American Greetings Corp. Contracts
Sample Business Contracts
Supplemental Executive Retirement Plan - American Greetings Corp.
AMERICAN GREETINGS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated Effective March 1, 2004)
<PAGE>
TABLE OF CONTENTS
ARTICLE I INTRODUCTION...................................................... 1
ARTICLE II DEFINITIONS....................................................... 2
ARTICLE III PLAN PARTICIPATION................................................ 7
ARTICLE IV CALCULATION, FORM OF A PARTICIPANT'S ACCRUED BENEFIT.............. 9
ARTICLE V FORMS OF RETIREMENT; ELIGIBILITY CONDITIONS....................... 10
ARTICLE VI DISTRIBUTION OF BENEFITS; LIMITATIONS............................. 13
ARTICLE VII DEATH BENEFIT..................................................... 19
ARTICLE VIII ADMINISTRATION; PLAN MODIFICATION................................. 21
ARTICLE IX GENERAL PROVISIONS................................................ 25
-i-
<PAGE>
ARTICLE I
INTRODUCTION
1.1 NAME OF PLAN. This Plan shall be known as the American Greetings
Corporation Supplemental Executive Retirement Plan (as amended and
restated effective March 1, 2004). It constitutes a full and complete
amendment and restatement of, and continuation of, the American
Greetings Corporation Supplemental Executive Retirement Plan, effective
as of March 1, 1986.
1.2 PURPOSE. The purpose of the Plan is to provide any Executive designated
to participate in the Plan with a retirement benefit that supplements
those benefits provided under any other pension, retirement or
profit-sharing plan maintained by American Greetings Corporation (the
"Company"). The Plan is being maintained primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated Company employees on an unfunded basis, within the
meaning of section 201(2) of the Employee Retirement Income Security
Act, as amended ("ERISA").
1.3 RIGHTS OF FORMER EMPLOYEES. The terms of the Plan, as in effect
immediately prior to this amendment and restatement, shall control and
be used exclusively to determine the rights and duties of any Executive
or former Executive who separated from employment by the Company and
all Company subsidiaries and affiliates prior to the March 1, 2004
effective date of this amendment and restatement.
- 1 -
<PAGE>
ARTICLE II
DEFINITIONS
The following words and phrases, where used in the Plan, shall have the
following meanings, unless a different meaning is plainly required by the
context.
2.1 ACCRUED BENEFIT shall have the meaning set forth in Article IV hereof.
2.2 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).
2.3 ASSUMED BONUS PERCENTAGE shall mean, for any Fiscal Year, the assumed
bonus award percentage to which an Executive is entitled under the
corporate component of the Company's key management incentive plan,
earned while a Participant, based on his job classification and
assuming a one hundred percent (100%) of target bonus award is payable
for said Fiscal Year. For this purpose, the schedule set forth by the
Company's Board for the various levels of job classifications covered
by the Company's key management incentive plan shall be used to
calculate such awards.
2.4 BENEFICIARY shall mean any person or persons designated by the
Executive to receive payments hereunder in the event of such
Executive's death. If an Executive fails to designate one or more
persons as his Beneficiary, or no such "beneficiary" designation is
held to be lawful and in effect, any Plan benefit becoming due and
payable to a Participant's Beneficiary hereunder shall be paid over to
such Participant's estate.
2.5 BOARD shall mean the board of directors of the Company; provided, that
if the Board by resolution designates a person or a committee to act
specifically on matters relevant to this Plan, such person or committee
shall act (and, have the power and authority to act) as the Board with
respect to such matters.
- 2 -
<PAGE>
2.6 CHANGE IN CONTROL shall mean an event, shall mean the occurrence of any
of the following events, individually or in combination:
(a) American Greetings Corporation, an Ohio corporation ("AGCorp")
is merged or consolidated or reorganized into or with another
corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority
of the combined voting power of the then-outstanding
securities of such corporation or person immediately after
such transition is held in the aggregate by the holders of
AGCorp's common shares immediately prior to such transaction;
(b) AGCorp sells or otherwise transfers all or substantially all
of its assets to any other corporation or other legal person,
and less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of AGCorp's common shares immediately
prior to such sale or transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"), disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities
representing 20% or more of the voting power of AGCorp's
common shares;
(d) AGCorp files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of AGCorp has or may have occurred or will
or may occur in the future pursuant to any then-existing
contract or transaction; or
(e) If during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors
of AGCorp cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by AGCorp's shareholders, of each director of AGCorp
first elected during such period was approved by a vote of at
least two-thirds of the directors
- 3 -
<PAGE>
of AGCorp then still in office who were directors of AGCorp at
the beginning of any such period.
Notwithstanding the foregoing provisions of Section 12c and (d) above,
a "Change in Control" shall not be deemed to have occurred for purposes
of this Plan (i) solely because (A) AGCorp; (B) a Subsidiary; (C) any
AGCorp-sponsored employee stock ownership plan or other employee
benefit plan of AGCorp; or (D) any family member of Jacob Sapirstein
(including lineal descendants, spouses of such descendants, the lineal
descendants of any such spouses, the spouse of any such spouses' lineal
descendants and trusts (including voting trusts) either files or
becomes obligated to file a report or proxy statement under or in
responses to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by it of shares, whether
in excess of 20% of the voting power of AGCorp's common shares or
otherwise, or because AGCorp reports that a Change in Control of AGCorp
has or may have occurred or will or may occur in the future by reason
of such beneficial ownership or (ii) solely because of a Change in
Control of any Subsidiary.
2.7 COMMITTEE shall mean the Compensation & Management Development
Committee of the Board.
2.8 COMPANY shall mean AGCorp, together with any successor thereto that
specifically assumes sponsorship of the Plan by written action taken by
its board of directors (or comparable governing body). Such term also
shall include any Subsidiary, or Affiliate (both, as herein defined)
that adopts the Plan in a written instrument that (a) is signed by such
Subsidiary or Affiliate (as applicable) and by AGCorp, (b) delegates to
AGCorp all right, power and authority to act as the "Company" with
respect to the Plan as the agent and attorney-in-fact for such
Subsidiary or Affiliate (as applicable), and (c) obligates such
Subsidiary or Affiliate (as applicable) to reimburse AGCorp for the
direct and indirect cost of providing benefits to those employees of
such Subsidiary or Affiliate who participate herein.
2.9 COMPENSATION shall mean, for any calendar year preceding the calendar
year in which an Executive who is a Participant attains Normal
Retirement Date (or Late Retirement Date,
- 4 -
<PAGE>
where applicable), the annual base pay received by such Participant
from the Company while a Participant. In the event an Executive who is
also a Participant becomes disabled and is eligible for and receiving
benefits under the Long Term Disability Plan, such Participant's
participation in the Plan shall be deemed to continue and, for Plan
purposes, the "Compensation" attributable to such Participant shall be
deemed to continue until the close of the calendar year coincident with
or next preceding the date such Participant no longer receives such
disability income benefits.
2.10 EFFECTIVE DATE shall mean March 1, 2004. The effective date of the
Plan, in effect prior to this amendment and restatement, was March 1,
1986.
2.11 EXECUTIVE shall mean an employee of the Company, or of a Subsidiary, or
of an Affiliate, who is either a named executive officer, a senior vice
president, or a vice president, of such Company; provided, that such
term shall specifically exclude any individual who is (or, is
classified as) a non-resident alien of the United States during any
period(s) such individual performs services outside of the United
States.
2.12 FINAL AVERAGE COMPENSATION shall mean an amount, expressed in dollars
and cents, determined by the sum of (a) and (b), where: (a) is the
average of a Participant's two (2) calendar years of Compensation that
provide the highest average, and (b) is the product derived from
multiplying (i) that amount determined in part (a) hereof, by (ii) that
average of such Participant's two (2) Fiscal Year Assumed Bonus
Percentages which provide the highest average; provided, that for this
purpose, if a Participant has only one Assumed Bonus Percentage, such
Percentage will be considered to be the average.
2.13 FISCAL YEAR shall mean that period which begins on March 1 of each year
and ends on the last day of February of the ensuing year.
2.14 LONG TERM DISABILITY PLAN shall mean the American Greetings Corporation
Long Term Disability Plan, an employee welfare benefit plan sponsored
and maintained by the Company to provide long-term disability income
benefits to plan-covered employees.
2.15 PARTICIPANT shall mean any Executive who is, or becomes, eligible to
participate in the Plan in accordance with the provisions of Sections
3.1 or 3.2 hereof; provided, that such
- 5 -
<PAGE>
Executive shall continue as a Participant hereunder only so long as
such Executive remains eligible to participate in the Plan and has not
had such participation terminated or suspended in accordance with
Section 3.3 hereof. An Executive, or other individual, who was a
Participant shall remain a Participant so long as such Executive or
individual has a vested interest in the Plan, without regard to whether
such Executive or individual is then employed by the Company, or a
Subsidiary, or an Affiliate.
2.16 PLAN shall mean the American Greetings Corporation Supplemental
Executive Retirement Plan, as amended and restated effective March 1,
2004, as set forth in this instrument and as further amended from time
to time.
2.17 PLAN ADMINISTRATOR shall mean that person identified in Section 8.1
hereof.
2.18 PLAN BENEFIT shall mean the monthly benefit amount a Participant is
eligible to receive pursuant to Article IV, calculated in accordance
with Article V, and payable in the form of a monthly annuity for life
(with 180 months, guaranteed) in accordance with (and limited by)
Article VI and the remaining provisions of the Plan.
2.19 SERVICE shall mean that period of time an Executive is in the employ of
the Company, commencing with such Executive's date of hire and ending
with the date such Executive separates from Company employment, as
further determined in accordance with the following rules:
(a) Service shall specifically exclude any period(s) when an
Executive is employed by a Subsidiary or an Affiliate, unless
such Subsidiary or Affiliate participates in the Plan as part
of the "Company" in accordance with Section 2.8 hereof, or the
Committee by written action specifically recognizes such
period(s) of service as Service for Plan purposes.
(b) Service shall specifically include any period(s) when an
Executive is on a medical, military, family or personal leave
of absence that either has been approved by the Company or is
required by law to be recognized as employment service for
seniority and benefit plan purposes.
- 6 -
<PAGE>
(c) Service shall specifically include any period(s) of time an
Executive (who is also a Plan Participant) is disabled and
receiving benefits under the Long Term Disability Plan, even
though no longer classified as a Company employee.
(d) Periods of employment by a predecessor-in-interest to the
Company or by a predecessor-in-interest to a Subsidiary or an
Affiliate, and any periods of employment by a Subsidiary or an
Affiliate during which such Subsidiary or Affiliate has not
adopted the Plan, shall be recognized as Service only where
(and, to the extent) recognized by the Board by written
action.
2.20 SUBSIDIARY shall mean 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 American
Greetings Corporation.
In this document, unless the context clearly requires otherwise, the
singular shall include the plural and the masculine gender shall include the
feminine.
- 7 -
<PAGE>
ARTICLE III
PLAN PARTICIPATION
3.1 AUTOMATIC PARTICIPATION, AS OF THE EFFECTIVE DATE. Each Executive who
was a Participant in the Plan on the day before the Effective Date of
this amendment and restatement shall automatically continue as a
Participant, as of the Effective Date.
3.2 PARTICIPATION AFTER THE EFFECTIVE DATE; NEW ENTRANTS. Any Executive who
does not automatically become a Participant as of the Effective Date
shall become a Participant on any date, subsequent to the Effective
Date, that such Executive is designated as eligible to participate in a
written action taken by the Board. Where a written Board action
designates an Executive as eligible to participate in the Plan without
also specifying a date for commencing such participation, the date such
Board action was taken shall constitute the commencement date.
3.3 TERMINATION OR SUSPENSION OF PARTICIPATION; RENEWED PARTICIPATION. A
Participant's continued participation in the Plan may be discontinued
at any time by the Board by written action, in accordance with and
subject to the following rules:
(a) In the event a Participant's participation herein is
discontinued, the terms of such discontinuation shall be set
forth in writing and a copy of such terms shall be provided to
such Participant, the Plan Administrator, and the Committee.
(b) Subject to the provisions of Article VI hereof, if at the time
a Participant discontinues participation hereunder such
Participant has a right to a Plan benefit based on the term of
the Plan then in effect, said right shall not be forfeitable
and such Participant shall be entitled to receive such Plan
benefit, based on and in accordance with the terms of the Plan
in effect at the time of such discontinuation.
(c) In the event a Participant whose Plan participation has been
discontinued is again designated for participation in the Plan
in accordance with Section 3.2 hereof, the Board by written
action may specify the terms and conditions under which such
Participant's Compensation and Service (and
previously-determined Plan benefit, if any) are to be taken
into account when determining such Participant's Plan
- 8 -
<PAGE>
rights hereunder. In the absence of any direction from the
Board, such Participant shall be considered a newly-eligible
Participant for all Plan purposes (other than with respect to
any Plan benefit such Participant already has qualified to
receive); provided, that such Participant's Service shall only
be used once.
- 9 -
<PAGE>
ARTICLE IV
CALCULATION, FORM OF PARTICIPANT'S ACCRUED BENEFIT
4.1 FORM OF ACCRUED BENEFIT. A Participant's accrued benefit hereunder
shall consist of a monthly benefit, commencing on the first day of the
calendar month coincident with or next following the date such
Participant attains such Participant's Normal Retirement Date, and
payable thereafter to such Participant as an annuity for life (with 180
monthly payments, guaranteed) (the "Accrued Benefit").
4.2 CALCULATION OF ACCRUED BENEFIT. A Participant's Accrued Benefit, when
payable in its normal form and commencing as provided in Section 4.1
hereof, is equal in amount to one-twelfth (1/12th) of the product of
(a) times (b), where:
(a) is equal to one percent (1%) of such Participant's Final
Average Compensation; and
(b) consists of such Participant's years of Service, calculated to
the nearest attained calendar month, but in any event subject
to a maximum of twenty (20) years of Service.
4.3 CERTAIN COMPENSATION, SERVICE TO BE DISREGARDED. Notwithstanding any
contrary Plan provision, when calculating a Participant's Accrued
Benefit there shall be disregarded (a) any Compensation paid to such
Participant and any Service rendered by such Participant for any Fiscal
Year (or, fraction thereof) in which such Participant is determined by
the Committee (acting in its reasonable discretion, following
consultation with legal counsel) to have violated Section 304 or
Section 306 of the Sarbanes-Oxley Act (15 U.S.C. Sections 7243, 7244),
or other applicable law (including, without limitation, any
otherwise-applicable faithless servant doctrine), and (b) any
Compensation received by such Participant that is attributable to any
period prior to the date such Participant first commences participation
hereunder as a Participant.
- 10 -
<PAGE>
ARTICLE V
FORMS OF RETIREMENT; ELIGIBILITY CONDITIONS
5.1 NORMAL/LATE RETIREMENT BENEFIT. A Participant shall be entitled to
receive a Normal Retirement benefit as of the first day of the calendar
month coinciding with or next following the date such Participant
attains age 65. If a Participant retires after attaining age 65, such
Participant shall qualify to receive a Late Retirement benefit. The
Normal/Late Plan Benefit payable to a Participant who retires on such
Participant's Normal/Late Retirement Date shall consist of such
Participant's Accrued Benefit, determined as of the later of such
Normal Retirement Date or Late Retirement Date (as applicable).
5.2 EARLY RETIREMENT BENEFIT.
A Participant who has not attained age 65 but nevertheless has
a vested interest in the Plan may retire on the first day of any
calendar month coinciding with or next following:
(a) the date such Participant attains age 55 and completes ten
(10) years of Service (at least five (5) of which must be
completed while a Participant); or
(b) any date certain designated by the Board in writing, acting in
its sole discretion or by agreement with said Participant,
irrespective of said Participant's age and years of Service.
The Early Retirement Benefit payable to a Participant who
retires under this Section 5.2 shall be in an amount equal to such
Participant's Accrued Benefit, determined as of the date such Benefit
commences payment hereunder, but reduced by the appropriate reduction
factor specified in Schedule A (attached hereto). A Participant seeking
to receive an Early Retirement Benefit shall otherwise apply for it, as
provided in Section 6.1 hereof, but shall specify the date such
Participant wishes to have such Benefit commence; provided, that such
Benefit can commence no earlier than the latest to occur of: (a)
(above); or (b) (above); or the first day of the calendar month next
following the date the Plan Administrator receives such application.
- 11 -
<PAGE>
5.3 DEFERRED VESTED BENEFIT.
A Participant's right to an Accrued Benefit shall vest after
completing ten (10) years of Service (at least five (5) of which is
completed while a Participant), even though such Participant separates
from Company employment prior to attaining age 55, but only if one (1)
or more of the following events occur(s) after such Participant's 45th
birthday:
(a) Such Participant's Company employment is terminated
unilaterally by the Company; or
(b) Such Participant is a member of a class of Company executives
(or where applicable, Subsidiary or Affiliate executives)
declared by written Board action to be ineligible to
participate further in the Plan; or
(c) Such Participant is demoted to non-Executive status by the
Company; or
(d) A Change in Control occurs.
Any Participant who vests hereunder (as provided above) but
separates from Company employment prior to attaining age 55
nevertheless shall be eligible to commence receiving a Plan Benefit
either on such Participant's 65th birthday or on the first of any
calendar month between such Participant's 55th birthday and his or her
65th birthday (as such Participant may elect); however, the Accrued
Benefit of a Participant who separates from Company employment prior to
attaining age 55 shall be computed and frozen as of the date such
Participant separates from Company employment.
The Plan Benefit actually payable to a Participant whose
Accrued Benefit vests hereunder shall be determined in accordance with
(i) Section 5.1 hereof, if such Participant commences receiving such
Plan Benefit on or after attaining age 65; or (ii) Section 5.2 hereof,
if such Participant commences receiving such Plan Benefit prior to
attaining age 65 but on or after the date such Participant attains age
55 (but based on the above determination of such Participant's Accrued
Benefit).
A Participant wishing to commence receiving a Plan Benefit in
any event shall be required to submit a written request at least sixty
(60) days before the date on which such
- 12 -
<PAGE>
Participant wishes to commence receiving such Benefit. Such Benefit
shall commence the first day of the calendar month so selected.
5.4 DISABILITY RETIREMENT BENEFIT.
A Participant who becomes disabled and who is eligible for and
receiving benefits under the Long Term Disability Plan may retire on
the later of the first day of the month coinciding with or next
following:
(a) The date such Participant attains age 65, or
(b) The date such Participant ceases to receive benefit payments
under the Long Term Disability Plan.
The Plan Benefit payable to a Participant who retires on a
Disability Retirement Date shall consist of such Participant's Accrued
Benefit, determined as of the date such Participant commenced receiving
benefits under the Disability Retirement Plan. Notwithstanding any
contrary Plan provision, a Participant who becomes disabled on or after
attaining age 55 but ceases to be disabled before such Participant's
Disability Plan Benefit would have otherwise commenced shall be
eligible to receive an Early Retirement Benefit as provided in Section
5.2 hereof.
- 13 -
<PAGE>
ARTICLE VI
DISTRIBUTION OF BENEFITS; LIMITATIONS
6.1 COMMENCING PAYMENT. A Participant shall initiate the process of
receiving a Plan Benefit by applying for it, in a writing dated and
signed by such Participant and mailed or otherwise delivered to the
Plan Administrator. Such application, when made, shall thereupon be
treated as a claim for benefits made in accordance with Section 8.2
hereof.
6.2 DELAY OF DISTRIBUTION TO PRESERVE ALLOWABLE DEDUCTION. In the event the
Plan Administrator, after consultation with the Committee but otherwise
acting in its sole and absolute discretion, determines that one (1) or
more of the payments to be made to a Participant hereunder cannot be
claimed by the Company as an allowable federal income tax deduction
(whether on account of the limitations imposed by Section 162(m) or
Section 280G of the Code, or otherwise), the Plan Administrator shall
cause such payment(s) to be suspended and deferred, and paid as such
time and in such manner so as to permit the Company to claim such
payment(s) as an allowable deduction for federal income tax purposes.
In the event any such payment is suspended or deferred hereunder to
avoid the limitations imposed by Section 162(m) of the Code, and such
period of suspension or deferment exceeds thirty-six (36) months,
interest shall accrue on such payment at the rate of one percent (1%)
per month, simple interest, for each month or fraction thereof; such
interest shall accrue from the date of initial suspension or deferment
and shall be paid with such payment, when made to or in respect of such
Participant.
6.3 PROTECTION OF COMPANY INTERESTS. A Participant's right to receive a
Plan Benefit hereunder is conditioned upon such Participant engaging in
conduct (or where applicable, refraining from conduct) so as to
protect, and not impair, the Company's interests while covered by and
benefiting from the Plan. Each Participant accordingly shall observe
and comply with the following rules, covenants and restrictions,
commencing with the date such Participant first commences participation
hereunder and ending with the second (2nd) anniversary of the date such
Participant separates from employment with the Company and all
Subsidiaries and Affiliates (the "Restricted Period"):
- 14 -
<PAGE>
(a) Disclosure of Confidential Information. A Participant shall
keep in strict confidence and not directly or indirectly make
known, divulge, reveal, furnish, make available or use (except
for use in the regular course of such Participant's duties on
behalf of the Company) any "Confidential Information," as
herein defined, and shall return to the Company any Company
property or documents and any other documents or property
containing or constituting Confidential Information in such
Participant's possession, custody or control as and when such
Participant separates from Company employment or ceases to
perform any personal services therefor. For this purpose, the
term "Confidential Information" shall mean that non-public
data and other information (regardless of the form such
Information takes) which the Company determines to be a
strategic asset of the Company (specifically including,
without limitation, customer and personnel lists, licensing
agreements, materials sources and costs, and delivery and
distribution sources, methods and costs) the disclosure or
release of which would financially harm or impair the Company.
(b) Solicitation of Workforce. A Participant will not directly or
indirectly solicit, encourage, or otherwise attempt to
influence, any employee or representative of the Company or
consultant to the Company, or of or to any Subsidiary or
Affiliate, to terminate his or her relationship, employment or
other association with the Company or such Subsidiary or
Affiliate (whether or not the purpose of such solicitation,
encouragement or attempt at influence is to become an
employee, representative or consultant of such Participant or
any organization employing, owned by or associated with such
Participant).
(c) Solicitation of Customers. A Participant will not directly or
indirectly, on his or her own behalf or on the behalf of any
other person, firm or entity, solicit or attempt to solicit,
or attempt to divert the patronage or business of, any current
customer of the Company, any customer that has engaged in
business with the Company during the Restricted Period, or any
prospective customer to whom (or, to which) the Company has
presented a proposal to provide goods or services during the
Restricted Period, or any party or entity related to any such
customer or
- 15 -
<PAGE>
prospective customer (including but not limited to any
employees or agents of any such customer or prospective
customer).
(d) Disparagement of Company, Officers and Directors. Other than
with the prior consent of the Company, a Participant will not
communicate any false, critical, disparaging or otherwise
negative comment(s), statement(s) or information of and
concerning the Company, or any of its directors, officers,
employees or shareholders, or which could reasonably be
perceived or construed as critical, disparaging or otherwise
negative, other than comments, statements and information made
and published to an individual who is (at the time of such
communication) then a Company director, officer, employee or
shareholder; provided, that this provision shall not preclude
a Participant from testifying under oath in a legal or
comparable administrative proceeding.
(e) Appropriation of Business Opportunities. A Participant will
promptly disclose and report to Company superiors (and where
applicable, the Board) any and all business opportunities
brought to such Participant (whether internal to the Company,
or from persons or parties not associated or affiliated with
the Company) or of which such Participant is made or becomes
aware, which directly or indirectly relate to or have any
commercial, artistic, or conceptual connection to any of the
Company's current or contemplated businesses (as discussed or
described in any of the Company's strategic or business
plans).
(f) Sanctioned Personal Conduct. A Participant will refrain from
committing, or attempting to commit, any felony; and refrain
from taking any other action or engaging in any other conduct
that results in the forfeiture of property or a property
interest (regardless whether imposed upon such Participant, or
the Company, or both).
In the event the Committee, in its sole and absolute discretion,
determines that a Participant has violated one (1) or more of the
covenants and restrictions set forth in this Section 6.3, then except
as provided in Section 6.6 herein, such Participant shall immediately
forfeit any and all right to any Plan Benefit for which such
Participant
- 16 -
<PAGE>
otherwise would qualify hereunder; provided, that no Participant shall
forfeit a Plan Benefit hereunder, or any part thereof, on account of
having engaged in (or, agreed to engage in) conduct protected by
Section 806 of the Sarbanes-Oxley Act (18 U.S.C. Section 1541A, et
seq.) and related rulings and regulations.
6.4 POST-EMPLOYMENT PROHIBITIONS. In addition to the restrictions set forth
in Sections 6.3 hereof and the obligations imposed under Section 6.5
hereof, a Participant's right to receive a Plan Benefit hereunder is
conditioned upon such Participant refraining from any of the following
conduct, following the termination of such Participant's employment by
the Company (and all Subsidiaries and Affiliates) and for period of ten
(10) years thereafter:
(a) Acquires five percent (5%) or more of the voting stock in a
corporation (or a comparable capital and profits interest in
an organization that is not a corporation) that competes with
the Company, or, without the written consent of the Company,
provides personal services to such corporation or other
organization as a director, officer, employee, consultant,
advisor, agent, member, partner or owner thereof; provided,
that for purposes of this provision, a corporation or other
organization will be considered to "compete" with the Company
if, at the time of such Participant's retirement or separation
from Company employment and as determined by the Committee,
such corporation or other organization is substantially
engaged in any one (1) or more of the production,
merchandising, marketing, e-commerce or other business
activities in which the Company is then engaged; and
(b) Fails or refuses to provide personal services, as a
compensated consultant to the Company upon the Company's
reasonable written request; and
(c) Commences, or threatens to commence, an action seeking
recovery of a Plan Benefit that has been completely or
partially denied hereunder or to enforce the terms of the
Plan, without first signing a binding confidentiality and
nondisclosure agreement that commits such Participant to not
disclose, publish or otherwise
- 17 -
<PAGE>
reveal (other than pursuant to court order, or under oath) any
financial, business or personnel information of and regarding
the Company, or any Subsidiary or Affiliate thereof, or any of
their respective directors, officers, agents and employees, or
the fact of any dispute involving such Participant's claim to
a Plan Benefit.
In the event the Committee, in its sole and absolute discretion,
determines that the Participant has violated any or all of the above
conditions, then except as specifically provided in Section 6.6 hereof,
the Company shall be relieved of any and all obligation to pay, or
continue payment of, any Plan Benefits to or on behalf of such
Participant.
6.5 OWNERSHIP OF INTELLECTUAL PROPERTY; ASSIGNMENT OF CERTAIN RIGHTS. So
long as an Executive remains a Participant in the Plan and remains
employed by the Company or a Subsidiary or Affiliate thereof, such
Participant shall assign and transfer to the Company (or such
Subsidiary or Affiliate, where applicable law so requires or permits)
any and all discoveries, inventions and improvements, whether or not
patentable, which such Participant at any time during such
Participant's employment by the Company has made or has conceived, or
may make, conceive, acquire or suggest, whether solely or jointly with
others, and which (i) relates to any subject matter within the field in
which such Participant provided personal services to the Company or
such Subsidiary or Affiliate, and involved the use of resources
belonging to the Company (or Subsidiary or Affiliate, as applicable).
Such Participant also shall promptly disclose to the Company (or such
Subsidiary or Affiliate, where applicable) any and all such
discoveries, inventions and improvements; and, without charge to the
Company (or such Subsidiary or Affiliate) but at its expense, shall
execute, acknowledge and deliver all documents and information
(including applications for patents) necessary to obtain patents for
such inventions in any and all countries, and to vest title thereto in
the Company (or such Subsidiary or Affiliate).
In the event a Participant is determined by the Committee, in its sole
and absolute discretion, to have violated any of the above conditions,
then except as specifically provided in Section 6.6 hereof, the Company
shall be relieved of any and all obligation to
- 18 -
<PAGE>
pay, or continue payment of, any Plan Benefits to or on behalf of such
Participant.
6.6 CONSTRUING FORFEITURE PROVISIONS; DISCRETION TO IMPOSE LESSER SANCTION.
The Committee, acting in its sole and absolute discretion (but
otherwise in accordance with the provisions of this Section 6.6), shall
determine whether (and, to what extent) a Participant has violated any
or all of the provisions of Section 6.3, Section 6.4 and/or Section 6.5
hereof, and if so, whether such conduct warrants imposition of a
limited monetary sanction, equal in amount to the lesser of (a)
one-half (1/2) of the present value of the Participant's Plan Benefit
(determined as of the date of the violation(s)), or (b) one hundred
thousand dollars ($100,000), as a set off against the Plan Benefit
otherwise payable and in lieu of the complete forfeiture of such
Participant's interest (as otherwise prescribed in Sections 6.3, 6.4
and 6.5 herein, as applicable). Notwithstanding the generality of the
preceding sentence, the Committee shall be entitled to impose the
limited monetary sanction described herein only if the Committee,
acting in consultation with counsel, determines that the financial
impact on the Company from such violation(s) can be expected to be less
than two hundred fifty thousand dollars ($250,000) in the aggregate.
- 19 -
<PAGE>
ARTICLE VII
DEATH BENEFIT
7.1 ELIGIBILITY FOR DEATH BENEFIT. A death benefit shall be paid to the
Beneficiary of any Participant who dies under the following
circumstances:
(a) A Participant then eligible to elect to retire and receive an
Early or Normal/Late Retirement Benefit (including a
Participant receiving benefits under the Long Term Disability
Plan who had attained age 55 on or prior to the date of his or
her disability); or
(b) A Participant who has retired with an Early Retirement Benefit
but has not yet commenced receiving a Plan Benefit; or
(c) A former Executive with a vested interest in the Plan
(determined in accordance with Section 5.3 hereof), who dies
on or after attaining age 55; or
(d) A Participant who has retired and commenced receiving a Plan
Benefit, but dies before a total of one hundred eighty (180)
monthly payments have been made.
Where a Participant dies before payment of such Participant's
Plan Benefit has commenced, payment of a death benefit (as prescribed
in this Section) shall commence as of the first day of the calendar
month coincident with or next following the date such Participant dies;
provided, that if such Participant dies before attaining age 55,
payment of such death benefit shall commence as of the first day of the
calendar month coincident with or next following the date such
Participant would have attained age 55 (had such Participant survived
until their 55th birthday).
7.2 AMOUNT OF DEATH BENEFIT. The death benefit payable to the Beneficiary
of a deceased Participant shall consist of one hundred eighty (180)
monthly payments, commencing with the first day of the calendar month
next following the date application is made for a death benefit
hereunder, less any payments made while such deceased Participant was
still alive (per Section 7.1(d), above). For death benefits not payable
under the circumstances described in Section 7.1(d) hereof, the monthly
amount payable shall be
- 20 -
<PAGE>
calculated as of the date payment of such death benefit commences, as
if the deceased Participant had retired (or, commenced receiving his
Plan Benefit) on such date and had then died, based on whichever
benefit described in Article V would have then applied.
7.3 DISCRETION TO ACCELERATE. The Plan Administrator, after consulting with
the Committee but otherwise acting in its sole and absolute discretion,
may accelerate and pay any Death Benefit becoming payable hereunder, in
a single lump sum representing the present value of such Death Benefit,
less applicable withholding. When determining the present value of a
Participant's Death benefit for this purpose, the Plan Administrator
shall use the interest rate in effect for United States Treasury
Department debt securities having a maturity of ten (10) years, based
on the auction of Treasury securities held on the date coincident with
or next preceding the date of such Participant's death.
- 21 -
<PAGE>
ARTICLE VIII
ADMINISTRATION; PLAN MODIFICATION
8.1 PLAN ADMINISTRATOR.
(a) The Company's Senior Vice President - Human Resources shall
act as the Plan Administrator; provided, that if no individual
holds such position within the Company, or in the absence of
such a position within the Company, such other Company officer
as the Committee shall in writing direct.
(b) The Plan Administrator shall be responsible for the Plan's
general administration and for carrying out the provisions
hereof. The Plan Administrator shall have all needed
discretionary power, authority and control to carry out the
Plan's provisions, including the power and authority to (i)
determine all questions relating to whether an individual
qualifies as a Participant hereunder, and whether any person
found to be a Participant or a Beneficiary hereunder qualifies
for or is otherwise entitled to a benefit hereunder
(including, without limitation, deciding any and all questions
pertaining to claims for benefits made in accordance with
Section 8.2 hereof), (ii) resolve any and all questions
arising under the Plan, including any questions of
construction, and (iii) take such further action as the Plan
Administrator deems advisable in the administration of the
Plan. Except as specifically provided in Section 8.2 hereof
(relating to the appeal of adverse benefit determinations),
decisions by the Plan Administrator, made in good faith, shall
be final, conclusive and binding upon all parties.
(c) In the event the Plan Administrator qualifies as a Participant
hereunder, the Plan Administrator shall not make or
participate in any decision affecting the Administrator as a
Participant; rather, the Committee shall make all
determinations with regard to such Participant, as though the
Committee were the Plan Administrator, and any appeal or the
Committee's decisions shall be reviewed (if at all) by the
Board.
- 22 -
<PAGE>
(d) The Plan Administrator from time to time may allocate or
delegate to any other persons or organizations any or all of
its rights, powers, duties and responsibilities with respect
to the operation and administration of the Plan. Any such
allocation or delegation shall be made in writing and shall be
terminable upon such notice as the Plan Administrator deems
reasonable and proper under the circumstances.
8.2 CLAIMS PROCEDURES. Any application for benefits made under the Plan
(whether by or on behalf of a Participant or by a Beneficiary) shall
strictly comply with the following procedures:
(a) Making A Claim. Any application for benefits made by a
claimant shall be made by sending a letter to the Plan
Administrator by first-class mail, identifying the benefit(s)
being sought, the terms of the Plan that entitle the claimant
to apply for such benefit(s), and such other information as
may be reasonably needed to confirm the identity of the
claimant and such claimant's eligibility for said benefit.
Within ninety (90) days following receipt, the Plan
Administrator shall respond to such application letter either
(i) by complying with the terms set forth in the application,
in their entirety, or (ii) by requesting a sixty (60)-day
extension to further consider such application, or (iii) by
sending a letter denying some or all of the application, in
the manner described in subparagraph (b) hereof. Any claimant
whose application has been wholly or partly denied, or
believes that such application has been wholly or partly
denied, may file an appeal in the manner described in
subparagraph (c) hereof.
(b) Denying A Claim. Unless an application for benefits is allowed
in total by the Plan Administrator, the Plan Administrator
shall, within ninety (90) days after such claim is filed (plus
an additional period of sixty (60) days, if required for due
consideration, so long as notice of such extension is provided
within the initial ninety (90)-day period), provide a letter
to the claimant, by first class mail, totally or partially
denying such application. Such notice shall be written in a
manner calculated to be understood by the claimant and shall
include (i) the specific reasons for denying the application,
(ii) specific reference to the Plan provisions
- 23 -
<PAGE>
upon which the denial of the application is based, (iii) a
description of any additional materials or information needed
to perfect the application and an explanation why such
material or information is necessary, and (iv) an explanation
of the review procedure specified in subparagraph (c) hereof.
A claimant who does not receive any such notice from the Plan
Administrator within one hundred (100) days after post-marking
such application letter is entitled to conclude that such
application has been denied.
(c) Appeals. Within sixty (60) days after a claimant's application
is denied, such claimant may appeal such denial by filing with
the Committee (as a whole) a written request for review of
that denial. In the event of such an appeal, such claimant
shall be entitled to submit written comments, documents,
records and other information pertinent to such claimant's
claim(s), and have a reasonable opportunity to examine (free
of charge) all documents, records and other information relied
upon by the Plan Administrator when considering such claim(s).
If a claimant files an appeal within such sixty (60)-day
period, the Committee shall conduct a full and fair review of
such appeal and mail or deliver to such claimant a written
decision on the matter, based on the facts and the Plan's
pertinent provisions within sixty (60) days after receiving
the request for review (unless special circumstances require
an extension of up to sixty (60) additional days, in which
case the Committee shall provide written notice of such
extension prior to the commencement of such extension). Any
adverse decision of an appeal shall be written in a manner
calculated to be understood by the claimant, shall state the
specific reasons for the decision and the specific Plan
provisions on which the decision is based and shall, to the
extent permitted by law, be final and binding on all
interested persons. During any such review, an appealing
claimant shall be given the opportunity to review those files
and documents pertinent such claimant's application, and be
entitled to submit comments and argument in writing. If a
decision on review is not furnished within such sixty (60) day
or such one hundred-twenty (120)-day period, as the case may
be, such claimant is entitled to conclude that the decision by
the Plan Administrator has been upheld by the Committee,
following its review.
- 24 -
<PAGE>
8.3 INDEMNIFICATION. The Company shall defend, indemnify and hold harmless
the Board and its constituent members, and the Committee and its
constituent members, and the Plan Administrator (and its delegatee(s),
if any) from and against any and all liabilities, claims, demands,
judgments, tax liens, settlement payments, losses, costs, damages, and
expenses whatsoever (including reasonable attorneys', consultants' and
other professional fees and disbursements of every kind, nature and
description) that such indemnified party may sustain, suffer, or incur
in connection with, or that may result from, the administration of the
Plan (including participation in tax liens and levies, bankruptcy
proceedings, garnishment actions, and foreclosures and other
creditor-initiated proceedings), so long as such liability, claim,
demand, judgment, settlement expense, loss, cost, damage or expense
does not involve bad faith or gross neglect of duty on the part of the
indemnified party. The Company may, but shall not be required to,
provide such indemnification through the purchase of fiduciary or
comparable errors and omissions insurance.
8.4 TERMINATION, SUSPENSION OR AMENDMENT OF THE PLAN. The Board may, in its
sole discretion, amend, suspend, modify, discontinue or terminate this
Plan at any time. No such amendment, suspension, modification,
discontinuation, or amendment shall adversely affect:
(a) The benefits or rights thereto of any Participant that
retired, whether or not such Participant has commenced to
receive a Plan Benefit; or
(b) The right of any Participant to receive the amount, on an
immediate or deferred basis, computed under Article V to which
such Participant would be entitled under this Plan prior to
its suspension, termination or amendment taking into account
such person's age, Service and Final Average Compensation as
of the date of such termination, suspension or amendment:
provided, that subsections (a) and (b) above shall not apply to any
such termination, suspension or amendment if a change has occurred in
the law (or in its interpretation) which would adversely affect the
Company or such Participant if this Plan were to remain in effect and
unamended in its form immediately prior to such occurrence.
- 25 -
<PAGE>
ARTICLE IX
GENERAL PROVISIONS
9.1 PLAN IS UNFUNDED; COMPANY HAS NO PREFUNDING OBLIGATION. All interests
in the Plan are unfunded. Neither the Company nor any Subsidiary or
Affiliate has any obligation to establish any special or separate fund,
or segregate any of its assets in order to assure the payment of any
amounts due or becoming due and payable under the Plan. However, to
provide for the discharge of its obligations under the Plan, the
Company in its sole discretion may settle and establish a trust or
other fund in its name, or acquire property or contract rights in its
name. The right of a Participant or a Beneficiary to receive a Plan
distribution hereunder shall constitute an unsecured claim against the
Company's general assets, and no Participant or Beneficiary shall have
any right in or against any specific Company assets.
9.2 EXPENSES. All costs and expenses incurred in the administration of this
Plan shall be paid by the Company, except as specifically provided in
Section 9.3 hereof.
9.3 NON-ALIENABILITY OF PLAN INTERESTS.
(a) In General. Except as specifically provided in this Section
9.3, no Participant or Beneficiary shall have any right,
directly or indirectly, to alienate, assign, anticipate or
encumber any Plan interest or amount that may be payable
hereunder, and no amount or Plan interest shall be subject to
voluntary or involuntary alienation, assignment, encumbrance
or garnishment, whether by process of law, in equity, or
otherwise. Any such attempted alienation, assignment,
encumbrance, or garnishment shall be null and void and of no
effect. In the event any attempt by a Participant or
Beneficiary is made to alienate, pledge or charge any such
interest of any such benefit for any debt, liabilities in tort
or contract, or otherwise, contrary to the prohibitions of
this Section, the Plan Administrator in its discretion may
suspend or forfeit the interest of such person and during the
period of such suspension, or in the case of forfeiture, the
Plan Administrator shall hold such interest for the benefit
of, or shall make the benefit payments to which such
Participant would otherwise be entitled to, to the
- 26 -
<PAGE>
Beneficiary or to some member of the Participant's or
Beneficiary's family, acting in its sole and exclusive
discretion.
(b) Domestic Relations Orders. Notwithstanding the provisions of
subsection (a) hereof, a Participant's Plan 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
Section 414(p) of the Code 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 Plan Administrator in
connection with such QDRO shall be charged against such
Participant's Plan benefit, as an offset in accordance with
the provisions of subsection (c) hereof, prior to effecting
any such division or partition.
(c) Set Off Rights. Notwithstanding the generality of the
foregoing, the Company shall have the unrestricted right to
set off against or recover out of any payments or benefits
becoming payable to or for the benefit of a Participant, at
the time such payments or benefits otherwise become payable
hereunder, any and all amounts owed to the Company, or any
Subsidiary or Affiliate, by such Participant. Any and all
amounts that the Company recovers or withholds as a set off
hereunder, which are attributable to amounts owed (or, claimed
to be owed) to a Subsidiary or an Affiliate, shall be received
and held by the Company as agent for such Subsidiary or
Affiliate (as applicable).
9.4 NO IMPLIED RIGHTS. No Participant or any other person shall have any
legal or equitable right or interest in the Plan not expressly provided
for hereunder.
9.5 NO CONTRACT OF EMPLOYMENT. The Plan does not constitute a contract of
employment, nor is it evidence of the existence of any contract of
employment, or any contractual or other right to continued employment,
between an individual and the Company (or where applicable, a
Subsidiary or Affiliate). In addition, the Plan (including specifically
and without limitation, any participation agreement that an eligible
Executive signs when
- 27 -
<PAGE>
commencing participation) shall not be held to have created, or
evidenced, any right on the part of any such Executive (whether or not
then a Participant) to be employed, or to continue to be employed, by
the Company or by any Affiliate or Subsidiary thereof. Rather, the
Company (or where relevant, the actual employer of any individual,
whether or not then an Executive) has the right to terminate the
employment or personal services of such individual (whether or not then
or at any time an Executive, and whether or not then a Participant) at
any time, and for any reason or no reason, in the absence of a written
agreement expressly providing to the contrary.
9.6 GOVERNING LAW. The provisions of this Plan shall be interpreted and
construed in accordance with the laws of the State of Ohio without
regard to conflicts of laws, but only to the extent not preempted by
relevant federal law.
9.7 TAX WITHHOLDING. Where and to the extent the accrual of Plan benefits
by or for a Participant, and/or the payment and distribution of Plan
rights or interests to a Participant or Beneficiary, causes a federal,
state or local tax withholding obligation to be imposed upon the
Company or the Plan Administrator, or some other party (including
without limitation, a participating Subsidiary or Affiliate), the
Company (or such other party) shall have the right to withhold such
amounts from any Plan benefit(s) due or becoming due and payable to
such Participant or Beneficiary, and to the extent not unlawful, from
any regular remuneration paid by the Company to a Participant.
9.8 SEVERABILITY. In the event that any one or more of the Plan provisions
is held to be invalid, illegal, or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other Plan
provision, and the Plan thereafter shall be construed as if such
invalid, illegal, or unenforceable provisions had never been contained
herein. In such event, the Committee will designate and substitute a
lawful provision that most nearly accomplishes the Company's intent.
9.9 NO TAX GUARANTEES. While the Plan is designed to provide deferred
compensation to Executives who qualify as Participants hereunder, the
Company makes no representation, warranty or guarantee of any federal,
state or local tax consequences of participation in the Plan to any
Participant or designated Beneficiary.
- 28 -
<PAGE>
IN WITNESS WHEREOF, the undersigned, a duly elected officer of American
Greetings Corporation, has executed his Plan as of the first (1st) day of March,
2004, by the authority and at the direction of the Board of Directors of
American Greetings Corporation.
/s/ PAMELA L. LINTON
-------------------------------------------
Name PAMELA L. LINTON
Title SENIOR VICE PRESIDENT-HUMAN RESOURCES
- 29 -
<PAGE>
AMERICAN GREETINGS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SCHEDULE A
REDUCTION FACTORS FOR BENEFITS
PAYABLE PRIOR TO AGE 65
AGE* AT WHICH REDUCTION
BENEFITS BEGIN FACTOR
-------------- ------
65 0.00%
64 2.88
63 5.76
62 8.64
61 11.52
60 14.40
59 17.28
58 20.16
57 23.04
56 25.92
55 28.80
- For completed months of age, straight line interpolation shall be used.