part of a “controlled group of corporations” that includes AGCo (within the meaning of

 

 

Code Section 414(b) and related regulations), or is “under common control” with AGCo (within the
meaning of Code Section 414(c) and related regulations).

“Compensation” means the total of all retainer fees, meeting fees, and any other fees for
personal services rendered by a Director for the Company, acting in that capacity, whether paid to
the Director in cash or in-kind. Compensation shall not include, for purposes of determining a
Director’s Deferred Compensation Benefit under the Plan, any remuneration received by such Director
for services he or she renders to the Company in the capacity of an independent contractor.

“Deferred Compensation Benefit” means the benefit of a Participant as determined under
Article IV of this Plan.

“Director” means any person serving as an “outside director” on the Board. An “outside
director” is any individual performing personal services as a member of the Board who does not
concurrently perform services for the Company as an Employee; provided, however, that a Director
may include an “outside director” who concurrently performs services for the Company as an
independent contractor.

“Disability” or “Disabled” means a Participant’s absence from service on the
Company’s Board due to: (i) his or her inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less than twelve (12) months; or
(ii) such medically determinable physical or mental impairment, which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve (12) months, for
which the Participant is receiving income replacement benefits for a period of not less than three
(3) months under an accident and health plan covering the Company’s Directors.

“Employee” shall mean any individual employed by the Company who receives “W-2 wages” from
the Company. Any individual who provides personal services to the Company concurrently as both
Employee and Director shall not be considered a Director, while serving in such dual capacities.

“Participant” means a Director who is eligible to participate in the Plan and who is
actually participating in the Plan in accordance with Section 3.2.

“Plan” means the American Greetings Corporation Outside Directors’ Deferred Compensation
Plan.

“Plan Year” means the calendar year.

“Separation from Service” shall mean a Participant’s resignation, removal or withdrawal as
a Director (whether on account of such Participant’s death, permanent and total disability,
retirement, or other circumstances). A Participant will not be deemed to have experienced a
Separation from Service if such Participant commences employment with the Company as an Employee,
or otherwise continues to provide “significant services” to the Company. For purposes of the
preceding sentence, a Participant will be considered to provide “significant services” if such
Participant provides continuing services that average at least twenty percent

2

 

(20%) of the services provided by such Participant to the Company during the immediately preceding
three (3) full calendar years and the annual remuneration paid for such services is at least twenty
percent (20%) of the average annual compensation earned during the final three (3) full calendar
years (or, if less, the period of service).

“Subsidiary” means any corporation at least eighty percent (80%) of whose equity securities
(determined either by voting power or by interest in profits) are directly or indirectly owned by
AGCo.

“Unforeseeable Emergency” means any of the following: (i) a severe financial hardship to
the Participant resulting from an illness or accident of the Participant, the Participant’s spouse
or the Participant’s dependent (as defined under Code Section 152(a)), (ii) loss of the
Participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the Participant’s control as determined by the
Administrator pursuant to Code Section 409A.

Section 2.2 Usage. Except where otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine and vice versa, and the definition of any
term herein in the singular shall also include the plural and vice versa.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

Section 3.1 Eligibility. A Director shall be eligible to participate in the Plan on the
day he or she first serves as a Director of AGCo, unless the Board, by written action, otherwise
designates such Director as ineligible to participate in the Plan.

Section 3.2 Participation. Each Director eligible to participate in the Plan in accordance
with Section 3.1 shall become a Participant by entering into an Agreement with AGCo. Each
Director’s participation in the Plan shall be governed by his or her Agreement, including the
effective date of each Director’s participation, and the terms of the Plan. In the event that the
terms of the Agreement and the terms of the Plan conflict, the terms of the Agreement control.

Section 3.3 Agreement Procedure.

(a) AGCo and each Director who is eligible to participate in the Plan may execute one or more
Agreements for all or a the portion of Compensation the Director elects to defer into the Plan.
Each Agreement shall provide for the amount credited to a Participant’s Account in accordance with
Section 4.3 below, the period of deferral in accordance with rules established by the
Administrator, the investment of such amount in accordance with Section 4.4 below, and the payment
of the Participant’s Deferred Compensation Benefit in accordance with Sections 5.1 and 5.2 below.

(b) For the initial Plan Year in which a Director becomes eligible to participate in the Plan, the
Agreement shall be properly completed, executed and delivered to the Administrator prior to the
date that ends thirty (30) days after the date on which the Director first becomes eligible to
participate in the Plan.

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(c) For any subsequent Plan Year for which a Director is eligible to participate in the Plan, the
Agreement shall be properly completed, executed and delivered to the Administrator prior to the
first day of each Plan Year for which amounts will be deferred on behalf of such Director.

(d) An Agreement shall be effective no earlier than the date on which it is delivered to the
Administrator and shall continue in effect for all succeeding Plan Years until the Deferred
Compensation Benefit attributable to such Agreement has been paid, unless otherwise provided under
the Plan.

Section 3.4 Deferral Period.

(a) A Participant may elect to defer his or her Compensation for three (3) years, five (5) years,
or until the date such Participant no longer performs personal services as a Director. A
Participant must select a deferral period on the Agreement he or she enters into with the Company
before any Compensation will be deferred under the Plan on such Participant’s behalf.

(b) A deferral period provided for under a prior Agreement (the ‘Prior Deferral Election’) may be
extended in accordance with rules established by the Administrator. Notwithstanding the foregoing,
in no event shall a change in a Prior Deferral Election (i) take effect until at least twelve (12)
months after the date on which the election to change is made, (ii) permit a payment on account of
Separation from Service or in accordance with a specified time or fixed schedule (as set forth on
the Agreement) to commence earlier than five (5) years from the date the initial payment under the
Prior Deferral Election would otherwise have been made, and (iii) permit a payment in accordance
with a specified time or fixed schedule of the Prior Deferral Election (as set forth on the
Agreement) to occur earlier than twelve (12) months prior to the date of the first scheduled
payment under the Prior Deferral Election.

Section 3.5 Termination or Suspension of Participation; Renewed Participation. A
Participant’s future participation in the Plan may be discontinued at any time by written action of
the Board, in accordance with and subject to the following rules:

(a) The terms of any discontinuance must be set forth in writing and a copy of these written terms
shall be provided to the affected Participant, the Plan Administrator, and the Board.

(b) In the event that a Participant, whose future participation in the Plan is discontinued, is
again designated for participation in the Plan by the Board, such Participant must enter into an
Agreement in accordance with Section 3.3(c) above.

ARTICLE IV

DEFERRED COMPENSATION BENEFIT

Section 4.1 Deferred Compensation Benefit. A Participant’s Deferred Compensation Benefit
shall be equal to the total amount credited to the Participant’s Account under this Article IV.

Section 4.2 Accounts. The Company shall establish and maintain Accounts on behalf of each
Participant, which shall include all Deferred Compensation Benefits deferred on behalf of such
Participant. Each Account shall list and reflect each Participant’s credits and valuations. All
amounts credited to a Participant’s Account shall be entered as of the date on which the

4

 

Compensation would have been paid had it not been deferred. At all times prior to the distribution
of all or a portion of amounts maintained in a Participant’s Account, amounts so credited shall
represent a general unsecured obligation of the Company subject to the claims of the Company’s
general creditors.

Section 4.3 Director’s Contributions. Directors who have been identified by the Board as
eligible to participate in the Plan shall be eligible to elect to defer all or a portion of his or
her Compensation under the Plan, which may be communicated as a certain percentage or set dollar
amount. The terms of any election to defer a Director’s Compensation must be made in accordance
with Sections 3.3(b) and 3.3(c) above. Further, the timing and form of payment of such Deferred
Compensation Benefit must be specified in the Agreement, subject to the provisions of Sections
3.3(d), 5.1, 5.2 and 6.1.

Section 4.4 Investments. A Participant may elect, at the time and in the manner he or she
makes an initial deferral election, the vehicles in which assets held in his or her Account will be
invested. The Company will provide a Participant, as part of his or her Agreement, a choice of
investment vehicles, which have been pre-selected by the Board. In the event all or a portion of a
Participant’s Account is not invested pursuant to the Agreement, such Participant’s Account shall
be invested as reasonably determined by the Company, in accordance with the procedures established
by the Administrator. A Participant may elect to change his or her investment elections in
accordance with procedures established by the Administrator.

Section 4.5 Valuation of Accounts. The value of a Participant’s Account shall be
determined from time to time by the Administrator in the following manner:

(a) Each Participant’s Account shall be valued as of the last day of each Plan Year, or more
frequently as agreed upon by the Administrator, and shall again be valued as of the date that a
Participant receives a payment under the Plan, in accordance with the procedures established by the
Administrator.

(b) All allocations to a Participant’s Account under this Section 4.5 shall be deemed to have been
made on the applicable valuation date, even though actually determined at a later date.

ARTICLE V

PAYMENT OF BENEFIT PRIOR TO DEATH OR DISABILITY

Section 5.1 Commencement of Benefit Payments. Except as provided in Section 6.1 below, the
payment of a Participant’s Deferred Compensation Benefit shall commence thirty (30) days after the
date on which the earlier of the following events occurs:

(a) The expiration of the deferral period provided under the Participant’s Agreement.

(b) The Participant incurs an Unforeseeable Emergency (as determined by the Administrator in
accordance with the Plan’s terms).

(c) The Participant experiences a Separation from Service with the Company for any reason.

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Section 5.2 Form of Benefit Payments. Except as provided in Article VI, a Participant
shall be given the option to elect to receive his or her Deferred Compensation Benefit as (a) one
lump sum payment, (b) installments, payable over a period of five (5) years, or (c) installments,
payable over a period of ten (10) years. The form that a Participant’s Deferred Compensation
Benefit will be paid in, must be selected on the Participant’s Agreement. If the Participant’s
Agreement does not provide for a form of payment, then the Participant’s Deferred Compensation
Benefit shall be paid in a single lump-sum. If the Participant has negotiated two or more
Agreements that do not provide for the same form of payment, then a proportionate amount of the
Participant’s Deferred Compensation Benefit attributable to each individual Agreement shall be paid
in the form provided under both this Section 5.2 and each respective Agreement in accordance with
the procedures established by the Administrator.

Section 5.3 In-Kind Payments. A Participant’s Deferred Compensation Benefit that is payable
to such Participant, Participant’s beneficiary, or Participant’s guardian (as the case may be) in
accordance with Sections 5.1 or 6.1, as applicable, may be paid to such Participant, Participant’s
beneficiary, or Participant’s guardian in the form of cash or in-kind, as such amounts were held in
the Participant’s Account immediately prior to the commencement of benefit payments under Sections
5.1 or 6.1; provided, however, that a Participant may elect instead to receive any portion of his
or her Account that was held in-kind as cash, at the time and in the form and manner prescribed by
the Board.

ARTICLE VI

PAYMENT OF BENEFIT ON OR AFTER DEATH OR DISABILITY

Section 6.1 Commencement of Benefit Payments. If a Participant dies or becomes Disabled
prior to receiving his or her entire Deferred Compensation Benefit, then the remainder of such
Deferred Compensation Benefits payable to the Participant shall be paid to the Participant, the
Participant’s beneficiary, or the Participant’s guardian (as the case may be) in a single lump-sum
amount thirty (30) days following the date on which the Administrator is notified of the
Participant’s death or Disability.

Section 6.2 Designation of Beneficiary. A Participant may designate one or more
beneficiaries, in the manner and form determined by the Administrator, to receive the Deferred
Compensation Benefit following the Participant’s death. A Participant may change such beneficiary
designations from time to time, as permitted by the Administrator. In the event that the
Participant has beneficiary designations, the last written designation filed with the Administrator
prior to the Participant’s death shall control. If a Participant fails to specifically designate a
beneficiary, or if no designated beneficiary survives the Participant, payment shall be made by the
Administrator in accordance with the laws of descent and distribution in effect in the
Participant’s State of residence.

Section 6.3 Disability Determinations. The Administrator will be responsible for
determining whether a Participant suffers from a Disability, as defined herein. The Administrator
may delegate this responsibility to an independent third party selected by the Board.

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ARTICLE VII

ADMINISTRATION

Section 7.1 General. The Administrator shall be the Board, or such other person or persons
as designated by the Board. Except as otherwise specifically provided in the Plan, the
Administrator shall be responsible for administration of the Plan.

Section 7.2 Administrative Rules. The Administrator may adopt such rules of procedure as
it deems desirable for the conduct of its affairs, except to the extent that such rules conflict
with the provisions of the Plan.

Section 7.3 Duties. The Administrator shall have the following rights, powers and duties:

(a) Subject to the terms of this Plan and the Agreement, the decision of the Administrator in
matters within its jurisdiction shall be final, binding and conclusive upon the Company and upon
any other person affected by such decision.

(b) The Administrator shall have the duty and authority to interpret and construe the provisions of
the Plan, to decide any question which may arise regarding the rights of Directors, Participants,
and beneficiaries, including the amounts of their respective interests, to adopt such rules and to
exercise such powers as the Administrator may deem necessary for the administration of the Plan,
and to exercise any other rights, powers or privileges granted to the Administrator by the Board
under the terms of the Plan.

(c) The Administrator shall maintain full and complete records of its decisions. The Administrator
shall have the duty to maintain Account records of all Participants, including all relevant data
pertaining to Participants. The Administrator shall within a reasonable time after the end of each
Plan Year provide each Participant a detailed report of the status of the Participant’s Account.

(d) The Administrator shall cause the principal provisions of the Plan to be communicated to the
Participants, and a copy of the Plan and other documents shall be available at the principal office
of the Company for inspection by the Participants at reasonable times determined by the
Administrator.

(e) The Administrator shall periodically report to the Board with respect to the status of the
Plan.

Section 7.4 Fees. No fee or compensation shall be paid to any person for services as the
Administrator.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.1 Amendment. The Company reserves the right to amend the Plan retroactively or
otherwise, in any manner that it deems advisable, by a written action taken by the Board. No
amendment shall, without the prior written consent of the Participant or the beneficiary, as the
case may be, affect the amount or form of the Participant’s or beneficiary’s Deferred

7

 

Compensation Benefit at the time the amendment becomes effective or the right of the Participant or
the beneficiary to receive such Deferred Compensation Benefits.

Section 8.2 Termination. The Company reserves the right to terminate the Plan at any time
by a written action taken by the Board. No termination shall, without the prior written consent of
the Participant or the beneficiary, as the case may be, affect the amount or form of the
Participant’s or the beneficiary’s Deferred Compensation Benefit prior to the termination or the
right of the Participant or beneficiary to receive such Deferred Compensation Benefit.

Section 8.3 No Assignment.

(a) The Participant shall not have the power to pledge, transfer, assign, anticipate, mortgage or
otherwise encumber or dispose of in advance any interest in amounts payable hereunder or any of the
payments provided for herein, nor shall any interest in amounts payable hereunder or in any
payments be subject to seizure for payments of any debts, judgments, alimony or separate
maintenance, or be reached or transferred by operation of law in the event of bankruptcy,
insolvency or otherwise.

In the event of an attempted seizure, any amounts payable hereunder may be paid to one or more of
the Participant’s relatives or children, or the Participant’s spouse, as the Administrator shall
determine.

(b) Notwithstanding the foregoing, a Participant’s Deferred Compensation Benefit shall be subject
to division and partition in accordance with the terms of a domestic relations order satisfying the
requirements of a “qualified domestic relations order” (“QDRO”), as defined in Code Section 414(p)
and related regulations; provided, that (i) a separate benefit shall be recognized and maintained
for any spouse or former spouse determined to have an interest in the Plan as a result of a QDRO;
and (ii) all costs and expenses incurred by the Company or the Administrator in connection with
such QDRO shall be charged against such Participant’s Deferred Compensation Benefit.

Section 8.4 Successors. The provisions of the Plan are binding upon and inure to the
benefit of the Company, its successors and assigns, and the Participant, his or her beneficiaries,
heirs, and legal representatives.

Section 8.5 Governing Law. The Plan shall be subject to and construed in accordance with
the laws of the State of Ohio, to the extent not preempted by applicable law.

Section 8.6 No Guarantees. Nothing contained in the Plan shall be deemed to give any
Participant the right to any equity or other interest in the assets, business or affairs of AGCo
(or any entity comprising part of the Company). No Participant hereunder shall have a security
interest in assets of the Company used to make contributions or pay benefits.

Section 8.7 Severability. If any provision of the Plan shall be held illegal or invalid
for any reasons, such illegality or invalidity shall not affect the remaining provision of the
Plan, but the Plan shall be construed and enforced as if such illegal or invalid provision had
never been included herein.

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Section 8.8 Code Section 409A Compliance. The Plan is intended to be operated in
compliance with the provisions of Code Section 409A (including any rulings or regulations
promulgated thereunder). In the event that any provision of the Plan fails to satisfy the
provisions of Code Section 409A, then such provision shall be void and shall not apply to a
Participant’s Deferred Compensation Benefit, to the extent practicable. In the event that it is
determined to not be feasible to so void a Plan provision as it applies to a Participant’s Deferred
Compensation Benefit, such Plan provision shall be construed in a manner so as to comply with the
requirements of Code Section 409A.

             IN WITNESS WHEREOF, the undersigned, on behalf of American Greetings Corporation, has executed
and adopted this Plan this 14th day of December, 2005.

	 	 	 	 	 
	 	AMERICAN GREETINGS CORPORATION

 	 
	 	By:  	/s/ Brian T. McGrath
 	 
	 	Name: Brian T. McGrath  	 
	 	Title: Vice President, Human Resources  	 
	 

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