Executive Service Contract: John Charlton

(A)

The First Employer: Hanson White Group Limited, a company incorporated in England and Wales and registered under number 3220599 whose registered office is at 9th floor, Wettern House, 56 Dingwall Road, Croydon, CR0 0XH (the “First Employer”); and

(B)

The Second Employer: UK Greetings Limited, a company incorporated in England and Wales and registered under number 3480710 whose registered office is at Mill Street East, Dewsbury, West Yorkshire WF12 9AW (c/o Carlton Cards Limited) (the “Second Employer”); and

(C)

The Employee: John Charlton of Englefield Lodge, Middle Hill, Englefield Green, Surrey TW20 0JR (“You”).

(1)

UK Greetings Limited has agreed to purchase the entire share capital of Hanson White Group Limited from, inter alia, John Charlton under an agreement of the same date as this agreement (the “Share Purchase Agreement”).

(2)

The parties have agreed that conditional on the Closing of the stock purchase (as defined in the Share Purchase Agreement) and following the Closing Date (as defined in the Share Purchase Agreement), John Charlton will continue to be employed by Hanson White Group Limited as sale Managing Director of that company for a period of six months from the Closing Date or less if agreed between the parties on the terms and conditions set out below. Thereafter, Hanson White Group Limited will be replaced as John Charlton’s employer by UK Greetings Limited and John Charlton will thereafter instead be employed on the terms and conditions set out below by UK Greetings Limited as sole Managing Director of UK Greetings Limited (and will no longer be employed by Hanson White Group Limited, whether or not he retains any office in Hanson White Group Limited), without giving rise to any claim on the part of John Charlton for damages or compensation in respect of this change.

1.

Employment

1.1

Conditional on Closing pursuant to the Share Purchase Agreement, your employment under this Agreement by the First Employer (the “First Employment”) will commence on the date hereof (the “Commencement Date”) and (subject to earlier termination as provided in this Agreement) will continue for a fixed period of 6 months or such lesser period as is agreed between you and the First and Second Employers (together the “Employers”). At the end of this period, the Second Employer will replace the First Employer as your employer and your employment under this Agreement by the Second Employer (the “Second Employment”) will continue (subject to earlier termination as provided in this Agreement) for a fixed period up to and including the day before the third anniversary of the date hereof (the “Fixed Period”) and thereafter until terminated by you giving the Second Employer 3 months’ prior written notice or

by the Second Employer giving you 12 months’ prior written notice, such notice to expire on or after the end of the Fixed Period. Notwithstanding the above, the substitution of the Second Employer as your employer in place of the First Employer shall not operate so as to transfer any accrued liabilities or rights of the First Employer to the Second Employer.

1.2

The First and Second Employments together are hereafter referred to as the “Employment”. References hereafter to the “Employer” shall mean the First Employer during the period of the First Employment and the Second Employer during the period of the Second Employment.

1.3

Your previous employment with the First Employer, which began on 1st December 1985, counts as part of your period of continuous employment with the Group.

1.4

During the First Employment the First Employer will employ you, and you will work, as the sole Managing Director of the First Employer. During the Second Employment the Second Employer will employ you, and you will work, as the sole Managing Director of the Second Employer.

1.5

You will (without further remuneration), if and for as long as the Reporting Officer reasonably requires, during this Agreement:

1.5.1

carry out duties for the benefit of or on behalf of any Group Company; and/or

1.5.2

hold any office and/or other appointment in or on behalf of the Group.

1.6

You will, at all times during the period of this Agreement:

1.6.1

devote the whole of your time, attention and ability during your hours of work (as set out in Clause 1.7) to the duties of your employment;

1.6.2

faithfully and diligently perform your duties and exercise only such powers as are consistent with them;

1.6.3

obey all and any lawful and reasonable directions of the Reporting Officer;

1.6.4

act in accordance with the Memorandum and Articles of Association of the Employer or, where acting pursuant to Clause 1.5, of the relevant Group Company;

1.6.5

use all reasonable endeavours to promote the interests of the Group; and

1.6.6

keep the Reporting Officer promptly and fully informed (in writing if so requested) of your conduct of the business or affairs of the Group and provide such explanations as the Reporting Officer may reasonably require.

1.7

Your hours of work are the normal hours of business of the Employer together with such additional hours as may be reasonably necessary for you to perform your duties properly.

1.8.

Your normal place of work is the Employer’s head office, initially at 9th floor, Wettern House, 56 Dingwall Road, Croydon, CR0 0XE, and/or such other place(s) of business of the Employer or Group inside the M25 motorway ring as the Reporting Officer may reasonably require from time to time. You will, if and for as long as reasonably required by the Reporting Officer, make visits in the ordinary course of your duties to such places anywhere in the world as he may specify to the extent reasonably necessary or expedient for the proper performance of your duties provided that you shall not be required to work outside the United Kingdom for any single period in excess of 4 weeks or for more than 90 days in aggregate in any single 12 month period.

1.9

During the Employment you will not without the prior written consent (not to be unreasonably withheld or delayed) of the Reporting Officer be employed, engaged, concerned or interested directly or indirectly in any trade or business or hold any public office, directorship or occupation other than in the business of the Employer and the Group Companies (provided that you are permitted to hold as a passive investor only not more than 5% of the issued ordinary shares of any company of a class which are listed or traded on the London Stock Exchange or other investment exchange permitted by the Reporting Officer).

2.

Pay

2.1

During the Employment, the Employer will pay you a basic salary at the rate of £135,000 each year (or such higher rate as may be awarded to you pursuant to Clause 2.2) which will accrue from day to day and be payable in equal monthly or twice-monthly instalments in arrears on such working day or days of each month as are designated for such purposes by the Employer (the “Base Salary”). The Base Salary is inclusive of all and any fees receivable by you as the holder of offices or appointments within the Group or on behalf of the Employer or any Group Company.

2.2

On or about 1st May 1999 and each subsequent anniversary, your Base Salary will be reviewed by the Reporting Officer and the rate of Base Salary then payable may be increased by the Employer with effect from the date of such review by such amount (if any) as the Reporting Officer may recommend.

2.3

You are also eligible to participate in the American Greetings Key Management Annual Bonus Plan (the “Annual Bonus Plan”) and the Key Management Special Three-Year Super Bonus Plan (the “Special Three-Year Super Bonus Plan”) and any of their successors from time to time (the “Plans”) in accordance with the rules of such plans as amended from time to time subject to the provisions of Clause 2.4 below. The rules of the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000 (which runs from 1st March 1997 to 28th February 2000) and the present rules of the Annual Bonus Plan as they apply to you are set forth in Appendix A, save that:

2.3.1

for the fiscal year 1999 (1st March 1998 to 28th February 1999) your target bonus will be 30% of £135,000;

2.3.2

for fiscal year 2000 (1st March 1999 to 28th February 2000) your target bonus will be 30% of the amount of Base Salary under Clause 2.1 paid during the fiscal year 2000;

2.3.3

in relation to the Annual Bonus Plan your target financial goal for fiscal year 1999 will be determined by reference to the performance of Hanson White Group Limited and for fiscal year 2000 will be determined by reference to the performance of UK Greetings Limited; and

2.3.4

in relation to the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000 your target financial goals for fiscal year 1999 will be determined by reference to the performance of Hanson White Group Limited and UK Greetings Limited and for fiscal year 2000 will be determined by reference to the performance of UK Greetings Limited and the consolidated American Greetings Corporation.

2.4

In the event that your Employment is terminated by the Employer (other than pursuant to Clause 10.2) with effect from a date during the First Employment or Fixed Period, your entitlement under the Plans will be as follows (notwithstanding any rule of the Plans to the contrary):

2.4.1

in relation to the Annual Bonus Plan for the fiscal year during which the Employment is terminated, you will be entitled to 100% of your target bonus whether or not the target financial goals are achieved or exceeded and notwithstanding the fact that the Employment has terminated prior to the end of the fiscal year and prior to the date on which bonuses are awarded under this Plan, such entitlement accruing and becoming due on the date of termination of the Employment;

2.4.2

in relation to the Special Three-Year Super Bonus Plan for the fiscal years 1998, 1999 and 2000, if the Employment is terminated during the fiscal year 1999, you will not be entitled to any bonus. If the Employment is terminated during the fiscal year 2000, it will be deemed that both target financial goals have been met in 2000 and provided each target financial goal is met in 1999, you will be entitled to 60% of the target bonus, notwithstanding the fact that the Employment has terminated prior to the end of the fiscal year 2000 and prior to the date on which bonuses are awarded under this Plan, such entitlement accruing and becoming due on the date of termination of the Employment;

and for the avoidance of doubt, the above Clauses 2.4.1 and 2.4.2 will not apply in the event that the Employment is terminated by the Employer in accordance with Clause 10.2 or if you resign from the Employment. For the avoidance of doubt resignation from the office of director whilst remaining in employment with the Employer shall not constitute resignation from the Employment for these purposes.

3.

Fringe Benefits

3.1

The Employer will provide you (for your business use and your reasonable private use) with a car of such make, model, age and specification as you may select in accordance with the Employer’s car policy from time to time. The Employer will pay for all standing and running expenses of the car excluding the cost of fuel for private use of the car outside the UK and excluding any additional insurance costs associated with private use of the car outside the UK (and excluding any income tax payable by you on this benefit). The Employer will replace your company car periodically in accordance with its car policy from time to time. You must comply with all the Employer’s rules from time to time regarding company cars, hold a current driving licence or ensure that you have available to you during your hours of work for your use on the Employer’s business and at your own expense a driver holding a current driving licence, notify the Employer immediately of any accidents involving the car and of any charges of driving offences made against you (whether or not while on the Employer’s business) and return the car to the Employer at its head office in as good a condition as that in which it was originally supplied to you (subject to reasonable wear and tear) immediately when the Employment ends.

3.2

You are entitled, by written notice given to the Reporting Officer on or within 7 days after the Commencement Date or by giving 3 months’ prior written notice to the Reporting Officer to expire on the replacement date of any company car provided to you under Clause 3.1, to elect in substitution for your entitlement under Clause 3.1 to receive a non-pensionable, taxable car allowance of £15,000 per annum (or such higher rate as is payable in accordance with Clause 3.3) paid in equal monthly or twice-monthly instalments with your Base Salary. If you elect to receive this allowance, you agree that you will procure the availability at all times of a car which is suitable (in terms of age, make, specification and model) for use by you on the Employer’s business, that you will ensure (at your expense) that the car is properly insured, maintained and repaired for such use and that all standing and running expenses will be for your own account.

3.3

The car allowance referred to in Clause 3.2 will be altered if and when and by the same percentage as the percentage by which the cost to the Employer of providing such car as you are entitled to under Clause 3.1 (and if the car is leased, this shall be the invoiced lease cost inclusive of VAT) alters, provided that the allowance will not be reduced below £15,000 per annum.

3.4

You (and, in the case of private medical expenses insurance, your spouse and dependant children under 25 in full time education) are entitled to participate in the private medical expenses insurance and any long term incapacity plan provided by the Employer from time to time for the benefit of employees, subject always to the rules of the relevant schemes and provided that such entitlement will be no less favourable than that provided to you by the First Employer immediately prior to the Commencement Date.

3.5

The Employer will provide you with death-in-service life assurance cover of four times your Base Salary at the rate payable to you at the date of your death, subject to the terms of the insurance policy or scheme from time to time.

3.6

During the Employment, the Employer will contribute in twelve equal monthly instalments each year an amount equal to the greater of £26,250 and 15% of your Base Salary (at the rate then payable) for your benefit to any company pension scheme set up by or on behalf of the Employer or the Group (provided you are eligible to be a member) subject to the rules of any such scheme and Inland Revenue contribution limits from time to time.

4.

Expenses

4.1

The Employer will reimburse you in arrears for your ordinary and necessary travelling, telephone, hotel, entertainment and other business expenses incurred in the course of your duties provided that you comply with the Employer’s regulations from time to time in this respect and provide the Reporting Officer with receipts or other proof of payment as the Reporting Officer may reasonably require.

5.

Holiday

5.1

In addition to public holidays, you are entitled to 25 working days’ holiday without loss of pay in each holiday year (which runs from 1st January to 31st December) to be taken at such time or times as may be authorised in advance by the Reporting Officer. You may not, except with prior permission from the Reporting Officer, carry forward any unused part of your holiday entitlement to a subsequent holiday year.

5.2

Your entitlement for the first and last holiday year of your employment under this Agreement will be the number of working days which is the same proportion of 25 as the period of your employment during that year is of a whole calendar year, rounded down to the nearest whole day. Unless your Employment is terminated pursuant to Clause 10, you will be entitled on termination to pay in lieu of any unused holiday entitlement. If you have taken holiday in excess of your accrued entitlement on termination of your Employment, you will be required to repay any excess Base Salary you have received for such holiday. The basis for payment and repayment is 1/365th of your Base Salary for each day.

6.

Incapacity

6.1

If you are absent from work because of illness, mental disorder or injury (“Incapacity”), you must report that fact immediately to the Reporting Officer and, after seven continuous days’ absence, provide medical practitioners’ certificate(s) of your Incapacity and its cause for Statutory Sick Pay purposes covering the whole period of your absence. For Statutory Sick Pay purposes, your qualifying days are your normal working days.

6.2

If you are absent from work due to Incapacity and have complied with the provisions of Clause 6.1, you will continue to be paid your Base Salary for up to 130 working days’ absence (excluding Saturdays, Sundays and public holidays) in any period of 12 consecutive months and, thereafter, such part of your Base Salary, if any, as the Reporting Officer, in his/her absolute discretion, determines from time to time provided that any such payment will not be less than and will be deemed to include all and any Statutory Sick Pay to which you are entitled and any Social Security Sickness Benefit or other state benefits recoverable by you

(whether or not recovered) may be deducted from such payment. If your absence exceeds 30 consecutive days, the Employer will be entitled to appoint a temporary replacement to cover your absence.

6.3

You will, whenever requested by the Reporting Officer, submit to examination by a medical practitioner selected and paid for by the Employer. You hereby authorise such medical practitioner to disclose to and discuss with the Reporting Officer any matters which, in the medical practitioner’s opinion, might hinder or prevent you (if during a period of Incapacity) from returning to work for any period or (in other circumstances) from properly performing your duties at any time.

7.

Confidentiality and Integrity

7.1

You agree that you will not directly or indirectly solicit, receive, obtain or offer any discount, rebate, commission, entertainment or other inducement (whether in cash or in kind) to or from any customer, supplier or potential customer or supplier or intermediary which is not authorised by regulations or guidelines from time to time governing dealings by executives on behalf of the Employer or, if you do, that you will account immediately to the Employer for the amount so received.

7.2

Without prejudice to your obligations at common law, your obligations concerning the preservation of the confidential information of the Employer and its Group Companies are in the terms set forth in the Carlton Cards Employee Handbook (as amended from time to time, with reference therein to the “Company” read as referring to the Employer and amended to apply in respect of the confidential information of the Employer and its Group Companies).

7.3

You agree not at any time during or after your Employment to make any untrue or misleading statement relating to the Employer or its Group Companies.