Employment Agreement - American Greetings Corp. and Edward Fruchtenbaum
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") is made this 18th day of May, 1992,
between Edward Fruchtenbaum ("Fruchtenbaum") and American Greetings Corporation
("AG" or "Company").
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. POSITION: As of March 1, 1992, Fruchtenbaum will be employed by AG
as the Company's President and Chief Operating Officer. Fruchtenbaum will
perform any and all duties commensurate with those positions.
2. TERM: This Agreement will be in effect for "rolling" three (3)
year terms. The initial three (3) year term will commence on March 1, 1992,
and will terminate on February 28, 1995; successive three (3) year terms will
commence on March 2, 1992, and on each day thereafter, and will terminate three
(3) years from each commencement date.
3. TERMINATION: It is understood that Fruchtenbaum's employment with
AG, whether pursuant to this Agreement or otherwise, is terminable at-will, and
may be terminated by either party at any time for any reason or for no reason.
This Agreement will end on the date that Fruchtenbaum ends his employment with
AG ("Termination Date"). Unless he voluntarily resigns, Fruchtenbaum will
continue to receive compensation pursuant to paragraph 4(a) below, at the then
current rate, for three (3) years after the Termination Date. As of the
Termination Date, Fruchtenbaum will no longer be an employee of AG and will not
be entitled to or receive any benefits or privileges of employment, except for
those provided herein and those post-employment benefits generally afforded
such former employees under AG's then current policies and procedures.
4. COMPENSATION: During the term of this Agreement, in addition to
the other regular benefits offered to Executive Officers (as designated by the
AG Board of Directors or otherwise), including but not limited to, the profit
sharing, 401-K, stock option and supplemental executive retirement plans,
health benefits and life insurance, Fruchtenbaum will receive the following
salary and benefits:
a. Beginning March 1, 1992, Fruchtenbaum will be paid an annual
base salary of $350,000.00, less payroll taxes and other withholdings as
required by law ("Base Salary"). Such Base Salary may be changed from time to
time at the discretion of the AG Board of Directors. Unless Fruchtenbaum
voluntarily resigns,
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the then current Base Salary will be paid for three years from the Termination
Date, but Fruchtenbaum will not be eligible for bonuses under subparagraphs
4.b. and 4.c. below. If Fruchtenbaum voluntarily resigns, he will receive no
further Base Salary or bonuses under subparagraphs 4.b. and 4.c. below after
the Termination Date. AG agrees to promptly compensate Fruchtenbaum for any
PRO RATA shortage in Base Salary for the period between March 1, 1992 to the
present.
b. For each AG fiscal year, March 1 through February 28
("Fiscal Year") in which AG pays its officers and certain key employees a cash
bonus pursuant to the Company's regular Executive Incentive Compensation Plan,
Fruchtenbaum will receive such a bonus based upon a target bonus of 40% of his
then current annual Base Salary.
c. Fruchtenbaum shall further be eligible to receive a cash
bonus, if and when paid, under the terms of AG's current three year Special
Bonus Plan or other future long-term executive incentive compensation plans for
officers and certain key employees, in accordance with its/their terms. If the
Special Bonus Plan is not renewed or a similar plan is not instituted at the
end of the current three year Special Bonus Plan period, AG agrees to promptly
review, but not necessarily act upon, the need for such a bonus as an element
of Fruchtenbaum's compensation package.
d. 1. On each of February 28, 1993, February 28, 1994, and
February 28, 1995, AG will grant Fruchtenbaum 5,000 shares of AG
Common Stock, which may be in either Class A or Class B Shares, or any
combination thereof, at AG's election ("Shares"). Fruchtenbaum's
ownership of each block of 5,000 Shares will vest at the rate of 20%
as of the end of each fiscal year, with the first 20% vesting on
February 28, 1993, and each succeeding 20% vesting on the last day of
each following fiscal year, until each block is 100% vested.
2. Beginning on April 12, 1996, and thereafter on
the last business day preceding April 15th following the end of
each fiscal year ("Grant Date"), AG will annually grant
Fruchtenbaum 5,000 Shares if the Company, as a whole, has attained its
profit goal for the recently ended fiscal year, and 3,000 Shares if it
has not. If AG grants 5,000 Shares because it has attained its profit
goal for the respective fiscal year, Fruchtenbaum's ownership of such
block will vest at the annual rate of 20% over five years, with the
first 20% vesting on the Grant Date and each succeeding 20% vesting on
each succeeding anniversary of the Grant Date, until the block is 100%
vested. If AG grants only 3,000 Shares because
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it has not attained its profit goal for the respective fiscal year,
Fruchtenbaum's ownership of such block will vest at the annual rate of
33-1/3% over three years, with the first 33-1/3% vesting on the Grant
Date and each succeeding 33-1/3% vesting on each succeeding
anniversary of the Grant Date, until the block is 100% vested.
3. The following shall apply to Shares granted pursuant
to this subparagraph 4.d.:
i) Declared dividends will be paid on only
vested Shares.
ii) Voting rights will be exercisable on only
vested Shares.
iii) Subject to applicable state and federal law,
including but not limited to Section 16 of the Securities Act of
1934, Shares may be sold or otherwise disposed of at any time on
or after they have vested.
iv) If Fruchtenbaum voluntarily resigns his
employment with AG, all Shares that have been granted, but have not
vested, will be forfeited as of the effective date of such
resignation.
v) If Fruchtenbaum retires or AG terminates
Fruchtenbaum's employment, any Shares that have been granted and
would otherwise have vested annually at the applicable 20% or
33-1/3% rate, as described above, over the three (3) year period
beginning as of the date that Fruchtenbaum retires or AG mails or
delivers written notice of termination to Fruchtenbaum, as the case
may be ("Notice Date"), shall instead vest as of the Notice
Date. However, no additional Shares will be granted after the
Notice Date, and all granted Shares that would otherwise have
vested after such three (3) year period shall be forfeited as
of the Notice Date.
vi) If during the term of this Agreement
Fruchtenbaum dies and his death is not the result of suicide, all
Shares that have been granted hereunder will upon his death
immediately vest in favor of his estate.
vii) If during the term of this Agreement
Fruchtenbaum becomes totally and permanently disabled, as determined
by AG's then current disability insurance carrier, and such
disability is not self-inflicted ("Disability Date"), all Shares
that have been granted hereunder will immediately vest on the
Disability Date, and no further Shares will be granted. The Shares
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Fruchtenbaum is entitled to receive under this subparagraph 4.d.3.vii)
are in addition to any and all disability benefits he would otherwise
be entitled to receive as an AG Executive Officer.
5. CONFIDENTIAL AND TRADE SECRET INFORMATION: Fruchtenbaum
acknowledges that in the course of his employment with AG he has and will have
access to confidential information and trade secrets ("Confidential
Information"), misuse or disclosure of which would adversely affect AG's
business. Fruchtenbaum agrees that he will not, either during his employment
with AG or at any time thereafter, use for himself or others, or disclose or
convey to others (except as is necessary in the ordinary course of his
employment) any of AG's Confidential Information. Confidential Information
shall include documents so marked, as well as any other information, oral or
written, which a reasonable person would believe to be confidential to or a
trade secret of AG. This paragraph shall not prohibit disclosure of
information which has become public, unless it became public through
Fruchtenbaum's breach of this Agreement.
6. NON-COMPETITION: In consideration of AG's agreement to employ
Fruchtenbaum under the terms of this Agreement, Fruchtenbaum agrees that he
will not for the following periods engage anywhere in the United States or
Canada, directly or indirectly, in any business activities, either as
principal, agent or consultant or through any corporation, firm or organization
in which he may be an officer, director, employee, substantial shareholder,
partner, member or be otherwise affiliated that are in competition with AG's
businesses at such time: (i) for the period of his employment hereunder; (ii)
if Fruchtenbaum voluntarily resigns his employment with AG or retires, for
three (3) years thereafter; or (iii) if AG terminates Fruchtenbaum's
employment with AG, for three (3) years thereafter.
7. CONFLICT OF INTEREST: Fruchtenbaum represents and warrants
that he has no interest or obligation that is inconsistent with or in conflict
with this Agreement or that would prevent, limit or impair his performance of
any part of this Agreement.
8. MISCELLANEOUS:
a. This Agreement constitutes the entire understanding
between Fruchtenbaum and AG relating to the subject matter contained herein and
this Agreement supersedes any previous oral or written agreement(s) and
understandings. This Agreement may not be changed, modified, or altered
without the express written consent of Fruchtenbaum and AG.
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b. Either party's failure to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive the other part of his/its rights thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
c. If any part or section of this Agreement is found to be
contrary to law or unenforceable, the remainder shall remain in force and
effect.
d. This Agreement will be governed by and construed in
accordance with the law of the State of Ohio. Any disputes that cannot be
resolved amicably shall be resolved by binding arbitration in Cleveland in
accordance with applicable rules of the Center for Public Resources, or if the
Center for Public Resources' facilities are not available, the rules of the
American Arbitration Association.
e. Upon Fruchtenbaum's termination, regardless of the reason,
Fruchtenbaum will promptly surrender to AG any of its property in
Fruchtenbaum's possession including, but not limited to, all correspondence,
memoranda, notes, records, reports, plans, computer printouts, reproductions,
slides, and any other papers or items, and copies of papers and other items,
received or made by Fruchtenbaum in connection with his employment with AG.
9. REVIEW BY ADVISORS. Fruchtenbaum acknowledges that he has had
ample opportunity to consult with his legal and financial advisors, has
carefully considered this Agreement, and fully understands its provisions. He
has not relied on any other representations or statements, written or oral.
10. SURVIVAL. The following paragraphs shall survive the
expiration or termination of this Agreement: 3.; 4.a.; 4.d.3.i.), ii) and iii)
as they apply under 4.d.3.v); 4.d.3.v); 4.d.3.vi); 4.d. 3.vii); 5.; 6.; 7.;
8.d.; and 8.e.
AMERICAN GREETINGS CORPORATION EDWARD FRUCHTENBAUM
BY: /s/ Morry Weiss /s/ Edward Fruchtenbaum
-------------------------- --------------------------
NAME: MORRY WEISS
-------------------------
TITLE: CHAIRMAN & CEO DATE: 5/26/92
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DATE: 6/10/92
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AMENDMENT NO. 1
The Employment Agreement entered into between Edward Fruchtenbaum
("Fruchtenbaum") and American Greetings Corporation ("AG" or "Company") on May
18, 1992 ("Agreement"), is hereby amended effective March 1, 1993, by deleting
paragraphs 4(d)(1) and 4(d)(2) in their entirety and replacing them with the
following paragraphs number 4(d)(1), 4(d)(2), 4(d)(3), and 4(d)(4) and
renumbering original paragraph 4(d)(3) as 4(d)(5), including each reference in
paragraph 10 of the Agreement to original paragraph 4(d)(3):
4(d)(1). On February 28, 1993, AG granted Fruchtenbaum 5,000 Class A
shares of AG Common Stock, on June 1, 1993, AG will grant Fruchtenbaum an
additional 10,000 shares of AG Common Stock, which may be in either Class A or
Class B Shares, or any combination thereof, at AG's election ("Shares")
(collectively the "1993 Grant"). Fruchtenbaum's ownership of the 1993 Grant
will vest as set forth in attached Schedule "A".
4(d)(2). (i) On February 29, 1996, and on each third anniversary
thereafter during the term of the Agreement, beginning on February 28, 1999, AG
will grant Fruchtenbaum a block of 15,000 Shares, which may be in either Class
A or Class B Shares, or any combination thereof at AG's election ("Shares") and
which, except as set forth in subparagraph 4(d)(2)(ii) below and attached
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Schedule "C", will vest as set forth in attached Schedule "B" so long as the
Agreement is in effect.
4(d)(2)(ii). For each block of 15,000 Shares granted under subparagraph
4(d)(2)(i), up to 6,000 Shares will expire in increments of 2,000 Shares each
at the close of each fiscal year, beginning with the Fiscal Year ending
February 29, 1996, and at each fiscal year end thereafter during which the
Agreement is in effect, in which the Company, as a whole, has not attained its
profit goal for the then ended fiscal year. Therefore, beginning with the
Fiscal Year ending February 29, 1996, 2,000 Shares that would have otherwise
vested 1,000 Shares on each of the last business days preceding April 15, 1999,
and April 15, 2000, will expire retroactively to February 29, 1996, if the
Company, as a whole, has not attained its profit goal for the fiscal year ending
February 26, 1996. For purposes of example only, attached Schedule "C" sets
forth the applicable vesting for the block of 15,000 Shares that will be granted
on February 29, 1996, if the Agreement is then in effect, in the event the
Company, as a whole, has not attained its profit goal for one or more of the
Fiscal Years ending February 29, 1996, February 28, 1997 and February 28, 1998.
4(d)(3). The vesting of Shares set forth in subparagraphs 4(d)(1)
and 4(d)(2) above, including attached Schedules "A" and "B", are cumulative and
overlap, so that by way of example only, the Shares will vest cumulatively as
set forth in attached Schedule "D" so long as the Agreement is in effect.
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4(d)(4). AG will provide Fruchtenbaum with certain registration
rights in connection with the Stock granted pursuant to subparagraphs 4(d)(1)
and 4(d)(2) above.
AMERICAN GREETINGS CORPORATION EDWARD FRUCHTENBAUM
By: Morry Weiss Edward Fruchtenbaum
-------------------------- ----------------------------
Name: Date: 8/7/93
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Title: Chairman - CEO
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Date: 8-17-93
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SCHEDULE "A"
The 15,000 Shares granted pursuant to the 1993 Grant, will vest as follows:
February 28, 1993 - 1,000 Shares
March 1, 1994 - 2,000 Shares
March 1, 1995 - 3,000 Shares
March 1, 1996 - 3,000 Shares
March 1, 1997 - 3,000 Shares
March 1, 1998 - 2,000 Shares
March 1, 1999 - 1,000 Shares
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SCHEDULE "B"
Each block of 15,000 Shares granted under subparagraph 4(d)(2) of Amendment No.
1 to the Agreement will vest as follows:
April, 1996,1 - 1,000 Shares
and every three years thereafter
April, 1997, - 2,000 Shares
and every three years thereafter
April, 1998, - 3,000 Shares
and every three years thereafter
April, 1999, - 3,000 Shares2
and every three years thereafter
April, 2000, - 3,000 Shares
and every three years thereafter
April, 2001, - 2,000 Shares
and every three years thereafter
April, 2002, - 1,000 Shares
and every three years thereafter
____________________
1 The exact date in this and each following year will be the
last business day preceding April 15th.
2 Beginning with April, 1999 and continuing for the term of
the Agreement, this Schedule "C" assumes the Company has made its
profit goal in all applicable fiscal years and subparagraph
4(d)(2)(i) is therefore not applicable.
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SCHEDULE "C"
By way of example, the following shows the effect of subparagraph 4(d)(2)(i) on
the block of 15,000 Shares granted on the last business day preceeding April
15, 1996, in the event the Company, on a whole, (i) has not made its profit
goal for the Fiscal Year ended February 28, 1996; (ii) has not made its profit
goals for the Fiscal Years ended February 28, 1996, and February 28, 1997;
(iii) has not made its profit goals for the Fiscal Years ended February 28,
1996, February 28, 1997, and February 28, 1998.
Failure to Failure to Failure to
Make Goal Make Goal Make Goal
F.Y. 1996 F.Y. F.Y.
1996/1997 1996/1997/
1998
April, 1996 1,000 1,000 1,000
April, 1997 2,000 2,000 2,000
April, 1998 3,000 3,000 3,000
April, 1999 2,000 2,000 2,000
April, 2000 2,000 1,000 1,000
April, 2001 2,000 1,000 ---
April, 2002 1,000 1,000 ---
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SCHEDULE "D"
By way of example only, and without limiting Fruchtenbaum's rights under
subparagraphs 4(d)(1) and 4(d)(2)*, so long as the Agreement is in effect, the
vesting set forth in Schedules "A" and "B" will be cumulative as shown below:
<Caption
Feb March March March/ March/ March/ March/ April April April
1993 1994 1995 April April April April 2000 2001 2002
1996 1997 1998 1999
1993 1,000 2,000 3,000 3,000 3,000 2,000 1,000
Grant
April 1,000 2,000 3,000 3,000 3,000 2,000 1,000
1996
Grant
April 1,000 2,000 3,000 3,000
1999
Grant
<FN>
*It is expressly understood that so long as the Agreement is in effect,
Fruchtenbaum will continue to receive a grant of 15,000 Shares every three (3)
years pursuant to subparagraph 4(d)(2) and that subparagraph 4(d)(2)(i) applies
to each such grant.
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AMENDMENT NO. 2
In order to reflect the split of American Greetings Corporation ("AG") Common
Stock which occurred on September 10, 1993, the Employment Agreement entered
into between Edward Fruchtenbaum ("Fruchtenbaum") and AG on May 18, 1992, as
amended by Amendment No. 1 on June 1, 1993 ("Agreement") is hereby amended by
doubling (i) each grant of AG Common Shares ("Shares") made pursuant to the
terms of the Agreement on or after September 10, 1993; (ii) the number of
Shares vested upon each event of vesting of Shares occurring pursuant to the
terms of the Agreement on or after September 10, 1993; and (iii) the number of
shares expired upon each event of expiration of Shares occurring pursuant to
the terms of the Agreement on or after September 10, 1993.
AMERICAN GREETINGS CORPORATION EDWARD FRUCHTENBAUM
By: Morry Weiss Edward Fruchtenbaum
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Name: Date: 11/29/93
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Title: Chairman - CEO
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Date: 10-29-93
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AMENDMENT NO. 3
The Employment Agreement entered into between Edward Fruchtenbaum
("Fruchtenbaum") and American Greetings Corporation ("AG" or "Company") on May
18, 1992 as amended ("Agreement"), is hereby amended effective September 11,
1993, by adding paragraph 4(d)(6) as follows:
4(d)(6). All numbers of shares referred to in paragraphs 4(d)(2) and
4(d)(3) above, including all Schedules thereto, will be adjusted to reflect
any future adjustments in the price and in the number or kind of shares
resulting from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
(b) any merger, consolidation, separation, reorganization or partial or
complete liquidation, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing.
AMERICAN GREETINGS CORPORATION EDWARD FRUCHTENBAUM
By: Morry Weiss Edward Fruchtenbaum
-------------------------- ----------------------------
Name: Date: 3/1/94
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Title: Chairman - CEO
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Date: 3/2/94
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