Severance Agreement - American Greetings Corp. and William S. Meyer
AGREEMENT
This Agreement ("Agreement") is made this 26th day of March 2002,
between William S. Meyer ("Meyer") and American Greetings Corporation ("AG" or
"Company").
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. TERM. This Agreement will be in effect from March 26, 2002, until
March 31, 2006.
2. POSITION. Meyer is employed by AG as the Company's Senior Vice
President and Chief Financial Officer. Meyer will perform any and all duties
commensurate with that position, including without limitation, assisting in the
hiring of a new Chief Financial Officer and orderly transition following that
hiring.
3. END OF ACTIVE EMPLOYMENT. It is understood that Meyer'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. If not sooner terminated, on April 1, 2003, Meyer will end his active
employment with AG ("End Date"). As of the End Date, Meyer will not be entitled
to or receive any benefits or privileges of employment or post-employment,
except for those specifically provided herein.
4. COMPENSATION AND BENEFITS.
a. PRE-END DATE. For the period March 26, 2002, through March 31, 2003,
or until Meyer voluntarily resigns or is terminated for cause prior to
March 31, 2003, the Company will pay Meyer as compensation for his
services:
i. ANNUAL BASE. An annual base salary of $335,000, less
payroll taxes and other withholdings, which amount will be
reviewed and may be adjusted to an annual base salary of
$350,000 by Morry Weiss on September 1, 2002, based on Meyer's
performance;
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ii. BONUS. Meyer will participate in the FY03 bonus plan, the
actual pay out amount, if any, will be based upon a Senior
Vice-President level in enterprise management, and the
individual performance component, if any, will be calculated
at 100% of the FY03 target bonus for Senior Vice Presidents.
The actual pay out to Meyer will be less payroll taxes and
other withholdings;
iii. OPTIONS. Meyer will receive as of March 1, 2002, a grant
of options equal to the number of stock options granted to
Tier 3 Senior Vice Presidents. If a grant of stock options is
made generally to Senior Vice Presidents between the date of
this Agreement and July 1, 2003, Meyer will be granted such
number as are granted to other Senior Vice Presidents. If the
number of options granted depends in whole or in part on
Meyer's performance, he will receive such number of options as
are granted to Senior Vice Presidents who are eligible for
100% of their target bonus (currently these would be Tier 3
Senior Vice Presidents); and
iv. OTHER BENEFITS. The other regular benefits offered to
Senior Vice Presidents, including but not limited to, health,
life and disability, profit-sharing and 40l(k) benefits,
401(k) maximizer and profit-sharing restoration benefits.
If Meyer voluntarily resigns or is terminated "for cause," as defined
herein, between March 26, 2002, and March 31, 2003, he will no longer
receive the compensation and benefits set forth under subparagraph 4.a.
as of the effective date of such resignation or termination.
b. POST-END DATE. If Meyer has not voluntarily resigned or been
terminated for cause before April 1, 2003, the Company will pay Meyer
or ensure that he will participate in the following:
i. SALARY CONTINUATION. From April 1, 2003, through March 31,
2006, an amount equal to Meyer's annual base salary as of
March 31, 2003, which shall not be lower than $335,000
annually, for each April 1-March 31 period through March 31,
2006, payable twice a month in the regular payroll cycle;
ii. HEALTH CARE. From April 1, 2003, through Meyer's 65th
birthday, AG will make available to Meyer and his wife, if
any, those health
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care alternatives made available by AG to active associates in
Meyer's then current area of residence. For this coverage,
Meyer will pay the full rate that would be paid by a pre-age
65 retiree who has Meyer's years of service as of March 31,
2003, and Meyer's actual age, for the health care coverage
chosen by Meyer. AG will pay to Meyer this same amount, less
the amount that an actively employed associate would pay for
this same coverage, grossed up by 40% to cover applicable
taxes. Following his 65th birthday, Meyer and his wife, if
any, will be eligible to participate in AG's health care plans
for AG retirees, if any, by paying the full amount for such
coverage for post age 65 retirees. These obligations by both
parties will be made as adjustments to the amounts paid to
Meyer hereunder. If these obligations cannot be satisfied by
such payments, Meyer shall promptly pay AG the balance due;
iii. OTHER PLANS. From April 1, 2003, through March 31, 2006,
participation in the life insurance coverages, including but
not limited to, the current basic and executive life
coverages, if and to the extent that any is available to
Senior Vice Presidents generally, with AG paying the full cost
of such coverages;
iv. SERP. Supplemental Executive Retirement Plan benefits
accorded participants who have vested and are age 55 or older
when they retire, payable pursuant to the terms of the plan as
of March 31, 2006; and
v. CAR. From April 1, 2003, until February 18, 2005, Meyer
will be entitled to use his existing company car. During this
time, AG will make all lease payments, insure the car and make
material repairs, and Meyer will pay for all gas and other
routine maintenance. On or before February 18, 2005, Meyer may
purchase the car from AG, free and clear of all liens and
encumbrances, upon payment of $28,574.00.
If between April 1, 2003, and March 31, 2006, Meyer breaches the
provisions in paragraphs 5. and/or 6. below, the payments and benefits
set forth in paragraph 4.b.(i) and (ii) shall cease and any such future
payments and benefits shall be forfeited.
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The compensation and benefits set forth above in subparagraphs
4.b.i.-v. constitutes the complete list of post-End Date compensation
and benefits due, payable and available to Meyer.
Meyer will not be deemed to have "voluntarily resigned" should he
consent to a written request by AG to cease performing the duties and
obligations of his position prior to April 1, 2003.
c. STOCK OPTIONS VESTING AND EXERCISABILITY. All options in Company
stock granted prior to and on July 1, 2003, shall vest on April 1,
2006, if they have not already vested by April 1, 2006. All such vested
options shall be exercisable for ten (10) years from the date of grant,
unless the plan under which they were granted provides for a shorter
period of exercisability after April 1, 2006.
d. FOR CAUSE. "For cause" as used in this Agreement is defined as
termination as a result of Meyer's personal dishonesty, gross
incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, material and willful violation of any law, rule,
regulation or AG policy (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of this
Agreement.
5. CONFIDENTIAL AND TRADE SECRET INFORMATION. Meyer acknowledges that
in the course of his employment with AG, he has and will have access to
confidential information and trade secrets, oral or written ("Confidential
Information"), misuse or disclosure of which could adversely affect AG's
business. Meyer 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. This paragraph shall not prohibit disclosure of
information, which has become public, unless it became public through Meyer's
breach of this Agreement.
6. NON-COMPETITION; NON-DISPARAGEMENT. In consideration of AG's
agreement to employ Meyer under the terms of this Agreement, Meyer 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:
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(i) for the period of his active employment from March 26, 2002, until March 31,
2003, and (ii) during the period he is receiving monies under paragraph 4.b.(i).
Further, Meyer agrees that at no time during or following his employment with AG
will he directly or indirectly disparage AG, its affiliates and subsidiaries or
any of AG's directors, officers, employees, agents and representatives.
Notwithstanding the provisions of subparagraph 8.d., AG may seek injunctive or
other equitable relief in any court of competent jurisdiction if Meyer breaches
the provisions of this paragraph 6.
7. CONFLICT OF INTEREST. Meyer 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. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire understanding between Meyer and AG relating to the subject
matter contained herein and effective March 26, 2002, this Agreement
supersedes any previous oral or written agreement(s) and
understandings, including without limitation, the employment agreement,
dated December 1, 1987, between AG and Meyer. This Agreement may not be
changed, modified, or altered without the express written consent of
Meyer and AG.
b. NO WAIVER. 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 party of his/its rights thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.
c. SEVERABILITY. 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. GOVERNING LAW; DISPUTES. This Agreement will be governed by and
construed in accordance with the law of the State of Ohio. Any disputes
regarding this Agreement that cannot be resolved amicably shall be
resolved through AG's "Solutions" alternative dispute resolution
program or its successor, if any. If such dispute cannot be resolved
through mediation under that program, it shall be resolved by binding
arbitration in Cleveland in accordance with the applicable rules of the
American Arbitration Association.
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e. RETURN OF AG PROPERTY. Upon Meyer's retirement or termination,
regardless of the reason, Meyer will promptly surrender to AG any of
its property, except for his company car, in Meyer's possession
including, but not limited to, all correspondence, memoranda, notes,
records, reports, plans, computer printouts, reproductions, slides,
electronic data, and any other papers or items, and copies thereof,
received or made by Meyer in connection with his employment with AG.
9. REVIEW BY ADVISORS. Meyer 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: subparagraphs 4.b.ii, 4.b.iv. and paragraphs 5,
6, and 8.
AMERICAN GREETINGS CORPORATION WILLIAM S. MEYER
BY: _______________________________ __________________________________
NAME: ____________________________
TITLE: ____________________________
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