($60,000 x 2%)

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

AMERICAN GREETINGS

KEY MANAGEMENT

ANNUAL INCENTIVE PLAN

This brochure provides an overview of the Key Management Annual Incentive Plan — a valuable component of your total compensation package. It contains details about how the Plan rewards for Corporate, Business Unit and Individual performance results. In addition, your Incentive Compensation Statement — provided separately — includes information specific to your participation in the plan: your assigned business unit and sub-business unit if any, your target

incentive percentage and detailed examples of the incentive calculation under different performance scenarios. Together, these documents provide the information you need to understand the Plan so you can maximize your annual incentive award.

¢ ELIGIBILITY

You are eligible to participate in the Key Management Annual Incentive Plan if you are a Key Manager or Officer in one of the following primary business units and you do not participate in another Company-sponsored annual incentive plan:

PRIMARY BUSINESS UNIT

PARTICIPANTS

Chairman, Chief Executive Officer, President and Chief Operating Officer, Corporate-level Senior Vice Presidents and other Section 16 Executive Officers

Associates who are part of:

AGIP Corporate Staff

AG Interactive

AG Interactive associates

AG Properties

AG Properties associates

UK Greetings

UK Greetings associates

John Sands Group

John Sands Group associates

Key Managers include individuals in Key Manager 1 and Key Manager 2 job levels. Officers include Corporate-level Executive Directors, Vice Presidents, Senior Vice Presidents, President and Chief Operating Officer, Chief Executive Officer, Chairman of the Board and any other job level(s) that may be designated.

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

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AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

WEIGHTING THE MEASURES

Performance measures are weighted by job level to reflect the degree to which positions within a job level can affect performance in each of the three key performance areas. Accordingly, associates at higher job levels — who have more impact on the achievement of corporate objectives — have more weight assigned to the corporate performance measure. Lower job levels, in contrast, have more weight assigned to the individual performance area.

The following chart shows the specific weightings for each job level for fiscal year 2009.

      JOB LEVEL

    Chairman of the Board, CEO, President and COO, Corporate-level Senior Vice Presidents and other Section 16 Executive Officers

    Corporate-level Vice Presidents and Executive Directors; Key Managers 2; Key Managers 1

EXAMPLE

Joe, a Key Manager 1 with base earnings of $60,000 and a 10% incentive target, would have the following set of performance measure weightings and target incentive awards:

Key Manager 1 Weightings

Joe’s Target Incentive

(Percent of Base Earnings)

Joe’s Target Incentive ($)

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AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

¢ PERFORMANCE MEASURES

CORPORATE PERFORMANCE

Creating value for our shareholders and increasing our focus on delivering profitable revenue growth are key drivers to American Greetings success. To help achieve these objectives, corporate performance and your corporate incentive award will be determined using two performance measures:

¡ Corporate earnings per share (EPS), and

¡ Corporate total revenue

Your corporate incentive award is determined using a two-step process:

Step 1: Calculate Preliminary Award

Corporate EPS performance is based on fiscal year-end corporate earnings per share compared to goal. Minimum performance of 90% of goal must be attained before any incentive is earned. Above 90%, your incentive award is determined using a performance multiplier of 4 as illustrated on page 6. This incentive amount is a preliminary award based solely on EPS performance.

Step 2: Calculate Adjustment

The preliminary award based on EPS performance (Step 1) may be adjusted up or down depending on corporate total revenue performance. For high levels of performance (greater than 103% of goal) or lower levels of performance (less than 97% of goal), the adjustment is determined by applying a performance multiplier of 5 to the difference between actual corporate total revenue performance and 103% or 97% as illustrated below. Any adjustment is added to the preliminary award from Step 1. There is no adjustment in this step for corporate total revenue performance at or between 97% and 103% of goal.

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AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

BUSINESS UNIT PERFORMANCE

Business unit performance is based on fiscal year-end earnings results compared to goal. All associates are assigned to a primary business unit. However, some will also be assigned to a sub-business unit based on business conditions and American Greetings strategic priorities.

Business unit and sub-business unit performance measures will vary, but your primary business unit measure will be one of the following:

¡ Business Unit Pro Forma Earnings Before Interest and Taxes (Business Unit Pro Forma EBIT), or

¡ Corporate Earnings Before Interest and Taxes (Corporate EBIT).

Earnings are charged/credited for any variation from plan in Net Capital Employed at the weighted average cost of capital. Performance is based on fiscal year-end earnings compared to goal.

The incentive is earned when the performance threshold for the primary business unit (or sub-business unit, where applicable) is achieved.

¡ The performance threshold for all primary and sub-business units, except for Carlton Cards Retail, is 90% of goal.

¡ The performance threshold for Carlton Cards Retail is 60% of goal.

A listing of each business unit’s and sub-business unit’s assigned earnings measure(s) and performance multipliers is provided in the Appendix. An example of the calculation of this incentive follows.

EXAMPLE

Joe is a KM1 with $60,000 in base earnings. Let’s assume his business unit has a performance multiplier of 4 and that its performance at year-end is 96% of goal. Joe’s business unit incentive award is calculated in three steps:

1.     Determine the business unit performance adjustment

2.     Apply the business unit performance adjustment to Joe’s target incentive percentage for the business unit component

3.     Multiply the result by Joe’s base earnings

100%

Target Performance

Business Unit

Performance Multiplier

Business Unit

Performance Adjustment

Joe’s Target Incentive

Performance Adjustment

Joe’s Base Earnings

Joe’s Incentive Earned

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AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

EXAMPLE

The following example shows how Joe’s actual incentive award is calculated based on the assumptions that were used throughout this brochure:

[(104.3% - 103% top of range) x 5]

Target Corporate Incentive (20% Weight)

+

Target Business Unit Incentive (50% Weight)

+

Target Individual Incentive (30% Weight)

=

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

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BUSINESS UNIT/

PARTICIPANTS

PERFORMANCE

MEASURE

Corporate Consolidated

Chairman, CEO, President,

COO, Corporate-level

Senior Vice Presidents

and other Section 16

Executive Officers

Business Intelligence,

Canada, Carlton Mexico,

Corporate Staff (Delta,

Finance, HR, ISD, Legal),

Creative, DesignWare &

Specialty SBU, Everyday

& Seasonal Cards, Field

Sales, FSO, Gift Packaging & Holiday SBU,

Global Sourcing, Plants,

Product Development,

all other North American

Greeting Card Division

units

Carlton Cards Retail pro

forma EBIT

AG Intellectual Properties

Group – Corporate Staff

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN

ADMINISTRATIVE DETAILS

If your employment status changes, your Plan participation and any payouts may be affected as described below.

¡ New Hires. If you are hired during the Plan year — defined as the American Greetings fiscal year ending February 28, 2009 — and are eligible to participate in the Key Management Annual Incentive Plan, you will receive a prorated incentive payout based on the period of time you participated in the Plan and your base earnings during that time.

¡ Promotions and Transfers. If you are promoted or you move from one business unit to another during the Plan year, your individual target incentive, base earnings, business unit goal and corresponding performance multiplier may change. If any of these do change, your incentive will be calculated based on the targets, base earnings, plan provisions and actual performance for each business unit you participated in on a prorated basis and rounded to the nearest full month.

¡ Termination. If you voluntarily or involuntarily leave American Greetings before the completion of the Plan year, you will forfeit your Key Management Annual Incentive Plan award for that fiscal year.

¡ Retirement, Leave of Absence, Disability, Death. If your employment ends during the Plan year because you elect to retire after age 60, or if you take a leave of absence, suffer a permanent disability or die, your incentive payout will be prorated to the nearest full month based on the actual period you participated in the Plan during the year.

An associate will be deemed to suffer a permanent disability only in the following circumstances: (A) where an associate is absent from employment with American Greetings due to his or her inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which either can be expected to result in death, or can be expected to last for a continuous period of not less than 12 months; or (B) where an associate is scheduled

to receive income replacement benefits for a period of not less than 3 months under an accident and health plan covering American Greetings associate on account of a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than 12 months.

¡ Incentive Payout. Incentive payouts earned in fiscal year 2009 will be paid to participants within two and one-half months following the end of fiscal 2009, typically within 60 days after the end of the fiscal year. Incentive payouts are subject to normal tax withholding at a standardized rate and will be deposited to a bank account of your choice.

It is the intent that incentive payouts fall under the short-term deferral rules of Section 409A of the Internal Revenue Code to exempt the payment of such Key Management Annual Incentive Plan benefits from the requirements of Section 409A.

¡ Calculating Payouts. For computation purposes, financial goals and actual performance results are rounded to the nearest $1,000. The percent of the financial goal achieved and the percent of target bonus earned is rounded to the nearest one-tenth of one percent. The actual incentive payout is rounded to the nearest dollar.

¡ Omnibus Incentive Plan. The Key Management Annual Incentive Plan is governed by the American Greetings Corporation 2007 Omnibus Incentive Compensation Plan, as such plan may be amended from time to time. In the event of a conflict between the Key Management Annual Incentive Plan and the Omnibus Incentive Plan, the terms of the Omnibus Incentive Plan will govern.

¡ Questions. If you have questions about the Key Management Annual Incentive Plan and how it works, please contact your manager. Your manager will work with you to ensure you understand the Plan so you can maximize your annual incentive.

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INDIVIDUAL PERFORMANCE

Notwithstanding the description of the Individual Performance component included in the brochure (the “Plan Brochure”) outlining the Fiscal 2009 Key Management Annual Incentive Plan, the Individual Performance component of American Greetings Key Management Annual Incentive Plan for all Senior Executive Officers of American Greetings, consisting of the Corporation’s Chairman, Chief Executive Officer, President and Chief Operating Officer, Senior Vice Presidents and other Section 16 officers (collectively the “Senior Executive Officers”) is modified by this Addendum as follows:

¡A range has been added to the target percentage of participants who receive an “Exceeds Expectations” performance rating. The range is 20% to 30% of the total number of Senior Executive Officers.

¡Managers will now have even more discretion to adjust the percentage of the individual incentive based on an individual’s performance. Senior Executive Officers who receive an “Exceeds Expectations” performance rating will earn between 100% and 150% of their target incentive under the Individual Performance component. Those who receive a “Meets Expectations” performance rating will earn between 50% and 100% of their target incentive under the Individual Performance component.

As with all participants of the Key Management Annual Incentive Plan, at the

end of the fiscal year, managers assess each Senior Executive Officer’s performance compared to other participants. Managers determine the degree to which the participants have achieved the goals and job expectations defined at the beginning of the year.

Managers rank participants based on their relative performance and determine actual performance ratings based on these rankings and the targeted percentage of participants for each rating.

¡For Senior Executive Officers, the targeted percentage of participants for the “Exceeds Expectations” performance rating is 20% to 30%; the targeted percentage for the “Meets Expectations” performance rating is 60%; and the targeted percentage for the “Improvement Expected / Performance Below Peer Level” is 10%. (See chart on the following page.)

¡Senior Executive Officers who receive an “Exceeds Expectations” performance rating will receive between 100% and 150% of their target individual incentive, as determined by his or her manager. In certain circumstances, this payout can be increased up to a maximum of 200% of target¹.

¡Senior Executive Officers who receive a “Meets Expectations” rating will receive between 50% and 100% of their target individual incentive, as determined by his or her manager.

¡As with other participants, Senior Executive Officers who receive an

“Improvement Expected / Performance Below Peer Level” rating will not receive an individual performance incentive and will only receive 50% of any incentive otherwise earned.

As with other participants, if corporate earnings performance is below the performance threshold, only those Senior Executive Officers with a performance rating of “Exceeds Expectations” may receive awards for the individual performance measure.

¡Participants, including Senior Executive Officers, who receive an “Exceeds Expectations” performance rating, will receive 50% of the target incentive payable for the individual performance component.

¡Senior Executives who receive a “Meets Expectations” or “Improvement Expected / Below Peer Level” performance rating will not receive any portion of the individual performance incentive.

The schedule below shows how individual amounts will be adjusted based on individual performance.

Except as set forth in this Addendum, the description of the Key Management Annual Incentive Plan included in the Plan Brochure remains unchanged. In the event of a conflict between the terms described in the Plan Brochure and this Addendum, the terms set forth in this Addendum will govern.

Exceeds Expectations¹

Meets Expectations

Improvement Expected /

Performance Below Peer Level

¹

Managers can, at their discretion, increase the Individual Payout percentage up to a maximum of 200% of target, for Senior Executive Officers rated as “Exceeds Expectations” who demonstrate an extraordinary level of performance. Accomplishments must be the result of extraordinary effort and initiative that go well beyond the contribution of other Senior Executive Officers rated as “Exceeds Expectations.” The number of persons eligible to receive an Individual Payout Percentage between 150% and 200% may not exceed 10% of the total number of Senior Executive Officers rated as “Exceeds Expectations.”