-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TtcQ/afC8kD99SsusZ+vRXhBLJV4d99xKBn9MS4BkPy/i/svVeJhie8TKzqYKcxm xJcrhQSBvPLqy1/oxGNzog== 0000950152-01-506580.txt : 20020413 0000950152-01-506580.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950152-01-506580 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20011221 EFFECTIVENESS DATE: 20011221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GREETINGS CORP CENTRAL INDEX KEY: 0000005133 STANDARD INDUSTRIAL CLASSIFICATION: GREETING CARDS [2771] IRS NUMBER: 340065325 STATE OF INCORPORATION: OH FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-75696 FILM NUMBER: 1820801 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 BUSINESS PHONE: 2162527300 MAIL ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 S-8 1 l91835as-8.txt AMERICAN GREETINGS CORPORATION S-8 As filed with the Securities and Exchange Commission on December 21, 2001 Registration No. 333-_____ - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AMERICAN GREETINGS CORPORATION (Exact name of registrant as specified in its charter) OHIO 34-0065325 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) ONE AMERICAN ROAD CLEVELAND, OHIO 44144 (Address of principal executive offices, including zip code) AMERICAN GREETINGS EMPLOYMENT AGREEMENT WITH SELLING SHAREHOLDER DATED SEPTEMBER 25, 2001 (Full title of the Plan) JON GROETZINGER, JR., ESQ. SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY AMERICAN GREETINGS CORPORATION. ONE AMERICAN ROAD CLEVELAND, OHIO 44144 (216) 252-7300 (Name, address and telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------- Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of to be registered Registered Offering Price per share Aggregate Offering Price Registration fee - ------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Class A Common 175,000 Shares $13.76(1) $2,407,125 $575.30 Shares $1 par value - -------------------------------------------------------------------------------------------------------------------
(1) Estimated in accordance with Rules 457(c) and (h) solely for the purpose of calculating the registration fee on the basis of the average of the high and low prices as quoted on the New York Stock Exchange on December 18, 2001. EXPLANATORY NOTE Set forth on the pages immediately following is a "reoffer prospectus." The reoffer prospectus is filed as part of this registration statement on Form S-8 of American Greetings Corporation. The prospectus has been prepared in accordance with the requirements of Part I of Form S-3, and it may be used for reoffers of "restricted securities" (as defined in General Instruction C (1)(a) to Form S-8) by the selling shareholder referenced in the prospectus. PROSPECTUS 175,000 CLASS A COMMON SHARES AMERICAN GREETINGS CORPORATION OFFERED BY THE SELLING SHAREHOLDER Founded in 1906, American Greetings Corporation (the "Company") is the second largest greeting card company in the world with approximately 39% market share of the $7 billion U.S. greeting card industry. It creates, manufactures and distributes greeting cards, gift-wrap, party goods, calendars, candles, balloons, stationery, non-prescription reading glasses and educational products. The Company sells its products internationally in over 70 countries through its wholly owned subsidiaries and licensees. It offers online greeting cards through its subsidiary AmericanGreetings.com. The contribution of each major product category as a percentage of fiscal 2001 net sales was: everyday greeting cards (42%), seasonal greeting cards (20%), gift wrap and wrap accessories (16%) and other products (22%). This prospectus covers reoffers and resales of up to 175,000 Class A Common Shares (the "Shares") of the Company by the selling shareholder. The selling shareholder received the Shares pursuant to a grant described in his employment agreement with the Company. These Shares may be offered and sold over time by the selling shareholder named in this prospectus under the caption "Selling Shareholder." The selling shareholder may sell the Shares in the open market at prevailing market prices, or in private transactions at negotiated prices. He may sell the Shares directly, or he may sell them through underwriters, brokers or dealers. Underwriters, brokers, or dealers may receive discounts, concessions or commissions from the selling shareholder or from the purchaser, and this compensation might be in excess of the compensation customary in the type of transaction involved. The Company will not receive any of the proceeds from the sale of the Shares. The Company's Class A Common Shares trade on the New York Stock Exchange under the symbol "AM." The last reported sale price on December 18, 2001 was $13.41 per share. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. In connection with this offering, no dealer, salesperson or other person is authorized to give any information or to make any representation not contained in this prospectus. If information is given or representations are made, you may not rely on that information or representations as having been authorized by us. This prospectus is neither an offer to sell nor a solicitation of an offer to buy any securities other than those registered by this prospectus, nor is it an offer to sell or a solicitation of an offer to buy securities where an offer or solicitation would be unlawful. You may not imply from the delivery of this prospectus, nor from any sale made under this prospectus, that the Company's affairs are unchanged since the date of this prospectus or that the information contained in this prospectus is correct as of any time after the date of this prospectus. Prospectus dated December 21, 2001 No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offer made by this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the selling shareholder. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy, the securities offered hereby in any jurisdiction where such offer or solicitation is not authorized, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that any information contained herein is correct as of any time subsequent to the date hereof. TABLE OF CONTENTS Incorporation of Certain Documents by Reference...............................2 Risk Factors..................................................................3 Caution Regarding Forward-looking Statements..................................8 Recent Developments...........................................................8 Information about the Company.................................................9 Use of Proceeds...............................................................9 Price Range of Class A Common Shares..........................................10 Selling Shareholder...........................................................10 Plan of Distribution..........................................................11 Description of Capital Stock..................................................12 Legal Matters.................................................................13 Experts.......................................................................14 Where You Can Find More Information...........................................14 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Securities and Exchange Commission allows the Company to incorporate into this prospectus information that it files with the Commission in other documents. This means that the Company can disclose to you important business and financial information that is not included with the prospectus by referring to other documents that contain that information. The information incorporated by reference is considered to be part of this prospectus. Information contained in this prospectus and information that the Company files with the Commission in the future and incorporates by reference in this prospectus automatically updates and supersedes previously filed information. The Company incorporates by reference the documents listed below and any future filings it makes with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the sale of all the shares covered by this prospectus: (a) its Annual Report on Form 10-K for the fiscal year ended February 28, 2001; (b) its Form 10-Q for the fiscal quarters ended May 31, 2001 and August 31, 2001; (c) its Form 8-K dated April 3, 2001 and the related Form 8-K/A filed with the Commission on June 1, 2001; (d) its Form 8-K dated September 27, 2001 and the related Form 8-K/A filed with the Commission on November 21, 2001; (e) the description of its capital stock contained in its registration statement on Form 8-A filed with the Commission on February 6, 1998, including any amendments or reports filed for the purpose of updating that description; and (f) all its other filings with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of the offering. UPON REQUEST. YOU MAY OBTAIN WITHOUT CHARGE COPIES OF ANY OR ALL OF THESE DOCUMENTS, INCLUDING EXHIBITS. PLEASE MAKE YOUR REQUEST TO JON GROETZINGER, JR., SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, AMERICAN GREETINGS CORPORATION, ONE AMERICAN ROAD, CLEVELAND, OHIO 44144; TELEPHONE (216) 252-7300. RISK FACTORS Your investment in the Shares involves significant risk. You should carefully consider the following risk factors and the other information set forth in this prospectus before deciding to purchase any Shares. RISKS RELATING TO THE OFFERING THE PRICE OF THE COMPANY'S CLASS A COMMON SHARES MAY BE VOLATILE, WHICH MAY RESULT IN LOSSES FOR INVESTORS. The market price for the Company's Class A Common Shares has been volatile in the past, and several factors could cause the price to fluctuate substantially in the future. These factors include: - - announcements of developments related to the Company's business; - - fluctuations in the Company's results of operations; - - sales of substantial amounts of the Company's securities into the marketplace; - - general conditions in the Company's industry or the worldwide economy; - - an outbreak of war or hostilities; - - a shortfall in revenues or earnings compared to securities analysts' expectations; - - changes in analysts' recommendations or projections; and - - announcements of new acquisitions or other projects by the Company. The market price of Class A Common Shares may fluctuate significantly in the future, and these fluctuations may be unrelated to its performance. General market price declines or market volatility in the future could adversely affect the price of Class A Common Shares, and the current market price may not be indicative of future market prices. FUTURE SALES OF THE COMPANY'S CAPITAL STOCK MAY DEPRESS PRICES OF ITS CLASS A COMMON SHARE PRICES. Sales of a substantial amount of the Company's capital stock in the public market, or the appearance that such amount is available for sale, could adversely affect the market price for Class A Common Shares. As of November 30, 2001, the Company had the following equity securities and options to purchase equity securities outstanding: 62,764,009 Class A Common Shares; options to purchase 9,365,365 Class A Common Shares; 4,623,751 Class B Common Shares; and options to purchase 1,122,963 Class B Common Shares. In addition, 13,004,002 Class A Common Shares and 1,311,578 Class B Common Shares were reserved for issuance pursuant to options granted or available for grant under the Company's stock options plans and employee stock purchase plan. Class B Common Shares may be converted into Class A Common Shares at any time at the election of the holder. THE COMPANY'S CHARTER DOCUMENTS AND OHIO LAW MAY INHIBIT A TAKEOVER AND LIMIT THE COMPANY'S GROWTH OPPORTUNITIES, WHICH COULD CAUSE THE MARKET PRICE OF ITS CLASS A COMMON SHARES TO DECLINE. Certain provisions of Ohio law and the Company's Articles of Incorporation could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company. The Company's Articles of Incorporation provide for the Board of Directors to be divided into three classes of directors serving staggered three-year terms. Such classification of the Board of Directors expands the time required to change the composition of a majority of directors and may tend to discourage a proxy context or other takeover bid for the Company. In addition, its Articles of Incorporation provide for Class B Common Shares, which have ten votes per share. Applicable provisions of Ohio law also restrict the Company's ability to engage in certain business combination transactions with owners of 10% or more of the outstanding common shares. RISKS RELATING TO THE COMPANY'S BUSINESS THE COMPANY CANNOT ASSURE YOU THAT IT WILL HAVE ADEQUATE LIQUIDITY TO FUND ITS ONGOING CASH NEEDS. Over the next twelve months, the Company will face significant capital requirements in order to fund its restructuring program, its negotiated contract with a major mass merchandiser, and its seasonal working capital needs. In addition, the Company may have additional funding needs during or after that period that are not currently anticipated. There can be no assurance that additional financing will be available to the Company or, if available, that it can be obtained on terms acceptable to management or within limitations that are contained in the Company's current or future financing arrangements. Failure to obtain any necessary additional financing could result in the delay or abandonment of some or all of the Company's restructuring plans, negatively impact its ability to make capital expenditures and result in its failure to meet its obligations. In addition, from 1992 to 1999, the Company took certain tax deductions related to its corporate-owned life insurance programs (COLI). Recently, a federal tax decision unfavorable to another corporation for a similar COLI issue was published. As a result, the Company recorded a non-cash charge of approximately $143 million in the fourth quarter of 2001, which amount represents the effect of assessments by the internal revenue service for the disallowance of certain deductions related to this insurance program. Although management believes that in the event of a proceeding against the Company, it would actively defend itself and believes the Company could distinguish certain of its COLI plans from those addressed in the prior litigation, there can be no assurance that the Company would be successful, and the Company could be required to pay the amount of its recorded charge to the Internal Revenue Service. In this event, the Company would require additional financing to provide the cash for such a payment. There can be no assurance that additional financing will be available to the Company or, if available, that it can be obtained on terms acceptable to the Company or within limitations that are contained in its current or future financing arrangements. THE COMPANY CANNOT ASSURE YOU THAT IT WILL BE ABLE TO IMPLEMENT ITS PROPOSED COST SAVINGS INITIATIVES OR THAT THOSE INITIATIVES WILL PRODUCE THE ANTICIPATED POSITIVE EFFECTS. In November 2000, management announced that the Company would undertake a review of its operations, focusing on process improvements. In March 2001, the Company devised a restructuring plan for its core greeting card business that is expected to improve efficiency and reduce costs. The restructuring plan includes a rationalization process, a product line size reduction program, the consolidation of its facilities and workforce reduction of approximately 1,500 employees, or approximately 13% of its current full-time workforce. The reorganization is expected to result in a pre-tax charge of between $200 million and $220 million in fiscal 2002. Although management believes the implementation of the restructuring is feasible on the schedule currently contemplated, the Company may encounter unanticipated difficulties. There can be no assurance that the anticipated cost savings will be realized as a result of the implementation of the restructuring plan. In addition, several large retailers, two of which together represented approximately 15% of the Company's sales in fiscal 2001, have encouraged the Company to implement scan-based trading, which is a form of consignment selling in which inventory is held on the Company's books, instead of the books of its retailers, until an actual sale to a consumer occurs. The Company is in the process of implementing scan-based trading with certain retailers, and it expects this implementation to result in a one-time pre-tax charge of between $80 and $90 million in fiscal 2002, and it anticipates the effects on the Company to be an ongoing reduction in working capital, maximization of retail productivity and throughput, reduced costs and enhanced retailer relationships. However, there can be no assurance that the expected benefits of scan-based trading will be realized. THE COMPANY HAS A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE. The Company experienced a loss in fiscal 2001 and may incur additional losses in the future. The Company has and will continue to have a substantial amount of interest expense in respect of debt incurred and depreciation and amortization expenses relating to its recent acquisitions as well as to its fiscal 2002 restructuring program. Such expenses have contributed to the net losses the Company experienced. Management expects that the Company will continue to incur such non-operating expenses at increased levels as a result of scan-based trading, the restructuring program and a change in the contractual relationship with a partner of the Company's Internet unit. THE COMPANY RELIES ON A FEW LARGE CUSTOMERS FOR A SIGNIFICANT PORTION OF ITS SALES. A few of the Company's customers are material to its business and operations. In both fiscal 2000 and fiscal 2001, the Company's largest customer , Wal-Mart Stores, Inc., represented approximately 10% of its consolidated net sales. Aggregate consolidated net sales to its five largest customers represented approximately 29% of its total consolidated net sales in fiscal 2001. There can be no assurance that these large customers will continue to purchase the Company's products in historical quantities. The loss of sales to one of its large customers could materially adversely affect the Company, its operating results, its financial condition and its prospects. DIFFICULTIES IN INTEGRATING POTENTIAL ACQUISITIONS COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS. The Company regularly evaluates potential acquisition opportunities to support and strengthen its business. The Company cannot be sure that it will be able to locate suitable acquisition candidates, acquire candidates on acceptable terms or integrate acquired businesses successfully. Future acquisitions may require the Company to incur additional debt and contingent liabilities, which may materially and adversely affect its business, operating results and financial condition. Furthermore, the process of integrating acquired businesses effectively involves the following risks: - - assimilating operations and products may be unexpectedly difficult; - - management's attention may be diverted from other business concerns; - - the Company may enter markets in which it has limited or no direct experience; and - - the Company may lose key employees of an acquired business. The Company does not currently have any material agreements relating to proposed or pending acquisitions or joint ventures. THE COMPANY'S OPERATING RESULTS MAY FLUCTUATE ON A SEASONAL BASIS. The greeting card business is a seasonal business based on holidays, with results of operations for the first, second and fourth fiscal quarters generally being lower than those of the third fiscal quarter. Consequently, the Company's overall operating results in the future may fluctuate substantially based on seasonal demand for its products. Such variations in demand could have a material adverse effect on the timing of its cash flows and therefore its ability to service its obligations with respect to the notes. THE COMPANY OPERATES IN AN EXTREMELY COMPETITIVE MARKET, AND ITS BUSINESS WILL SUFFER IF IT IS UNABLE TO COMPETE EFFECTIVELY. The Company operates in a highly competitive industry. The greeting card business is extremely concentrated, and the Company is one of only two main competitors, which together encompass over 75% of the overall market. The Company's main competitor may have substantially greater financial, technical or marketing resources, a greater customer base, stronger name recognition and a lower cost of funds than the Company has, and that competitor also has longstanding relationships with certain large customers to which it may offer products not provided by the Company, which may put the Company at a competitive disadvantage. As a result, this competitor or others may be able to: - - adapt to changes in customer requirements more quickly; - - take advantage of acquisition and other opportunities more readily; and - - devote greater resources to the marketing and sale of its products and adopt more aggressive pricing policies than the Company. There can be no assurance that the Company will be able to continue to compete successfully in this market or against such competition. If the Company is unable to introduce new and innovative products that are attractive to its customers, or is unable to allocate sufficient resources to effectively market and advertise its products so that they achieve widespread market acceptance, the Company may not be able to compete effectively, and its operating results and financial condition will be adversely affected. THE COMPANY MAY BE ADVERSELY AFFECTED BY RETAIL TRENDS AND VOLATILITY. The Company's business and that of most of its customers is cyclical and has historically experienced periodic downturns in direct relation to general economic downturns. A downturn in the economy may affect consumer purchases of discretionary items, which could adversely affect the Company's sales. The Company's success depends on the sustained demand for its products. Many factors affect the level of consumer spending on the Company's products, including, among others, general business conditions, interest rates, the availability of consumer credit, taxation and consumer confidence in future economic conditions. Consumer purchases of discretionary items, such as the Company's products, tend to decline during recessionary periods when disposable income is lower. These downturns have been characterized by diminished product demand and subsequent accelerated erosion of average selling prices. A general slowdown in the economies in which the Company sells its products or even an uncertain economic outlook could adversely affect consumer spending on the Company's products and, in turn, its sales and results of operations. With the growing trend toward towards retail trade consolidation, the Company is increasingly dependent upon a reduced number of key retailers whose bargaining strength is growing. The Company may be negatively affected by changes in the policies of its retail trade customers, such as inventory de-stocking, limitations on access to shelf space, scan-based trading and other conditions. Increased consolidations in the retail industry could result in price and other competition that could damage the Company's business. TWO SIGNIFICANT STOCKHOLDER GROUPS CONTROL A SUBSTANTIAL PORTION OF THE COMPANY'S OUTSTANDING CAPITAL STOCK. As of November 30, 2001, two significant stockholder groups beneficially owned approximately 52% in the aggregate of the Company's outstanding Class B Common Shares. Class A Common Shares are entitled to one vote per share, and Class B Common Shares are entitled to ten votes per share. Accordingly, holders of Class B Common Shares, as a group, will be able to significantly influence the outcome of stockholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in the Company's Articles of Incorporation or Code of Regulations, and the approval of mergers and other significant corporate transactions, and their interests may not be aligned with your interests. Two of the nine members of the Company's board of directors are members of one of these stockholder groups. The existence of these levels of ownership concentrated in a few persons makes it less likely that any other shareholder will be able to affect the Company's management or strategic direction. These factors may also have the effect of delaying or preventing a change in the Company's management or voting control or its acquisition by a third party. THE LOSS OF KEY MEMBERS OF THE COMPANY'S SENIOR MANAGEMENT TEAM COULD ADVERSELY AFFECT ITS BUSINESS. The Company's success depends largely on the efforts and abilities of its current senior management team. The experience and industry contacts of its management team significantly benefit the Company. If the Company were to lose the benefit of that experience and those contacts, the Company's business could be adversely affected. POLITICAL AND ECONOMIC CONDITIONS IN FOREIGN COUNTRIES IN WHICH THE COMPANY OPERATES COULD ADVERSELY AFFECT THE COMPANY. A portion of the Company's current operations are conducted and located abroad. International revenue represented 17.1% of total revenue in fiscal 2001 and 19.5% of total revenue in fiscal 2000. Management expects that international revenue will continue to represent a significant portion of the Company's total revenue in the foreseeable future. The success of the Company's sales to, and operations in, foreign markets depends on numerous factors, many of which are beyond its control, including economic conditions in the foreign countries in which the Company sells its products and services. Its international sales and operations may also expose the Company to risks inherent in doing business outside the United States, including currency fluctuations, restrictions on the repatriation of profits and assets, compliance with foreign laws and standards and political risks. In general, the Company does not execute hedge transactions to reduce its exposure to foreign currency exchange rate risks. There can be no assurance that any foreign government will not adopt regulations or take other actions that would have a direct or indirect adverse impact on the Company's business or market opportunities within any country. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to the Company's operations and growth strategy. THE COMPANY'S BUSINESS COULD BE ADVERSELY AFFECTED IF MANAGEMENT IS UNSUCCESSFUL IN NEGOTIATING NEW COLLECTIVE BARGAINING AGREEMENTS. The Company is subject to a limited number of collective bargaining agreements. At November 30, 2001, the Company had a total of approximately 12,231 full-time employees and approximately 27,128 part-time employees. Approximately 2,700 of its hourly plant employees are unionized, of which 100% are covered by eight collective bargaining agreements. These agreements expire at various times over the next four years. These agreements generally cover wages, health care benefits and retirement plans, seniority, job classes and work rules. The Company can give you no assurance that these collective bargaining agreements will be renewed upon expiration or that new collective bargaining agreements on terms acceptable to the Company will be established. Failure to renew such agreements could adversely impact the Company's financial condition and results of operations. VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO ITS BUSINESS MAY REQUIRE THE COMPANY TO TAKE ACTIONS, WHICH WILL ADVERSELY AFFECT ITS RESULTS OF OPERATIONS. The Company's business is subject to numerous federal, state, provincial, local and foreign laws and regulations, including regulations with respect to air emissions, wastewater discharges and the generation, handling, storage, transportation, treatment and disposal of waste materials. Although management believes the Company is in substantial compliance with all applicable laws and regulations, legal requirements are frequently changed and subject to interpretation, and management is unable to predict the ultimate cost of compliance with these requirements or their effect on the Company's operations. The Company may be required to make significant expenditures to comply with governmental laws and regulations. Management cannot be certain that existing laws or regulations, as currently interpreted or reinterpreted in the future, or future laws or regulations, will not have a material adverse effect on the Company's results of operations and financial condition. CAUTION REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties and include statements regarding position, business strategy and other plans and objectives for future operations and statements, which are not historical facts. Although the Company believes that such statements are based on reasonable assumptions, these forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include, among others, retail bankruptcies and consolidations, successful integration of acquisitions, a weak retail environment, consumer acceptance of products as priced and marketed, the impact of technology on core product sales and competitive terms of sale offered to customers. Risks pertaining specifically to the Company's electronic marketing business include the ability of AmericanGreetings.com to attract strategic partners as investors, the viability of online advertising as a revenue generator and the public's acceptance of online greetings and other social expression products. These factors expressly qualify all subsequent oral and written forward-looking statements attributable to the Company or persons acting on our behalf. Except for its ongoing obligations to disclose material information as required by the federal securities laws, the Company does not have any intention or obligation to update forward-looking statements after the distribution of this prospectus. Actual results may differ materially from those suggested by the forward-looking statements for various reasons, including those discussed under "Risk Factors" in this prospectus. RECENT DEVELOPMENTS On December 18, 2001, the Company reported lower third-quarter earnings because of special charges in the fiscal quarter ended November 30, 2001 compared to the third quarter of the prior year. The lower earnings were principally related to scan-based trading and business reorganization initiatives. However, earnings did meet projections. Net income in the quarter fell 79%, to $6.6 million, or 10 cents a share, from $32 million, or 50 cents a share. The after-tax special charges in the quarter totaled $34.3 million, or 54 cents a share. For the quarter, sales declined nearly 8%, to $705.4 million from $766.1 million. Net sales were down due in part to unfavorable exchange rates and reduced shipments from the Company's Plus Mark subsidiary, as well as continued implementation impacts of the scan-based trading and brand elimination initiatives. On the other hand, cost reductions related to the integration of the Gibson Greetings and CPS Corp. acquisitions, along with continued process improvements, were beginning to have a positive impact on net earnings. On December 18, 2001, the Company also announced suspension of its dividend, after paying quarterly dividends for 50 consecutive years. The Company suspended the dividend, even though the Company is in compliance with its debt covenants, because generating cash and reducing debt are primary objectives at the present time. The Company previously paid a dividend of 10 cents a share. INFORMATION ABOUT THE COMPANY American Greetings Corporation is incorporated under the laws of the State of Ohio, and its principal executive offices are located at One American Road, Cleveland, Ohio 44144-2398, the Company's telephone number is (216) 252-7300. The Company is a fully integrated company in the social expressions industry. It has one of the largest design studios in the world, with over 300 artists generating more than 30,000 new design concepts annually. The Company has a digital library with over 100,000 active designs that consist of well-known images such as Strawberry Shortcake, Holly Hobbie and the Care Bears. These designs are manufactured in its state-of-the-art facilities located in North America, the United Kingdom, Australia, New Zealand, Malaysia and South Africa. The Company has developed an automated distribution system whereby it is able to replenish retailers' shelves within days of initiating a re-order in order amounts as small as two or three cards. The social expression industry, which includes greeting cards, gift-wrap and related accessories that are used to express feelings and celebrate special occasions, is a more than $12 billion industry in the United States. The industry is highly fragmented, with over 2,000 companies. The Company's principal competitor is Hallmark Cards, Incorporated, which is privately held. The major component of the social expression industry is greeting cards, which is a $7 billion industry in the United States. Greeting cards are low-priced, necessity-related purchases that are a strong source of cash flow and a vital component of our retail partners' product mix. Over the last ten years, greeting card dollar sales have grown at a compound annual growth rate of approximately 2.6%. The Company sells to and services more than 100,000 retail stores worldwide, of which more than 70,000 are located in the United States. It has the number one position in the mass retail distribution channel in the United States (which comprises mass merchandisers, chain drug stores and supermarkets), where the Company has a market share in excess of 50%. The Company has strong relationships with key retailers including Wal-Mart, Kmart, Target, Toys R Us, Rite Aid, CVS, Consolidated Stores, Eckerd, Kroger, Albertsons, Winn-Dixie, Royal Ahold and H.E.B. It has agreements with various retailers for the supply of greeting cards and related products. Under those agreements, customers typically grant the Company preferred supplier status and commit to minimum sales volumes in consideration of allowances, discounts and other terms of sale. In order to maximize sell-through for our retail partners, the Company has approximately 21,800 part-time merchandisers in the field to ensure in-stock position, superior merchandising and product freshness. USE OF PROCEEDS The Company is registering the Shares offered by this prospectus for the account of the selling shareholder identified in the section of this prospectus captioned Selling Shareholder. All the net proceeds from the sale of the Shares will go to the selling shareholder offering and selling the Shares. The Company will not receive any part of the proceeds from the sale of the Shares. PRICE RANGE OF CLASS A COMMON SHARES The Class A Common Shares are traded on the NYSE under the symbol "AM." Set forth below are the high and low sales prices of the Class A Common Shares for the periods indicated as reported on the NYSE Composite Tape.
HIGH LOW FISCAL QUARTER ENDED AUGUST 31, 2001 14.25 10.36 FISCAL QUARTER ENDED MAY 31, 2001 14.38 9.95 FISCAL YEAR ENDED FEBRUARY 28, 2001 First Quarter 19 9/16 15 5/16 Second Quarter 24 1/16 16 7/8 Third Quarter 20.13 8. 94 Fourth Quarter 13.91 8. 19 FISCAL YEAR ENDED FEBRUARY 29, 2000 First Quarter 28 13/16 22 5/16 Second Quarter 32 3/8 27 3/16 Third Quarter 28 1/2 23 1/16 Fourth Quarter 25 11/16 17 1/4 FISCAL YEAR ENDED FEBRUARY 28, 1999 First Quarter 49 7/16 44 7/8 Second Quarter 53 3/4 36 5/8 Third Quarter 44 35 Fourth Quarter 44 5/16 22
On December 18, 2001, the last reported sales price of the Company's Class A Common Shares on the NYSE was $13.41 per share. As of November 30, 2001, there were approximately 6,198 shareholders of record of Class A Common Shares, and there were 62,764,009 Class A Common Shares issued and outstanding. SELLING SHAREHOLDER James C. Spira, the selling shareholder, acquired the Shares from the Company in a grant described in his employment agreement with the Company. As selling shareholder, Mr. Spira will receive all the net proceeds from the sale of the Shares offered by this prospectus. Mr. Spira is the Company's President and Chief Operating Officer, a position he has held since June 25, 2000. Mr. Spira was not employed by the Company (or by any predecessor or affiliate of the Company) prior to such date, but he also currently serves as a director of the Company, a position he has held since 1998. The following table sets forth certain information regarding Mr. Spira's beneficial ownership of the Company's Class A Common Shares as of November 30, 2001. The number of Class A Common Shares outstanding will not change as a result of the offering, nor will the number of shares owned or percentage of ownership of any person other than Mr. Spira change as a result of any sales made pursuant to this offering. The number of shares owned by Mr. Spira after the offering, as shown in the following table, assumes that all the Shares offered hereby will be sold. However, there can be no assurance that Mr. Spira will offer or sell any or all of the Shares covered by this prospectus. Mr. Spira owns less than 0ne percent of the outstanding Class A Common Shares, and he will own less than one percent of such shares upon completion of the offering. SHARES OWNED SHARES OWNED NAME BEFORE OFFERING SHARES OFFERED AFTER OFFERING James C. Spira 185,000 175,000 10,000 PLAN OF DISTRIBUTION The Shares offered by this prospectus may be sold from time to time by the selling shareholder. Such sales may be made on the New York Stock Exchange, in the over-the-counter market, or otherwise at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The shares may be sold in one or more of the following transactions: (a) a block trade in which the broker or dealer so engaged will attempt to sell the Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus; (c) an exchange distribution in accordance with the rules of the exchange; and (d) ordinary brokerage transactions and transactions in which the broker solicits purchasers. In effecting sales, brokers or dealers engaged by the selling shareholder may arrange for other brokers or dealers to participate. Any broker or dealer to be utilized by the selling shareholder will be selected by him. Brokers or dealers will receive commissions or discounts from the selling shareholder in amounts to be negotiated immediately prior to the sale. These brokers or dealers and any other participating brokers or dealers, as well as certain pledgees, donees, transferees and other successors in interest, may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act of 1933 in connection with the sales. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than pursuant to this prospectus. Upon being notified by the selling shareholder that any material arrangement has been entered into with a broker-dealer for the sale of the Shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, the Company will file a supplemental prospectus, if required, pursuant to Rule 424(c) under the Securities Act of 1933, disclosing: (i) the name of the selling shareholder and the participating broker-dealer(s), (ii) the number of Shares involved, (iii) the price at which the Shares were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and (vi) other facts material to the transaction. The selling shareholder reserves the sole right to accept and, together with any agent of the selling shareholder, to reject in whole or in part any proposed purchase of the Shares. The selling shareholder will pay any sales commissions or other seller's compensation applicable to such transactions. To the extent required, the number of Shares to be sold, purchase prices, public offering prices, the names of any agents, dealers or underwriters, and any applicable commissions or discounts with respect to a particular offer will be set forth in a prospectus supplement accompanying this prospectus or, if appropriate, a post-effective amendment to the registration statement. The selling shareholder and agents who execute orders on his behalf may be deemed to be underwriters as that term is defined in Section 2(11) of the Securities Act of 1933 and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act of 1933. Offers and sales of Shares have not been registered or qualified under the laws of any country, other than the United States. To comply with certain states' securities laws, if applicable, the Shares will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states, the Shares may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from registration or qualification is available and is complied with. Under applicable rules and regulations under the Securities and Exchange Act of 1934, any person engaged in a distribution of the Company's Class A Common Shares may not simultaneously engage in market-making activities with respect to such shares for a period of two to nine business days prior to the commencement of such distribution. In addition to and without limiting the foregoing, the selling shareholder and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including without limitation, Regulation M, which provisions may limit the timing of purchases and sales of any of the Company's Class A Common Shares by the selling shareholder or any such other person. All the foregoing may affect the marketability of the Class A Common Shares and the brokers' and dealers' ability to engage in market-making activities with respect to such shares. The Company will pay substantially all of the expenses incident to the registration of the Shares offered hereby, estimated to be approximately $5,000. DESCRIPTION OF CAPITAL STOCK The Company, an Ohio corporation, has authorized capital stock consisting of 203,432,968 common shares, classified as 187,600,000 Class A Common Shares, par value $1.00 per share, and 15,832,968 Class B common shares, par value $1.00 per share. As of November 30, 2001, 62,764,009 Class A Common Shares were issued and outstanding and held by approximately 6,198 holders of record and individual participants in security position listings. These shares are currently listed on the New York Stock Exchange under the ticker symbol "AM." Each Class A Common Share is entitled to one vote on all matters presented to shareholders. Holders of Class A Common Shares have no pre-emptive rights to purchase or have offered to them for purchase any stock of any class of the Company, and the Class A Common Shares are neither redeemable nor convertible into any other securities. At November 30, 2001, 4,623,751 Class B Common Shares were issued and outstanding and held by 189 holders of record and individual participants in security positions listings. There is no public trading market for the Class B Common Shares, which are held by members of the founder's extended family, officers and directors of the Company and their extended family members, family trusts, institutional investors and certain other persons. Each Class B Common Share is entitled to ten votes on all matters presented to shareholders and is convertible at the option of the holder to one Class A Common Share; provided, however, that the holder must first tender the share to the Company pursuant to its right to repurchase the share at the then-market value for the Class A Common Shares. Class B Common Shares may only be transferred by the holder to the company or certain permitted transferees, a group which generally includes members of the holder's extended family, family trusts and certain charities. Certain Class B Common Shares are subject to a Shareholders' Agreement, dated November 19, 1984, which provides that shareholders who are parties thereto will offer Class B Common Shares to the other signatory shareholders and then to the Company before transferring Class B Common Shares outside of a group consisting of certain family members, family trusts, charities and the Company. The Shareholders' Agreement terminates on December 31, 2014, unless extended. Subject to the restrictions below, the Company may issue or transfer Class B Common Shares to any person, including pursuant to its employee and dividend reinvestment plans. The Company may not issue additional Class B Common Shares, unless at the same time it also issues Class A Common Shares in an amount sufficient to prevent any reduction in the then existing relative voting power of the holders of Class A Common Shares and reserves a sufficient number of additional authorized but unissued Class A Common Shares for issuance on conversion of the newly issued Class B Common Shares. This limitation does not apply to issuances of Class B Common Shares held in treasury. Each holder of Class B Common Shares has a pre-emptive right to purchase any Class B Common Shares (other than treasury shares) offered by the company for cash, in proportion to his respective holdings of all Class B Common Shares. Any proposal to amend the Company's Articles of Incorporation to increase the authorized number of Class A Common Shares or Class B Common Shares requires the approval of at least two-thirds of the then outstanding shares of each class, voting separately as a class. Generally, in all other respects Class A Common Shares and Class B Common Shares are identical and have similar rights, privileges, qualifications, limitations and restrictions. Management may not declare a share dividend, split or combination with respect to either class of its capital stock, unless a corresponding action is taken with respect to the other class. Holders of each class are entitled to receive ratably such dividends as may be declared by the Company's board of directors out of funds legally available therefor. Upon liquidation, dissolution or winding up of the Company, a holder of shares of either class of its capital stock is entitled to share ratably in the entire net assets of the Company, after payment in full of all liabilities of the Company. All outstanding shares are fully paid and nonassessable. The Ohio Control Share Acquisition Act and the Ohio Merger Moratorium Act, which are applicable to the Company as an Ohio corporation, may have the effect of delaying, deferring or preventing any takeover attempt or change in control. The board of directors is classified into three classes consisting of not less than three directors each, with one class being elected each year. These provisions regarding directors may be amended only by holders entitled to vote at least two-thirds of the voting power of the Company on such matter. Under certain circumstances, including adequate notice to the Company in advance of a shareholders' meeting to vote for the election of directors, a holder of either class of the Company's capital stock may cause cumulative voting in such election of directors to be invoked. These provisions may also have the effect of delaying, deferring or preventing a takeover attempt or change in control. LEGAL MATTERS The legality of the notes has been passed on for the Company by Brouse McDowell, Akron, Ohio. EXPERTS The consolidated financial statements and schedule of American Greetings Corporation, appearing in American Greetings Corporation's Annual Report (Form 10-K) for the fiscal year ended February 28, 2001, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon, included therein and incorporated herein by reference. Such consolidated financial statements and schedule are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION American Greetings Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, and, accordingly, files reports, proxy statements and other information with the Commission. You may read and copy any document the company has filed at the Commission's public reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on the public reference room. The Commission maintains an Internet site that contains reports, proxy and information statements and other information about issuers that file electronically with the Commission. The address of the Commission's Internet site is http://www.sec.gov. This prospectus is part of a registration statement that the company filed with the Commission. The registration statement contains more information than this prospectus regarding the company and its capital stock, including certain exhibits and schedules. You can obtain a copy of the registration statement from the Commission at the address listed above or from the Commission's Internet site. THE FOLLOWING ITEMS REFERRED TO IN THIS PROSPECTUS ARE TRADEMARKS WHICH ARE FEDERALLY REGISTERED, OR FOR WHICH APPLICATIONS FOR REGISTRATION ARE PENDING, IN THE UNITED STATES PURSUANT TO APPLICABLE INTELLECTUAL PROPERTY LAWS AND ARE THE PROPERTY OF THE COMPANY OR ITS SUBSIDIARIES: STRAWBERRY SHORTCAKE, HOLLY HOBBIE AND THE CARE BEARS. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The documents containing the information required in Part I of the Registration Statement have been delivered to James C. Spira, the only participant in the arrangement under which the shares that are the subject of this registration statement were granted, as required by Rule 428(b)(1). Such documents are not being filed with the Securities and Exchange Commission (the "Commission") in accordance with the instructions to Form S-8, but such documents constitute (along with the documents incorporated by reference into the Registration Statement pursuant to Item 3 of Form S-8) a prospectus that meets the requirements of Section 10(a) of the Securities Act of 1933. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference The following documents of American Greeting Corporation (the "Company"), previously filed with the Securities and Exchange Commission (the "Commission"), are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for its fiscal year ended February 28, 2001; 2. The Company's Quarterly Report on Form 10-Q for its fiscal quarters ended May 31, 2001 and August 31, 2001, its Form 8-K dated April 3, 2001 and the related Form 8-K/A filed with the Commission on June 1, 2001, its Form 8-K dated September 27, 2001 and the related Form 8-K/A filed with the Commission on November 21, 2001; and 3. The description of the Company's Class A Common Shares and Class B Common Shares contained in the Company's Form 10 Registration Statement (File No. 0-1502) and all amendments and reports filed for the purpose of updating that description, including without limitation, Exhibit (3)(i) to the Company's Annual Report on Form 10-K for its fiscal year ended February 28, 1999; other than the portions of such documents, which by statute, by designation in such document or otherwise, are not deemed to be filed with the Commission or are not required to be incorporated herein by reference. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this Registration Statement, but prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in the Registration Statement and to be a part hereof from the date of filing of such documents other than the portions of such documents, which by statute, by designation in such document or otherwise, are not deemed to be filed with the Commission or are not required to be incorporated herein by reference. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Registration Statement shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained in this Registration Statement or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference in this Registration Statement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Item 4. Description of Securities Not applicable Item 5. Interests of Named Experts and Counsel Not applicable Item 6. Indemnification of Directors and Officers Section 1701.13(E) of the Ohio Revised Code authorizes the indemnification of officers and directors in defense of any civil, criminal, administrative or investigative proceeding. Article IV of the Code of Regulations of the Company provides for indemnification in terms consistent with statutory authority, and the Company maintains insurance covering certain liabilities of its directors and the elected and appointed officers of the Company and its subsidiaries, including liabilities under the Securities Act of 1933 Item 7. Exemption from Registration Claimed Not applicable Item 8. Exhibits See the Exhibit Index at Page E-1 of this Registration Statement. Item 9. Undertakings A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and II-2 (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. The undersigned registrant undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, this 21 day of December, 2001. AMERICAN GREETINGS CORPORATION By: /s/ Jon Groetzinger, Jr. ------------------------------ Jon Groetzinger, Jr., Secretary Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on December 21, 2001.
SIGNATURE TITLE /s/ Morry Weiss Chairman; Chief Executive Officer (principal executive - ----------------------------- officer); Director Morry Weiss /s/ James C. Spira President; Chief Operating Officer; Director - ---------------------------- James C. Spira /s/ William S. Meyer Senior Vice President, Chief Financial Officer (principal - ---------------------------- financial and accounting officer) William S. Meyer /s/ Scott S. Cowen Director - ---------------------------- Scott S. Cowen /s/ Stephen R. Hardis Director - ---------------------------- Stephen R. Hardis //s/ Jack Kahl Director - ---------------------------- Jack Kahl /s/ Harriet Mouchly-Weiss Director - ---------------------------- Harriet Mouchly-Weiss //s/ Charles A. Ratner Director - ---------------------------- Charles A. Ratner
/s/ Harry H. Stone Director - -------------------- Harry H. Stone /s/ Jerry Sue Thornton Director - ------------------------ Jerry Sue Thornton AMERICAN GREETING CORPORATION EXHIBIT INDEX EXHIBIT DESCRIPTION NUMBER 4(a) Amended Articles of Incorporation of the Company This Exhibit has been previously filed as Exhibit 3(i) to the Company's 10-K Annual Report for its fiscal year ended February 28, 1999 and is incorporated herein by reference. 4(b) Amended Regulations of the Company This Exhibit has been previously filed as Exhibit 3(ii) to the Company's 10-K Annual Report for its fiscal year ended February 28, 1999 and is incorporated herein by reference. 4(c) Forms of share certificate for Class A Common Shares of the Registrant This Exhibit has been previously filed as Exhibit 4(c) to the Company's Registration Statement No. 33-39726 on Form S-3, filed with the Commission on May 6, 1991 and is incorporated herein by reference. 5 Opinion of Brouse McDowell, A Legal Professional Association, regarding the validity of the securities being registered 10(a) Employment Agreement dated as of September 25, 2001 between James C. Spira and American Greetings Corporation 10(b) Restricted Share Agreement dated as of September 5, 2001 between James C. Spira and American Greetings Corporation 23(a) Consent of Brouse McDowell, A Legal Professional Association (included in Exhibit 5) 23(b) Consent of Ernst & Young LLP 24 Power of Attorney E-1 EX-5 3 l91835aex5.txt EXHIBIT 5 EXHIBIT 5 [LETTERHEAD OF BROUSE McDOWELL] December 21, 2001 American Greetings Corporation One American Road Cleveland, Ohio 44144 Gentlemen: We are acting as counsel to American Greetings Corporation. (the "Company") in connection with the reoffer and resale by the selling shareholder of up to 175,000 of the Company's Class A Common Shares (the "Shares"). The Shares were granted to the selling shareholder pursuant to the terms of an employment agreement between the selling shareholder and the Company. We have examined such documents, records and matters of law as we have deemed necessary for purposes of this opinion, and based thereon we are of the opinion that the Shares granted to the selling shareholder pursuant to the employment agreement have been duly authorized and are validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as Exhibit 5 to the Registration Statement on Form S-8 being filed today by the Company with the Securities and Exchange Commission to effect registration of the Shares under the Securities Act of 1933. Very truly yours, /s/ Brouse McDowell Brouse McDowell, A Legal Professional Association Ref. 01-250 416 706.1 EX-10.A 4 l91835aex10-a.txt EXHIBIT 10(A) EXHIBIT 10(a) EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is made as of the 25th day of September 2001, between James C. Spira ("Spira") and American Greetings Corporation ("AG" or "Company"). In consideration of the mutual promises contained herein, the parties agree as follows: 1. POSITION: Spira is employed by AG as the Company's President and Chief Operating Officer. Spira will perform any and all reasonable duties commensurate with these positions, devote substantially all of his business time and attention and give his reasonable best efforts to the business affairs of the Company as the AG Board of Directors or Executive Committee may from time to time determine. Spira may serve on corporate, civic and charitable boards and committees, deliver lectures, fulfill speaking engagements and manage personal investments so long as they do not significantly interfere with the performance of his duties under this Agreement. 2. TERM: Employment pursuant to this Agreement commenced on June 25, 2000, and will continue until terminated by Company or Spira. While the parties contemplate that the term, unless extended by the parties, will end on or around June 25, 2003, it is understood that Spira'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. 3. COMPENSATION: During the term of this Agreement, in addition to the other health and welfare benefits normally offered to Executive Officers (as designated by the AG Board of Directors or otherwise), including participation in the AG Retirement Profit Sharing and Savings Plan, and the health care, disability and life insurance plans, Spira will receive the following base salary and benefits: a. BASE SALARY: Spira will be paid an annual base salary of $500,000, less payroll taxes and other withholdings ("Base Salary"). Such Base Salary will be reviewed around the end of each AG fiscal year and at that time may be increased at the discretion of the AG Board of Directors. b. STOCK GRANT. The Company has granted to Spira the following shares of Class A Common Stock of AG on the terms stated herein. Spira shall pay no purchase price for the shares, but at Spira's written election, shares may be withheld by the Company to pay federal, state and local taxes and withholdings. (i) UNRESTRICTED GRANT. As of June 22, 2001, the Company granted to Spira 175,000 shares of Class A Common Stock, which grant vested immediately as of June 22, 2001, at the grant date price of $10.36 per share, for a total value of $1,813,000. This is an unrestricted grant from shares held in Treasury that may be sold, assigned, transferred, pledged, hypothecated, gifted or otherwise disposed of (collectively, "transferred") by Spira at any time following the June 22, 2001 grant date, subject to applicable federal, state and local law and AG policies and procedures regarding trading by insiders. The Company shall file at its expense, and as soon as practical, a Form S-8 and/or such other forms and documents (including, but not limited to, a reoffer prospectus) as may be necessary to register the shares subject to this unrestricted grant and Spira shall fully cooperate in such filings. To the extent that it has not already done so, the Company shall deliver certificates for the shares subject to this unrestricted grant to Spira as soon as practical after the date hereof. Mr. Spira has informed the Company that if he does not use shares of Class A Common Stock to satisfy any tax withholding requirement, he intends to deposit the shares subject to this unrestricted grant with a broker with an order to sell such shares should their fair market value decrease to a stated price. The Company acknowledges that the foregoing is neither addressed nor prohibited under AG policies and procedures regarding trading by insiders. Spira acknowledges that his decision to proceed with the foregoing is a personal decision and his alone, that he will fully comply with the requirements for Rule 10b5-1 plans, and that prior to any transaction in such shares he will allow the Company to review and approve the planned transaction, which approval shall not be unreasonably withheld. (ii) RESTRICTED GRANT. As of September 5, 2001, the Company granted to Spira 65,000 restricted shares of Class A Common Stock ("Restricted Shares") at the grant date price of $12.70 per share, for a total value of $825,500. These Restricted Shares were granted under the Company's 1997 Equity and Performance Incentive Plan ("1997 Plan") [Attachment 1] and are subject to the substantial risk of forfeiture and restrictions on transfer described in paragraph 6. of the Plan. Such restrictions on the Restricted Shares shall lapse and Spira may thereafter transfer them upon the occurrence of the following: (a) 43,333 Restricted Shares may be transferred on and after (but not before) June 25, 2002, only if both of the following occur for FY02: (1) the Company attains the restructure savings goal set in the annual management incentive plan and earns $1.14 per share (as adjusted for stock splits or stock dividends after September 5, 2001); and (2) the AG Board declares an annual bonus to AG management under the annual management incentive plan. Except as set forth in paragraph 3.b.(ii)(c) below, if both conditions are not met, Spira's interest in the 43,333 Restricted Shares shall terminate on June 26, 2002, and Spira shall forthwith deliver or cause to be delivered to the AG Secretary the certificates(s), if any, previously delivered to Spira for such shares, accompanied by such endorsement(s) and/or instrument(s) of transfer as the Secretary may require. (b) 21,667 Restricted Shares may be transferred on and after June 25, 2003, only if both of the following occur for FY03: (1) the Company attains the annual bonus goals for AG management established hereafter by the AG Board; and (2) the AG Board declares an annual bonus to AG management under the annual management incentive plan. Except as set forth in paragraph 3.b.(ii)(c) below, if both conditions are not met, Spira's interest in the 21,667 Restricted Shares shall terminate on June 26, 2003, and Spira shall forthwith deliver or cause to be delivered to the AG Secretary the certificates(s), if any, previously delivered to Spira for such shares, accompanied by such endorsement(s) and/or instrument(s) of transfer as the Secretary may require. (c) All of the Restricted Stares shall become immediately vested (and all substantial risk of forfeitures and restrictions on transfer will lapse) upon the happening of: (a) Spira's death, or permanent and total disability, (b) AG's termination of Spira's employment without cause, or (c) a Change in Control of the Company (as defined in the Company's 1997 Equity and Performance Incentive Plan as in effect as of the date hereof). The terms of the restricted stock grant contained herein are incorporated into the attached Restricted Share Agreement. c. STOCK OPTIONS. Effective September 5, 2001, the Company granted to Spira, pursuant to the equity plans set forth below, stock options to purchase shares of Class A Common Stock ("Option Shares") in the number, at the prices and on the vesting schedule set forth below in accordance with Company policies and procedures regarding the exercise of Options and as further set forth in the attached Stock Option Agreements [Attachment 2]:
----------------------- ----------------------- ------------------------------------- ----------------------------- OPTION GRANT PRICE ATTACHED PLAN GRANTED UNDER NO. OF OPTIONS * PER SHARE VESTING DATE ----------------------- ----------------------- ------------------------------------- ----------------------------- 164,712 $13.01 1992 Plan 3/6/02 51,449 $13.01 1996 Plan 3/6/02 51,113 $13.01 1996 Plan 6/26/02 2,375 $12.70 1997 Plan 6/26/02 25,557 $13.01 1996 Plan 6/26/03 1,188 $12.70 1997 Plan 6/26/03
*See attached Schedule for Calculations [Attachment 3] (I) TIME WITHIN WHICH TO EXERCISE OPTIONS. The options vesting on March 6, 2002, shall be exercisable for 10 years, through September 5, 2011. The options vesting on June 26, 2002, shall be exercisable for 10 years, through September 5, 2011; provided, however, if AG does not achieve both (a) the restructure savings goal in the annual management incentive plan for FY02, and (b) FY02 earnings of $1.14 per share (as adjusted for stock splits or stock dividends after September 5, 2001), then such options shall be exercisable for 6 months plus 1 day following the later of (x) the date that it is determined that such FY02 thresholds were not met or (y) the date of the termination of Spira's employment with AG. The options vesting on June 26, 2003, shall be exercisable for 10 years, through September 5, 2011; provided, however, if AG does not achieve the annual bonus goals for AG management set by the Board for FY03, then such options shall be exercisable for 6 months plus 1 day following the later of (x) the date that it is determined that such FY03 thresholds were not met or (y) the date of the termination of Spira's employment with AG. (ii) ACCELERATION OF VESTING. Any options not vested at the time of any of the following events shall become vested immediately upon the happening thereof: (a) Spira's death, or permanent and total disability, (b) AG's termination of Spira's employment without cause, or (c) a Change in Control of the Company (as defined in the Company's 1997 Equity and Performance Incentive Plan as in effect as of the date hereof). The options so vested by acceleration shall be exercisable on the same basis as the options vesting on the next scheduled vesting date. For purposes hereof, "cause" means any of the following: (I) Spira's conviction of a felony or misdemeanor involving fraud or moral turpitude, (ii) the willful or intentional breach of a material fiduciary duty owed to the Company or (iii) the willful or intentional refusal to follow the lawful and reasonable written policies of the Company or lawful and reasonable written directives of the Company's Board of Directors, which refusal is not cured within thirty (30) days after delivery of written notice to Spira. d. REIMBURSEMENT FOR PROFESSIONAL FEES. The Company will reimburse Spira for up to $10,000 of fees and costs for legal, accounting and other professional services related to the negotiation and drafting of this Agreement. e. OTHER COMPENSATION. Except as set forth herein, Spira shall not be eligible to participate in or receive any other compensation, bonus or benefits, including without limitation, benefits under the AG Supplemental Executive Retirement Plan. 4. CONFIDENTIAL AND TRADE SECRET INFORMATION: a. Spira 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. Spira 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, that a reasonable person would believe to be confidential to or a trade secret of AG. This paragraph shall not prohibit disclosure of information that has become public, unless it became public through Spira's breach of this Agreement. b. Upon Spira's termination, regardless of the reason, Spira will promptly surrender to AG any of its property in Spira's possession including, but not limited to, all correspondence, memoranda, notes, records, reports, plans, electronic files, computer printouts, reproductions, slides and any other papers, files or items, and all copies thereof, received or made by Spira in connection with his employment with AG. 5. NON-COMPETITION; NON-DISPARAGEMENT: In consideration of AG's agreement to employ Spira under the terms of this Agreement, Spira agrees that he will not 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 of 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, for the period of his employment hereunder and for three (3) years thereafter. Spira has carefully read and considered the provisions hereof and, having done so, agrees that the restrictions set forth herein (including, but not limited to, the time periods and geographical area of the restrictions) are fair and reasonably required for the protection of the interests of the Company. At no time during or after his employment with AG shall Spira, directly or indirectly, disparage AG or AG's management. In addition to all of the remedies otherwise available to the Company, including, but not limited to, recovery of damages and reasonable attorneys' fees incurred in the enforcement of this Agreement, the Company shall have the right to injunctive relief to restrain and enjoin any actual or threatened breach of the provisions of paragraphs 4 and 5. All of the Company's remedies for breach of this Agreement shall be cumulative and the pursuit of one remedy shall not be deemed to exclude any other remedies. 6. CONFLICT OF INTEREST: Spira 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. 7. CONFLICT WITH PLANS: If the terms of this Agreement conflict or cannot otherwise be construed consistently with any of the terms of the 1992, 1996 and/or 1997 Plans, as applicable, the terms of such applicable Plan(s) shall govern. In this regard, to the Company's knowledge, the terms of the Restricted Shares and Options described in Section 3.b.(ii) and 3.c. of this Agreement and incorporated in the Restricted Share Agreement and Stock Option Agreements attached hereto do not conflict with any of the terms of the 1992, 1996 and/or 1997 Plans, as applicable. 8. MISCELLANEOUS: a. This Agreement constitutes the entire understanding between Spira 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 Spira and AG. 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 party 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 full force and effect. d. This Agreement will be governed by and construed in accordance with the laws of the State of Ohio. Any disputes that cannot be resolved amicably shall be resolved by binding arbitration in Cleveland in accordance with the applicable rules of Solutions, the Company's alternative dispute resolution program, administered through the American Arbitration Association. 9. REVIEW BY ADVISORS: Spira 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.b(II); 3.c.; 3.d; 3.e; 4.; 5.; 7; 8; AND 10. AMERICAN GREETINGS CORPORATION JAMES C. SPIRA BY: /s/ Morry Weiss /s/ James C. Spira -------------------------- ----------------------------- NAME: Morry Weiss DATE: December 21, 2001 ------------------------ ----------------------- TITLE: Chairman and CEO ----------------------- DATE: December 20, 2001 ------------------------ AMERICAN GREETINGS CORPORATION ADDITIONAL STOCK OPTION AGREEMENT TERMS 1992 EMPLOYEE STOCK OPTION PLAN Cleveland, Ohio WHEREAS, the Associate identified on the attached form, (the "Optionee") is an employee of American Greetings Corporation or one of its subsidiaries (the "Corporation"); and WHEREAS, the Board of Directors of the Corporation at a meeting held on February 24, 1992, adopted the 1992 Employee Stock Option Plan ("1992 Plan") and the Corporation through the Board of Directors or the Stock Option Committee of the Board of Directors (the "Committee") has duly authorized the execution of this stock option agreement; NOW, THEREFORE, in consideration of their mutual promises herein, the Corporation and the Optionee agree as follows: Subject to the terms and conditions set forth in the 1992 Plan: (1) As of September 5, 2001, the Corporation hereby grants to the Optionee options ("Options") to purchase Class A of Common Shares, par value $1 per Share ("Shares"), of the Corporation in the amount and at the price indicated on the attached form, the option price being the fair market value of the stock at the time of the grant of this option, and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon receipt of the purchase price in cash or, in whole or in part, in Class A or Class B Common Shares of the Corporation valued at fair market value as of the close of business on the last business day preceding the date of exercise, to the extent permitted by all applicable laws and regulations; provided that the Board of Directors does not determine that the application of any Financial Accounting Standards Board rule affecting the tender of Class A Common Shares would be detrimental to the best interests of the Corporation. (2) The Options shall be exercisable, from time to time, in whole or in part, at any time after the earliest of (i) March 6, 2002, (ii) the Optionee's death, or permanent and total disability, (iii) the termination of the Optionee's employment with the Corporation by the Corporation without cause (as defined in that certain Employment Agreement (the "Employment Agreement") between the Optionee and the Corporation dated as of September 25, 2001, or (iv) a Change in Control of the Corporation (as defined in the Corporation's 1997 Equity and Performance Incentive Plan as in effect on the date hereof); provided, however, in the case of (i), (ii) or (iv), only to the extent that the Optionee is employed by the Corporation on such date. (3) The Options shall terminate on September 5, 2011, or, if earlier, the date of such act or omission as constitutes grounds for termination of the Optionee's employment with the Corporation by the Corporation for cause (as defined in the Employment Agreement) if Optionee is thereafter terminated for cause. Nothing contained in this option shall limit whatever right the Corporation might otherwise have to terminate the employment of the Optionee and the terms of this option shall not be affected in any manner by any agreement between the Optionee and the Corporation other than the main Employment Agreement together with its attachments. (4) This option is not transferable by the Optionee otherwise than by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by the Optionee. (5) The option shall not be exercisable if such exercise would involve a violation of any applicable state securities law, and the Corporation hereby agrees to make reasonable efforts to comply with any applicable state securities law. (6) This option shall not be exercisable if at the time of exercise such exercise would require registration of the Class A Common Shares or other securities to be purchased hereunder under the Securities Act of 1933, as amended, or under any similar federal securities law then in effect and such registration shall not then be effective. The Corporation shall register the Class A Common Shares or other securities covered by this option under any such law if (i) such registration shall be necessary to the exercise of this option and the Board of Directors shall not determine that such registration would result in undue expense or undue hardship to the Corporation or (ii) the Board of Directors in its sole discretion determines that such registration is desirable to effect the purposes for which this option is granted and would not result in undue expense or undue hardship to the Corporation. (7) The Board of Directors shall make such adjustments in the option price and in the number or kind of Class A Common Shares or other securities covered by this option as the Board in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that would otherwise result from (a) any stock dividend, stock split, combination of shares, issuance of stock purchase warrants or rights, recapitalization or other changes in the capital structure of the Corporation, or (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. No adjustment provided for in this Section (7) shall require the Corporation to sell any fractional shares. (8) Option rights may be exercised by the Optionee by (i) delivering to the Corporation (Attention of the Director, Retirement and Stock Administration) written notice of the number and class of shares with respect to which the rights are being exercised, and (ii) in those cases where the Optionee does not intend to immediately sell the shares covered by this option, paying the purchase price of the shares being acquired plus any required withholdings. The Optionee shall have no rights as a shareholder with respect to any shares covered by this option until the date that the option becomes exercisable with respect to such shares, and for which the Optionee shall have paid in full. In those cases where the Optionee intends to immediately sell shares covered by this option, after notifying the Corporation of his or her intention to sell, the broker retained to sell the exercised shares may provide the required amount on or before the transaction settlement date. (9) Upon the exercise of options through the delivery of any class of the Corporation's Common Shares, an Optionee who is in the active employ of the Corporation shall receive Reload Options equal in number to the number of Common Shares surrendered in order to exercise the Option. The option price for any such Reload Options shall be the price of the Corporation's Class A Common Shares, quoted by the National Association of Securities Dealers at the close of business on the last business day preceding the date of grant of the Reload Options. The Reload Options themselves may not be reloaded, may be exercised at any time after they are granted, but may not be exercised after the date on which the options in respect of which such Reload Options were granted, expire, are canceled or terminate. (10) The term "subsidiary" as used in this agreement means any corporation or other entity (other than the Corporation) in which the Corporation has a direct or indirect interest of 50 percent or more of the total combined voting power of all classes of stock of the corporation or other entity. (11) If any of the provisions of this Stock Option Agreement conflict with those of the 1992 Plan, the provisions of the 1992 Plan shall govern. AMERICAN GREETINGS CORPORATION NOTICE OF GRANT OF STOCK OPTIONS AMERICAN GREETINGS AND OPTION AGREEMENT ID: 34-0065325 One American Road Cleveland, OH 44144 Expiration 09/05/11 JAMES C. SPIRA OPTION NUMBER: 0000________ 16950 SOUTH WOODLAND ROAD PLAN: 92___ SHAKER HEIGHTS, OH 44120 ID: ###-##-#### - -------------------------------------------------------------------------------- Effective 09/05/01, you have been granted Non-Qualified Stock Options to buy 164,712 shares of American Greetings Corporation (the Company) stock at $13.01 per share. The total option price of the shares granted is $2,142,903.10. Shares will become vested on the date shown. Shares VEST ------ ---- 164,712 03/06/02 - -------------------------------------------------------------------------------- By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document. - -------------------------------------------------------------------------------- - ------------------------------- --------------------------------------- American Greetings Corporation Date - ------------------------------- --------------------------------------- JAMES C. SPIRA Date Date: 11/14/2001 Time: 9:23:46 AM AMERICAN GREETINGS CORPORATION STOCK OPTION AGREEMENT 1996 EMPLOYEE STOCK OPTION PLAN Cleveland, Ohio WHEREAS, the Associate identified on the attached form, (the "Optionee") is an employee of American Greetings Corporation (the "Company"); and WHEREAS, the Shareholders of the Corporation at a meeting held on June 28, 1996, adopted the 1996 Employee Stock Option Plan ("Plan"); NOW, THEREFORE, in consideration of their mutual promises herein, the Company and the Optionee agree as follows: Subject to the terms and conditions set forth in the Plan: (1) As of September 5, 2001, the Company hereby grants to the Optionee options ("Options") to purchase the Class of Common Shares, par value $1 per Share ("Shares"), of the Company in the amount and at the price indicated on the attached form ,the option price being the price of the Company's Class A Common Shares quoted by the New York Stock Exchange ("NYSE") at the close of business on the last business day preceding that day on which these Options are granted, and agrees to cause certificates for any Shares purchased hereunder (or other evidence of share ownership selected by the Company) to be delivered to the Optionee upon receipt of the purchase price either in cash or, in whole or in part, Class A and/or Class B Common Shares of the Company valued (in the case of both Class A and/or Class B Common Shares) at the price for Class A Common Shares quoted by NYSE at the close of business on the date of exercise, to the extent permitted by all applicable laws and regulations. (2) The Options shall be exercisable, from time to time, in whole or in part, as follows: (a) As of March 6, 2002, the Options shall become exercisable as to 51,449 of the Options subject to this Stock Option Agreement, provided that the Optionee is then employed by the Company. (b) As of June 26, 2002, the Options shall become exercisable as to an additional 51,113 of the Options subject to this Stock Option Agreement, provided that the Optionee is then employed by the Company. (c) As of June 26, 2003, the Options shall become exercisable as to the remaining 25,557 of the Options subject to this Stock Option Agreement, provided that the Optionee is then employed by the Company. (d) Notwithstanding anything to the contrary in this Section (2), the Options shall become exercisable in full (i.e., as to all of the Options subject to this Stock Option Agreement) at any time after the earliest of (i) the Optionee's death or permanent and total disability, (ii) the termination of the Optionee's employment with the Company by the Company without cause (as defined in that certain Employment Agreement (the "Employment Agreement") between the Optionee and the Company dated as of September 25, 2001, or (iii) a Change of Control of the Company (as defined in the Company's 1997 Equity and Performance Incentive Plan as in effect as of the date hereof); provided, however, in the case of (i) or (iii), only if the Optionee is employed by the Company on the date of such event. (3) The Options shall terminate on September 5, 2011, or, if earlier, the date of such act or omission as constitutes grounds for termination of the Optionee's employment with the Corporation by the Corporation for cause (as defined in the Employment Agreement) if Optionee is thereafter terminated for cause. Notwithstanding the foregoing, if the Company does not achieve both (a) the restructure savings goals in the annual management incentive plan for FY02 and (b) FY02 earnings of $1.14 per share ( as adjusted for stock splits or stock dividends after the date hereof), then the Options that vested pursuant to Section (2)(b ) above shall terminate upon the later of (x) the date that it is determined that the FY02 thresholds set forth in (a) and (b) of this sentence were not met or (y) the date that is six months and one day following the Optionee's termination of employment with the Company, whether with cause or without cause. Similarly, if the Company does not achieve the annual bonus goals for Company management set by the Company's Board of Directors for FY03, then the Options that vested pursuant to Section (2)( c) above shall terminate upon the later of (x) the date that it is determined that the FY03 annual bonus goals were not met or (y) the date that is six months and one day following the Optionee's termination of employment with the Company, whether with cause or without cause. Nothing contained in this option shall limit whatever right the Corporation might otherwise have to terminate the employment of the Optionee and the terms of this option shall not be affected in any manner by any agreement between the Optionee and the Corporation other than the main Employment Agreement together with its attachments. (4) The Options are not transferable by the Optionee other than by will or by the laws of descent and distribution. Those receiving Options in this manner may exercise the Options upon the terms provided for in the Plan and this Stock Option Agreement. The Options shall be exercisable during the Optionee's lifetime only by the Optionee, except that in case of incompetence or disability of an Optionee, an Option may be exercised on behalf of the Optionee by the Optionee's guardian or legal representative. (5) The Options shall not be exercisable if at the time of exercise such exercise would require registration of the Class A or Class B Common Shares or other securities to be purchased hereunder under the Securities Act of 1933, as amended, or under any similar federal securities law then in effect and such registration shall not then be effective. The Company shall register the Class A or Class B Common Shares or other securities covered by this Stock Option Agreement under any such law if (a) such registration shall be necessary to the exercise of the Options and the Compensation Committee shall not determine that such registration would result in undue expense or undue hardship to the Company or (b) the Compensation Committee in its sole discretion determines that such registration is desirable to effect the purposes for which the Options are granted and would not result in undue expense or undue hardship to the Company. (6) The Compensation Committee may make such adjustments in the grant price and in the number or kind of Class A or Class B Common Shares covered by this Stock Option Agreement as are equitably required to prevent dilution or enlargement of the rights of the Optionee that would otherwise result from (a) any stock dividend, stock split, combination of shares, recapitalization or other changes 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. No adjustments provided for in this Section (6) shall require the Company to sell any fractional Shares. (7) The Options may be exercised by the Optionee by (a) delivering to the Company (Attention of the Manager of Retirement Plans) written notice of the number and class of Shares with respect to which the Options are being exercised, and (b) in those cases where the Optionee does not intend to immediately sell the Shares covered by the Options, paying the purchase price of the Shares being acquired plus any required withholdings. The Optionee shall have no rights as a shareholder with respect to any Shares covered by the Options evidenced by this Stock Option Agreement until such time that the Option is exercised and the Optionee pays the full purchase price for the underlying Shares. In those cases where the Optionee intends to immediately sell Shares covered by the Options, after notifying the Company of his or her intention to sell, the Optionee will receive the amount by which the sale price exceeds the grant price for such shares, after deducting applicable taxes and brokerage fees, but not interest that might otherwise be paid on an advance of moneys to the Optionee between the exercise and settlement dates. The sale price for both Class A and Class B Common Shares shall be the price of Class A Common Shares as quoted by NYSE as of the close of business on the date of exercise. (8) Upon the exercise of Options through the delivery of any class of the Company's Common Shares held by an Optionee for at least six months, an Optionee who is in the active employ of the Company shall receive replacement Options equal in number to the number of Common Shares surrendered in order to exercise the Option ("Reload Options"). The grant price for any such Reload Options shall be the price of the Company's Class A Common Shares as quoted by NYSE as of the close of business on the date of exercise of the Options. The Reload Options themselves may not be reloaded, and may not be exercised after the date on which the Options in respect of which such Reload Options were granted, expire, are canceled or terminate. (9) If any of the provisions of this Stock Option Agreement conflict with those of the 1996 Employee Stock Option Plan, the provisions of the 1996 Employee Stock Option Plan shall govern. AMERICAN GREETINGS CORPORATION NOTICE OF GRANT OF STOCK OPTIONS AMERICAN GREETINGS AND OPTION AGREEMENT ID: 34-0065325 One American Road Cleveland, OH 44144 JAMES C. SPIRA OPTION NUMBER: 0000_____ 16950 SOUTH WOODLAND ROAD PLAN: 96___ SHAKER HEIGHTS, OH 44120 ID: ###-##-#### - -------------------------------------------------------------------------------- Effective 09/05/01, you have been granted a(n) Non-Qualified Stock Option to buy 103,723 shares of of American Greetings Corporation (the Company) stock at $13.01 per share. The total option price of the shares granted is $1,666,828.10. Shares will become vested on the date shown. SHARES VEST 51,449 03/06/02 51,113 06/26/02 25,557 06/26/03 By your signature and the Company's signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company's Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document. - --------------------------------- ---------------------------------- American Greetings Corporation Date - --------------------------------- JAMES C. SPIRA AMERICAN GREETINGS CORPORATION STOCK OPTION AGREEMENT 1997 EQUITY AND PERFORMANCE INCENTIVE PLAN Cleveland, Ohio WHEREAS, the Associate identified on the attached form, (the "Optionee") is an employee of American Greetings Corporation or one of its subsidiaries (the "Company"); and WHEREAS, the Company is authorized under the attached 1997 Equity and Performance Incentive Plan ("Plan") to grant stock options to certain employees including the optionee; NOW, THEREFORE, in consideration of their mutual promises herein, the Company and the Optionee agree as follows: Subject to the terms and conditions set forth in the Plan: (1) The Company hereby grants to the Optionee options ("Options") to purchase the Class of Common Shares, par value $1 per Share ("Shares"), of the Company in the amount and at the price indicated on the attached form, the option price being the market price of the Company's Class A Common Shares quoted by the New York Stock Exchange ("NYSE") on the day on which these Options are granted, and agrees to cause certificates for any Shares purchased hereunder (or other evidence of share ownership selected by the Company) to be delivered to the Optionee upon receipt of the purchase price either (i) in cash or check; (ii) in whole or in part, Class A and/or Class B Common Shares of the Company valued (in the case of both Class A and/or Class B Common Shares) at the time of exercise at least equal to the option price; (iii) by surrender of any other award or grant under the Plan valued at the time of exercise at least equal to the option price; or (iv) a combination of such payment methods. (2) The Options shall be exercisable, from time to time, in whole or in part, as follows: (a) As of June 26, 2002, the Options shall become exercisable as to an additional 2,375 of the Options subject to this Stock Option Agreement, provided that the Optionee is then employed by the Company. (b) As of June 26, 2003, the Options shall become exercisable as to the remaining 1,188 of the Options subject to this Stock Option Agreement, provided that the Optionee is then employed by the Company. (c) Notwithstanding anything to the contrary in this Section (2), the Options shall become exercisable in full (i.e., as to all of the Options subject to this Stock Option Agreement) at any time after the earliest of (i) the Optionee's death or permanent and total disability, (ii) the termination of the Optionee's employment with the Company by the Company without cause (as defined in that certain Employment Agreement (the "Employment Agreement") between the Optionee and the Company dated as of September 25, 2001, or (iii) a Change of Control of the Company (as defined in the Company's 1997 Equity and Performance Incentive Plan as in effect as of the date hereof); provided, however, in the case of (i) or (iii), only if the Optionee is employed by the Company on the date of such event. (3) The Options shall terminate on September 5, 2011, or, if earlier, the date of such act or omission as constitutes grounds for termination of the Optionee's employment with the Corporation by the Corporation for cause (as defined in the Employment Agreement) if Optionee is thereafter terminated for cause. Notwithstanding the foregoing, if the Company does not achieve both (a) the restructure savings goals in the annual management incentive plan for FY02 and (b) FY02 earnings of $1.14 per share ( as adjusted for stock splits or stock dividends after the date hereof), then the Options that vested pursuant to Section (2)(a) above shall terminate upon the later of (x) the date that it is determined that the FY02 thresholds set forth in (a) and (b) of this sentence were not met or (y) the date that is six months and one day following the Optionee's termination of employment with the Company, whether with cause or without cause. Similarly, if the Company does not achieve the annual bonus goals for Company management set by the Company's Board of Directors for FY03, then the Options that vested pursuant to Section (2)(b) above shall terminate upon the later of (x) the date that it is determined that the FY03 annual bonus goals were not met or (y) the date that is six months and one day following the Optionee's termination of employment with the Company, whether with cause or without cause. Nothing contained in this option shall limit whatever right the Corporation might otherwise have to terminate the employment of the Optionee and the terms of this option shall not be affected in any manner by any agreement between the Optionee and the Corporation other than the main Employment Agreement together with its attachments. (4) Persons receiving Options by will or by the laws of descent and distribution may exercise the Options upon the terms provided for in the Plan and this Stock Option Agreement. (5) The Options shall not be exercisable if at the time of exercise such exercise would require registration of the Class A or Class B Common Shares or other securities to be purchased hereunder under the Securities Act of 1933, as amended, or under any similar federal securities law then in effect and such registration shall not then be effective. The Company shall register the Class A or Class B Common Shares or other securities covered by this Stock Option Agreement under any such law if such registration shall be necessary to the exercise of the Options and the Compensation Committee in its sole discretion determines that such registration would not result in undue expense, hardship to the Company and that such registration is desirable to effect the purposes for which the Options are granted. (6) The Options may be exercised by the Optionee by (a) delivering to the Company (Attention of the Director - Retirement & Payroll or successor to such job title) written notice of the number and class of Shares with respect to which the Options are being exercised, and (b) in those cases where the Optionee does not intend to immediately sell the Shares covered by the Options, paying the purchase price of the Shares being acquired plus any required withholdings. The Optionee shall have no rights as a shareholder with respect to any Shares covered by the Options evidenced by this Stock Option Agreement until such time that the Option is exercised and the Optionee pays the full purchase price for the underlying Shares. In those cases where the Optionee intends to immediately sell Shares covered by the Options, after notifying the Company of his or her intention to sell, the Optionee will receive the amount by which the sale price exceeds the grant price for such shares, after deducting applicable taxes and brokerage fees, but not interest that might otherwise be paid on an advance of moneys to the Optionee between the exercise and settlement dates. The sale price for both Class A and Class B Common Shares shall be the price of Class A Common Shares as quoted by NYSE as of the close of business on the date of exercise. (7) Upon the exercise of Options or Reload Options (as defined below) through the delivery of any class of the Company's Common Shares or other grants or awards under paragraph 4.(d) of the Plan held by an Optionee for at least six months, an Optionee who is in the active employ of the Company shall receive replacement Options equal in number to the number of Common Shares and/or other grants or awards surrendered in order to exercise the Options and on the same terms as the Options or Reload Options surrendered, except that Reload Options shall not be exercisable more than ten (10) years from the date of grant of the initial Options ("Reload Options"). The Reload Options themselves may not be reloaded, and may not be exercised after the date on which the Options in respect of which such Reload Options were granted, expire, are canceled or terminate. (8) If any provision of this Stock Option Agreement conflicts with any provision in the 1997 Equity and Performance Incentive Plan, the provisions of the 1997 Equity and Performance Incentive Plan shall govern. AMERICAN GREETINGS CORPORATION - --------------------------------------------------------------------------- NOTICE OF GRANT OF STOCK OPTIONS AMERICAN GREETINGS AND OPTION AGREEMENT ID: 34-0065325 ONE AMERICAN ROAD CLEVELAND, OH 44144 - ---------------------------------------------------------------------------- JAMES C. SPIRA OPTION NUMBER: 0000____ 16950 SOUTH WOODLAND ROAD PLAN: 97___ SHAKER HEIGHTS, OH 44120 ID: ###-##-#### - ----------------------------------------------------------------------------- Effective 09/05/01, you have been granted a(n) Non-Qualified Stock Option to buy 3,563 shares of American Greetings Corporation (the Company) stock at $12.70 per share. The total option price of the shares granted is $45,250.10. Shares will become vested on the date shown. Shares Vest - ------ ----- 2,375 06/26/02 1,188 06/26/03 EX-10.B 5 l91835aex10-b.txt EXHIBIT 10(B) EXHIBIT 10(b) RESTRICTED SHARE AGREEMENT WHEREAS, James C. Spira (hereinafter called the "Grantee") is a key employee of American Greetings Corporation (hereinafter called the "Corporation"); and WHEREAS, the execution of a Restricted Share Agreement (hereinafter called the "Agreement") substantially in the form hereof has been authorized by a resolution of the Compensation and Management Development Committee of the Board of Directors of the Corporation duly adopted on September 5, 2001. NOW, THEREFORE, the Corporation, pursuant to its 1997 Equity and Performance Incentive Plan (the "Plan"), has this day granted to the Grantee, a total of **65,000** shares of the Corporation's Class A Common Stock ("Common Shares") subject to the terms and conditions of the Plan and the following terms, conditions, limitations and restrictions: 1. The Common Shares subject to this grant shall be fully paid and nonassessable and shall be represented by a certificate or certificates registered in the Grantee's name, endorsed with an appropriate legend referring to the restrictions hereinafter set forth. The Grantee shall have all the rights of a shareholder with respect to such shares, including the right to vote the shares and to receive all dividends paid thereon, provided that such shares, together with any additional shares which the Grant may become entitled to receive by virtue of a share dividend, a merger or reorganization in which the Corporation is the surviving corporation or any other change in capital structure, shall be subject to the restrictions hereinafter set forth. 2. Except as set forth in Section 4 hereof, the Common Shares subject to this grant may not be sold, exchanged, assigned, transferred, pledged or otherwise disposed of by the Grantee except to the Corporation, except that the Grantee's rights with respect to such shares may be transferred by will or pursuant to the laws of descent and distribution. Any purported transfer in violation of the provisions of this section shall be void, and the purported transferee shall obtain no rights with respect to such shares. The Corporation in its sole discretion, when and as permitted by the Plan, may waive the restrictions on transferability with respect to all or a portion of the Common Shares subject to this grant. 3. All the Common Shares with respect to which the substantial risk of forfeiture set forth in this Section 3 and the restrictions or transfer set forth in Section 2 hereof have not lapsed pursuant to Section 4 hereof shall be forfeited to the Corporation upon the Grantee's voluntary termination of employment (other than any reason of his permanent and total disability) or the Corporation's termination of the Grantee's employment with the Corporation for cause (as defined in that certain Employment Agreement between the Grantee and the Corporation dated as of September 25, 2001). 4. The substantial risk of forfeiture and restrictions on transfer imposed on the Common Shares pursuant to Section 2 and 3 hereof shall lapse and Grantee may thereafter transfer such Common Shares upon the occurrence of the following: (a) 43,333 of the Common Shares may be transferred on and after (but not before) June 25, 2002, only if both of the following occur for FY02: (1) The Corporation attains the restructure savings goal set in the annual management incentive plan and earns $1.14 per share (as adjusted for stock splits or stock dividends after September 5, 2001); and (2) the Corporation's Board declares an annual bonus to the Corporation's management under the annual management incentive plan. Except as set forth in (c) below, if both conditions are not met, Grantee's interest in the 43,333 of the Common Shares shall terminate on June 25, 2002, and Grantee shall forthwith deliver or cause to be delivered to the Corporation's Secretary the certificate(s), if any, previously delivered to Grantee for such shares, accompanied by such endorsement s) and /or instrument(s) of transfer as the Secretary may require. (b) 21,667 of the Common Shares may be transferred on and after June 25, 2003, only if both of the following occur for FY03: (1) The Corporation attains the annual bonus goals for the Corporation management established hereafter by the Corporation's Board; and (2) the Corporation's Board declares an annual bonus to the Corporation's management under the annual management incentive plan. Except as set forth in paragraph (c) below, if both conditions are not met, Grantee interest in the 21,667 of the Common Shares shall terminate on June 25, 2003, and Grantee shall forthwith deliver or cause to be delivered to the Corporation's Secretary the certificate(s), if any, previously delivered to Grantee for such shares, accompanied by such endorsement(s) and /or instrument(s) of transfer as the Secretary may require. (c) Notwithstanding anything to the contrary in this Section 4, all of the Common Shares shall become immediately vested (and all substantial risk of forfeitures and restrictions on transfer imposed on the Common Share will lapse and the Common Shares may be transferred) upon the happening of: (1) Grantee's death, or permanent and total disability, (2) The Corporation's termination of Grantee's employment with the Corporation without cause (as defined in that section Employment Agreement between the Grantee and the Corporation dated as of September 25, 2001, or (3) a Change in Control of this Corporation (as defined in the Plan). 1. During the period in which the transferability and forfeiture restrictions provided in Sections 2 and 3 hereof are in effect, the certificates representing the Common Shares covered by this grant shall be retained by the Corporation, together with the accompanying stock power, signed by the Grantee and endorsed in blank. Certificates for those Common Shares which have not previously been distributed to the Grantee shall be distributed to the Grantee as soon a reasonably practical after any substantial risk of forfeiture or restriction on transfer period on such Common Shares have lapsed pursuant to Section 4 hereof. 2. The Grantee hereby acknowledges that federal and state income, payroll or other applicable taxes may apply with respect to this grant. If the Corporation determines, in its sole discretion, that withholding is required, the Grantee agrees by the acceptance of this grant that such withholding may be accomplished through withholding from the cash compensation due to the Grantee from the Corporation an amount sufficient to satisfy the full withholding obligation. If withholding pursuant to the foregoing sentence is insufficient (in the sole judgment of the Corporation) to satisfy the full withholding obligation, the Grantee agrees that either (a) the Grantee will pay over to the Corporation the amount of cash necessary to satisfy such remaining withholding obligation by the time thereafter specified in writing by the Corporation, or (b) the Corporation may retain such number of the shares covered by this grant as shall be equal in value to the amount of the remaining withholding obligation. Upon due notice from the Grantee, the Corporation may (in its discretion) satisfy the entire withholding obligation by retaining shares as provided in (b) above in lieu of withholding from the Grantee's cash compensation. 3. For purposes of this Agreement, the continuous employ of the Grantee with the Corporation or a Subsidiary shall not be deemed interrupted, and the Grantee shall not be deemed to have ceased to be an employee of the Corporation or any Subsidiary, by reason of the transfer of his or her employment among the Corporation and its Subsidiaries. 2 4. Nothing contained in this Agreement shall limit whatever right the Corporation or a Subsidiary might otherwise have to terminate the employment of the Grantee. 5. This Agreement is subject to the terms and conditions of the Plan. Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan. EXECUTED as of the 5th day of September, 2001. By: /s/ Morry Weiss ------------------------------------------ Chairman of the Board and Chief Executive Officer The undersigned Grantee hereby acknowledges receipt of an executed original of this Restricted Share Agreement and accepts the Restricted Shares granted thereunder. Dated: As of September 5, 2001 /s/ James C. Spira -------------------------------------------- Grantee 3 EX-23.B 6 l91835aex23-b.txt EXHIBIT 23(B) Exhibit 23(b) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) for the registration of 175,000 Class A Common Shares pertaining to the American Greetings Employment Agreement with Selling Shareholder dated September 25, 2001, of our reports (a) dated March 27, 2001, with respect to the consolidated financial statements and schedule of American Greetings Corporation included in its Annual Report (Form 10-K) for the year ended February 28, 2001, (b) dated February 16, 2001, with respect to the financial statements of Egreetings Network, Inc. included in its Current Report on Form 8-K/A of American Greetings Corporation dated June 1, 2001, and (c) dated September 13, 2001, with respect to the financial statements of Blue Mountain Arts, a division of At Home Corporation, included in its Current Report on Form 8-K/A of American Greetings Corporation dated November 21, 2001, all filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Cleveland, Ohio December 17, 2001 EX-24 7 l91835aex24.txt EXHIBIT 24 EXHIBIT 24 AMERICAN GREETINGS CORPORATION REGISTRATION STATEMENT ON FORM S-8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of American Greetings Corporation (the "Company") hereby constitute and appoint Jon Groetzinger, Jr., Dale A. Cable, Phyllis Alden, Stanley E. Everett and David A. Basinski, Jr., and each of them, with full power of substitution and resubstitution, as attorneys or attorney of the undersigned, to execute and file under the Securities Act of 1933 a Registration Statement on Form S-8 relating to the registration of up to 175,000 of the Company's Class A Common and any and all amendments and exhibits thereto, including post-effective amendments, and any and all applications or other documents to be filed with the Securities and Exchange Commission pertaining to such registration, with full power and authority to do and perform any and all acts and things whatsoever necessary, appropriate or desirable to be done in the premises, or in the name, place and stead of the said directors and officers, hereby ratifying and approving the acts of said attorneys and any of them and any such substitute. Executed at Cleveland, Ohio, this 19th day of December, 2001.
Signature Title /s/ Morry Weiss Chairman of the Board; Chief Executive - ------------------------------------- Officer; Director Morry Weiss /s/ James C. Spira President; Chief Operating Officer; Director - ------------------------------------ James C. Spira /s/ Scott S. Cowen Director - ------------------------------------ Scott S. Cowen /s/ Stephen R. Hardis Director - ------------------------------------ Stephen R. Hardis /s/ Jack Kahl Director - ------------------------------------- Jack Kahl /s/ Harriet Mouchly-Weiss Director - ---------------------------------- Harriet Mouchly-Weiss
/s/ Charles A. Ratner Director - --------------------------------- Charles A. Ratner /s/ Harry H. Stone Director - --------------------------------- Harry H. Stone /s/ Jerry Sue Thorton Director - --------------------------------- Jerry Sue Thornton /s/ William S. Meyer Senior Vice President; Chief Financial - --------------------------------- Officer (principal financial officer) William S. Meyer /s/ Joseph B. Cipollone Vice President; Corporate Controller - --------------------------------- (principal accounting officer) Joseph B. Cipollone
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