AGREEMENT FOR DEFERRED COMPENSATION BENEFITS
EXHIBIT 10.5
Participant Name: «First» «Last»
AGREEMENT FOR
DEFERRED COMPENSATION BENEFITS
DEFERRED COMPENSATION BENEFITS
American Greetings Corporation (the “Employer”) has established the American Greetings Corporation
Executive Deferred Compensation Plan (together with any amendments thereto, the “Plan”), under
which the Employer and <<NAME>> (the “Participant”) may negotiate the portion of such
Participant’s annual Compensation (as defined under the Plan) to be paid as Deferred Compensation
Benefits (as defined by the Plan) pursuant to the terms of the Plan. To defer a portion of such
Compensation (as defined under the Plan) consisting of all or a portion of any incentive award the
Participant qualifies to receive under the Employer’s annual performance bonus program (the
“Incentive”), the Participant and the Employer hereby enter into this Agreement for Deferred
Compensation Benefits (the “Agreement”). In consideration of the mutual covenants contained within
this Agreement and subject to the terms of the Plan, the Employer and the undersigned Participant
hereby agree as follows:
Section 1 — Deferred Amount
The Participant hereby elects to defer an amount equal to ___% or $___of his or her
Incentive for the fiscal year ending
. In so doing, the Participant understands that if no
Incentive is otherwise payable, no deferral will occur; and that if a fixed amount is elected, the
lesser of the fixed amount or the actual amount of Incentive award (if any) will be deferred. Any
deferral made under this Agreement will be credited to an account bearing the Participant’s name
(hereinafter referred to as the “Account”), net of all required payroll deductions.
Section 2 — Deferral Period
The Participant’s Deferred Compensation Benefits shall be deferred until:
One (1) year from the ending date set forth in Section 1.* | ||||
Three (3) years from the ending date set forth in Section 1. | ||||
Five (5) years from the ending date set forth in Section 1. | ||||
Participant’s Separation from Service (as defined by Internal Revenue Code Section 409A and related regulations).** | ||||
* Note: A Participant may not re-defer a one-year deferral.
**If Separation from Service is not elected by the Participant, the Plan may require the
Participant to wait to receive his or her Deferred Compensation Benefits until the date
selected above.
Section 3 — Form of Benefits Payment
Upon Separation from Service, the Participant’s Deferred Compensation Benefits will be paid to the
Participant in either a lump sum payment, five annual installments, or ten annual installments.
(See Attachment 1). Please indicate below your choice of the Form of Benefits Payment upon
Separation from Service.
Lump Sum Payment. | ||||
Payment over five (5) years, as outlined in Attachment 1. | ||||
Payment over ten (10) years, as outlined in Attachment 1. | ||||
Except as provided for under Section 1 above, the Participant has the option of either re-deferring
his/her compensation (subject to the federal and state laws and regulations governing re-deferral),
or receiving payment of the Deferred Amount, plus any investment earnings paid in a lump sum at the
end of the Deferral Period selected in Section 2.
Section 4 — Amendments
This Agreement may not be amended or modified by either party, except by a written document signed
by both parties in accordance with the terms of the Plan.
Section 5 — Term of Agreement
The term of this Agreement shall be from the last date set forth below until all amounts in the
Participant’s Account have been paid out.
Section 6 — Rights and Obligations
The Participant’s right to Deferred Compensation Benefits and the Employer’s obligations to pay
such Deferred Compensation Benefits shall be governed by the Plan to the extent not addressed in
this Agreement. In the event of a conflict between the terms of this Agreement and the Plan, the
Plan shall govern.
By signing this Agreement, the Participant acknowledges that: this election is based on guidance
currently available for determining the requirements imposed on the Plan by the American Jobs
Creation Act of 2004 (the “Act”), determined as of the date of this Agreement; and that the
Employer expects to amend the Plan to bring the Plan into compliance with new guidance expected to
be promulgated under the Act. Employer will operate the Plan during 2005 based on its
understanding of the Act’s rules.
AGREED TO BY: |
||
«First» «Last»
|
Employer Signature | |
Date
|
Date |
2
Attachment 1
Form of Benefits Payment Options.
Upon Separation from Service, the Participant’s Deferred Compensation Benefits will be paid as
follows:
Option 1. Lump Sum Distribution paid within 30 days after the date that occurs six (6)
months after Separation from Service.
Option 2. Five annual installments according to the following schedule.
Payment Date | Payment Amount | |||
Payment Number 1
|
within 30 days after the date that occurs six (6) months after Separation from Service | 20% of the then current balance | ||
Payment Number 2
|
January 15 of the calendar year following the calendar year of Payment Number 1 | 25% of the then current balance | ||
Payment Number 3
|
Twelve (12) months after the date of Payment Number 2 | 33% of the then current balance | ||
Payment Number 4
|
Twelve (12) months after the date of Payment Number 3 | 50% of the then current balance | ||
Payment Number 5
|
Twelve (12) months after the date of Payment Number 4 | current balance |
Option 3. Ten annual installments according to the following schedule.
Payment Date | Payment Amount | |||
Payment No. 1
|
1st Anniversary of Separation from Service | 1/10 of Account Balance | ||
Payment No. 2
|
2nd Anniversary of Separation from Service | 1/9 of Account Balance | ||
Payment No. 3
|
3rd Anniversary of Separation from Service | 1/8 of Account Balance | ||
Payment No. 4
|
4th Anniversary of Separation from Service | 1/7 of Account Balance | ||
Payment No. 5
|
5th Anniversary of Separation from Service | 1/6 of Account Balance | ||
Payment No. 6
|
6thAnniversary of Separation from Service | 1/5 of Account Balance | ||
Payment No. 7
|
7thAnniversary of Separation from Service | 1/4 of Account Balance | ||
Payment No. 8
|
8thAnniversary of Separation from Service | 1/3 of Account Balance | ||
Payment No. 9
|
9thAnniversary of Separation from Service | 1/2 of Account Balance | ||
Payment No. 10
|
10thAnniversary of Separation from Service | Entire Account Balance |
3
CONFIDENTIAL
Date: |
||
To:
|
«Name» | |
From: |
||
Subject:
|
Executive Deferred Compensation Plan |
The Executive Deferred Compensation Plan allows participants to defer various elements of their
compensation for one year, three years, five years, or until separation from American Greetings.
Six months prior to the end of the deferral periods, the participant has three choices. Elect to:
1. | Receive a lump sum distribution including investment earnings (losses) at the end of the deferral period, | ||
2. | re-defer the balance, or | ||
3. | Receive discounted options pursuant to the American Greetings Corporation Executive Third Party Option Plan in lieu of deferred compensation at the end of the deferral period |
We are approaching the deadline to elect one of the choices above for the following previously
deferred item(s):
«Item_Deferred»
If you wish to re-defer these items or receive discounted options in lieu of your deferred
compensation account, please indicate your choices on the attached Amendment to Agreement for
Deferred Compensation Benefits.
If you wish to receive payment of any of these items, please indicate below.
Pay Now ___«Item_Deferred»
If you choose not to re-defer, the deferred income, plus investment earnings, will be paid to you
in accordance with your Agreement.
If your election is not received by ___, I will assume you have chosen to
re-defer all of the above for the same period of time as the original deferral period, to be
reviewed again at the expiration of that period.
Feel free to call me on extension ___if you have any questions.
Participant Signature |
4