Edgar Filing: AMERICAN GREETINGS CORP

PRER14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant ¨

Check the appropriate box:

x	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material under Rule 14a-12

AMERICAN GREETINGS CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

¨	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies: Class A common shares and Class B common shares

(2)

Aggregate number of securities to which transaction applies: 31,894,936 outstanding common shares (29,011,853 Class A common shares and 2,883,083 Class B common shares), 49,316 Class A common shares underlying certain restricted stock units, 3,180,678 Class A common shares underlying stock options to be cancelled pursuant to the merger

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

In accordance with Exchange Act Rule 0-11(c), the filing fee of $80,218 was determined by multiplying 0.0001364 by the aggregate merger consideration of $588,106,593. The aggregate merger consideration was calculated based on the sum of (i) 31,894,936 outstanding common shares (29,011,853 Class A common shares and 2,883,083 Class B common shares) as of April 10, 2013 to be acquired pursuant to the merger multiplied by the $18.20 per share merger consideration, (ii) 49,316 Class A common shares underlying certain restricted stock units held by non-employee directors to be cancelled pursuant to the merger multiplied by the $18.20 per share merger consideration, (iii) (A) 768,867 Class A common shares underlying stock options to be cancelled pursuant to the merger with an exercise price of less than $18.20 multiplied by (B) the excess of the $18.20 per share merger consideration over the weighted average exercise price of $12.94, and (iv) $2,676,966, representing an estimate of the aggregate cash payment to be made with respect to 2,411,811 options to purchase Class A common shares with an exercise price of $18.20 or higher that will be cancelled pursuant to the merger.

(4)

Proposed maximum aggregate value of transaction: $588,106,593

(5)

Total fee paid: $80,218

þ	Fee paid previously with preliminary materials.

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

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[—], 2013

Dear Shareholder:

You are cordially invited to attend a special meeting of the shareholders of American Greetings Corporation, an Ohio corporation (the “Company”), which we will hold at our world headquarters, One American Road, Cleveland, Ohio 44144, on [—], 2013, at [—], Cleveland, Ohio time.

At the special meeting, holders of our Class A common shares, par value $1.00 per share, and our Class B common shares, par value $1.00 per share, will be asked to consider and vote on a proposal to adopt an Agreement and Plan of Merger, dated March 29, 2013, among Century Intermediate Holding Company, a Delaware corporation (“Parent”), Century Merger Company, an Ohio corporation and wholly owned subsidiary of Parent (“Merger Sub”), and the Company (which we refer to as the “merger agreement”). Pursuant to the merger agreement, Merger Sub will be merged with and into the Company and each Class A common share and Class B common share issued and outstanding at the effective time of the merger (other than shares owned by the Company, Parent (which, at the effective time of the merger, will include “common shares” currently held by the “Family Shareholders,” as those terms are defined in the enclosed proxy statement), Merger Sub and holders of common shares who have properly demanded dissenters’ rights, which shares we refer to as “dissenting shares”) will be cancelled and converted into the right to receive $18.20, in cash, without interest.

The proposed merger is a “going private transaction” under Securities and Exchange Commission rules. If the merger is completed, the Company will become a privately held company, wholly owned by Parent. All of the common stock of Parent will be indirectly owned by Zev Weiss, a director and the Company’s Chief Executive Officer, Morry Weiss, the Company’s Chairman of the board of directors, Jeffrey Weiss, a director and the Company’s President and Chief Operating Officer, and certain other members of the Weiss family.

The board of directors of the Company, with Morry Weiss, Zev Weiss and Jeffrey Weiss (the “Family Shareholder directors”) abstaining, and based in part on the unanimous recommendation of a special committee of independent directors that was established to evaluate and negotiate a potential transaction and consider other alternatives available to the Company (as described more fully in the enclosed proxy statement), has (a) determined unanimously that the merger agreement and the merger are advisable and are fair to, and in the best interests of, the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders, (b) approved unanimously the merger agreement and the merger, and (c) resolved unanimously to recommend that the Company’s shareholders vote “FOR” the proposal to adopt the merger agreement. The board of directors (with the Family Shareholder directors abstaining) recommends unanimously that you vote “FOR” the adoption of the merger agreement.

Pursuant to rules of the Securities and Exchange Commission, you also will be asked to vote at the special meeting on an advisory (non-binding) proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger, as described in the proxy statement. The board of directors (with the Family Shareholder directors abstaining) also recommends unanimously that the shareholders of the Company vote “FOR” the advisory (non-binding) proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger.

The enclosed proxy statement describes the merger agreement, the merger and related agreements and provides specific information concerning the special meeting. In addition, you may obtain information about us

from documents filed with the Securities and Exchange Commission. We urge you to read the entire proxy statement, including the annexes, carefully, as it sets forth the details of the merger agreement and other important information related to the merger.

Your vote is very important, regardless of the number of common shares you own. The merger cannot be completed unless holders of our issued and outstanding Class A common shares and Class B common shares, voting together as a single class, representing at least two-thirds of the outstanding voting power of the Company, vote in favor of the adoption of the merger agreement. Pursuant to our articles of incorporation, the Class A common shares are entitled to one vote per share and the Class B common shares are entitled to ten votes per share. In addition, the merger agreement makes it a condition to the parties’ obligations to consummate the merger that at least a majority of our issued and outstanding Class A common shares and Class B common shares, excluding all Class A common shares and Class B common shares beneficially owned by the Family Shareholders, the Irving I. Stone Foundation or any director or executive officer of the Company or any of its subsidiaries, voting together as a single class, vote in favor of the adoption of the merger agreement (which we refer to as the “majority of the minority” shareholder approval condition). For purposes of this majority of the minority shareholder approval condition only, Class B common shares will be entitled to one vote per share. If you fail to vote on the merger agreement, the effect will be the same as a vote against the adoption of the merger agreement.

If you own shares of record, you will find enclosed a proxy and voting instruction card or cards and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy and voting instruction card(s), or vote over the phone or Internet, as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You can revoke your proxy before the special meeting and issue a new proxy as you deem appropriate. You will find the procedures to follow if you wish to revoke your proxy on page 72 of the enclosed proxy statement. Your vote is very important.

If you are a shareholder of record, submitting a proxy will not prevent you from voting your shares in person if you subsequently choose to attend the special meeting.

Sincerely,

Christopher W. Haffke

Vice President, General Counsel and Secretary

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement is dated [—], 2013

and is first being mailed to shareholders on or about [—], 2013.

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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of American Greetings Corporation will be held at our world headquarters at One American Road, Cleveland, Ohio 44144, on [—], 2013, at [—], Cleveland, Ohio time, for the following purposes:

to consider and vote on a proposal to adopt an Agreement and Plan of Merger, dated March 29, 2013, among Century Intermediate Holding Company, a Delaware corporation (“Parent”), Century Merger Company, an Ohio corporation and wholly owned subsidiary of Parent (“Merger Sub”), and the Company (which we refer to as the “merger agreement”);

to approve, on an advisory (non-binding) basis, specified compensation that may become payable to the named executive officers of the Company in connection with the merger;

to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval (as defined below) or obtain the majority of the minority shareholder approval (as defined below); and

to act upon other business that may properly come before the special meeting or any adjournment or postponement thereof.

The holders of record of our Class A common shares, par value $1.00 per share (the “Class A common shares”), and our Class B common shares, par value $1.00 per share (the “Class B common shares” and together with the Class A common shares, the “common shares”), at the close of business on [—], 2013, are entitled to notice of and to vote at the special meeting and at any adjournment thereof. All shareholders of record are invited to attend the special meeting in person.

Your vote is important, regardless of the number of common shares you own. The merger cannot be completed unless holders of our issued and outstanding Class A common shares and Class B common shares, voting together as a single class, representing at least two-thirds of the outstanding voting power of the Company, vote in favor of the adoption of the merger agreement (which we refer to as the “Company shareholder approval”). Pursuant to our articles of incorporation, the Class A common shares are entitled to one vote per share and the Class B common shares are entitled to ten votes per share. In addition, the merger agreement makes it a condition to the parties’ obligations to consummate the merger that at least a majority of our issued and outstanding Class A common shares and Class B common shares, excluding all Class A common shares and Class B common shares beneficially owned by the Family Shareholders, the Irving I. Stone Foundation or any director or executive officer of the Company or any of its subsidiaries, voting together as a single class, vote in favor of the adoption of the merger agreement (which we refer to as the “majority of the minority” shareholder approval condition). For purposes of this majority of the minority shareholder approval condition only, Class B common shares will be entitled to one vote per share. If you fail to vote on the merger agreement, the effect will be the same as a vote against the adoption of the merger agreement.

Each of the advisory (non-binding) proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval requires the affirmative vote of holders of a majority of the votes cast at the special meeting. The Class A common shares are entitled to one vote per share, and the Class B common shares are entitled to ten votes per share on each of these proposals.

Even if you plan to attend the special meeting in person, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares will be represented at the special meeting if you are unable to attend. You also may submit your proxy by using a toll-free telephone number or the Internet. We have provided instructions in the enclosed proxy statement and on the proxy and voting instruction card for using these convenient services.

If you sign, date and return your proxy and voting instruction card(s) without indicating how you wish to vote, your proxy will be voted in favor of the adoption of the merger agreement, in favor of the advisory (non-binding) proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger, and in favor of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval. If you fail to attend the special meeting or submit your proxy, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote against the adoption of the merger agreement. However, assuming a quorum is present, failure to vote or submit your proxy will not affect the advisory vote to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger or the vote regarding the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval.

You may revoke your proxy at any time before the vote at the special meeting by following the procedures outlined in the enclosed proxy statement. If you are a shareholder of record, attend the special meeting and wish to vote in person, you may revoke your proxy and vote in person.

By order of the Board of Directors

CHRISTOPHER W. HAFFKE

Secretary

Dated: [—], 2013

TABLE OF CONTENTS


	Page
SUMMARY TERM SHEET		1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER		13
SPECIAL FACTORS		17
Background of the Merger		17
Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger		33
Opinion of Peter J. Solomon Company		40
Purposes and Reasons of Family LLC, Parent, Merger Sub and the Family Shareholders for the Merger		48
Position of Family LLC, Parent, Merger Sub and the Family Shareholders as to Fairness of the Merger		49
Certain Effects of the Merger		52
Projected Financial Information		54
Financing		56
Interests of the Company’s Directors and Executive Officers in the Merger		62
Material U.S. Federal Income Tax Consequences of the Merger		65
Regulatory Approvals		66
Fees and Expenses		66
Anticipated Accounting Treatment of the Merger		67
Litigation		67
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION		69
THE PARTIES TO THE MERGER		70
American Greetings		70
Century Intermediate Holding Company		70
Century Merger Company		70
THE SPECIAL MEETING		71
Date, Time and Place		71
Record Date and Quorum		71
Required Vote		71
Voting; Proxies; Revocation		72
Adjournments and Postponements		74
Solicitation of Proxies		75
THE MERGER AGREEMENT		76
Explanatory Note Regarding the Merger Agreement		76
Structure of the Merger		76
When the Merger Becomes Effective		77
Effect of the Merger on the Common Shares of the Company and Merger Sub		77
Treatment of Company Equity Awards		77
Payment for the Common Shares in the Merger		78
Representations and Warranties		78
Conduct of Business Pending the Merger		81
Other Covenants and Agreements		82
Conditions to the Merger		90
Termination		91
Fees and Expenses		92
Amendments and Waivers		92
Equitable Remedies and Specific Performance		93


	Page
AGREEMENTS INVOLVING COMMON SHARES		94
Guaranty and Voting Agreement		94
Rollover and Contribution Agreement		94
PROVISIONS FOR UNAFFILIATED SHAREHOLDERS		94
IMPORTANT INFORMATION REGARDING AMERICAN GREETINGS		95
Company Background		95
Directors and Executive Officers		95
Prior Public Offerings		97
Historical Selected Financial Information		97
Ratio of Earnings to Fixed Charges		99
Book Value Per Share		99
Market Price of the Company’s Common Shares		100
Security Ownership of Management and Certain Beneficial Owners		101
Transactions in Common Shares		106
IMPORTANT INFORMATION REGARDING THE FAMILY SHAREHOLDERS, PARENT, MERGER SUB AND FAMILY LLC		110
DISSENTERS’ RIGHTS		112
ADVISORY VOTE ON MERGER RELATED COMPENSATION		114
MULTIPLE SHAREHOLDERS SHARING ONE ADDRESS		116
SUBMISSION OF SHAREHOLDER PROPOSALS		116
WHERE YOU CAN FIND ADDITIONAL INFORMATION		117
Annex A Agreement and Plan of Merger		A-1
Annex B Opinion of Peter J. Solomon Company, L.P.		B-1
Annex C Section 1701.85 of the Ohio General Corporation Law		C-1

PRELIMINARY COPY – SUBJECT TO COMPLETION

AMERICAN GREETINGS CORPORATION

SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD [—], 2013

PROXY STATEMENT

This proxy statement contains information related to a special meeting of shareholders (the “special meeting”) of American Greetings Corporation (“American Greetings,” the “Company,” “we,” “us” or “our”), which will be held at our world headquarters at One American Road, Cleveland, Ohio 44144, on [—], 2013, at [—], Cleveland, Ohio time, and any adjournments or postponements thereof. We are furnishing this proxy statement to shareholders of the Company as part of the solicitation of proxies by the Company’s board of directors (which we refer to as the “board of directors” or the “board”) for use at the special meeting. This proxy statement is dated [—], 2013 and is first being mailed to shareholders on or about [—], 2013.

SUMMARY TERM SHEET

This Summary Term Sheet discusses certain material information contained in this proxy statement, including with respect to the merger agreement, as defined below, the merger and the other agreements entered into in connection with the merger. We encourage you to read carefully this entire proxy statement, including its annexes and the documents referred to or incorporated by reference in this proxy statement, as this Summary Term Sheet may not contain all of the information that may be important to you. Each item in this Summary Term Sheet includes page references directing you to a more complete description of that item in this proxy statement.

The proposed merger is a “going private transaction” under Securities and Exchange Commission rules. If the merger is completed, the Company will become a privately held company, wholly owned by Century Intermediate Holding Company. All of the common stock of Century Intermediate Holding Company will be indirectly owned by Zev Weiss, a director and the Company’s Chief Executive Officer, Morry Weiss, the Company’s Chairman of the board of directors, Jeffrey Weiss, a director and the Company’s President and Chief Operating Officer, and certain other members of the Weiss family.

The Parties to the Merger Agreement

American Greetings

American Greetings is an Ohio corporation. Founded in 1906, American Greetings operates predominantly in a single industry: the design, manufacture and sale of everyday and seasonal greeting cards and other social expression products. We manufacture and sell greeting cards, gift packaging, party goods, stationery and giftware in North America, primarily in the United States and Canada, and throughout the world, primarily in the United Kingdom, Australia and New Zealand. In addition, our subsidiary, AG Interactive, Inc., distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals and electronic mobile devices. We also engage in character and design licensing, and we manufacture custom display fixtures for our products and products of others. We also operate approximately 400 card and gift retail stores throughout the United Kingdom. See “Important Information Regarding American Greetings – Company Background” beginning on page 95.

Additional information about American Greetings is contained in our public filings, certain of which are incorporated by reference into this proxy statement. See “Where You Can Find Additional Information” beginning on page 117.

Century Intermediate Holding Company

Century Intermediate Holding Company (“Parent”) is a Delaware corporation. Parent is currently a wholly owned subsidiary of Three-Twenty-Three Family Holdings, LLC, a Delaware limited liability company (“Family LLC”), which is currently owned by Zev Weiss, a director and the Chief Executive Officer of the Company. Neither Parent nor Family LLC has engaged in any business other than in connection with the merger and other related transactions. See “The Parties to the Merger – Century Intermediate Holding Company” beginning on page 70.

Century Merger Company

Century Merger Company (“Merger Sub”) is an Ohio corporation. Merger Sub is a wholly owned subsidiary of Parent and was formed solely for the purpose of engaging in the merger and other related transactions. Merger Sub has not engaged in any business other than in connection with the merger and other related transactions. See “The Parties to the Merger – Century Merger Company” beginning on page 70.

The Merger Proposal

You are being asked to consider and vote upon a proposal to adopt an Agreement and Plan of Merger, dated March 29, 2013, among Parent, Merger Sub and the Company (which we refer to as the “merger agreement”). The merger agreement provides that at the closing of the merger, Merger Sub will be merged with and into the Company (which we refer to as the “merger”), and each outstanding Class A common share, par value $1.00 per share (the “Class A common shares”), and Class B common share, par value $1.00 per share (the “Class B common shares” and together with the Class A common shares, the “common shares”), other than shares owned by the Company, Parent (which, at the effective time of the merger will include common shares currently held by the Family Shareholders) and Merger Sub and holders of common shares who have properly demanded dissenters’ rights (which shares we refer to as “dissenting shares”), will be converted into the right to receive $18.20 in cash, without interest and less any applicable withholding taxes.

If the merger is consummated, the Company will become a privately held company, wholly owned by Parent. All of the common stock of Parent will be owned by Family LLC, which, immediately prior to the closing of the merger, will be owned by Zev Weiss, Morry Weiss, the Company’s Chairman of the board of directors, Jeffrey Weiss, a director and the Company’s President and Chief Operating Officer, and certain other members of the Weiss family (collectively, the “Weiss Family”), who have collectively committed to roll over all of the common shares held by them immediately prior to the closing of the merger (which we refer to as the “rolled shares”) (which rolled shares will include the common shares contributed by Irving I. Stone Limited Liability Company (“Irving Stone LLC” and, together with the Weiss Family, the “Family Shareholders”) to each of the members of the Weiss Family pursuant to a planned dissolution of Irving Stone LLC), in exchange for all of the equity interests in Family LLC, and Family LLC has, in turn, committed to contribute the rolled shares to Parent in exchange for all of the common stock of Parent. For more information, see “Special Factors –Financing – Rollover Financing” beginning on page 56. Additionally, Koch AG Investment, LLC (“Koch AG Investment”), a subsidiary of Koch Industries, Inc., will hold between $215.6 million and $254.8 million in aggregate stated value of non-voting preferred stock of Parent. This preferred stock is non-voting and does not include a right to any board seats in Parent or the Company, but does have limited consent rights with respect to certain significant corporate actions proposed to be taken by Parent and the Company. For more information, see “Special Factors–Financing–Koch AG Investment Non-Voting Preferred Equity Financing” beginning on page 57.

The Special Meeting (Page 71)

The special meeting will be held at our world headquarters, which are located at One American Road, Cleveland, Ohio 44144, on [—], 2013, at [—], Cleveland, Ohio time.

Record Date and Quorum (Page 71)

The holders of record of the common shares as of the close of business on [—], 2013 (the record date for determination of shareholders entitled to notice of and to vote at the special meeting) are entitled to receive notice of and to vote at the special meeting.

Required Shareholder Votes for the Merger (Page 71)

voting power of the Company, vote in favor of the adoption of the merger agreement (which we refer to as the “Company shareholder approval”). Pursuant to our articles of incorporation, the Class A common shares are entitled to one vote per share and the Class B common shares are entitled to ten votes per share. In addition, the merger agreement makes it a condition to the parties’ obligations to consummate the merger that at least a majority of our issued and outstanding Class A common shares and Class B common shares, excluding all Class A common shares and Class B common shares beneficially owned by the Family Shareholders, the Irving I. Stone Foundation or any director or executive officer of the Company or any of its subsidiaries, voting together as a single class, vote in favor of the adoption of the merger agreement (which we refer to as the “majority of the minority” shareholder approval condition). For purposes of this majority of the minority shareholder approval condition only, Class B common shares will be entitled to one vote per share.

A failure to vote common shares or an abstention from voting will have the same effect as a vote against the merger for purposes of each required shareholder vote.

The Family Shareholders and the Irving I. Stone Foundation have voting power with respect to, in the aggregate, 4,766 Class A common shares and 2,510,697 Class B common shares, representing in the aggregate 43.2% of our outstanding voting power as of May 3, 2013. As of the record date, there were [—] Class A common shares outstanding and [—] Class B common shares outstanding.

The Family Shareholders and the Irving I. Stone Foundation have agreed, subject to certain conditions, to vote all common shares that they beneficially own in favor of adopting the merger agreement, pursuant to a guaranty and voting agreement entered into with the Company on March 29, 2013 (which we refer to as the “guaranty and voting agreement”). See “Agreements Involving Common Shares – Guaranty and Voting Agreement” beginning on page 94.

Except in their capacities as members of the board of directors or as members of the special committee of independent directors that was established to evaluate and negotiate a potential transaction and consider other alternatives available to the Company (as described more fully under “Special Factors – Background of the Merger” below and which we refer to as the “special committee”), no executive officer or director of the Company has made any recommendation either in support of or in opposition to the merger or the merger agreement. Morry Weiss, Zev Weiss and Jeffrey Weiss (who we collectively refer to as the “Family Shareholder directors”) recused themselves from the vote of the board of directors to approve and recommend the merger agreement and the merger.

Conditions to the Merger (Page 90)

The obligations of the Company, Parent and Merger Sub to effect the merger are subject to the fulfillment or waiver, at or before the effective time, of the following conditions:

•

that the Company shareholder approval has been obtained;

•

that the majority of the minority shareholder approval has been obtained;

•

that no restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing, or making illegal, the consummation of the merger and other transactions contemplated by the merger agreement, other than the financing, be in effect; and

•

that any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), has expired or been terminated.

The obligation of the Company to effect the merger is subject to the fulfillment or waiver, at or before to the effective time, of the following conditions:

•

or material adverse effect qualifier) does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect (as defined below) with respect to Parent and except that representations and warranties that are made as of a specified date or period need be true and correct only as of that specified date or period;

•

that each of Parent and Merger Sub has in all material respects performed all obligations and complied with all covenants required by the merger agreement to be performed or complied with by it at or prior to the effective time; and

•

that Parent has delivered to the Company a certificate, dated the effective time and signed by its chief executive officer or another senior executive officer, certifying that the conditions set forth in the two items described above have been satisfied.

The obligation of Parent and Merger Sub to effect the merger is subject to the fulfillment or waiver, at or before the effective time, of the following conditions:

•

that the representations and warranties of the Company set forth in the merger agreement are true and correct at and as of the date of the merger agreement and at and as of the closing date of the merger as though made at and as of the closing date of the merger, except where the failure of such representations and warranties to be true and correct (in each case without giving effect to any materiality or material adverse effect qualifier) does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect with respect to the Company and except that representations and warranties that are made as of a specified date or period need be true and correct only as of that specified date or period; and except that that (i) the representations and warranties of the Company pertaining to corporate organization, existence and good standing (with respect to the Company only), finders and brokers and state takeover statutes and rights agreements must be true and correct in all material respects, (ii) the representations and warranties pertaining to the Company’s capitalization must be true and correct in all respects, except for such inaccuracies as are de minimis in nature and amount relative to each such representation and warranty taken as a whole and (iii) the representations and warranties of the Company pertaining to corporate authority, the absence of a material adverse effect on the Company since March 1, 2012, the opinion of the financial advisor to the special committee and the required vote of Company shareholders under Ohio law must be true and correct in all respects;

•

that the Company has in all material respects performed all obligations and complied with all covenants required by the merger agreement to be performed or complied with by it at or prior to the effective time;

•

that the Company has delivered to Parent a certificate, dated the effective time and signed by a senior executive officer of the Company (other than any affiliate of Parent), certifying that the conditions set forth in the two items described immediately above have been satisfied;

•

that Parent and Merger Sub have received the proceeds of the financing as contemplated by the Preferred Stock Purchase Agreement (as defined in “Special Factors – Financing – Koch AG Investment Non-Voting Preferred Equity Financing” beginning on page 57) and the Debt Commitment Letter (as defined in “Special Factors –Financing –Debt Financing” beginning on page 60); and

•

that since the date of the merger agreement, there has not been any material adverse effect on the Company, subject to certain exceptions.

When the Merger Becomes Effective (Page 77)

We anticipate completing the merger in the third calendar quarter of 2013, subject to adoption of the merger agreement by the Company’s shareholders as specified herein and the satisfaction of the other closing conditions.

Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger (Page 33)

Based in part on the unanimous recommendation of the special committee, the board of directors (with the Family Shareholder directors abstaining) recommends unanimously that the shareholders of the Company vote

“FOR” the proposal to adopt the merger agreement. For a description of the reasons considered by the special committee and the board for their recommendations, see “Special Factors – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger” beginning on page 33.

The purpose of the merger for the Company is to enable its shareholders to realize the value of their investment in the Company through their receipt of the $18.20 per share merger consideration (the “per share merger consideration”) in cash, representing a premium of 13.0% to the closing price of the Class A common shares on March 28, 2013, the last trading day before the public announcement of the signing of the merger agreement, as well as a premium of 26.9% to the closing price of the Class A common shares on September 25, 2012, the last trading day before the announcement by the Weiss Family of their initial proposal to acquire the Company.

Opinion of Peter J. Solomon Company, L.P. (Page 40 and Annex B)

The special committee retained Peter J. Solomon Company, L.P. (“PJSC”) to act as its financial advisor in connection with the merger and to evaluate the fairness, from a financial point of view, of the merger consideration to be received in the merger by holders of the Class A common shares and Class B common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares).

On March 28, 2013, at a meeting of the special committee held to evaluate the merger, PJSC delivered to the special committee an oral opinion, subsequently delivered to the board of directors, confirmed by delivery of a written opinion dated March 28, 2013 to the special committee and the board of directors, to the effect that, as of such date and based on and subject to various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of Class A common shares and Class B common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to such holders.

The full text of PJSC’s written opinion, dated March 28, 2013, to the special committee and the board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this proxy statement. PJSC provided its opinion for the information and assistance of the special committee and the board of directors in connection with their consideration of the merger. The PJSC opinion is not a recommendation as to how any holder of Class A common shares or Class B common shares should vote with respect to the merger or any other matter.

Purposes and Reasons of Family LLC, Parent, Merger Sub and the Family Shareholders for the Merger (Page 48)

The Weiss Family decided to pursue the merger because it believes that it is time to return the Company to its roots as a family-owned business. The Weiss Family believes that the Company can be operated more effectively as a privately owned company because the Company will have greater operating flexibility, allowing management to concentrate on long-term growth and reduce the focus on the quarter-to-quarter performance often emphasized by the public markets. For a full description of the purposes and reasons of Family LLC, Parent, Merger Sub and the Family Shareholders, see “Special Factors – Purposes and Reasons of Family LLC, Parent, Merger Sub and the Family Shareholders for the Merger” beginning on page 48.

Certain Effects of the Merger (Page 52)

If the conditions to the closing of the merger are either satisfied or waived, Merger Sub will be merged with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence under Ohio law as the surviving corporation in the merger, with all of its rights, privileges, immunities, powers and franchises continuing unaffected by the merger. Upon completion of the merger, common shares, other than shares owned by the Company, Parent (including the rolled shares), Merger Sub or holders of dissenting shares, will be converted into the right to receive $18.20 per share, without interest and less any applicable withholding taxes. Following the completion of the merger, the common shares will no longer be publicly traded, and shareholders (other than the Family Shareholders through their interest in Parent) will cease to have any ownership interest in the Company.

Treatment of Company Equity Awards (Page 77)

Company Stock Options

Each option to purchase common shares, if any, held by any of the Family Shareholders immediately prior to the closing of the merger will be cancelled at the closing of the merger without the payment of any consideration.

Each other option to purchase common shares outstanding immediately prior to the closing of the merger will be cancelled at the closing of the merger in exchange for a cash payment. For any option with a per share exercise price less than $18.20, the cash payment will equal the product of (x) the excess of $18.20 over the per share exercise price and (y) the number of Company common shares subject to that option immediately prior to its cancellation. For any option with a per share exercise price that equals or exceeds $18.20, the amount of the cash payment will be based on the Black-Scholes value of the option using certain assumptions specified in the merger agreement.

Company Restricted Stock Units and Company Performance Shares

Each restricted stock unit and each performance share relating to common shares, if any, held by any of the Family Shareholders immediately prior to the closing of the merger will be cancelled at the closing of the merger without the payment of any consideration.

Each restricted stock unit held by a member of the board of directors (other than a Family Shareholder director) and outstanding immediately prior to the closing of the merger will fully vest and be settled for a cash payment equal to $18.20 and paid at the time provided under the applicable restricted stock unit award agreement and/or Company equity plan.

Each other restricted stock unit and performance share outstanding immediately prior to the closing of the merger will continue to be subject to the same terms and conditions (including vesting terms) as applied immediately before the closing of the merger, except that the applicable award will represent only the right to receive an amount of cash, instead of common shares, calculated by reference to a per share reference price of $18.20.

Interests of the Company’s Directors and Executive Officers in the Merger (Page 62)

In considering the recommendations of the special committee and of the board of directors with respect to the merger agreement, you should be aware that, aside from their interests as shareholders of the Company, the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. In particular, the Family Shareholder directors will, together with the other Family Shareholders and related persons, control the Company following the merger. Interests of executive officers and directors other than the Family Shareholders that may be different from or in addition to the interests of the Company’s shareholders include:

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They will receive cash payments in the treatment of equity awards pursuant to the merger agreement and, for executive officers, they will have the continued ability to become vested in outstanding restricted stock units and earn outstanding performance awards following the merger.

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Certain executive officers will receive benefits under employment plans or employment agreements that could result from the merger.

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The Company’s executive officers as of the effective time of the merger will become the initial executive officers of the surviving corporation.

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The Company’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement, and the Company’s directors and certain executive officers are entitled to continued indemnification and insurance coverage under indemnification agreements.

These interests are discussed in more detail in the section entitled “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 62. The special committee and

the board of directors were aware of the different or additional interests described herein and considered those interests along with other matters in recommending and/or approving, as applicable, the merger agreement and the transactions contemplated thereby, including the merger.

Financing (Page 56)

The Company and Parent estimate that the total amount of funds (including rollover equity) required to complete the merger and related transactions and pay related fees and expenses will be approximately $700 million. Parent expects this amount to be provided by a combination of proceeds from:

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the rollover of the Class A common shares and Class B common shares held by the Family Shareholders;

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a non-voting preferred equity investment in Parent by Koch AG Investment in an amount between $215.6 million and $254.8 million; and

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debt financing in the form of a $400.0 million term loan and an available $200.0 million revolving credit facility;

together with cash of the Company at the closing of the merger. The financing described above, when funded in accordance with the Preferred Stock Purchase Agreement, the Debt Commitment Letter and the rollover and contribution agreement (each as defined in “Special Factors – Financing”), as applicable, will provide Parent and Merger Sub with sufficient proceeds to consummate the merger.

Guaranty and Voting Agreement (Page 94)

In connection with the merger, the Family Shareholders, the Irving I. Stone Foundation and the Company entered into the guaranty and voting agreement through which (i) the Family Shareholder directors have, jointly and severally, guaranteed to the Company the obligations of Parent and Merger Sub under the merger agreement, subject to a maximum aggregate liability of $7.3 million, and (ii) each Family Shareholder and the Irving I. Stone Foundation has agreed to vote (or cause to be voted) all common shares over which they have voting power (representing 43.2% of the Company’s total outstanding voting power as of May 3, 2013) in favor of the adoption of the merger agreement and has waived any rights of appraisal or rights of dissent from the merger that are available under applicable law, unless either of the board of directors or the special committee has changed its recommendation or failed to make a recommendation with respect to the merger agreement. See “Agreements Involving Common Shares – Guaranty and Voting Agreement” beginning on page 94.

Material U.S. Federal Income Tax Consequences of the Merger (Page 65)

If you are a U.S. holder, the receipt of cash in exchange for common shares pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes. You should consult your own tax advisors regarding the particular tax consequences to you of the exchange of common shares for cash pursuant to the merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws).

Anticipated Accounting Treatment of the Merger (Page 67)

The merger will be accounted for in accordance with U.S. generally accepted accounting principles. The Company is currently researching whether the merger constitutes a change of control under U.S. generally accepted accounting principles, which will impact whether the purchase method of accounting or historical book values will be used to account for the transaction.

Litigation (Page 67)

On September 26, 2012, the Company announced that the board of directors had received a non-binding proposal (the “proposal”) dated September 25, 2012 from Zev Weiss, our Chief Executive Officer, and Jeffrey Weiss, our President and Chief Operating Officer, on behalf of themselves and certain other members of the Weiss Family and related parties, to acquire all of the outstanding Class A common shares and Class B common shares not then owned by them for $17.18 per share. On September 27, 2012, Dolores Carter, a purported

shareholder, filed a putative shareholder derivative and class action lawsuit (the “Carter Action”) in the Court of Common Pleas in Cuyahoga County, Ohio (the “Cuyahoga County Court”), against American Greetings Corporation and all of the members of the board of directors. The Carter Action alleged, among other things, that the directors of the Company breached their fiduciary duties owed to shareholders in evaluating and pursuing the proposal. The Carter Action further alleged claims for aiding and abetting breaches of fiduciary duty. Among other things, the Carter Action sought declaratory, injunctive, and other equitable relief.

Subsequently, six more lawsuits were filed in the Cuyahoga County Court purporting to advance substantially similar claims on behalf of American Greetings against the members of the board of directors and, in certain cases, additional direct claims against American Greetings. One lawsuit was voluntarily dismissed. The other lawsuits were consolidated by Judge Richard J. McMonagle on December 6, 2012 (amended order dated December 18, 2012) as In re American Greetings Corp. Shareholder Litigation, Lead Case No. CV 12 792421. Lead Plaintiffs and Lead Plaintiffs’ Counsel also were appointed.

Lead Plaintiffs filed a Consolidated Class Action Complaint on April 30, 2013 against the members of the American Greetings board of directors for alleged breaches of fiduciary duty and aiding and abetting alleged breaches of fiduciary duty in connection with the merger agreement announced on April 1, 2013 and the alleged omission of material information from the preliminary proxy statement filed on April 18, 2013. The Consolidated Class Action Complaint seeks, among other things, declaratory, injunctive, and other equitable relief.

On November 6, 2012, R. David Wolfe, a purported shareholder, filed a putative class action (the “Wolfe I Action”) in the United States District Court for the Northern District of Ohio (the “Federal Court”) against certain members of the Weiss Family and the Irving I. Stone Oversight Trust, the Irving Stone Limited Liability Company, the Irving I. Stone Support Foundation, and the Irving I. Stone Foundation alleging breach of fiduciary duties in proposing and pursuing the proposal, as well as against American Greetings, seeking, among other things, declaratory, injunctive, and other equitable relief. Shortly thereafter, on November 9, 2012, the Louisiana Municipal Police Employees’ Retirement System also filed a purported class action in the Federal Court (the “LMPERS Action”) asserting substantially similar claims against the same defendants and seeking substantially similar relief.

Plaintiffs in the Wolfe I and LMPERS Actions filed motions (1) to consolidate the Wolfe I and LMPERS Actions, (2) for appointment as co-lead plaintiffs, (3) for appointment of co-lead counsel, and, in the Wolfe I Action only, (4) for partial summary judgment. Defendants responded to plaintiffs’ motions, answered the complaints, and moved to dismiss the complaints on jurisdictional grounds. On February 14, 2013, the Federal Court dismissed both the Wolfe I and LMPERS Actions for lack of subject matter jurisdiction. On March 15, 2013, plaintiffs in both the Wolfe I and LMPERS Actions filed notices of appeal with the Sixth Circuit Court of Appeals. On April 18, 2013, plaintiff Wolfe moved to dismiss his appeal, which motion was granted on April 19, 2013. On May 8, 2013, plaintiff LMPERS’s appeal also was dismissed.

Plaintiffs in the Wolfe I and LMPERS Actions had alleged, in part, that Article Seventh of the Company’s articles of incorporation prohibited the special committee from, among other things, evaluating the merger. The Company considered these allegations and concluded that the Article is co-extensive with Ohio law and thus allows the Company to engage in any activity authorized by Ohio law. The Company also has consistently construed Article Seventh as permitting directors to approve a transaction so long as they are both disinterested and independent.

breached its fiduciary duties in considering and approving the merger, and that certain members of the Weiss Family and related entities breached fiduciary duties owed to the Company’s minority shareholders. On April 29, 2013, an amended complaint was filed incorporating additional allegations and a claim that the director defendants also have breached their fiduciary duties by failing to disclose certain information to shareholders. Among other things, the Wolfe II Action seeks substantially the same declaratory, injunctive, and other equitable relief as the Wolfe I Action, the LMPERS Action, and In re American Greetings Corp. Shareholder Litigation.

The Company believes that the allegations in these actions, including the claims in the litigation concerning the Company’s articles of incorporation, are without merit.

Dissenters’ Rights (Page 112 and Annex C)

If the merger is completed, holders of common shares who do not vote in favor of adopting the merger agreement will be entitled to seek relief as dissenting shareholders under Section 1701.85 of the Ohio Revised Code, which will include the right to seek appraisal of the fair cash value of their shares as determined by the Court of Common Pleas in Cuyahoga County, Ohio, but only if they comply with the Ohio law procedures applicable to those dissenting shareholders’ rights. The appraised value of common shares could be more, the same as, or less than the $18.20 per share that shareholders are entitled to receive pursuant to the merger agreement.

SECTION 1701.85 OF THE OHIO REVISED CODE GOVERNING THE RIGHTS OF DISSENTING SHAREHOLDERS IS REPRINTED IN ITS ENTIRETY AS ANNEX C TO THIS PROXY STATEMENT. ANY AMERICAN GREETINGS SHAREHOLDER WHO WISHES TO EXERCISE DISSENTING SHAREHOLDERS’ RIGHTS OR WHO WISHES TO PRESERVE HIS, HER, OR ITS RIGHT TO DO SO SHOULD REVIEW ANNEX C CAREFULLY AND SHOULD CONSULT HIS, HER, OR ITS LEGAL ADVISOR, BECAUSE FAILURE TO TIMELY COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF THOSE RIGHTS.

No Solicitation (Page 83)

Pursuant to the merger agreement, except as described below, the Company will not, nor will it authorize or permit any of its subsidiaries to, and will use its reasonable best efforts to instruct and cause any of its or their respective officers, directors, employees, agents and representatives, not to, directly or indirectly:

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initiate, solicit, encourage (including by providing information) or knowingly facilitate any inquiry, proposal or offer with respect to, or the making or completion of, an “alternative proposal” as described in the section entitled “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83, and will immediately cease any discussions, negotiations or communications with any party that has made or indicated an intention to make an alternative proposal;

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engage or participate in any negotiations concerning, or provide or cause to be provided any non-public information or data relating to the Company or any of its subsidiaries in connection with, an actual or proposed alternative proposal, or otherwise encourage or knowingly facilitate any effort or attempt to make or implement an alternative proposal;

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approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any alternative proposal;

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approve, endorse or recommend, or propose to approve, endorse or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, or other similar agreement relating to any alternative proposal;

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amend, terminate, fail to enforce, or grant any consent under, any confidentiality, standstill or similar agreement (except that the Company may allow the counterparty thereto to make an alternative proposal and otherwise amend, terminate or fail to enforce (or grant consent under) the provisions thereof in connection with negotiations and discussions permitted by the merger agreement); or

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resolve to propose or agree to do any of the foregoing.

If, prior to the receipt of the Company shareholder approval and the majority of the minority shareholder approval, (i) the Company receives an unsolicited alternative proposal, (ii) the Company has not breached its obligations under the non-solicitation provisions of the merger agreement (except where such breaches did not contribute to the making of the alternative proposal), (iii) the board (acting through the special committee) determines in good faith that the alternative proposal constitutes or is reasonably likely to result in a “superior proposal,” as described in the section entitled “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83, and (iv) after consultation with its counsel, the board (acting through the special committee) determines in good faith that failure to take action concerning an alternative proposal would be inconsistent with the directors’ fiduciary duties under applicable Ohio law, then the Company may:

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furnish information to the person making the alternative proposal and its representatives pursuant to a confidentiality agreement on terms no less restrictive than those contained in the existing confidentiality agreement between the Company and the Weiss Family; provided that such confidentiality agreement will not contain any provisions that would prevent the Company from complying with its obligation to provide certain required disclosures to Parent as set forth in this “The Merger Agreement – Other Covenants and Agreements – No Solicitation” section; and

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participate in discussions or negotiations with that person and its representatives regarding the alternative proposal.

The Company must promptly provide to Parent any non-public information concerning the Company or any of its subsidiaries that is provided to the person making the alternative proposal or its representatives that was not previously provided or made available to Parent.

The Company must promptly (and in any event within 48 hours) advise Parent orally and in writing of (i) any alternative proposal or inquiry with respect to or that would reasonably be expected to lead to any alternative proposal and (ii) any inquiry or request for discussion or negotiation regarding an alternative proposal including, in each case, the identity of the party making the alternative proposal or inquiry and the material terms of the alternative proposal or inquiry (including, if applicable, copies of any document or correspondence evidencing the alternative proposal or inquiry). The Company, upon the request of Parent, will keep Parent reasonably informed of the status (including any material change to the terms) of any such alternative proposal or inquiry.

Except as described below, neither the board of directors nor any committee thereof is permitted to:

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withdraw or modify in a manner adverse to Parent or Merger Sub, or publicly propose to withdraw or modify in a manner adverse to Parent or Merger Sub, its recommendation of the merger agreement or fail to recommend against acceptance of any tender offer or exchange offer that is publicly disclosed (other than by Parent or Merger Sub) prior to the earlier of the date of the special meeting and ten business days after the commencement of the tender offer or exchange, or recommend that the shareholders of the Company tender their shares in such tender offer or exchange offer;

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approve or recommend, or publicly propose to approve, endorse or recommend, any alternative proposal; or

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approve any letter of intent, agreement in principle, merger agreement, acquisition agreement or similar agreement relating to any alternative proposal.

At any time prior to obtaining the required votes of the Company shareholders, the special committee may:

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make a recommendation change in response to an event, fact, circumstance, development, occurrence or state of facts relating to the Company’s prospects that was not known to the board of directors or the special committee as of the date of the merger agreement, but becomes known to the board of directors or the special committee and would have improved the Company’s prospects such that the special committee determines in good faith after consulting with its legal and financial advisors that the transactions contemplated by the merger agreement are less favorable to shareholders than the Company continuing to pursue its business as a publicly traded company (such event, fact, circumstance, development, occurrence or state of facts, as more fully described in the section entitled “The Merger

Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83, an “intervening event”), if the special committee determines in good faith, after consultation with its counsel, that the failure to do so would be inconsistent with the directors’ fiduciary duties under Ohio law; or

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terminate the merger agreement in response to a superior proposal if (i) the superior proposal did not result from a breach by the Company of its covenants under the non-solicitation provisions of the merger agreement as described in the section entitled “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83, (ii) the board of directors (acting through the special committee) determines, in good faith after consultation with counsel, that the failure to terminate the merger agreement would be inconsistent with the directors’ fiduciary duties under Ohio law, (iii) the Company provides Parent five business days prior written notice of its intention to take action, which notice includes the information that is specified in the preceding paragraph of this “Summary Term Sheet – No Solicitation” section, (iv) after providing such notice and prior to terminating the merger agreement and entering into a definitive transaction agreement providing for the consummation of the transaction contemplated by the superior proposal, the Company negotiates in good faith with Parent (to the extent Parent desires to negotiate) during the five business days to make revisions to the terms of the merger agreement as would permit the board of directors and the special committee not to terminate the merger agreement, and (v) the board of directors and the special committee consider in good faith any changes to the merger agreement offered in writing by Parent and determine in good faith, after consultation with outside legal counsel and financial advisors, that the superior proposal would continue to constitute a superior proposal if the changes offered in writing by Parent were implemented, provided that in the event that the superior proposal is then modified by the party making the superior proposal, the Company provides written notice of the modified superior proposal to Parent and again complies with the requirements described in this paragraph of this “Summary Term Sheet – No Solicitation” section, except that the Company’s advance written notice obligation will be reduced to three business days.

Termination (Page 91)

The Company (authorized by the special committee) and Parent may terminate the merger agreement by mutual written consent at any time before the completion of the merger, whether prior to or after receipt of the Company shareholder approval and the majority of the minority shareholder approval. In addition, either the Company (with the prior approval of the special committee) or Parent may terminate the merger agreement if:

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the merger has not been completed by 11:59 p.m. on September 30, 2013 (the “end date”), provided that this termination right is not available to a party whose failure to perform any of its obligations under the merger agreement has been the primary cause of the failure of the merger to be consummated by the end date;

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any final nonappealable injunction, order, decision, opinion, decree, ruling or other action of a governmental entity permanently restrains, enjoins or prohibits the merger, provided that the party seeking to terminate the merger agreement pursuant to this provision shall have used its reasonable best efforts to remove such injunction, other legal restraint or order; or

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if the special meeting of the Company shareholders (including any adjournment or postponement of such special meeting) has concluded, and the Company shareholder approval and the majority of the minority shareholder approval has not been obtained.

The Company (with the prior approval of the special committee) may terminate the merger agreement:

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if there is a breach of any of the covenants on the part of Parent or if any of the representations or warranties of Parent fail to be true, such that the conditions to each party’s obligation to effect the merger or the conditions to the obligation of the Company to effect the merger would be incapable of fulfillment and the breach or failure is incapable of being cured, or is not cured, by the earlier of the end date and thirty days following written notice to Parent of the breach or failure, so long as the Company is not then in material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement; or

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prior to the approval of the merger agreement by our shareholders, in order to concurrently enter into a definitive agreement with respect to a superior proposal, but only if the Company has complied in all material respects with its obligations described in “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83.

Parent may terminate the merger agreement:

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if there is a breach of any of the covenants on the part of the Company or if any of the representations or warranties of the Company fail to be true, such that the conditions to each party’s obligation to complete the merger or the conditions to the obligation of Parent and Merger Sub to complete the merger would be incapable of fulfillment and the breach or failure is incapable of being cured, or is not cured, by the earlier of the end date and thirty days following written notice to the Company of the breach or failure, so long as Parent is not then in material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement;

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if prior to the approval of the merger agreement by our shareholders, the board of directors or the special committee withdraws or modifies its recommendation of the merger agreement or fails to recommend the merger agreement; or

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if prior to the approval of the merger agreement by our shareholders, the Company materially breaches (i) its non-solicitation obligations as described in “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83 or (ii) its filing obligations as described in “The Merger Agreement – Other Covenant and Agreements – Reasonable Best Efforts” beginning on page 85 and such breach is not cured within five business days following written notice by Parent to the Company.

Expense Reimbursement Provisions (Page 92)

The Company will pay to Parent an amount equal to the sum of Parent’s and Merger Sub’s expenses up to $7.3 million if:

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the Company, prior to obtaining the Company shareholder approval and the majority of the minority shareholder approval, terminates the merger agreement to enter into a definitive agreement providing for a superior proposal;

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Parent terminates the merger agreement because of a recommendation change or failure to make a recommendation by the Company’s board of directors or the special committee;

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Parent, prior to obtaining the Company shareholder approval and the majority of the minority shareholder approval, terminates the merger agreement because the Company materially breaches its non-solicitation covenant under the merger agreement or fails to take necessary steps to obtain approval for the merger and such breach is not cured within five business days following written notice by Parent to the Company;

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either the Company or Parent terminates the merger agreement because the merger agreement is not approved by the Company’s shareholders at the special meeting; or

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after an alternative proposal to acquire all or a portion of the Company has been disclosed publicly or has been made directly to the Company’s shareholders or any person has publicly announced an intention (whether or not conditional) to make a bona fide alternative proposal, the merger agreement is terminated by the Company or Parent because the merger has not been completed by the end date or by Parent pursuant to a breach by the Company of its covenants or representations and warranties, and the Company enters into a definitive agreement with respect to, or consummates, a transaction contemplated by any alternative proposal to acquire at least 50% of the Company’s common shares or assets within 12 months of the date the merger agreement is terminated.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the special meeting, the merger agreement and the merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

What is the proposed transaction?

The proposed transaction is the merger of Merger Sub with and into the Company pursuant to the merger agreement. If the merger is consummated, the Company will become a privately-held company, wholly owned by Parent. The Family Shareholders will own all of the common stock of Parent.

What will I receive in the merger?

If the merger is completed and you do not properly exercise dissenters’ rights, you will be entitled to receive $18.20 in cash, without interest and less any applicable withholding taxes, for each common share that you own. You will not be entitled to receive shares in the surviving corporation.

When and where is the special meeting?

The special meeting will take place on [—], starting at [—], Cleveland, Ohio, time, at our world headquarters at One American Road, Cleveland, Ohio 44144.

Will shareholders receive dividends before the merger is completed or the merger agreement is terminated?

Under the merger agreement, if the board of directors so determines prior to the completion of the merger, the Company is permitted to declare and pay one quarterly dividend on its common shares up to $0.15 per share, consistent with prior timing.

What matters will be voted on at the special meeting?

You will be asked to vote on the following proposals:

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to adopt the merger agreement;

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to approve, on an advisory (non-binding) basis, specified compensation that may be payable to the named executive officers of the Company in connection with the merger;

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to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval; and

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to act upon other business that may properly come before the special meeting or any adjournment or postponement thereof.

What vote of our shareholders is required to approve the merger agreement?

Foundation or any director or executive officer of the Company or any of its subsidiaries, voting together as a single class, vote in favor of the adoption of the merger agreement (which we refer to as the “majority of the minority” shareholder approval condition). For purposes of this majority of the minority shareholder approval condition only, Class B common shares will be entitled to one vote per share.

The Family Shareholders and the Irving I. Stone Foundation have voting power with respect to, in the aggregate, 4,766 Class A common shares and 2,510,697 Class B common shares, representing in the aggregate 43.2% of our outstanding voting power as of May 3, 2013. As of the record date, there were [—] Class A common shares issued and outstanding and [—] Class B common shares issued and outstanding.

The Family Shareholders and the Irving I. Stone Foundation have agreed, subject to certain conditions, to vote all common shares that they beneficially own in favor of adopting the merger agreement, pursuant to the guaranty and voting agreement. See “Agreements Involving Common Shares – Guaranty and Voting Agreement” on page 94.

Each of the directors and executive officers of the Company has informed the Company that as of the date of this proxy statement, he or she intends to vote in favor of the adoption of the merger agreement.

What vote of our shareholders is required to approve other matters to be presented at the special meeting?

Each of the advisory (non-binding) proposal to approve specified compensation that may be payable to the named executive officers of the Company in connection with the merger, and the proposal regarding adjournment, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval, requires the affirmative vote of the majority of the votes cast at the special meeting. The Class A common shares are entitled to one vote per share and the Class B common shares are entitled to ten votes per share on each of these proposals.

How does the board of directors recommend that I vote?

Based in part on the unanimous recommendation of the special committee, the board of directors (with the Family Shareholder directors abstaining) recommends unanimously that our shareholders vote:

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“FOR” the adoption of the merger agreement;

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“FOR” the advisory (non-binding) proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger; and

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“FOR” the proposal regarding adjournment, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval.

You should read “Special Factors – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger” beginning on page 33 for a discussion of the factors that the special committee and the board of directors (with the Family Shareholder directors abstaining) considered in deciding to recommend and/or approve, as applicable, the merger agreement. See also “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 62.

What effects will the merger have on American Greetings?

The Class A common shares and the Class B common shares are currently registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Class A common shares are quoted on the New York Stock Exchange (“NYSE”) under the symbol “AM.” As a result of the merger, the Company will cease to be a publicly traded company and will be wholly owned by Parent.

Following the consummation of the merger, the registration of the common shares and our reporting obligations with respect to the common shares under the Exchange Act will be terminated upon application to the Securities and Exchange Commission (“SEC”). In addition, upon the consummation of the merger, the Class A common shares will no longer be listed on any stock exchange or quotation system, including the NYSE. We expect, however, that we will continue to file reports with the SEC pursuant to requirements contained in the indenture with respect to our 7.375% senior notes due 2021 (the “2021 senior notes indenture”).

What will happen if the merger is not consummated?

If the merger is not consummated for any reason, the Company’s shareholders will not receive any payment for their shares in connection with the merger. Instead, the Company will remain a public company and the Class A common shares will continue to be listed and traded on the NYSE. Under specified circumstances, the Company may be required to pay Parent and Merger Sub certain expenses, up to a maximum of $7.3 million if the merger is not consummated. On the terms and conditions set forth in the guaranty and voting agreement, the Family Shareholder directors have, jointly and severally, guaranteed to the Company the obligations of Parent and Merger Sub under the merger agreement, subject to a maximum aggregate liability of $7.3 million. See “The Merger Agreement – Termination” beginning on page 91 and “Agreements Involving Common Shares – Guaranty and Voting Agreement” beginning on page 94.

What do I need to do now?

We urge you to read this proxy statement carefully, including its annexes and the documents referred to as incorporated by reference in this proxy statement, as well as the related Schedule 13E-3, including the exhibits thereto, filed with the SEC, and to consider how the merger affects you.

If you are a shareholder of record, you can ensure that your shares are voted at the special meeting by submitting your proxy via:

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telephone, using the toll-free number listed on your proxy and voting instruction card;

•

the Internet, at the address provided on your proxy and voting instruction card; or

•

mail, by completing, signing, dating and mailing your proxy and voting instruction card and returning it in the envelope provided.

If you hold your shares in “street name” through a broker, bank or other nominee, you should follow the directions provided by it regarding how to instruct it to vote your shares. Without those instructions, your shares will not be voted, which will have the same effect as voting against adoption of the merger agreement.

Should I send in my stock certificates or other evidence of ownership now?

No. After the merger is completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your common shares for the per share merger consideration. If your common shares are held in “street name” by your broker, bank or other nominee, you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” shares in exchange for the per share merger consideration. Do not send in your certificates now.

Can I revoke my proxy and voting instructions?

Yes. You can revoke your proxy and voting instructions at any time before your proxy is voted at the special meeting. If you are a shareholder of record, you may revoke your proxy by notifying the Company’s Secretary in writing at One American Road, Cleveland, Ohio 44144, by submitting a new proxy by telephone, the Internet or mail, in each case, dated after the date of the proxy being revoked, or by attending the special meeting and voting in person (but simply attending the special meeting will not cause your proxy to be revoked). Participants in our Retirement Profit Sharing and Savings Plan may revoke voting instructions in the same manner as shareholders of record, except that they may not do so by attending the special meeting and voting in person.

Please note that if you hold your shares in “street name” and you have instructed a broker, bank or other nominee to vote your shares, the above-described options for revoking your voting instructions do not apply, and instead you must follow the instructions received from your broker, bank or other nominee to revoke your voting instructions.

What does it mean if I get more than one proxy and voting instruction card?

If you are both a record shareholder and hold shares through the American Greetings Retirement Profit Sharing and Savings Plan, you may have received one proxy and voting instruction card that shows all common shares registered in your name, including all shares you have (based on the units credited to your account) under the Retirement Profit Sharing and Savings Plan. Accordingly, your proxy and voting instruction card also serves as your voting directions to the independent trustee of the Retirement Profit Sharing and Savings Plan.

Please note, however, that unless the identical name or names appeared on all your accounts, we were not able to consolidate your share information. If that was the case, you received more than one proxy and voting instruction card and must vote each separately.

If your shares are held through a broker, bank or other nominee, you will receive either a voting form or a proxy card from the nominee with specific instructions about the voting methods available to you. As a beneficial owner, in order to ensure your shares are voted, you must provide voting instructions to the broker, bank or other nominee by the deadline provided in the materials you receive from them.

Who will count the votes?

A representative of [—] will count the votes and act as an inspector of election.

Who can help answer my other questions?

If you have more questions about the merger, or require assistance in submitting your proxy or voting your shares or need additional copies of the proxy statement or the enclosed proxy and voting instruction card(s), please contact Georgeson Inc., which is acting as the proxy solicitation agent and information agent in connection with the merger.

Georgeson Inc.

480 Washington Blvd.

26^th Floor

Jersey City, NJ 07310

Toll Free: (888) 660-8331

If your broker, bank or other nominee holds your shares, you can also call your broker, bank or other nominee for additional information.

SPECIAL FACTORS

Background of the Merger

The Family Shareholders are related to Jacob Sapirstein, who founded the Company’s business over a century ago. From time to time, the Family Shareholders (including Messrs. Morry, Zev, Jeffrey and Gary Weiss, who are actively involved in the Company’s business) evaluate the state and direction of the Company. Similarly, from time to time the senior management of the Company and the board of directors, including the Family Shareholder directors, evaluate options available to the Company, including plans for growth, cost savings measures, the Company’s dividend policy and share repurchases. After careful consideration, the Family Shareholders determined on September 25, 2012 that the best course of action would be for the Company to return to its roots as a family-owned business. For more information, see “Special Factors – Purposes and Reasons of Family LLC, Parent, Merger Sub and the Family Shareholders for the Merger” beginning on page 48.

On the evening of September 25, 2012, the board received a written, non-binding proposal from Messrs. Zev and Jeffrey Weiss on behalf of the Family Shareholders to acquire all the Class A common shares and Class B common shares not owned by the Family Shareholders for a price of $17.18 per share. In the Family Shareholders’ letter to the board, the Family Shareholders stated that they had no current intention to sell all or any significant part of their common shares. The letter also stated that the Family Shareholders recognized that the independent directors of the Company would need to review the proposal and that the proposal was subject to a determination by the independent directors that the proposal is fair. The letter also stated that the proposal was subject to the finalization of financing (including the entering into of definitive agreements by the Family Shareholders and entering into definitive debt financing documents) and the entry into of definitive transaction documents.

On September 26, 2012, the Company issued a press release announcing the Family Shareholders’ proposal, and certain of the Family Shareholders filed a joint Schedule 13D with the Securities and Exchange Commission, which included as an exhibit the letter to the board that is described in the preceding paragraph.

On September 27, 2012, at a special meeting of the board that included only those directors who are not Family Shareholders, whom we refer to in this proxy statement as the “independent directors,” the independent directors met with representatives of Baker & Hostetler LLP (“Baker & Hostetler”), outside counsel to the Company. Representatives of Baker & Hostetler reviewed with the independent directors their fiduciary duties in respect of the proposal, and discussed with the independent directors the approach for establishing a special committee of independent and disinterested directors to consider and act with respect to the proposal, as well as the standard for independence that should be used to evaluate a director’s ability to serve on the special committee. Representatives of Baker & Hostetler, along with Ms. Catherine Kilbane, then general counsel to the Company, encouraged the independent directors to discuss any factors that might have a bearing on the independence of a special committee member. Representatives of Baker & Hostetler also reviewed with the independent directors the process for the special committee to consider and select its own counsel and financial advisors and the types of issues the independent directors might expect to encounter in connection with the Family Shareholders’ September 25, 2012 proposal.

Also on September 27, 2012, a shareholder lawsuit was filed against the Company and each of its directors in the Court of Common Pleas in Cuyahoga County, Ohio, relating to the Family Shareholders’ proposal. The complaint alleged, among other things, breaches of fiduciary duties by the Company’s directors for pursuing the proposal contemplated by the Family Shareholders’ proposal letter and for putting their personal interests ahead of the interests of the Company.

On September 28, 2012, the Company reported its earnings for the second quarter of its 2013 fiscal year, which included a net loss of $4.3 million, or $0.13 per share (on a fully-diluted basis).

On September 30, 2012, at a special meeting of the board at which all but one of the independent directors were in attendance and in which the Family Shareholder directors did not participate, the board established a special committee to consider and act with respect to the Family Shareholders’ proposal. Following disclosure by the directors of any factors that might have a bearing on the independence of a special committee member, the board appointed Dr. Scott S. Cowen and Messrs. William E. MacDonald, III, Jeffrey D. Dunn and Michael J.

Merriman, Jr., to the special committee, each of whom the board determined to be independent, with Dr. Cowen appointed to serve as the chair. The special committee was delegated the exclusive power and authority of the board of directors to, among other things: review and evaluate the advisability of the proposal; identify, review and evaluate other alternatives available to the Company; recommend, reject or seek to modify the terms of the proposal or any other alternatives available to the Company; if considered appropriate or advisable by the special committee, negotiate the price, structure, form, terms and conditions of the proposal or any alternative thereto and the form, terms and conditions of any definitive agreements in connection with the proposal or other alternative; determine whether the proposal or any alternative thereto is fair to, and in the best interests of, the Company and its shareholders; and recommend to the full board what action, if any, should be taken by the Company with respect to the proposal or any alternative thereto.

The board also authorized the special committee to retain the services of its own legal, financial and other advisors, at the Company’s expense. At the request of the special committee, the Company’s management (other than any Family Shareholders) evaluated numerous legal and financial advisors for these roles in order to identify firms that could present an actual or perceived conflict of interest if those advisors were engaged by the special committee.

On October 6, 2012, the special committee met with representatives of several law firms in New York City. The representatives of the various firms presented their credentials and preliminary views on the Company, financing and other issues that could arise in connection with the proposal. They also responded to questions from the special committee regarding their experience in advising special committees, their preliminary thoughts on how to position negotiations with the Family Shareholders regarding the Company’s value, their proposed fees, and their independence, objectivity and any relationships that could present an actual or perceived conflict of interest. Following each presentation, the special committee discussed the strengths and weaknesses of the firms, and, after considering all the firms, the special committee selected Sullivan & Cromwell LLP (“Sullivan & Cromwell”) as its legal advisor.

During the period from October 7, 2012, when the special committee selected Sullivan & Cromwell as its legal advisor, through March 29, 2013, when the merger agreement was executed, the special committee met 27 times in person or telephonically and all of those meetings were attended by representatives of Sullivan & Cromwell. All of the meetings were attended by all members of the special committee, with the exception of the meetings held on October 14, 2012, November 1, 2012 and December 15, 2012, at each of which three of the four members of the special committee were present.

On October 8, 2012, the special committee met in New York City with representatives of Sullivan & Cromwell to discuss preliminary steps in connection with the Family Shareholders’ proposal. Later that day, a representative from Sullivan & Cromwell had an introductory conversation with a representative from Jones Day, counsel to the Family Shareholders.

Also on October 8, 2012, the special committee met telephonically with representatives of Sullivan & Cromwell to discuss the initial conversation between representatives of Sullivan & Cromwell and Jones Day and the process of hiring an independent financial advisor.

On October 9, 2012, at the direction of the special committee, representatives of Sullivan & Cromwell participated in a telephone call with Ms. Kilbane, Mr. Christopher Haffke, then the deputy general counsel of the Company, Mr. Stephen Smith, the chief financial officer of the Company, and representatives of Baker & Hostetler. During the call, at the request of the Company’s senior management and the special committee, Sullivan & Cromwell provided guidance to the Company’s management regarding the operation and management of the Company during the pendency of the Family Shareholders’ proposal.

On October 11, 2012, a shareholder of the Company filed a shareholder lawsuit against the Company and its individual directors in the Court of Common Pleas in Cuyahoga County, Ohio. Throughout October and November 2012, five additional shareholder lawsuits were filed against the Company and its directors in the Court of Common Pleas in Cuyahoga County, Ohio, one of which was later dismissed. The complaints alleged, among other things, breaches of fiduciary duties by the Company’s directors for pursuing the proposal contemplated by the Family Shareholders’ letter dated September 25, 2012.

Also on October 11, 2012, Jones Day sent to Sullivan & Cromwell a draft confidentiality agreement for the Family Shareholders to enter into with the Company.

On October 12, 2012 and October 13, 2012, the special committee and representatives of Sullivan & Cromwell met in Chicago and interviewed representatives of several financial advisory firms with the objective of selecting a financial advisor to the special committee. The representatives of the various firms presented their credentials and preliminary views on valuation, financing and other issues that could arise in connection with the proposal. They also responded to questions from the special committee regarding their experience in advising special committees, their preliminary thoughts on how to position negotiations with the Family Shareholders regarding the Company’s value, their proposed fees and their independence, objectivity and any relationships that could present an actual or perceived conflict of interest. Following each presentation, the special committee discussed the strengths and weaknesses of the financial advisory firms.

Later on October 13, 2012, the special committee, after considering all the firms, determined to retain Peter J. Solomon, L.P. (“PJSC”), subject to confirmation of the absence of conflicting interests (which was subsequently confirmed and discussed at a meeting of the special committee held for that purpose on October 14, 2012) and entering into a formal engagement letter. The special committee determined to retain PJSC for a variety of reasons, including PSJC’s experience in comparable situations, its experience in representing special committees, its knowledge of the consumer products, social expressions and gifts, and media and IP licensing industries and its objectivity and independence with respect to the Company.

Also on October 13, 2012, the special committee was joined by Mr. Charles Ratner and Dr. Jerry Sue Thornton, the other independent directors of the Company, and Mr. Haffke, and the special committee briefed them on its intention to retain PJSC. The board then convened in a special meeting (which did not include directors who are Family Shareholders), at which it adopted resolutions providing for a quarterly retainer of $25,000, to be paid in advance, for each of Messrs. Dunn, MacDonald and Merriman, and a quarterly retainer of $37,500, to be paid in advance, for Dr. Cowen, in each case for their service on the special committee (see “Interests of the Company’s Directors and Executive Officers in the Merger – Compensation of the Special Committee” on page 64). The board also directed the Company’s management to suspend the Company’s practice of repurchasing Class B common shares when offered to the Company in accordance with its articles of incorporation, consistent with its September 25, 2012 suspension of repurchases of Class A common shares under its Rule 10b5-1 share repurchase program, for so long as the proposal from the Family Shareholders remained outstanding. No Class B common shares had been repurchased since the proposal.

Between October 15, 2012 and October 17, 2012, Sullivan & Cromwell, with guidance from Dr. Cowen on behalf of the special committee, and PJSC negotiated the terms of the PJSC engagement letter, and the engagement letter was entered into on October 17, 2012. The engagement letter provided for a fee to be paid to PJSC as described in “Special Factors – Fees and Expenses” and “Special Factors – Opinion of Peter J. Solomon Company.”

On October 16, 2012, PJSC submitted a preliminary financial due diligence request list to the Company. After the special committee’s October 17, 2012 engagement of PJSC, all of its meetings included representatives of PJSC.

On October 19, 2012, Dr. Cowen (on behalf of the special committee) and representatives of Sullivan & Cromwell and PJSC met with members of the Family Shareholders and representatives of Jones Day at Jones Day’s offices in Cleveland, Ohio. At the meeting, Dr. Cowen stressed the special committee’s commitment to discharge its responsibilities and fiduciary duties in evaluating the Family Shareholders’ proposal and any alternatives available to the Company. Representatives of Jones Day stated that the Family Shareholders agreed with the need for a thorough evaluation process and were prepared to work with the special committee as it evaluated and, if appropriate, negotiated the Family Shareholders’ proposal, including any related financing structure. Mr. Zev Weiss reiterated in response to a question the position noted in the Family Shareholders’ September 25, 2012 letter that the Family Shareholders had no intention to sell all or any significant portion of their shares in the Company. Later on October 19, 2012, a representative of Jones Day sent a revised draft of the confidentiality agreement to Sullivan & Cromwell, and the special committee met telephonically with representatives of Sullivan & Cromwell and PJSC to receive an update on the meeting in Cleveland, the due diligence process and the confidentiality agreement negotiations and to discuss retaining counsel to defend the shareholder lawsuits.

Also on October 19, 2012, representatives of PJSC met telephonically with representatives of the Company’s management (other than any Family Shareholders) as part of PJSC’s due diligence review. During

the call, members of senior management discussed and responded to initial diligence questions that PJSC had prepared, including providing a general overview of the Company, its three-year financial plan prepared by the Company's management and its performance during the first half of the fiscal year, as well as overall industry trends.

Also on October 19, 2012, at the direction of the special committee, the Company issued a press release announcing that the board of directors had formed the special committee to evaluate the proposal from the Family Shareholders and that the special committee had engaged PJSC and Sullivan & Cromwell to assist it in that process.

From October 19, 2012 through March 27, 2013, PJSC and Sullivan & Cromwell continued their respective ongoing due diligence reviews of the Company, including participating in multiple in-person and telephonic due diligence meetings with various members of the Company’s management team, the first of which took place at the Company’s headquarters in Cleveland, Ohio on October 22, 2012. Included in many of these diligence calls with PJSC were discussions with the Company’s management regarding adjustments for unusual or nonrecurring items that may be considered as they relate to the Company’s historical, and fiscal year 2013 estimated, EBIT and EBITDA for purposes of PJSC’s analyses.

During the period from October 22, 2012 through November 2, 2012, representatives of Sullivan & Cromwell and Jones Day exchanged several drafts of the confidentiality agreement, and the special committee met telephonically with representatives of Sullivan & Cromwell and PJSC on October 24, 2012 and November 1, 2012 to discuss the negotiations of the confidentiality agreement. The parties discussed in particular the special committee’s requirement that the confidentiality agreement contain a meaningful “standstill” provision pursuant to which the Family Shareholders would be prohibited, for a specified period of time, from pursuing a bid to acquire the Company (or taking certain other related actions) without the cooperation or consent of the special committee. Following the negotiations between representatives of Sullivan & Cromwell and Jones Day, and after discussions between Dr. Cowen and Mr. Zev Weiss, the Family Shareholders agreed to a 22-week standstill provision in the proposed confidentiality agreement, and the confidentiality agreement was entered into on November 2, 2012.

On October 26, 2012, the special committee met with representatives of Sullivan & Cromwell and PJSC in New Orleans. At the meeting, PJSC presented financial information relating to the Family Shareholders’ proposal and provided an overview of the status of the proposal, as well as an overview of the Company and the social expressions industry more generally. PJSC noted that the presentation was based on information provided to date by the Company and would be updated as more information was provided to it in due diligence. Among other things, PJSC explained its understanding of the Company’s internal financial forecasting processes, in particular the Company’s “treasury model,” which is a consolidated view of the Company’s financial forecast covering the current fiscal year and a multi-year period going forward and is prepared annually by the Company’s treasury department and updated on a periodic basis to reflect material changes to the Company’s financial and operating plan. PJSC noted that the Company indicated that, of the Company’s financial models, the “treasury model” was considered the most up-to-date forecasting tool and was the most appropriate model to rely on as the basis on which to evaluate the management financial forecasts. PJSC also described the work it had undertaken to understand any recent Company updates to the Company’s treasury model.

The presentation contained a review of the Company’s historical and projected financial performance (based on the Company’s treasury model) and its stock price trading history. PJSC also presented preliminary valuation analyses, applying various corporate finance methodologies, including comparable companies, selected precedent transactions, sum-of-the-parts, present value of the Company’s future share price, discounted cash flow and leveraged buyout analyses. The presentation also included observations regarding market conditions and financing feasibility for the Family Shareholders. The special committee inquired into the details regarding certain valuation analyses and discussed certain aspects of the Company’s business and the social expression industry that the special committee members thought PJSC should consider. The special committee and PJSC also discussed the possible effect of having three years of projections from the Company, as compared to having projections covering a longer period, on the results of the discounted cash flow analysis. Finally, the special committee and its advisors discussed potential restructuring alternatives that might be available to the Company in lieu of engaging in a potential transaction with the Family Shareholders.

On November 4, 2012, the independent directors participated in a call with representatives of Sullivan & Cromwell and PJSC for an update on actions taken to date by the special committee and PJSC in connection with the Family Shareholders’ proposal. Members of the special committee informed the other independent directors that the special committee was in communication with Mr. Smith regarding the financial performance of the Company, and updated the independent directors on the special committee’s actions to engage counsel to represent the independent directors collectively in connection with the shareholder lawsuits. Following its meeting with the other independent directors, the special committee determined to retain Squire Sanders (US) LLP (“Squire Sanders”) as litigation counsel for the independent directors, based in part on the recommendation of Messrs. MacDonald and Merriman who, on behalf of the special committee, had interviewed representatives of several law firms.

On November 5, 2012, following the execution of the confidentiality agreement between the Family Shareholders and the Company, Jones Day opened a data room for the Family Shareholders’ potential financing sources who executed a confidentiality and standstill agreement, and the data room was maintained through the execution of the merger agreement on March 29, 2013. PJSC was granted access to the data room and was provided with copies of all materials provided to potential financing sources, and Jones Day promptly informed PJSC and Sullivan & Cromwell when parties were granted access to the data room, in each case as provided in the confidentiality agreement. By the date the merger agreement was entered into, a total of 35 parties were granted access to the electronic data room.

On November 6, 2012 and November 9, 2012, shareholder lawsuits were filed in the United States District Court for the Northern District of Ohio Eastern Division against the Family Shareholders alleging breach of fiduciary duty and lack of independence of the special committee.

During the week of November 5, 2012, Dr. Cowen had telephone calls with Mr. Morry Weiss to discuss matters unrelated to the Family Shareholders’ proposal and also to discuss the status of the Family Shareholders’ efforts to secure financing in support of their proposal.

The special committee met telephonically on November 8, 2012 with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss the status of the Family Shareholders’ financing activities including the work of the Family Shareholders and KeyBanc Capital Markets (“KeyBanc”) (the Family Shareholders’ financial advisor) on the structure of the financing. The special committee also received an update from Squire Sanders on the status of shareholder litigation filed in connection with the Family Shareholders’ proposal.

During October and November of 2012, the Family Shareholders engaged in discussions with a number of potential financing sources. One of those financing sources was Bank of America, N.A. (“Bank of America”). Bank of America indicated to Zev Weiss that it was interested in providing financing to the Family Shareholders in connection with the proposed transaction but that it wanted to ensure that the Company was not going to view such a role as problematic in light of the fact that Bank of America acted as the second-lead underwriter for the Company’s 7.375% senior notes due 2021 and is a co-syndication agent and a lender under the Company’s Amended and Restated Credit Agreement.

On November 16, 2012, the Company received a request from Bank of America for a waiver to engage in discussions with, and provide advice to, the Family Shareholders with respect to potential senior debt financing options. On November 19, 2012, the special committee, after representatives of Sullivan & Cromwell conferred on its behalf with Messrs. Smith and Haffke, directed the Company to grant the waiver to facilitate the Family Shareholders’ discussions regarding potential senior financing structures, in light of Bank of America’s familiarity with the Company’s capital structure and because the special committee did not believe Bank of America’s assistance to the Family Shareholders, as discussed above, would be detrimental to the Company because Bank of America, as one of several lenders, played a relatively limited role in the Company’s existing financing.

On November 19, 2012, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders. At the meeting, PJSC updated its presentation from October 26, 2012. Among other things, PJSC’s presentation included updated financial analyses of the Company, based on (i) an

updated treasury model for fiscal year 2013 provided by the Company’s management to PJSC (with projections in the treasury model for fiscal years 2014 through 2016 remaining the same as those that had been provided to PJSC previously) and (ii) due diligence conducted by PJSC on the Company to date.

The special committee and PJSC then discussed management’s projections for fiscal years 2013 through 2016 and the evolution of management forecasts as reflected in management treasury models over the past three fiscal years. In particular, PJSC noted that management’s expectation for earnings before interest and taxes, or EBIT, in fiscal years 2014 and 2015 had decreased from the expectations expressed in the fiscal year 2012 plan. PJSC also presented other valuation analyses that it had conducted to date, including analyses of comparable companies, selected precedent transactions, sum-of-the-parts, present value of the Company’s future share price, discounted cash flow and potential leveraged buyout scenarios, and the special committee and PJSC discussed at length PJSC’s discounted cash flow analysis. As part of that discussion, PJSC noted that it had revised its range of terminal multiples downward because PJSC determined that based on further consideration of the trading valuations of selected relevant comparable companies, a 5.0x trading multiple that had been included for illustrative purposes in PJSC’s October 26, 2012 presentation was no longer deemed appropriate.

At various times in November 2012, the special committee and its advisors also discussed the Company’s plans to finalize its commitment to a new world headquarters building in December 2012 and the potential impact of the financial commitments associated with the headquarters project on the Family Shareholders’ financing for the proposed transaction and ability to increase the proposed per share merger consideration. The special committee determined that they would raise this issue with the board committee overseeing the headquarters project.

On November 27, 2012, Jones Day informed Sullivan & Cromwell that the Family Shareholders expected to be able to provide a detailed financing plan during the week of December 3, 2012.

On November 28, 2012, the Company issued a press release announcing the temporary delay of its project to move the Company’s world headquarters from Brooklyn, Ohio to Westlake, Ohio pending resolution of the Family Shareholders’ proposal.

On or about November 28, 2012, Dr. Cowen and Mr. Zev Weiss, and on November 29, 2012, representatives of Sullivan & Cromwell and Jones Day, respectively, discussed the Family Shareholders’ intention to provide updated information concerning financing arrangements for a potential transaction within a matter of weeks. On November 29, 2012, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss the conversations with Mr. Zev Weiss and representatives of Jones Day. Representatives of PJSC also informed the special committee that they understood that the Company’s management was in the process of making further revisions to its forecasts, and that it had produced a five-year treasury model, which would be shared with PJSC and the Family Shareholders’ potential financing sources when finalized. This updated treasury model was provided to PJSC and the potential financing sources on November 30, 2012.

On December 5, 2012, Jones Day sent to Sullivan & Cromwell (i) a preliminary draft commitment letter for a senior credit facility of up to $542.0 million, (ii) a “highly confident” letter from KeyBank National Association regarding a potential junior holding company facility of at least $150.0 million that would consist of either equity or debt and (iii) a letter from the Family Shareholders reiterating their proposal to acquire the Company at $17.18 per share, in cash. The letter from the Family Shareholders expressed the view that the $17.18 per share offer was a compelling price given the high volatility in the equity markets and the fact that it represented a 20% premium over the trading price for the Company’s Class A common shares immediately prior to the time of the Family Shareholders’ proposal on September 25, 2012.

On December 6, 2012, representatives of Sullivan & Cromwell and PJSC, and Jones Day and KeyBanc, had a telephone call during which representatives of Jones Day and KeyBanc answered questions from representatives of Sullivan & Cromwell and PJSC regarding the draft financing commitment papers and proposed structure of the financing. The representatives of Jones Day and KeyBanc requested that representatives of the special committee provide guidance as to the special committee’s view on valuation inasmuch as it was difficult to progress financing when the price was undetermined.

On December 7, 2012, the Company held a regularly scheduled board meeting and the special committee met with representatives of Sullivan & Cromwell, PJSC and Squire Sanders at the Company’s headquarters in Cleveland, Ohio. PJSC provided financial analyses of the Company, updated since PJSC’s telephonic presentation to the special committee on November 19, 2012 to reflect certain pro forma adjustments to fiscal year 2013 EBIT based on estimates that the Company’s management had provided to PJSC after the November 19, 2012 special committee meeting. The special committee determined, in consultation with PJSC, that the valuation work that had been completed by PJSC to date supported a higher offer price per share than $17.18 but that the Family Shareholders’ financing package was neither firm nor detailed enough for it to be advisable for the special committee to commence price negotiations. The special committee believed it would be preferable to negotiate price at a time when it understood the Family Shareholders’ financing structure and could be confident that any price agreed would be financeable. The special committee, Sullivan & Cromwell and PJSC then discussed the possible financing alternatives that might be available to the Family Shareholders in order to produce a proposal at a price that might be acceptable to the special committee, including seeking out traditional equity financing sources such as private equity firms. The participants also discussed insolvency risks that may arise in certain highly leveraged transactions and the merits of alternative transactions that might be available to the Company, such as a share repurchase or a divided recapitalization, as well as potential responses from the special committee to the Family Shareholders’ letter of December 5, 2012. The special committee determined at the meeting that given the requests from the Family Shareholders for price guidance and their insistence that such guidance was necessary to move forward with financing, Dr. Cowen would be authorized to express the view that the special committee believed that any transaction per share price should be in the $20s. This indication was authorized to be expressed in response to the Family Shareholders’ request for guidance and did not reflect a determination as to any particular price.

Later on December 7, 2012, Dr. Cowen and representatives of Sullivan & Cromwell and PJSC met with the Family Shareholder directors and representatives from Jones Day and KeyBanc (with some persons present at the Company headquarters and some participating telephonically). During this meeting, Dr. Cowen told the representatives of the Family Shareholders and their advisors that the special committee’s view was that the valuation work that had been completed by PJSC to date supported a higher offer price per share than $17.18. Dr. Cowen argued that PJSC’s analysis supported a price in excess of $20 per share and that the special committee would not be willing to recommend a transaction for less than $20 per share. Dr. Cowen also indicated that the special committee was concerned about the Family Shareholders’ ability to execute a transaction with the financing structure that had been contemplated by the draft commitment letter and highly confident letter that had been provided on December 5, 2012. Dr. Cowen raised the possibility of pursuing alternative transactions, such as a recapitalization, to enhance value. The special committee then reconvened and discussed with its advisors additional due diligence requests that PJSC would submit to the Company.

On December 8, 2012, Messrs. Morry, Zev and Jeffrey Weiss spoke with Dr. Cowen and asked whether he wanted a personal response to the special committee’s position. Dr. Cowen indicated that a response through advisors would be acceptable. The Weisses also indicated that they expected to be in a position to have definitive financing arrangements before final holiday season results would become available in late January or early February, and that they were pursuing financing alternatives in which the Family Shareholders would be in control of the Company after any transaction.

On December 11, 2012 and December 17, 2012, representatives of Sullivan & Cromwell and PJSC, at the request of the special committee, and Jones Day and KeyBanc had teleconferences to discuss issues relating to the financing structure, including the special committee’s view that the financial analyses that had been performed by PJSC supported a higher offer price per share than $17.18.

On December 15, 2012, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to receive an update on the recent discussions between Sullivan & Cromwell, PJSC, Jones Day, KeyBanc and Macquarie Capital (the lead placement agent for any subordinated debt or preferred equity comprising part of the Family Shareholders’ financing package). Sullivan & Cromwell reported that Jones Day stated that the Family Shareholders (i) recognized the need to propose a viable capital structure on which to obtain financing, including sufficient subordinated debt or preferred equity capital, (ii) wanted to move forward to direct price negotiations as quickly as possible due to the amount of time that had

passed since the Family Shareholders’ initial offer was made and because it was difficult to solidify financing without an agreement on transaction price, (iii) were exploring financing based on the value of certain real estate assets as well as equity financing and (iv) would not support a dividend recapitalization of the Company or a share repurchase. Sullivan & Cromwell also reported that Jones Day had inquired whether the Family Shareholders’ financial advisors could engage with PJSC on the proposal price, but that Sullivan & Cromwell, based on its instructions from the special committee, stated that PJSC was ready and willing to engage in price negotiations but would do so only once the Family Shareholders presented a firmer and more detailed financing structure. PJSC also reported to the special committee on recent due diligence conversations it had had with the Company’s management, and Squire Sanders provided an update relating to the shareholder litigation.

On December 18, 2012, representatives of Jones Day called representatives of Sullivan & Cromwell to reiterate the request for commencement of price negotiations and were advised that the special committee had determined not to commence price negotiations at this time. Later that day, Mr. Zev Weiss called Dr. Cowen and indicated both that the Family Shareholders would never pay a per share price in the $20s and that the special committee’s refusal to negotiate was making it difficult for him to solidify financing for a transaction. Dr. Cowen indicated that while the special committee was not prepared to negotiate until financing plans were more advanced, the Family Shareholders were free to submit another proposal at any time. Mr. Weiss requested an in-person meeting and Dr. Cowen agreed.

On December 19, 2012, Dr. Cowen and Mr. Zev Weiss had a meeting in Cleveland during which Dr. Cowen argued that PJSC’s analysis supported a price in excess of $20 per share and that the special committee would not be willing to recommend a transaction for less than $20 per share. Mr. Weiss reiterated that the Family Shareholders would be unable to pay a per share price in the $20s and noted that the Family Shareholders had significant concerns about obtaining financing on terms that were acceptable to them that would support their proposed price of $17.18 per share. Mr. Weiss again requested that the special committee negotiate a price to permit the Family Shareholders to advise their potential financing sources of all requirements. Dr. Cowen and Mr. Weiss discussed the Family Shareholders’ financing efforts in further detail, with Dr. Cowen noting that the Family Shareholders were free to present the special committee with an improved proposal, or withdraw their existing proposal, at any time. Mr. Weiss told Dr. Cowen that the Family Shareholders would continue to work with their financing sources, and Dr. Cowen and Mr. Weiss agreed to speak again at the beginning of January 2013.

Also on December 19, 2012, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders and discussed the status of the Family Shareholders’ financing structure and arrangements, as well as the recent conversations between the advisors and between Mr. Zev Weiss and Dr. Cowen.

On December 20, 2012, the Company reported its earnings for the third quarter of its 2013 fiscal year, which included a net loss of $0.8 million, or $0.03 per share (on a fully-diluted basis). The Company also announced an amendment to its Credit Agreement to exclude from the definition of consolidated EBITDA up to $40 million of certain cash and non-cash fees, costs and expenses incurred by the Company in connection with its acquisition of the Clinton Cards business in the United Kingdom.

In early January, a number of additional potential sources of financing for the Family Shareholders were given access to the online data room to perform due diligence on the Company. On January 11, 2013, Mr. Zev Weiss called Dr. Cowen to report that the Family Shareholders were making progress on potential financing, albeit at high funding costs. Mr. Weiss inquired about Dr. Cowen’s view of next steps, and Dr. Cowen said that it was incumbent upon the Family Shareholders to provide a revised proposal that was supported by solid financing commitments.

On January 15, 2013, a representative of Jones Day told representatives of Sullivan & Cromwell that Jones Day expected that the Family Shareholders would provide a revised proposal within a couple of days.

On January 17, 2013, Dr. Cowen and Mr. Zev Weiss had a telephone conversation during which Mr. Weiss informed Dr. Cowen that the Family Shareholders would be sending a revised proposal to the special committee that afternoon. Mr. Weiss told Dr. Cowen that the Company’s share price had decreased over the previous several days and that although the Family Shareholders had considered reducing their offer in light of this and other factors, the revised proposal would reflect an increased price per share. Mr. Weiss also told Dr. Cowen that

the Family Shareholders had no ability or intention to pay more than the amount that would be included in the revised proposal, and that they were not interested in further negotiations beyond that price. Later on January 17, the special committee received a letter from representatives of the Family Shareholders with a stated increased proposed price of $17.50 per share. The letter was filed by the Family Shareholders with the Securities and Exchange Commission on the afternoon of January 17 as a publicly available exhibit to an amendment to their Schedule 13D. On the night of January 17, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss the revised proposal. PJSC informed the special committee that it would be receiving updated financial due diligence (which would include information regarding the performance of the Company during the holiday season) within the next week and therefore would be able to update its financial analysis of the Company within 10 to 14 days. The special committee and its advisors discussed next steps, which the special committee determined would include: (i) awaiting the updated financial analysis of the Company that would be prepared by PJSC, (ii) reviewing the Family Shareholders’ proposed merger agreement, once received from Jones Day and (iii) awaiting more detailed information on the Family Shareholders’ financing structure.

On January 18, 2013, representatives of Jones Day spoke with representatives of Sullivan & Cromwell and stated that the financing structure for the Family Shareholders had become more costly and that, while the Family Shareholders believed that they ultimately would have fully committed financing for the proposed transaction, they needed to agree to a price with the special committee before the lenders would commit to provide financing or agree to the terms of the financing. Jones Day also stated that the Family Shareholders felt that the process was “dragging” and either wanted to agree to a transaction now or terminate the negotiations. Sullivan & Cromwell conveyed Jones Day’s message via e-mail to the special committee.

On January 19, 2013, Jones Day sent a draft merger agreement to Sullivan & Cromwell.

On January 22, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss the draft merger agreement and the upcoming special committee meeting scheduled for January 27, 2013. Sullivan & Cromwell noted for the special committee, among other things, that the draft merger agreement provided that the Company would not be permitted to pay its regular quarterly dividend, which was currently $0.15 per share, between the signing and closing of any transaction. In the view of the members of the special committee, assuming two regular quarterly dividend dates would occur between signing and closing of a transaction, the Family Shareholders’ revised proposal of $17.50 per share was the economic equivalent of $17.20 per share.

On January 25, 2013, Dr. Cowen called Mr. Zev Weiss to inform him that the special committee would be meeting in person on January 27, 2013 to consider the Family Shareholders’ revised proposal and to express disappointment with what the special committee viewed as effectively a nominal $0.02 price increase in the latest proposal.

On January 27, 2013, the special committee met in person with representatives of Sullivan & Cromwell and PJSC at Sullivan & Cromwell’s offices in New York. Representatives of Squire Sanders participated in the meeting telephonically. The special committee discussed and concluded that the price proposed by the Family Shareholders in their letter dated January 17, 2013 would effectively be $17.20 per share, if two regular dividend dates occurred between the date of any definitive agreement and the closing of the merger if the Company were prohibited from paying regular quarterly dividends as provided in the draft merger agreement. No negotiation of the terms of the merger agreement had been conducted at this time.

Representatives of PJSC gave a presentation to the special committee, which updated the financial information and analyses in the PJSC presentation from December 7, 2012. PJSC began by providing the special committee with an overview of the Company’s recent share trading profile and the inbound communications from shareholders. PJSC then reviewed certain elements of the Company’s recent financial performance based on information and materials provided to PJSC by the Company’s management. PJSC (i) reviewed updated financial analyses of the Company based on Company management’s five-year treasury model, taking into account a number of adjustments for unusual or nonrecurring items that the Company’s management had discussed with PJSC and (ii) noted that in updating and refining its financial analyses of the Company, PJSC had revised its range of terminal multiples slightly downward as compared to its last presentation. The financial analyses presented by PJSC included a

discounted cash flow analysis, a sum-of-the-parts analysis, an analysis of the present value of the Company’s future share price and an illustrative leveraged buyout analysis. In addition to these financial analyses, PJSC reviewed selected comparable public companies, but PJSC discussed with the special committee the limitations of such an analysis with respect to the Company and explained that the Company had no directly comparable publicly traded companies.

Mr. Smith, the chief financial officer of the Company, then joined the meeting telephonically at the invitation of the special committee. Mr. Smith discussed holiday results, expectations for the balance of fiscal year 2013, confidence levels in fiscal year 2014 projections and risks that, if realized, could hinder the Company’s performance so that it might not meet management’s projections of future performance. The special committee also discussed with Mr. Smith ways in which the Company might increase operating earnings and profitability over the next several years.

After Mr. Smith left the meeting, Sullivan & Cromwell reviewed with the special committee the draft merger agreement received from Jones Day. The discussions focused particularly on the merger agreement terms related to conditions to closing, the extent of the Family Shareholders’ obligations to obtain financing, the absence in the proposed merger agreement of a “majority of the minority” shareholder approval condition and the overall value of the offer (including the proposed suspension of quarterly dividends between signing and closing of the proposed transaction).

During the meeting the special committee also discussed with its advisors the communications it had received from various shareholders, some of which urged the special committee to respond to the Family Shareholders’ proposal in a way that would permit shareholders to choose whether or not to accept the proposal, and others of which expressed the view that the price proposed by the Family Shareholders was too low and that the Company should continue as a standalone business or pursue other alternatives.

The special committee determined that it would respond by letter to the Family Shareholders to express disappointment with respect to the Family Shareholders’ revised proposal, both as to value and proposed contract terms. The special committee also determined that the letter should state that, based upon the information currently available to the special committee, the special committee did not intend to accept an offer below $18.75 per share, with no suspension of quarterly dividends, and that any transaction would require closing certainty (including with respect to efforts to obtain financing and a reverse break fee to be paid by the Family Shareholders if financing could not be obtained or commitments fell through) and a majority of the minority shareholder approval condition in the merger agreement.

On January 29, 2013, Dr. Cowen telephoned Mr. Zev Weiss to inform him of the status of the special committee’s response to the Family Shareholders’ revised proposal.

At various times in January 2013, Dr. Cowen had conversations with Mr. Ratner and Dr. Thornton to update them on the general status of the special committee’s review of the Family Shareholders’ revised proposal.

On January 30, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss and agree on the text of the letter to be sent from the special committee to the Family Shareholders, a draft of which had been provided by Sullivan & Cromwell, setting forth the special committee’s counterproposal of not less than $18.75 per share. Later in the day on January 30, 2013, Sullivan & Cromwell sent Mr. Zev Weiss and Jones Day the letter from the special committee setting forth its counterproposal. The full text of the letter was as follows:

January 30, 2013

Via E-mail

Mr. Zev Weiss

Mr. Jeffrey Weiss

American Greetings Corporation

One American Road

Cleveland, Ohio 44144

Dear Zev and Jeff:

I am writing on behalf of the Special Committee of the Board of Directors of American Greetings Corporation. We are responding to your letter of January 17, 2013 and the draft merger agreement provided by your counsel. We thought that it would be helpful to do so in writing to bring the matter to closure as soon as possible.

I must express the Special Committee’s disappointment with your amended proposal both as to value and proposed contract terms. On value, despite your stated intention to enhance your offer “meaningfully”, the actual increase was only $0.02 per share because the draft merger agreement provides for a suspension of dividends (which we estimate to include two quarterly dividends that otherwise would be paid between signing and closing of a transaction, or $0.30 per share).

In order to address your stated need to settle on a price to obtain your financing, and based upon the information currently available to the Special Committee, I can advise you that the Special Committee does not intend to accept an offer below $18.75 per share. There would be no dividend suspension in any transaction. The financial materials we have considered, with the assistance of our financial advisors, support this price.

Although, as is typical at this stage of the process, we have a number of concerns with the terms of the draft merger agreement that your counsel has prepared, there are two issues that we want to highlight as an essential and integral part of the Special Committee’s response to your proposal.

First, a transaction must be conditioned on a “majority of the minority” approval vote by the shareholders to preserve the shareholders’ basic franchise rights.

Second, a transaction should provide at least a customary level of transaction certainty, including no financing condition to closing, customary covenants to obtain financing pursuant to the commitments (or replacement financing), and a reverse break fee should you not be able to obtain the financing necessary to complete the transaction. As you will appreciate, if financing fails to materialize, with the result that a transaction does not close, American Greetings could experience economic loss and reputational damage and will have incurred significant out-of-pocket expenses in the process. We also, of course, need to understand the terms associated with the holdco mezzanine debt financing you have said you intend to use in lieu of additional equity contributions to fund the transaction.

Please call me after you have had an opportunity to discuss this letter with your advisors. We look forward to hearing from you at your earliest convenience.

Very truly yours,

/s/ Scott S. Cowen

Scott S. Cowen,

on behalf of the Special Committee

of the Board of Directors of

American Greetings Corporation

On February 1, 2013, the special committee received an e-mail from Mr. Zev Weiss on behalf of the Family Shareholders, requesting the assistance of the Company’s Treasurer, Assistant Treasurer and Manager of Treasury Operations in the Family Shareholders’ evaluation of the Company’s 7.375% senior notes due 2021 and the Company’s working capital and cash flow trends.

On February 4, 2013, the special committee received a letter from Mr. Zev Weiss on behalf of the Family Shareholders formally requesting the assistance of the Company’s Treasurer, Assistant Treasurer and Manager of Treasury Operations in the Family Shareholders’ evaluation of the Company’s 7.375% Senior Notes due 2021 and the Company’s working capital and cash flow trends to help facilitate the Family Shareholders’ financing package, and stating that any such assistance would not impede such individuals’ abilities to perform their regular duties for the Company. The letter from Mr. Weiss also stated that PJSC would be provided with copies of any materials given to those individuals by the Family Shareholders. Based on its view that it would be in the

Company’s best interest for the Family Shareholders to be positioned to make a concrete proposal on the best possible terms, the special committee gave its permission on the evening of February 4 for the designated Company employees to provide the requested assistance, so that the Family Shareholders could finalize their potential financing structure as promptly as practicable.

On February 6, 2013, at the request of the special committee, representatives of PJSC had telephone conversations with representatives of KeyBanc and Macquarie Capital regarding the status of the Family Shareholders’ financing. In particular, the Family Shareholders’ financial advisors discussed the percentage of traditional equity that was contemplated to be part of the financing structure, and indicated that a financing involving preferred shares to be issued by a new holding company that would become the parent of the Company would be treated as equity financing by the lenders for a senior facility to be entered into between the Company and sources of senior debt financing, along the lines described in the senior debt commitment papers that were provided to the special committee and its advisors on December 5, 2012.

During the week of February 10, 2013, Dr. Cowen had several telephone calls with Mr. Zev Weiss. During these calls, Dr. Cowen reiterated the special committee’s disappointment with the $17.50 headline price in the Family Shareholders’ revised proposal and with certain of the transaction terms contained in the draft merger agreement, particularly the provision providing for the suspension of dividends between signing and closing and the absence of a majority of the minority shareholder approval condition. Mr. Weiss told Dr. Cowen that the Family Shareholders viewed their proposal as fair to the unaffiliated shareholders, but understood that the special committee may have different views of the proposed terms and that in order for a transaction to occur, there would need to be mutual agreement on all open items. Mr. Weiss expressed the belief that financing commitments would be far advanced by late February, and Dr. Cowen and Mr. Weiss agreed to meet in person on February 27, 2013 for further discussions.

On February 14, 2013, the shareholder lawsuits filed in the United States District Court for the Northern District of Ohio, Eastern Division against the Family Shareholders and the Company were dismissed for lack of subject matter jurisdiction.

On February 17, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss Dr. Cowen’s recent conversations with Mr. Zev Weiss and to receive an update from PJSC regarding its earlier telephone calls with KeyBanc and Macquarie Capital regarding the Family Shareholders’ financing.

Between February 18, 2013 and February 25, 2013, Dr. Cowen and Mr. Zev Weiss had several telephone conversations regarding the objectives and limitations of their in-person meeting scheduled for February 27, 2013. During the conversations, Mr. Weiss conveyed to Dr. Cowen that the Family Shareholders anticipated reaching an agreement with the special committee at the meeting, and Dr. Cowen informed Mr. Weiss that he would be the only member of the special committee present and therefore would not have the authority to agree on a transaction. In light of the inability to agree on transaction terms on February 27, 2013, the Family Shareholders initially cancelled the meeting. However, after further discussions, Mr. Weiss and Dr. Cowen determined that it could nonetheless be productive for the parties to meet, obtain more information on financing, better understand the basis for the parties’ respective perspectives on price, discuss the transaction terms and determine what differences remained on significant issues. Dr. Cowen and Mr. Weiss agreed that the meeting would take place, with Mr. Weiss representing the Family Shareholders and Dr. Cowen representing the special committee, together with their respective legal and financial advisors.

On February 24, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders. During the meeting, representatives of PJSC gave a presentation to the special committee that updated financial information and analyses from PJSC’s presentation of January 27, 2013. PJSC reviewed a summary of the valuation analyses it performed and noted that some of the analyses had been revised slightly based on updated management estimates of the amounts of certain adjustments being considered with respect to fiscal 2013 for purposes of the analyses. The special committee asked PJSC questions about the updated analyses and discussed with PJSC the valuation complexities associated with the lack of companies directly comparable to the Company.

The special committee and PJSC reviewed and discussed various offer price scenarios and implied trading multiples for the proposed transaction. The special committee and PJSC discussed the level at which the Company shares might trade if no transaction were agreed upon and alternative transactions available to the Company, such as a dividend recapitalization transaction, with the special committee concluding, on balance, that the potential economic benefits of such a transaction were not likely to provide a superior value to the per share merger consideration currently offered by the Family Shareholders and that the risks of realizing any such value were considerable. The members of the special committee expressed the view that, while they were interested in continuing to explore a potential recapitalization of the Company, it was currently in the best interests of the Company’s shareholders to focus on exploring whether a transaction with the Family Shareholders could be agreed upon on terms acceptable to the special committee. The special committee and its advisors also discussed the goals of Dr. Cowen’s upcoming meeting with Mr. Zev Weiss on February 27, 2013.

On February 25, 2013, representatives of Sullivan & Cromwell sent representatives of Jones Day an agenda of discussion items for the upcoming meeting on February 27, 2013. The agenda included an overview of financing components and commitment papers, the parties’ perspectives on valuation and dividend continuation, and certain conditions and covenants contained in the draft merger agreement.

On February 27, 2013, Mr. Zev Weiss and representatives of Jones Day and KeyBanc met with Dr. Cowen and representatives of Sullivan & Cromwell and PJSC in New Orleans. Mr. Weiss informed the group that the Family Shareholders had made considerable progress with their potential financing sources and felt comfortable that they would obtain sufficient financing for a transaction, but that it was likely to take several more weeks for the terms to be finalized. Representatives of PJSC then provided an overview of financial analyses that supported the special committee’s position that a price of $18.75 per share would be fully justified based on a number of financial metrics. Mr. Weiss noted that the Company’s stock had been trading below the $17.50 headline price in the Family Shareholders’ revised proposal and that the market does not value the stock above $17.50 per share, and that $17.50 is likely substantially greater than the trading price of the stock in the absence of a proposal. The parties then discussed certain key transaction terms, particularly the special committee’s requirement that the transaction be conditioned upon a majority of the minority shareholder approval.

Dr. Cowen and Mr. Weiss then met separately to discuss the offer price. Mr. Weiss stated that he believed the $17.50 price was more than fair but that the Family Shareholders might be willing to consider an offer of $18 per share as well as the payment of regular quarterly dividends between the signing and closing of a transaction, consistent with the Company’s past practice, but only if the special committee would be willing to support these terms. Dr. Cowen told Mr. Weiss that he would relay that message to the other special committee members, but that he thought $18 per share and those terms would not be acceptable to the special committee. Mr. Weiss also reiterated that the Family Shareholders were committed to pursuing a transaction that the special committee would recommend to the Company’s shareholders. Dr. Cowen and Mr. Weiss agreed they would attempt to finalize price negotiations around the next regularly scheduled board meeting on March 7, 2013.

While Dr. Cowen and Mr. Weiss were meeting, representatives of Jones Day indicated to representatives of Sullivan & Cromwell that the Family Shareholders would like to receive assistance from Messrs. Haffke and Smith with respect to the evaluation of the Family Shareholders’ potential financing arrangements. The Sullivan & Cromwell representatives indicated that they would relay the requests to the special committee.

On February 28, 2013, Mr. Zev Weiss, on behalf of the Family Shareholders, sent the special committee a letter requesting the cooperation of Mr. Smith to assist with the evaluation of the Family Shareholders’ potential financing arrangements.

Later on February 28, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders to discuss the February 27, 2013 meeting between Dr. Cowen and Mr. Zev Weiss and their respective advisors, and to discuss the Family Shareholders’ request for access to Mr. Smith. The special committee noted that while Mr. Smith could be allowed to advise the Family Shareholders regarding the structure and terms of their proposed financing package, it would require him to continue to be available to provide information to the special committee in his role as chief financial officer of the Company. On this basis, the special committee granted the request in order to facilitate the Family Shareholders’ ability to obtain financing to support a higher offer price and, ultimately, put the Family Shareholders in a position to make their best proposal to the special committee.

On March 2, 2013, representatives from Sullivan & Cromwell, Baker & Hostetler and Mr. Haffke discussed the draft merger agreement. Later that day, Sullivan & Cromwell sent a revised draft of the merger agreement to Jones Day.

On March 5, 2013, Sullivan & Cromwell and Jones Day had a telephone call to negotiate the draft merger agreement.

On March 6, 2013, representatives of Sullivan & Cromwell and Jones Day met in New York to continue to negotiate the merger agreement, and discussed in particular: (i) the Family Shareholders’ financing obligations; (ii) the majority of the minority shareholder approval condition; (iii) a reverse break fee that would become payable by the Family Shareholders in certain circumstances and, as an alternative to a reverse break fee, the possibility of a personal guaranty from the Family Shareholder directors of the obligations of Parent and Merger Sub under the merger agreement and (iv) the reimbursement by the Company of the expenses of Parent and Merger Sub (up to an agreed cap, to be determined) if the merger agreement were terminated under certain circumstances. Sullivan & Cromwell said that it would be critical for the Family Shareholders to fully negotiate definitive agreements for any preferred financing at a holding company level before a transaction was entered into, as opposed to proceeding on the basis of term sheets with commitment letters, in order to give the special committee sufficient comfort that such financing (together with senior debt commitments) would be likely to be funded to close a transaction.

On March 7, 2013, Dr. Cowen and Mr. Zev Weiss had a telephone conversation during which Mr. Weiss stated that the Family Shareholders anticipated they would receive their financing commitment letters during the week of March 18, 2013. Mr. Zev Weiss also related that as part of continuing discussions with several potential investors regarding a non-voting preferred equity financing, the Family Shareholders were currently considering Koch AG Investment, LLC (which we refer to in this proxy statement as “Koch AG Investment”), a subsidiary of Koch Industries, Inc., as the most likely investor in the non-voting preferred equity facility. Dr. Cowen and Mr. Zev Weiss agreed to defer price discussions until financing was closer to completion.

Later on March 7, 2013, the special committee met in Cleveland with representatives of Squire Sanders, with representatives of Sullivan & Cromwell and PJSC participating telephonically, to discuss the status of negotiations regarding the merger agreement and the status of the Family Shareholders’ financing. After the meeting, Dr. Cowen spoke to Mr. Zev Weiss regarding the status of the Family Shareholders’ financing. Around the same time, Dr. Cowen stated to Mr. Smith that the special committee was concerned that the process for the Family Shareholders to obtain financing and for the parties to negotiate a transaction was taking longer than expected and that it wanted a resolution no later than the end of the month. Dr. Cowen also relayed this concern to Mr. Zev Weiss at various times leading up to the meetings between the parties at the end of March.

On March 10, 2013, Jones Day sent Sullivan & Cromwell a revised draft merger agreement and draft rollover and contribution agreement providing for the contribution of the Family Shareholders’ common shares to Parent.

On March 12, 2013, the special committee received a letter from Mr. Zev Weiss on behalf of the Family Shareholders requesting the assistance of the Company’s Treasurer in the evaluation of the Family Shareholders’ financing arrangements. On the same day, the special committee gave its permission to the request for assistance, similar to the arrangement with Mr. Smith, in order to facilitate the Family Shareholders’ ability to obtain financing to support a higher offer price and, ultimately, put the Family Shareholders in a position to make their best proposal to the special committee.

On March 13, 2013, Sullivan & Cromwell sent a revised draft rollover and contribution agreement and a draft guaranty and voting agreement to Jones Day, pursuant to which (i) the Family Shareholder directors would guarantee the obligations of Parent and Merger Sub under the merger agreement and (ii) the Family Shareholders would agree to vote their common shares to adopt the merger agreement.

Between March 14, 2013 and March 23, 2013, Sullivan & Cromwell and Jones Day continued to negotiate the draft merger agreement and related agreements.

On March 22, 2013 and March 23, 2013 Jones Day sent Sullivan & Cromwell a draft of the senior debt commitment letter (which had been updated from the draft provided on December 5, 2012) and a redacted draft of the fee letter relating to the senior debt commitment.

On March 23, 2013, the special committee met telephonically with representatives of Sullivan & Cromwell, PJSC and Squire Sanders. During the meeting, Sullivan & Cromwell updated the special committee on the negotiations of the merger agreement and related agreements, and the special committee and Sullivan & Cromwell discussed in particular the special committee’s requirement that the merger agreement contain the majority of the minority shareholder approval condition, the Family Shareholders’ financing commitments, the “no shop” and “change in recommendation” provisions and the conditions to closing in the draft merger agreement, and the limited guaranty in favor of the Company to be provided by certain Family Shareholders. PJSC also reviewed with the special committee updated financial information and analyses from its February 24, 2013 presentation. In addition, PJSC reviewed with the special committee preliminary “sources and uses” of funds information that had been provided by the Family Shareholders. The special committee also discussed with PJSC the significance of historical adjusted last twelve months to January 2013 EBITDA amounts being provided by the Family Shareholders to potential financing sources. The special committee and PJSC discussed the differences between the $211 million last 12 months EBITDA identified to financing sources and the $201 million fiscal year 2013 EBITDA used in PJSC’s most recent analyses. Differences included the time period referenced (the last 12 months ended January 2013, as compared to the Company’s 2013 fiscal year ended February 28, 2013) and the treatment of selected pro forma adjustments to EBITDA. Representatives of PJSC also noted that PJSC had adjusted its range of terminal multiples slightly in the financial presentation based on refinements to its financial model.

During the meeting, Dr. Cowen told the meeting participants that he had raised with Mr. Zev Weiss reimbursement of the Company by the Family Shareholders for the time spent by Mr. Smith and certain other Company employees in advising the Family Shareholders on their financing, and that Mr. Weiss had agreed that the Family Shareholders would provide such reimbursement.

Later on March 23, 2013 and continuing through March 28, 2013, representatives from Sullivan & Cromwell and Jones Day continued to negotiate the merger agreement and related agreements and the senior debt commitment letter. On March 24, 2013, representatives from Sullivan & Cromwell and Baker & Hostetler and Mr. Haffke had a telephone conversation to discuss the draft merger agreement. On March 25, 2013 Jones Day sent to Sullivan & Cromwell drafts of the agreements with Koch AG Investment relating to the non-voting preferred equity financing, which Sullivan & Cromwell and Jones Day continued to negotiate during the week of March 25. Jones Day also negotiated the financing documents with counsel to the senior lenders and Koch AG Investment during this period.

On the evening of March 27, 2013, the special committee and the other independent directors met in Cleveland (with Messrs. MacDonald and Ratner participating telephonically) with representatives of Sullivan & Cromwell, PJSC and Squire Sanders and Mr. Haffke, general counsel to the Company. Representatives of Sullivan & Cromwell gave a presentation to the independent directors regarding the fiduciary duties of the directors generally, as well as specifically with respect to the revised proposal from the Family Shareholders. PJSC then gave a presentation to the independent directors, updating the financial information and analyses in the PJSC presentation from February 24, 2013, and providing Mr. Ratner and Dr. Thornton with an explanation of the various financial analyses that the special committee had been reviewing throughout its evaluation of the Family Shareholders’ proposal.

Mr. Smith then joined the meeting telephonically at the invitation of the special committee. He first confirmed that since the announcement of the Family Shareholders’ proposal he had not had any discussions with any Family Shareholder or any representative of the Family Shareholders regarding his compensation or continued employment with the Company following the closing of any transaction. Mr. Smith answered questions from the special committee regarding fiscal year 2013 results, fiscal year 2014 expectations, EBITDA adjustments included in information provided to financing sources, and regarding the Family Shareholders’ financing arrangements. Mr. Smith and Mr. Ratner then left the meeting.

After Mr. Smith left the meeting, representatives of Sullivan & Cromwell reviewed with the independent directors the terms of the draft merger agreement, the guaranty and voting agreement, the rollover and contribution agreement and the financing commitments. The special committee members and Dr. Thornton asked the representatives of Sullivan & Cromwell questions and discussed the provisions of the agreements. Dr. Thornton and

Mr. Haffke then left the meeting. The special committee then discussed issues related to value and price negotiations, including (i) the fact that although the Company’s estimated EBITDA for fiscal year 2013 was greater than previously expected by management, adjusted EBITDA had decreased significantly from year to year during the previous several years, (ii) how the changes in the Company’s estimated EBITDA should affect negotiations with the Family Shareholders and the special committee’s determination of a fair price for the Company’s shares and (iii) the price that the Family Shareholders might be capable of paying in light of the cost of the financing they had obtained.

On March 28, 2013, the special committee and representatives of Sullivan & Cromwell, PJSC and Squire Sanders met in Cleveland with representatives of the Family Shareholders and Jones Day and KeyBanc to negotiate price and certain open terms in the various transaction agreements. In a morning meeting of the parties, Dr. Cowen, Mr. Zev Weiss and their respective advisors discussed the current negotiations relating to price, the merger agreement and the related agreements. The meeting recessed and the special committee and the Family Shareholders met with their respective legal and financial advisors to discuss the status of the negotiations. Following these discussions, the special committee concluded that it was appropriate and prudent to continue to negotiate for a higher price and decided to reiterate its prior counterproposal of not less than $18.75 per share. Dr. Cowen conveyed this message in a meeting with Mr. Zev Weiss. Mr. Weiss responded that the Family Shareholders had no ability and no intention to pay more than $18.00 per share, plus the one regular quarterly dividend that likely would be paid in the period between signing and closing of a transaction. Following a break during which Dr. Cowen conferred with the special committee, Dr. Cowen reiterated the special committee’s request for $18.75 per share plus ordinary course dividends.

Following the meeting between Dr. Cowen and Mr. Weiss, the special committee determined that Dr. Cowen should tell Mr. Weiss that, absent an indication from the Family Shareholders that they were willing increase the offer price above $18.00 per share, the discussions should be terminated or, alternatively, a meeting of all special committee members and the Family Shareholder directors could be convened to evaluate whether to continue discussions. The special committee members and Messrs. Morry, Zev and Jeffrey Weiss then met and discussed the status of the negotiations. During that meeting the Family Shareholders indicated that they would pay $18.25 per share with no dividend, but that they would pay no more.

Following that meeting, the special committee met with its advisors and considered the position of the Family Shareholders. They discussed the current terms of the transaction, the risks and consequences of not accepting the proposal, particularly in light of the impending expiration of the standstill provision governing the Family Shareholders, the risk that the Family Shareholders would commence a tender offer at prices lower than those currently being offered, and the benefits of affording the Company’s shareholders the opportunity and ability to review, evaluate and consider the transaction on their own as a result of adopting the majority of the minority shareholder approval condition, which had been agreed to by the Family Shareholders earlier in the March 28 meetings. The special committee then agreed that Dr. Cowen should communicate an offer of $18.20 plus one quarterly dividend (in addition to payment of the regular quarterly dividend that had been declared on March 8, 2013 for payment on April 8, 2013), which offer was accepted by the Family Shareholders.

At the request of the special committee, PJSC then reviewed with the special committee its financial analyses and delivered to the special committee an oral opinion, confirmed by delivery of a written opinion dated March 28, 2013, that as of that date and based on, and subject to, various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of common shares (other than the Family Shareholders, Parent, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to those holders.

The special committee then unanimously resolved that the merger is fair to and in the best interests of the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub) and recommended that the board (i) determine that the merger agreement is advisable and in the best interests of the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), (ii) approve the merger agreement and (iii) resolve to recommend that the Company’s shareholders adopt the merger agreement.

Promptly thereafter a meeting of the board was convened. A representative of Baker & Hostetler reviewed for the directors their fiduciary duties in connection with their consideration of the proposed transaction. Next, the board reviewed the final proposed terms for the merger, representatives of PJSC described PJSC’s financial analysis

of the proposal and delivered to the board PJSC’s oral opinion as to the fairness of the merger consideration, in identical form to the oral opinion that was delivered to the special committee as described above (which was confirmed by delivery of a written opinion dated March 28, 2013), and representatives of Sullivan & Cromwell described the terms of the merger agreement and other transaction documents. The board, with the unanimous vote of the independent directors, and based in part on the unanimous recommendation of the special committee, adopted resolutions (i) determining and declaring that the merger agreement and the transactions contemplated thereby, including the merger, were advisable and were fair to, and in the best interests of, the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), (ii) approving the execution, delivery and performance of the merger agreement and the transactions contemplated thereby, including the merger, (iii) recommending that the Company’s shareholders vote to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger and (iv) addressing various other Company matters. The Family Shareholder directors recused themselves from the vote of the board on these matters.

The parties executed the merger agreement and related agreements on March 29, 2013. On April 1, 2013, before the opening of trading on the next NYSE trading day after March 28, 2013, the Company issued a press release and filed a Current Report on Form 8-K with the SEC announcing the transaction.

Also on April 1, 2013, the Family Shareholders filed an amendment to their Schedule 13D with the Securities and Exchange Commission reflecting their entering into definitive agreements for the transaction and attaching a copy of the merger agreement and related agreements.

During the period from the public announcement of the Family Shareholders’ proposal on September 26, 2012 through the execution of the merger agreement on March 29, 2013, no third party provided any indication of interest to the Company or its advisors or the special committee or its advisors that it might be willing to pursue a transaction involving the Company.

Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger

The special committee, acting with the advice and assistance of its legal and financial advisors, evaluated and negotiated the merger, including the terms and conditions of the merger agreement, and determined that the merger is fair to and in the best interests of the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders. Since the members of the special committee were independent non-employee directors, neither the special committee nor the other non-employee directors retained a separate unaffiliated representative to act solely on behalf of unaffiliated shareholders for purposes of negotiating the terms of the merger or preparing a report concerning the fairness of the merger. The special committee unanimously recommended to the board of directors that the board:

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determine that the merger agreement is advisable and in the best interests of the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub);

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approve the merger agreement; and

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resolve to recommend that the Company’s shareholders adopt the merger agreement.

Overview

The special committee held almost 30 meetings to discuss the Family Shareholders’ proposed acquisition of all of the outstanding Class A common shares and Class B common shares not currently owned by them (the “Family Shareholders’ proposal”), as it was revised from time to time. On at least 14 occasions the special committee discussed the price that was proposed and other substantive issues raised by the Family Shareholders’ proposal. The special committee found that the special circumstances of the Company gave rise to unusual considerations and significant complexity that made it particularly challenging to analyze the Family Shareholders’ proposal. These factors included:

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That the Company’s dual class voting structure gives the Family Shareholders effective control over the election of directors of the Company and, while historically the Family Shareholders have supported having a majority of independent directors on the board (and the Family Shareholders gave the special committee no indication this position would change), there was no assurance this support would continue;

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The special committee viewed this as a potential limitation on effecting and maintaining significant changes in business strategy that were not supported by the Family Shareholders.

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That the Family Shareholders have effective control of the Company, and that other shareholders acquired their equity interests with knowledge of that control (or ready access to that knowledge), which supported the Family Shareholders’ position that public shareholders should not anticipate a “control premium” in a sale of the Company;

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That the Company’s dual class voting structure gives the Family Shareholders an effective veto over any alternative sale transaction and that the Family Shareholders firmly asserted on multiple occasions that they would not support in their capacities as shareholders any alternative sale transaction or alternative recapitalization transaction;

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That the Company’s financial results in recent years have been significantly affected by non-recurring, one-time and other special items, which makes it difficult to identify clear trends in the Company’s business and the Company’s likely future financial performance;

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The advice of PJSC that there were no publicly traded companies or precedent transactions that are directly comparable to the Company for purposes of valuation;

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That some, but not all, of PJSC financial analyses suggested possible values for the Company in excess of the $18.20 per share merger consideration;

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These financial analyses gave the special committee pause in analyzing the Family Shareholders’ proposal, but the special committee considered, in addition to financial analyses that suggested lower values, (i) that the risks of realizing the forecasts underlying these more positive financial analyses were substantial in light of the challenges facing the Company’s business, (ii) that the Company’s recent results have underperformed compared to the Company’s forecasts in recent years and (iii) the special committee’s belief that the potential for an adverse secular change in the business trends affecting the greeting card and social expression industry, which has existed for several years, is likely greater than the potential for a favorable secular change, suggesting, in the special committee’s view, a greater risk on the downside than foregone opportunity on the upside with respect to the Company’s value.

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That PJSC’s discounted present value of projected future stock prices produced valuations mostly below the $18.20 per share merger consideration even though this analysis assumes that the Company’s financial forecasts will be realized, and, while this valuation methodology requires a view that as publicly traded the Class A common shares will continue to trade in an EBITDA multiple range of 3.25x to 4.25x (which the special committee recognized may or may not prove to be the case), it is the analysis that seeks to predict the value that the Company’s shareholders could realize for their common shares if the Company continued as a public company; and

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That under some circumstances a significant dividend/recapitalization transaction (which the special committee recognized could be effected in some forms, such as through borrowings to pay a special dividend, without the support of the Family Shareholders) could potentially create value comparable to the $18.20 per share merger consideration, while leaving public shareholders with the opportunity to share in increases in equity value created through the operation of a more highly leveraged Company.

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The special committee was concerned, however, based on the advice of PJSC, that the common equity of a recapitalized, more indebted Company might trade at lower multiples of EBITDA than it has traded in the recent past and that the Company’s small equity capitalization could impair the liquidity and trading value of the Company’s Class A common shares.

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The special committee also was concerned that substantially greater debt levels at the Company would reduce the Company’s flexibility and ability to respond to adverse business developments and potentially jeopardize the equity value of the Company.

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The special committee concluded, on balance, that the potential economic benefits of such a dividend/recapitalization transaction were not likely to provide a value superior to the $18.20 per share merger consideration and that the risks to realizing any superior value were considerable.

After taking into account the foregoing, as well as the factors described below, and in particular the majority of the minority shareholder approval condition, the special committee determined unanimously to recommend the merger to the board.

Reasons for the Merger – Additional Considerations

In the course of reaching its determination and recommendation, the members of the special committee considered the following factors and potential benefits of the merger, each of which the special committee believed supported its decision:

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management’s and their own views and opinions on the current industry environment of greeting cards and other social expression products;

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their understanding of the business, operations, financial condition, earnings, strategy and prospects of the Company (including the risks involved in achieving those prospects), as well as the Company’s historical and projected financial performance;

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the current and historical market prices of the Class A common shares and that the $18.20 per share merger consideration in cash, without interest, to be received by Company shareholders for each common share represented a 26.9% premium over the unaffected closing price of Class A common shares as of September 25, 2012, the date on which the Family Shareholders announced their initial proposal to acquire the common shares, and a 13.0% premium to the closing price of Class A common shares on March 28, 2013, the date on which the special committee made its recommendation;

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that the $18.20 per share merger consideration indicates an implied valuation multiple of 4.1x the Company’s projected EBITDA for fiscal year 2013, as compared to (i) the valuation multiple of 3.6x the Company’s projected EBITDA for fiscal year 2013 implied by the unaffected closing price of Class A common shares on September 25, 2012 and (ii) the one-year mean last 12 months valuation EBITDA multiple of 3.1x for the 12-month period prior to September 25, 2012, the date on which the Family Shareholders made their initial proposal;

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the opinion of PJSC, dated March 28, 2013, that as of that date and based on, and subject to, various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of common shares (other than the Family Shareholders, Parent, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to such holders;

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the various analyses undertaken by PJSC, each of which is described below under “Special Factors –Opinion of Peter J. Solomon Company” beginning on page 40;

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the negotiations that took place between the parties that resulted in an approximately 5.9% increase in the per share merger consideration from the stated value of the initial Family Shareholders’ proposal of $17.18 per share to the $18.20 per share price;

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the special committee’s belief that the $18.20 per share merger consideration represented, after prolonged negotiations, the highest per share consideration that they could obtain from the Family Shareholders;

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that under the merger agreement, if the board so determines prior to the completion of the merger, the Company is permitted to declare and pay one regular quarterly dividend on its common shares of up to $0.15 per share, consistent with prior timing, which had been prohibited under the Family Shareholders’ earlier proposal, and which is in addition to the dividend declared by the Company on March 8, 2013 and paid on April 8, 2013;

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the special committee’s belief that the all-cash merger consideration will allow the Company’s shareholders (other than the Family Shareholders) to realize in the near term a fair value, in cash, for their shares, while avoiding medium- and long-term business risk and the risk associated with realizing current expectations for the Company’s future financial performance, while also providing shareholders certainty of value for their shares;

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the special committee’s belief that it was unlikely that any alternative sales transaction could be consummated at this time, or in the immediate future, in light of (i) the position of the Family Shareholders

(contained in the letters, dated September 25, 2012 and January 17, 2013, from certain Family Shareholders to the special committee and subsequently confirmed to the special committee) that they have no intention to sell all or any significant portion of their shares in the Company and (ii) certain provisions of Ohio law and the Company’s charter documents that, together or separately, make it unlikely that a third party could acquire control of the Company without the support of the Family Shareholders;

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the potential adverse earnings and cash flow impact on the Company as a result of expenses and investments it may make over the next several years, including by expanding Internet and other channels of electronic distribution, restructuring the Clinton Cards business, the modernization of the Company’s information technology systems and the construction of and relocation to a new world headquarters or a significant rehabilitation of the existing headquarters;

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all of the terms and conditions of the merger agreement, including, among other things, the representations, warranties, covenants and agreements of the parties, the conditions to closing of the merger, the form and structure of the merger consideration and the termination rights, and that the merger agreement was negotiated by the special committee over the course of several months;

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the majority of the minority shareholder approval condition in the merger agreement, in which each Class B common share will have only one vote, rather than the ten votes to which the relevant holder otherwise would be entitled;

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that while the merger agreement contains a covenant prohibiting the Company from soliciting third-party acquisition proposals, the merger agreement permits the Company, prior to the time that Company shareholders and the majority of the minority shareholders adopt the merger agreement, to discuss and negotiate, under specified circumstances, an unsolicited acquisition proposal should one be made and, if the special committee determines in good faith, after consultation with its legal and financial advisors, that the unsolicited acquisition proposal constitutes a superior offer within the meaning of the merger agreement, the special committee is permitted, after taking certain steps, to terminate the merger agreement in order to enter into a definitive agreement for that superior offer, subject to reimbursement by the Company of Parent’s and Merger Sub’s expenses up to $7.3 million;

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that, although the Family Shareholders’ proposal has been public since September 26, 2012, and the special committee and its advisors were named in a press release on October 19, 2012, no third party provided any indication of interest to the special committee or its advisors;

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that the merger agreement allows the special committee to change or withdraw its recommendation of the merger agreement if any event, change, development, effect, occurrence or state of facts (other than, in certain circumstances, a potential leveraged recapitalization of the Company) becomes known to the board or the special committee before the Company shareholders or the majority of the minority shareholders adopt the merger agreement, and the special committee determines in good faith, after consultation with its legal advisors, that the failure to do so would be inconsistent with the directors’ fiduciary duties under Ohio law;

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the special committee’s belief, after extensive deliberations, that the merger was likely to be more favorable to shareholders unaffiliated with the Family Shareholders than the value likely to be realized from other alternatives available to the Company, including remaining a public company and pursing the current strategic plan or engaging in a significant dividend/recapitalization transaction, in light of the potential rewards, risks and uncertainties associated with those alternatives;

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that the Family Shareholders had in place committed senior debt financing and non-voting preferred equity financing and the level of effort that Parent and Merger Sub must use under the merger agreement to obtain the proceeds of the financing on the terms and conditions described in the Family Shareholders’ senior debt financing commitment letter and non-voting preferred equity financing agreements; and

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that the Family Shareholders have entered into a guaranty pursuant to which they will guarantee to the Company the due and punctual payment of any obligation or liability of Parent and Merger Sub as a result of a breach of their obligations under the merger agreement, up to a maximum liability under the guaranty of $7.3 million.

The special committee also considered a variety of risks and potentially negative factors concerning the merger and the merger agreement, including the following:

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the possibility that the Family Shareholders will be unable to obtain the financing proceeds, including obtaining the senior debt financing proceeds from the senior lenders and the preferred financing from the preferred investor, and that the merger is expressly conditioned upon the receipt of the financing proceeds;

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that there is no reverse termination fee payable by Parent to the Company if Parent or Merger Sub is unable to consummate the merger, even if it is because of their inability to consummate the financing transactions;

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that the Company’s shareholders, with the exception of the Family Shareholders, will have no ongoing equity participation in the Company following the merger and that those shareholders will cease to participate in the Company’s future earnings or growth, if any, and will not benefit from increases, if any, in the value of the common shares;

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that because of (i) the Family Shareholders’ ownership of a significant percentage of the voting power of the common shares and their firm, expressed unwillingness to consider alternative sale transactions, (ii) certain provisions of Ohio law and the Company’s charter documents that, together or separately, make it unlikely that a third party could acquire control of the Company and (iii) the widespread press concerning the Family Shareholders’ proposal, there was no reason to contact, and in light thereof, no attempt was made to contact, third parties that might otherwise consider an acquisition of the Company; the special committee recognized that, absent the refusal of the Family Shareholders to entertain an alternative transaction, it was possible that a sale process open to all possible bidders might result in a higher sale price than the cash consideration payable in the merger;

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the possibility that, at some future time, the Family Shareholders could sell some or all of the surviving corporation or its businesses or assets to one or more purchasers at a valuation higher than that available in the merger, and that the current shareholders of the Company (other than the Family Shareholders) would not be able to participate in such a sale;

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the risk of incurring substantial expenses related to the merger, including in connection with the litigation that has arisen since the announcement of the Family Shareholders’ proposal and any litigation that may arise in the future;

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the significant costs involved in connection with negotiating the merger agreement and completing the merger, the substantial management time and effort required to effectuate the merger and the related disruption to the Company’s day-to-day operations during the pendency of the merger;

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that the Company may be required to bear certain costs and expenses involved in connection with negotiating the merger agreement and attempting to close the merger if the merger is not consummated;

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the risk, if the merger is not consummated, that the pendency of the merger could affect adversely the relationship of the Company and its subsidiaries with their respective customers, employees, suppliers, agents and others with whom they have business dealings;

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the risk that the merger will be delayed or will not be completed, including the risk that the approval of the majority of the minority shareholders or the required regulatory approvals may not be obtained, as well as the potential loss of value to the Company’s shareholders and the potential negative impact on the operations and prospects of the Company if the merger is delayed or is not completed for any reason;

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the terms of the merger agreement that place restrictions on the conduct of the Company’s business prior to completion of the merger, which may delay or prevent the Company from undertaking business opportunities that may arise pending completion of the merger, and the resultant risk if the merger is not consummated;

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that the receipt of cash in exchange for common shares pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes for many Company shareholders;

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that the Company’s officers and directors may have interests in the merger that are different from, or in addition to, the interests of the Company’s shareholders, including the conversion of stock awards held by officers and directors, the payment of severance to officers party to employment agreements with the Company if a termination of employment were to occur in connection with the merger, and the interests of the Company’s directors and officers in being entitled to continued indemnification and insurance coverage from the surviving corporation under the merger agreement; and

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that Parent and Merger Sub are newly-formed corporations with essentially no assets.

The special committee also considered a number of factors relating to the procedural safeguards involved in the negotiation of the merger, including those discussed below, each of which it believed supported its determination and recommendation and provided assurance of the fairness of the merger to the shareholders of the Company unaffiliated with the Family Shareholders:

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that the special committee consists solely of disinterested and independent directors who are not officers or controlling shareholders of the Company, or affiliated with the Family Shareholders, and who do not otherwise have a conflict of interest or lack independence with respect to the merger;

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that the special committee was delegated the exclusive power and authority to review and evaluate the advisability of the Family Shareholders’ proposal and any other alternatives available to the Company;

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that the Family Shareholders agreed to a “standstill” agreement in connection with the Company’s agreement to provide confidential information to the Family Shareholders’ advisors and financing sources, thus limiting until April 5, 2013 the ability of the Family Shareholders to make an offer directly to shareholders;

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that the special committee received the advice and assistance of PJSC, as its financial advisor, and Sullivan & Cromwell LLP, as its legal advisor, and requested and received from PJSC an opinion, dated March 28, 2013, that as of such date and based on, and subject to, various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of common shares (other than the Family Shareholders, Parent, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to such holders;

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that the special committee was involved in extensive deliberations since the time of the submission of the Family Shareholders’ proposal in September 2012 until the execution of the merger agreement and was provided with access to the Company’s management (other than any Family Shareholders) in connection with the due diligence conducted by it and its advisors;

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that the financial and other terms and conditions of the merger agreement were the product of negotiations that took place over the course of several months between the special committee and its independent legal and financial advisors, on the one hand, and the Family Shareholders and their representatives, on the other hand;

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that the Company is permitted under certain circumstances to respond to inquiries regarding acquisition proposals and, upon reimbursement by the Company of Parent’s and Merger Sub’s expenses up to $7.3 million, to terminate the merger agreement in order to accept a superior proposal; and

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that under Ohio law dissenting shareholders have the right to demand appraisal of their shares.

The above discussion of the information and factors considered by the special committee is not intended to be exhaustive, but indicates the material matters considered. In reaching its determination and recommendation, the special committee did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual members of the special committee may have considered various factors differently. The special committee did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. Moreover, in

considering the information and factors described above, individual members of the special committee may have given differing weights to differing factors. The special committee based its unanimous recommendation on the totality of the information presented.

The special committee did not consider the liquidation value of the Company in determining the fairness of the merger to the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders, because of its belief that liquidation value does not present a meaningful valuation for the Company and its business, as the Company’s value is derived from the cash flows generated from its continuing operations rather than from the value of assets that might be realized in a liquidation. Accordingly, the valuation analyses presented by PJSC to the special committee (as described under “Special Factors – Opinion of Peter J. Solomon Company” beginning on page 40) were based on the operation of the Company as a continuing business, and, to that extent, such analyses could be characterized collectively as forms of going concern valuations.

The special committee also did not consider net book value, which is an historical accounting measure, in determining the fairness of the merger to the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders, because of its belief that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical acquisition costs, and does not take into account the prospects of the Company, market conditions, trends in the industries in which the Company operates or the business risks inherent in those industries. Further, the special committee did not believe that net book value accurately reflects the Company’s present market value. The Company’s net book value per share as of February 28, 2013 was approximately $21.33 (calculated based on 31,970,841 common shares outstanding), which is higher than the $18.20 per share merger consideration and higher than the $14.34, closing price of the Class A common shares on September 25, 2012, the last trading date prior to the announcement of the Weiss Family proposal.

The special committee did not view the prices paid by the Company for the open market purchases or privately negotiated transactions of Class A common shares and Class B common shares detailed in the “Important Information Regarding American Greetings – Transactions in Common Shares” section beginning on page 106 as relevant beyond indicating the trading price of Class A common shares during such periods. Further, since the Company has not received any offer concerning a potential acquisition of the Company or similar fundamental transaction during the past two years from any party (other than the proposals from the Family Shareholders that led to the merger agreement), the consideration of any alternative or recent offers was not a factor available for the special committee to consider.

Recommendation of the Board of Directors

The board of directors consists of nine directors. On March 28, 2013, based in part on the unanimous recommendation of the special committee, as well as on the basis of the other factors described above, the board (with the Family Shareholder directors abstaining) on behalf of the Company unanimously:

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determined unanimously that the merger agreement and the merger are advisable and are fair to, and in the best interests of, the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders;

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approved unanimously the merger agreement and the merger; and

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resolved unanimously to recommend that the Company’s shareholders vote “FOR” the proposal to adopt the merger agreement and approve the merger.

In reaching these determinations, the board of directors (with the Family Shareholder directors abstaining) considered a number of factors, including the following material factors:

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the special committee’s analysis (as to both substantive and procedural aspects of the transaction), conclusions and unanimous determination, which the board adopts, that the merger is fair to and in the best interests of the Company and its shareholders (other than the Family Shareholders, Parent and Merger Sub), including the unaffiliated shareholders, and the special committee’s unanimous recommendation that the board determine the advisability of the merger agreement, approve the merger agreement and recommend that the Company’s shareholders adopt the merger agreement;

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the procedural fairness of the transaction, including that the transaction was negotiated over a period of months by a special committee consisting of four independent directors who are not affiliated with the Family Shareholders and are not employees of the Company or any of its subsidiaries, that the members of the special committee do not have an interest in the merger different from, or in addition to, that of the Company’s unaffiliated shareholders other than their interests described under “Special Factors—Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 62, and that the special committee was advised by its own legal and financial advisors; and

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the financial analyses of PJSC, financial advisor to the special committee, and the opinion of PJSC, dated March 28, 2013, to the special committee and the board that as of that date and based on, and subject to, various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of common shares (other than the Family Shareholders, Parent, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to those holders, as described under “Special Factors—Opinion of Peter J. Solomon Company” beginning on page 40.

The board of directors (with the Family Shareholder directors abstaining) recommends unanimously that you vote “FOR” the adoption of the merger agreement.

Opinion of Peter J. Solomon Company, L.P.

The special committee has retained PJSC to act as its financial advisor in connection with the merger. On March 28, 2013, at a meeting of the special committee held to evaluate the merger, PJSC delivered to the special committee an oral opinion, subsequently delivered to the board of directors, confirmed by delivery of a written opinion dated March 28, 2013 to the special committee and the board of directors, to the effect that, as of such date and based on and subject to various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of the common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to such holders.

The full text of PJSC's written opinion, dated March 28, 2013, to the special committee and the board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety. The following summary of PJSC’s opinion is qualified in its entirety by reference to the full text of the opinion. PJSC delivered its opinion to the special committee for the benefit and use of the special committee (in its capacity as such) and the board of directors for the benefit and use of the board of directors (in its capacity as such). PJSC’s opinion did not address any aspect of the merger except as expressly identified in its opinion and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to the Company or in which the Company might engage or as to the underlying business decision of the Company to proceed with or effect the merger. PJSC also expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the merger or any related matter.

In arriving at its opinion, PJSC, among other things:

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reviewed certain publicly available financial statements and other information of the Company;

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reviewed certain internal financial statements and other financial and operating data concerning the Company prepared by the management of the Company;

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reviewed certain financial projections for the Company;

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discussed the past and current operations, financial condition and prospects of the Company with management of the Company;

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reviewed the reported prices and trading activity of the Class A common shares;

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compared the financial performance and condition of the Company and the reported prices and trading activity of the Class A common shares with that of certain other publicly traded companies that PJSC deemed relevant;

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reviewed publicly available information regarding the financial terms of certain transactions, in whole or in part, that PJSC deemed relevant;

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participated in certain discussions among representatives of each of Parent and the Company;

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reviewed the merger agreement and drafts of the rollover and contribution agreement and the guaranty and voting agreement; and

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performed such other analyses as PJSC deemed appropriate.

In arriving at its opinion, PJSC was not authorized to solicit, and did not solicit, interest from any party with respect to a merger or other business combination transaction involving the Company or any of its assets.

In arriving at its opinion, PJSC assumed and relied upon the accuracy and completeness of the information reviewed by PJSC for the purposes of its opinion and PJSC did not assume any responsibility for independent verification of such information and relied on such information being complete and correct. PJSC relied on assurances of the management of the Company that they are not aware of any facts or circumstances that would make such information inaccurate or misleading in any respect material to PJSC’s opinion. With respect to the financial projections, PJSC assumed that the financial projections were reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of the Company. PJSC did not conduct a physical inspection of the facilities or property of the Company. PJSC did not assume any responsibility for any independent valuation or appraisal of the assets or liabilities of the Company, nor was PJSC furnished with any such valuation or appraisal. Furthermore, PJSC did not consider any tax, accounting or legal effects of the merger or the transaction structure on any person or entity.

PJSC assumed that the final form of the merger agreement would be substantially the same as the last draft dated March 27, 2013 reviewed by PJSC prior to delivering the opinion and would not vary in any respect material to PJSC’s analysis. PJSC also assumed that the merger will be consummated in accordance with the terms of the merger agreement, without waiver, modification or amendment of any material term, condition or agreement (including, without limitation, the consideration proposed to be received by the holders of common shares (other than the Family Shareholders, Parent and Merger Sub and the holders of dissenting shares) in connection with the merger), and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company. PJSC further assumed that all representations and warranties set forth in the merger agreement are and will be true and correct as of the dates made or deemed made for purposes of the merger agreement as set forth in the merger agreement and that all parties to the merger agreement will comply with all covenants of such parties thereunder as set forth in the merger agreement.

PJSC’s opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to PJSC as of, March 28, 2013, the day the opinion was delivered. In particular, PJSC did not express any opinion as to the prices at which common shares may trade at any future time. Furthermore, PJSC’s opinion did not address the Company’s underlying business decision to undertake the merger, and PJSC’s opinion did not address the relative merits of the merger as compared to any alternative transactions that might be available to the Company. PJSC’s opinion did not address any other aspect or implication of the merger or any other agreement, arrangement or understanding entered into in connection with the merger or otherwise except as expressly identified in the opinion. PJSC did not express a view to, and its opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the merger, or any class of persons, relative to the consideration to be received by the holders of the common shares (other than the Family Shareholders, Parent, Merger Sub and the holders of dissenting shares) pursuant to the merger agreement.

The following summarizes the significant financial analyses performed by PJSC and reviewed with the special committee and board of directors on March 28, 2013 in connection with the delivery of PJSC’s opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand PJSC’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of PJSC’s financial analyses.

Selected Publicly Traded Company Analysis

PJSC reviewed and compared selected financial information of the Company with similar information using publicly available information of the following publicly traded companies that share similar business characteristics to the Company or its operating segments, and that PJSC deemed relevant, including publicly traded companies selected as operating in the following segments similar to individual business segments in which the Company operates: social expression, print media, directories, e-commerce and licensing, as well as publicly traded companies selected as low-growth retailers with similar growth patterns to that of the Company:

Social Expression

CSS Industries Inc.

Blythe, Inc.

Print Media

Quad/Graphics, Inc.

R.R. Donnelley & Sons Company

Scholastic Corporation

Selected Low-Growth Retailers

Barnes & Noble, Inc.

hhgregg, Inc.

Best Buy Company, Inc.

GameStop Corporation

Directories

PagesJaunes Groupe

Eniro AB

Yellow Media Limited

Selected E-Commerce

Shutterfly, Inc.

1-800-Flowers.com

CaféPress Inc.

Licensing

Iconix Brand Group, Inc.

Cherokee Inc.

Meredith Corporation

These companies are referred to herein as the “selected companies”.

PJSC calculated and compared various financial multiples and ratios, including, among other things:

•

the enterprise value (which represents equity value plus book values of total debt, including preferred stock and minority interest less cash) of the selected companies based on closing share prices on March 28, 2013, as a multiple of: (i) revenue, (ii) earnings before interest and taxes, excluding non-recurring items (“EBIT”), as calculated from publicly reported data, and (iii) estimated earnings before interest, taxes, depreciation and amortization, excluding non-recurring items (“EBITDA”), as calculated from publicly reported data, in each case for each of the selected companies for each of the latest twelve months (“LTM”), from the latest month of information available to PJSC as of March 28, 2013, and calendar year 2012, as applicable.

•

the most recent share price as a multiple of earnings per share (“EPS”), for the LTM period and the projected calendar year 2013 based upon (i) the closing share prices as of March 28, 2013 and (ii) the median of Wall Street analysts’ estimates for calendar year 2013 EPS as reported by ThomsonReuter’s on March 28, 2013.

Based on its professional judgment and after taking into consideration, among other things, the observed data for the selected companies as of March 28, 2013, PJSC developed the following reference ranges of trading valuation multiples and ratios for the selected companies:


Enterprise Value as a Ratio of:	Range of Multiples
LTM Revenue		0.2x – 0.4x
FY2013E Revenue		0.2x – 0.4x
LTM EBITDA		3.3x – 4.3x
FY2013E EBITDA		3.3x – 4.3x
LTM EBIT		3.6x – 7.0x
FY2013E EBIT		3.6x – 7.0x
FY2014E EPS		7.7x – 11.4x

For the purposes of the selected public company analysis, PJSC used certain financial forecasts prepared by management of the Company for the fiscal year ending February 28, 2013, as well as certain adjustments thereto prepared with the guidance of the Company’s management. See “Projected Financial Information” beginning on page 54.

Using the reference ranges described above, PJSC estimated ranges of the implied equity value per share and applied them to the Company’s corresponding estimated financial metrics as of the end of its fiscal year on February 28, 2013, both excluding and including a “control premium.” For these purposes, PJSC used a control premium of 25%, which reflects the median premium paid in certain cash transactions selected based on PJSC’s professional judgment.

Based on PJSC’s professional judgment and after taking into consideration, among other things, the observed data, PJSC selected a valuation range for the common shares of $11.50 – $20.00 excluding a control premium, and a valuation range for the common shares of $14.38 – $25.00 including a control premium, in each case compared to the $18.20 per share merger consideration to be received by holders of the common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) in connection with the merger.

No company used in this analysis is identical to the Company. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which the Company was compared.

Selected Precedent Transactions Analysis

PJSC reviewed and compared selected publicly available financial information relating to the following six selected transactions announced between January 1, 2005 and March 28, 2013, which transactions generally were selected because they were transactions involving companies with low-growth characteristics similar to the Company, companies operating in similar segments and experiencing similar sector trends as compared to the Company, transactions reflecting companies experiencing changes or evolution of their business model in connection with evolving macro trends, or transactions that PJSC, based on its experience and judgment as a financial advisor, deemed relevant to consider in relation to the transaction:


Announcement Date	Acquirer	Target
August 2012	Dex One Corporation	SuperMedia Inc.
May 2012	Berkshire Hathaway, Inc.	Media General, Inc.’s Newspaper Operations
March 2009	BCE, Inc.	The Source (Bell) Electronics Inc.
March 2009	Barnes & Noble, Inc.	Barnes & Noble College Booksellers, Inc.
July 2005	Berkshire Partners LLC	National Vision, Inc.
January 2005	Movie Gallery, Inc.	Hollywood Entertainment Corporation

These transactions are referred to herein as the “selected precedent transactions.”

PJSC calculated and compared various financial multiples and ratios, including, among other things:

•

enterprise value (which represents equity value plus book values of total debt, including preferred stock and minority interest less cash) of the selected transactions, as a multiple of: (i) revenue, (ii) EBIT, as

calculated from publicly reported data, and (iii) EBITDA, as calculated from publicly reported data, in each case for each of the companies above for the LTM, from the latest month of information available to PJSC as of March 28, 2013.

Based on its professional judgment and after taking into consideration, among other things, the observed data for the selected precedent transactions and PJSC’s analysis of such data, PJSC developed the following reference ranges of precedent transaction valuation multiples and ratios for the selected precedent transactions:


Enterprise Value as a Ratio of:	Range of Multiples
FY2013E Revenue		0.3x – 0.6x
FY2013E EBITDA		3.0x – 4.5x
FY2013E EBIT		4.5x – 6.5x

For the purposes of the selected precedent transactions analysis, PJSC used certain financial forecasts prepared by the management of the Company for the fiscal year ending February 28, 2013, as well as certain adjustments thereto prepared with the guidance of the Company’s management. See “Projected Financial Information” beginning on page 54.

Based on PJSC’s professional judgment and after taking into consideration, among other things, the observed data measured across all identified valuation multiples and ratios for the selected precedent transactions and PJSC’s analysis of such data, PJSC selected a valuation range for the common shares of $11.75 – $20.50, compared to the $18.20 per share merger consideration to be received by holders of the common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) in connection with the merger.

No company, business or transaction used in this analysis is identical to the Company or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which the Company and the merger were compared.

Sum- of- the- Parts Analysis

In light of the segmented nature of the Company's business, PJSC also conducted a sum-of-the-parts analysis. PJSC applied the estimated Company EBITDA by segment for the fiscal year ending February 28, 2013, provided to PJSC by the management of the Company, including selected adjustments for certain items based on Company management guidance, for each segment of the Company's business to the following range of multiples selected from a review by PJSC of the companies referred to in the section above titled “Selected Publicly Traded Company Analysis,” based on PJSC’s professional judgment.

The “unallocated overhead” segment discussed below refers to corporate costs that are deducted from estimated EBITDA for the Company for the fiscal year ending February 28, 2013. PJSC selected an “unallocated overhead” multiple equal to a weighted average of the multiples for each of the other segments, prior to the allocation of overhead expenses.


Segment	Range of Multiples
North American Greeting Cards Division		3.25x – 4.25x
International		3.25x – 4.25x
Retail Operations		3.25x – 4.25x
AG Interactive		6.00x – 8.00x
In-Store		3.25x – 4.25x
Properties		8.00x – 10.00x
Unallocated Overhead		3.46x – 4.53x

Based on PJSC’s professional judgment and after taking into consideration, among other things, the observed data measured across all multiples and PJSC’s analysis of such data, PJSC selected a valuation range for common shares of $14.25 – $20.50, compared to the $18.20 per share merger consideration to be received by holders of common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) in connection with the merger.

Discounted Cash Flow Analysis

PJSC performed a discounted cash flow analysis of the Company by calculating the estimated present value of the standalone unlevered, after-tax free cash flows that the Company was forecasted to generate during the fiscal year ending February 28, 2014 through the full fiscal year ending February 28, 2018 based on the financial forecasts prepared by management of the Company that are disclosed in “Projected Financial Information” beginning on page 54. PJSC believed it appropriate to utilize a range of terminal values from 3.0x to 4.0x for the Company, applied to the estimated EBITDA of the Company for the fiscal year ending February 28, 2018. The cash flows and terminal values were then discounted to present value as of February 28, 2013, using discount rates ranging from 10.5% to 12.5%, which range was selected based on PJSC's professional judgment and after taking into consideration, among other things, an estimate of the Company’s weighted average cost of capital. Based on this data, PJSC selected a valuation range for common shares of $16.00 – $22.00, compared to the $18.20 per share merger consideration to be received by holders of the common shares (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) in connection with the merger.

Present Value of Future Stock Price Analysis

PJSC performed an illustrative analysis of the implied present value of future prices per common share based on a range of multiples selected from a review of the companies referred to in the section above titled “Selected Publicly Traded Company Analysis” and the projected EBITDA, net debt and diluted share count for fiscal years 2014 through 2018 from financial forecasts prepared by management of the Company that are disclosed in “Projected Financial Information” beginning on page 54 to calculate future share prices at each multiple for each fiscal year 2014 through 2018. The future per share prices of Company common shares were then discounted to present values utilizing a discount rate of 13%, reflecting an estimate of the Company’s cost of equity. In order to illustrate total value to shareholders, PJSC incorporated the present value of a $0.15 quarterly dividend every quarter in each fiscal year 2014 through 2018. The values of these dividends were discounted to the present value utilizing a discount rate of 13%, reflecting an estimate of the Company’s cost of equity. Based on the addition of the present value of future share prices and present value of future dividends, PJSC selected a valuation range for Company common shares of $12.75 – $20.00, compared to the $18.20 per share merger consideration to be received by holders of the Company common shares) (other than Family Shareholders, the Company, Merger Sub and holders of dissenting shares) in connection with the merger.

Other

PJSC reviewed the historical closing trading prices and volumes for the Class A common shares for the one-year period ended September 25, 2012. PJSC noted that this review of historical share trading is not a valuation methodology but was presented for informational purposes.


Date	Closing Share Price
9/25/12 (last trading date prior to the announcement of the Weiss Family’s proposal to acquire the Company)	$	14.34
52-Week Low (prior to 9/25/2012)	$	12.50
52-Week High (prior to 9/25/2012)	$	19.50

Other Written Presentations by Peter J. Solomon Company, L.P.

In addition to the presentation made to the special committee on March 28, 2013 described above, PJSC also made written presentations to the special committee on October 26, 2012, November 19, 2012, December 7, 2012, January 27, 2013, February 24, 2013, and March 27, 2013. Each of these presentations has been filed as an exhibit to the Schedule 13E-3 filed with the SEC in connection with the transaction for informational purposes and because they provide background with respect to the final March 28, 2013 presentation and opinion. None of these other written presentations by PJSC, alone or together, constitute an opinion of, or recommendation by, PJSC with respect to a possible transaction or otherwise, and were presented solely for discussion purposes.

Information contained in these other written presentations is substantially similar to the information provided in PJSC’s written presentation to the special committee on March 28, 2013 described above, including

that, among other things, PJSC’s analyses were based on financial information and management’s treasury model, which is management’s consolidated view of the Company’s financial forecast prepared annually by the Company’s treasury department and updated on a periodic basis to reflect material changes to the Company’s financial and operating plan, as they existed as of the dates of the respective presentations, and pro forma adjustments to the Company’s historical and fiscal year 2013 estimated EBIT and EBITDA that the Company’s management discussed with PJSC, as well as on other information that was available at those times, including information from the due diligence conducted by PJSC on the Company to each such date, and on PJSC’s preliminary working assumptions at those times.

The October 26, 2012 materials contained an overview of transaction process, an overview of the work performed by PJSC as of such date, initial observations on the Company, which included the performance of the Company’s stock price over the last five years and subsequent to the initial Weiss family non-binding proposal, an ownership profile of the Company, financial information of the Company, which included financial information based on the Company’s treasury model, and preliminary valuation analyses. The November 19, 2012 materials contained an update on the transaction process, the performance of the Company’s stock price over the last two years and subsequent to the initial Weiss family non-binding proposal, changes in institutional ownership subsequent to the initial Weiss family non-binding proposal, financial information of the Company, which reflected the updated treasury model including management’s expectations for EBIT in fiscal years 2014 and 2015 which had decreased from expectations expressed in the fiscal year 2012 plan, and preliminary valuation analyses, which reflected a downward revised range of terminal multiples based on further consideration by PJSC of the trading valuations of selected relevant publicly traded companies. The December 7, 2012 materials contained an overview of the December 5, 2012 Weiss family proposal, updated review of the Company’s management’s financial forecast, the performance of the Company’s stock price over the last two years and subsequent to the initial Weiss family non-binding proposal, observations regarding the Company’s treasury model presented to PJSC to date and preliminary valuation analyses. The January 27, 2013 materials contained an overview of the Weiss family proposal to date, which included the January 17, 2013 Weiss family proposal, the performance of the Company’s stock price over the last two years and between the initial Weiss family proposal and the revised proposal, an updated review of the financial information of the Company, which included updated financial analyses of the Company based on Company management’s five-year treasury model, taking into account a number of adjustments for unusual or nonrecurring items that the Company’s management had discussed with PJSC, and preliminary valuation analyses, which reflected a slightly downward revised range of terminal multiples. The February 24, 2013 materials contained the performance of the Company’s stock price subsequent to the initial Weiss family proposal, an updated review of the financial information of the Company, which included a review of PJSC’s discussion with Company management, and preliminary valuation analyses, which included revisions from prior analyses based on updated management estimates of the amounts of certain adjustments being considered with respect to fiscal 2013 for purposes of the analyses. The March 27, 2013 materials contained an overview of the transaction, updated financial information, the performance of the Company’s stock price over the last five years and over the last two years, and preliminary valuation analyses.

The valuation analyses contained in these other written presentations made by PJSC included, depending on the presentation and among other things, the following types of valuation analyses: selected publicly traded company analysis, selected precedent transaction analysis, present value of future equity analysis, discounted cash flow analysis, sum-of-the-parts analysis, and leveraged buyout sensitivity analysis.

The financial analyses in these other written presentations were based on the Company’s treasury model, as in effect and provided to PJSC as of the date of the respective presentation, certain pro forma adjustments that the Company’s management had discussed with PJSC through the date of the respective presentation, publicly available information, including financial information, and market, economic and other conditions as they existed as of the dates of the respective presentations as well as other information that was available at those times, including information from the due diligence conducted by PJSC, and PJSC’s preliminary working assumptions at those times. Accordingly, the results of these financial analyses differed due to changes in those conditions. Among other things, the selected publicly traded companies and selected precedent transactions changed as new and updated information became available to PJSC to use in selecting the publicly traded

companies and precedent transactions. Multiples attributable to selected comparable companies changed as those companies’ stock prices and future earnings estimates changed. The discounted cash flows analyses changed as the Company’s financial results became known and the Company’s treasury model and the adjustments being made for unusual or nonrecurring items were updated to reflect the Company’s actual results. Finally, PJSC continued to refine various aspects of its financial analyses with respect to the Company over time.

Miscellaneous

In arriving at PJSC’s opinion, PJSC performed a variety of financial analyses, the material portions of which are summarized above. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances and, therefore, such an opinion is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, PJSC did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to significance and relevance of each analysis and factor. Accordingly, PJSC believes that its analysis must be considered as a whole and that selecting portions of its analysis, without considering all such analyses, could create an incomplete view of the process underlying PJSC’s opinion. In addition, PJSC may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be PJSC’s view of the actual value of the Company.

In performing its analyses, PJSC relied on numerous assumptions made by the Company’s management and made judgments of its own with regard to current and future industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. Any estimates contained in PJSC’s analyses are not necessarily indicative of future results or actual values of the Company, which may be significantly more or less favorable than those suggested by such estimates. Actual values will depend upon several factors, including changes in interest rates, dividend rates, market conditions, general economic conditions and other factors that generally influence the price of securities. The analyses performed by PJSC are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as a part of PJSC’s analysis of the fairness, from a financial point of view, of the consideration to be received by holders of common shares (other than Family Shareholders, Parent, Merger Sub and holders of dissenting shares) and were provided to the Company’s special committee and board of directors in connection with the delivery of PJSC’s oral opinion. The analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities might actually be sold, which are inherently subject to uncertainty. Because such analyses are inherently subject to uncertainty, neither the Company nor PJSC, nor any other person, can guarantee that future results or actual values of the Company will not differ materially from those indicated in PJSC’s analyses. With regard to the publicly traded company analysis and the precedent transaction analysis summarized above, PJSC selected public companies on the basis of various factors for reference purposes only; however, no public company or transaction utilized as a comparison is fully comparable to the Company or the merger. Accordingly, an analysis of the foregoing was not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the selected public companies and other factors that could affect the acquisition or public trading value of the selected public companies and transactions to which the Company and the merger were being compared.

PJSC provided advice to the special committee during the negotiations between the special committee and the Family Shareholders to determine the per share merger consideration, which was recommended to the board by the special committee and approved by the board. PJSC did not, however, recommend any specific amount of consideration to the Company or the special committee or the board or that any specific amount of consideration constituted the only appropriate consideration for the merger.

The special committee retained PJSC based on its qualifications and expertise in providing financial advice and on its reputation as an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. During the two years preceding the date of PJSC’s written opinion, PJSC had not been engaged by or received any compensation from the Company, Parent or any other parties to the merger

(other than amounts that were paid to PJSC under the engagement letter pursuant to which PJSC was retained as financial advisor to the special committee in connection with the merger). Under the terms of PJSC’s engagement letter, dated October 17, 2012, the Company has agreed to pay PJSC for its services in connection with the merger aggregate fees of up to $6.0 million, which include a $500,000 retainer fee, a fee of $1.5 million payable in connection with PJSC’s delivery of its opinion, a $2 million transaction fee to be paid contingent upon consummation of the merger, and a potential additional discretionary fee of up to $2 million to be paid by the Company at the special committee’s sole discretion, of which the special committee has instructed the Company to pay $1 million to-date. The Company also has agreed to reimburse PJSC for its reasonable and documented out-of-pocket expenses (including any reasonable fees and disbursements of PJSC’s counsel) incurred in connection with PJSC’s engagement, and to indemnify PJSC and its affiliates, and their respective directors, officers, members, partners, controlling persons, agents and employees against specified liabilities.

In the future PJSC may provide financial advisory services to the Company and its affiliates and in the future PJSC may receive compensation for rendering these services. The issuance of PJSC’s opinion was authorized by PJSC’s fairness opinion committee.

Purposes and Reasons of Family LLC, Parent, Merger Sub and the Family Shareholders for the Merger

Under the SEC rules governing “going-private” transactions, each of Family LLC, Parent, Merger Sub and the Family Shareholders is an affiliate of the Company and, therefore, required to express their purposes and reasons for the merger to the unaffiliated shareholders of the Company, as defined in Rule 13e-3 of the Exchange Act. Family LLC, Parent, Merger Sub and the Family Shareholders are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

As stated in their initial proposal letter for the merger, the Weiss Family decided to pursue the merger because after careful consideration it has concluded that, at this time in the Company’s operating history, the best course of action for the Company is to return to its roots as a family owned business. The Weiss Family believes that the Company can be operated more effectively as a privately owned company for a number of reasons, including the Family Shareholders’ belief that:

•

the Company will have greater operating flexibility, allowing management to concentrate on long-term growth and reduce the focus on the quarter-to-quarter performance often emphasized by the public markets;

•

management will benefit from eliminating certain costs and duties associated with managing a publicly traded company, enabling it to devote more of its time, energy and financial resources to focus on the Company’s long-term growth strategies;

•

as unit sales in paper greetings cards have been flat to declining, the Company needs to substantially redirect capital toward reinvestment in the business;

^¡

versus an historical capital expenditures rate of approximately $50 million per year, up to approximately $446 million will be required over the next five years to:

•

invest in emerging channels of distribution for social expressions products such as the Company’s Cardstore business or other emerging channels of distribution;

•

invest in information systems technology; and

•

upgrade the current world headquarters, which is approximately 60 years old, or invest in a new world headquarters;

^¡

for information concerning the Company’s financial projections, see “Special Factors—Projected Financial Information” beginning on page 54;

•

the Company’s largest competitor is privately held and able to invest and reinvest in its business without the pressure to produce period-over-period earnings and cash flow growth.

For Family LLC, Parent, Merger Sub and the Family Shareholders, the purpose of the merger is to benefit from any future earnings and growth of the Company after the merger of Merger Sub with and into the Company,

making the Company privately held and wholly owned by Parent. Family LLC, Parent, Merger Sub and the Family Shareholders believe that structuring the transaction in the manner described in this proxy statement is preferable to other transaction structures because it will enable Parent to acquire all of the common shares while, at the same time enabling the public shareholders to realize immediately the value of their investment in the Company through their receipt of the $18.20 per share merger consideration in cash, without interest. In addition, the merger will (i) allow the Family Shareholders to maintain their investment in the Company through their equity investment in Parent via the rollover of all of their existing holdings of Class A common shares and Class B common shares as described in the “Special Factors – Financing – Rollover Financing” section beginning on page 56, and (ii) enable the Weiss Family to maintain a leadership role with the surviving corporation. For these reasons, Family LLC, Parent, Merger Sub and the Family Shareholders believe that private ownership is in the best interests of the business and that the merger is in the best interests of the Company’s shareholders.

Position of Family LLC, Parent, Merger Sub and the Family Shareholders as to Fairness of the Merger

Under the SEC rules governing “going-private” transactions, the Family Shareholders are affiliates of the Company and, therefore, required to express their beliefs as to the substantive and procedural fairness of the merger to the unaffiliated shareholders of the Company. The Family Shareholders are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

As described below, the Family Shareholders believe that the merger is fair to the unaffiliated shareholders of the Company on the basis of (i) the factors described in the “Special Factors – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger” section beginning on page 33, which factors Family LLC, Parent, Merger Sub and the Family Shareholders agree with and adopt, and (ii) the additional factors described below. In this section, when we refer to the “board of directors” and “board,” we are referring to the board of directors other than the Family Shareholder directors (who recused themselves from the board’s vote on the merger).

None of Family LLC, Parent, Merger Sub or the Family Shareholders participated in the deliberations of the special committee or the vote of the board of directors regarding, or received advice from the Company’s legal advisor or the special committee’s legal or financial advisors as to, the fairness of the merger. As described in the “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” section beginning on page 62, the Family Shareholders have interests in the merger different from those of the unaffiliated shareholders of the Company by virtue of the Family Shareholders’ obligation to make an equity investment in Parent via the rollover of all of their existing holdings of Class A common shares and Class B common shares and the Weiss Family’s continuing leadership role in the surviving corporation.

The unaffiliated shareholders were represented by the special committee, which negotiated the terms and conditions of the merger agreement with the assistance of the special committee’s legal and financial advisors. None of Family LLC, Parent, Merger Sub or the Family Shareholders have performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the merger to the unaffiliated shareholders of the Company. The Weiss Family and Parent engaged KeyBanc Capital Markets as a financial advisor in connection with negotiating the terms of the merger and the financing for the merger. However, KeyBanc Capital Markets did not provide any opinion with respect to the fairness of the merger consideration.

Based on the Family Shareholders’ knowledge and analysis of available information regarding the Company, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and the analysis and resulting conclusions of, the board of directors and the special committee described in the “Special Factors – Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger” section beginning on page 33 (including, without limitation, the board’s and special committee’s analysis with respect to the Company’s going concern value), with which Family LLC, Parent, Merger Sub and the Family Shareholders agree and which analysis and resulting conclusions Family LLC, Parent, Merger Sub and the Family Shareholders adopt, Family LLC, Parent, Merger Sub and the Family Shareholders believe that the

merger is substantively fair to the unaffiliated shareholders of the Company. In particular, Family LLC, Parent, Merger Sub and the Family Shareholders considered the following:

•

other than their receipt of board of directors and special committee fees (which are not contingent upon the consummation of the merger or the special committee’s or the board’s recommendation or approval of the merger) and their interests described in the “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” section beginning on page 62, no member of the board or the special committee has a financial interest in the merger that is different from, or in addition to, the interests of the unaffiliated shareholders generally, although the merger agreement does include customary provisions for indemnity and the continuation of liability insurance for the Company’s officers and directors;

•

the board of directors determined, by the unanimous vote of all members of the board, based in part on the unanimous recommendation of the special committee, that the merger is fair to, and in the best interests of, the Company and its unaffiliated shareholders;

•

the $18.20 per share merger consideration represents a 26.9% premium to the closing price of the Company’s Class A common shares on September 25, 2012, the last trading day before the announcement by the Weiss Family of their initial proposal to acquire the Company;

•

the $18.20 per share merger consideration represents an approximately 27.5% premium over the average closing price of the Company’s Class A common shares for the 45 trading days prior to September 25, 2012, the last trading day before the announcement by the Weiss Family of their initial proposal to acquire the Company;

•

the merger will provide consideration to the unaffiliated shareholders of the Company entirely in cash, allowing the unaffiliated shareholders of the Company to realize immediately a certain and fair value for their Class A common shares and eliminating any uncertainty in valuing the consideration to be received by those shareholders; and

•

that there are no unusual requirements or conditions to the merger, and Merger Sub has received a Debt Commitment Letter and Parent has entered into the Preferred Stock Purchase Agreement in connection with the Non-Voting Preferred Equity Investment, in each case, as described in the “Special Factors – Financing” section beginning on page 56, to provide the financing necessary to consummate the merger expeditiously, each increasing the likelihood that the merger will be consummated and that the consideration to be paid to the unaffiliated shareholders of the Company in the merger will be received.

Family LLC, Parent, Merger Sub and the Family Shareholders did not establish, and did not consider, a pre-merger public company going concern value of Class A common shares for the purposes of determining the per share merger consideration or the fairness of the per share merger consideration to the unaffiliated shareholders of the Company because, following the merger, the Company will have a significantly different capital structure. However, to the extent the pre-merger going concern value was reflected in the pre-announcement per share price of Class A common shares, the $18.20 per share merger consideration represented a premium to the going concern value of the Company. In addition, Family LLC, Parent, Merger Sub and the Family Shareholders did not consider the net book value of Class A common shares because they believe that net book value, which is an accounting concept, does not reflect, or have any meaningful impact on, either the market trading prices of Class A common shares or the Company’s value as a going concern. Family LLC, Parent, Merger Sub and the Family Shareholders did not consider liquidation value in determining the fairness of the merger to the unaffiliated shareholders of the Company because of their belief that liquidation sales generally result in proceeds substantially less than sales of a going concern, because of the impracticability of determining a liquidation value given the significant execution risk involved in any breakup, because they considered the Company to be a viable, going concern and because the Company is expected to continue to operate its business following the merger.

Family LLC, Parent, Merger Sub and the Family Shareholders believe that the merger is procedurally fair to the unaffiliated shareholders of the Company based upon the following:

•

the special committee, consisting solely of directors who are not officers or employees of the Company and who are not affiliated with the Family Shareholders, Family LLC, Parent, or Merger Sub, and who

have no financial interest in the merger that is different from, or in addition to, the interests of the unaffiliated shareholders generally, other than their receipt of board of directors and special committee fees (which are not contingent upon the consummation of the merger or the special committee’s or the Board’s recommendation or approval of the merger) and their interests described in the “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” section beginning on page 62, was given exclusive authority to, among other things, review, evaluate and negotiate the terms of the proposed merger, to decide whether or not to engage in the merger and to consider alternatives to the merger;

•

the special committee retained its own nationally recognized independent legal and financial advisors;

•

the special committee and its advisors conducted an extensive due diligence investigation of the Company before commencing negotiations, which the Family Shareholders believe provided the special committee with the information necessary to represent effectively the interests of the unaffiliated shareholders;

•

the $18.20 per share merger consideration, and the other terms and conditions of the merger agreement, resulted from extensive negotiations between the Family Shareholders and its advisors, on the one hand, and the special committee and its advisors, on the other hand;

•

the special committee was deliberate in its process, taking approximately six months to analyze and evaluate the Weiss Family’s initial proposal and consider alternatives and to negotiate with the Family Shareholders the terms of the proposed merger, ultimately resulting in a $1.02 increase in the per share merger consideration to be paid in connection with the merger over that initially proposed by the Family Shareholders;

•

the special committee requested and received from PJSC an opinion, dated March 28, 2013, that as of such date and based on, and subject to, various assumptions and limitations described in its opinion, the $18.20 per share merger consideration to be received by holders of common shares (other than the Family Shareholders, Parent, Merger Sub and holders of dissenting shares) was fair, from a financial point of view, to such holders;

•

the merger was approved by the unanimous vote of the board of directors (with the Family Shareholder directors abstaining), based in part on the unanimous recommendation of the special committee; and

•

the merger is subject to a condition requiring an affirmative vote of the holders of issued and outstanding common shares (with each Class B common share entitled to only one vote) held by shareholders other than the Family Shareholders, the Irving I. Stone Foundation and directors or executive officers of the Company, voting together as a single class.

While members of the Weiss Family are officers and directors of the Company, because of their participation in the transaction as described in the “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” section beginning on page 62, they did not serve on the special committee, nor did they participate in, or vote in connection with, the special committee’s evaluation or recommendation of the merger agreement and the merger or the board’s approval of the merger agreement and the merger. For these reasons, the Weiss Family does not believe that their or any other Family Shareholders’ interests in the merger influenced the decision of the special committee or the board with respect to the merger agreement or the merger.

The foregoing discussion of the information and factors considered and given weight by Family LLC, Parent, Merger Sub and the Family Shareholders in connection with the fairness of the merger agreement and the merger is not intended to be exhaustive but is believed to include all material factors considered by them. Family LLC, Parent, Merger Sub and the Family Shareholders did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their position as to the fairness of the merger agreement and the merger. Rather, each of Family LLC, Parent, Merger Sub and the Family Shareholders made its fairness determination after considering all of the foregoing as a whole. Family LLC, Parent, Merger Sub and the Family Shareholders believe these factors provide a reasonable basis upon which to form their belief that the merger is fair to the unaffiliated shareholders of the Company. This belief should not, however, be construed as a recommendation to any Company shareholder to approve the merger or adopt the merger

agreement. None of Family LLC, Parent, Merger Sub or any Family Shareholder makes any recommendation as to how shareholders of the Company should vote their common shares relating to the merger.

Certain Effects of the Merger

If the Company shareholder approval and majority of the minority shareholder approval are obtained and the other conditions to the closing of the merger are either satisfied or waived, Merger Sub will be merged with and into the Company with the Company being the surviving corporation. If the merger is completed, all of our equity interests will be owned by Parent. Except for the Family Shareholders and any other person who may have a beneficial ownership interest in the Company as of the closing of the merger, through their interest in Parent, none of our current shareholders will have any ownership interest in, or be a shareholder of, the Company after the completion of the merger. As a result, our current shareholders (other than the Family Shareholders and any other person who may have an ownership interest in Parent) will no longer benefit from any increase in our value, nor will they bear the risk of any decrease in our value. Following the merger, Parent will benefit from any increase in our value and also will bear the risk of any decrease in our value.

Upon the consummation of the merger:

•

each issued and outstanding common share held by shareholders (other than the Family Shareholders and holders of dissenting shares) immediately prior to the effective time of the merger will be converted automatically into and will represent the right to receive the $18.20 per share merger consideration in cash, without interest, and each such share will otherwise cease to be outstanding and will otherwise automatically be cancelled and cease to exist;

•

each issued and outstanding common share that is owned by the Family Shareholders (all of which shares will, immediately prior to the effective time of the merger, be held by Parent pursuant to the rollover and contribution agreement, as defined below and described in the “Agreements Involving Common Shares – Rollover and Contribution Agreement” section beginning on page 94) immediately prior to the effective time of the merger, will cease to be outstanding and will automatically be cancelled and will cease to exist;

•

each option to purchase common shares, if any, held by the Family Shareholders immediately prior to the closing of the merger will be cancelled at the closing of the merger without the payment of any consideration;

•

each other option to purchase common shares outstanding immediately prior to the closing of the merger will be cancelled at the closing of the merger in exchange for a cash payment (for any such option with a per share exercise price less than $18.20, the cash payment will equal the product of (x) the excess of $18.20 over the per share exercise price and (y) the number of Company common shares subject to that option immediately prior to its cancellation, and for any such option with a per share exercise price that equals or exceeds $18.20, the amount of the cash payment will be based on the Black-Scholes value of the option using certain assumptions described below under “Special Factors – Interests of the Company’s Directors and Executive Officers in the Mergers – Company Stock Options, Company Restricted Stock Units and Company Performance Shares” beginning on page 63;

•

each restricted stock unit and each performance share relating to common shares, if any, held by the Family Shareholders immediately prior to the closing of the merger will be cancelled at the closing of the merger without the payment of any consideration;

•

each restricted stock unit held by a member of the board of directors (other than the Family Shareholder directors) and outstanding immediately prior to the closing of the merger will fully vest and be settled for a cash payment equal to $18.20 and paid at the time provided under the applicable restricted stock unit award agreement and/or Company equity plan; and

•

each other restricted stock unit and each performance share outstanding immediately prior to the closing of the merger will continue to be subject to the same terms and conditions (including vesting terms) as applied immediately before the closing of the merger, except that the applicable award will represent only the right to receive an amount of cash, instead of common shares, calculated by reference to a per share reference price of $18.20.

The Company does not expect to grant any equity awards under the existing Company equity plans following the closing of the merger.

Following the merger, all of the equity interests in the surviving corporation will ultimately be owned by Parent. If the merger is completed, the Weiss Family and the other beneficial owners of Parent will be the sole beneficiaries of our future earnings and growth, if any, and will be entitled to vote on corporate matters affecting the Company following the merger. Similarly, the Weiss Family and the other shareholders of Parent will also bear the risks of ongoing operations, including the risks of any decrease in our value after the merger and the operational and other risks related to the incurrence by the surviving corporation of additional debt as described below under “Special Factors – Financing” beginning on page 56.

If the merger is completed, the Company’s shareholders other than the Family Shareholders and any other person who may have a beneficial ownership interest in Parent will have no interest in the Company’s net book value or net earnings.

As a result of and upon consummation of the merger, the Company will be 100% owned by Parent. Following the merger, the Weiss Family and the other Family Shareholders will hold their interests in the Company indirectly through Family LLC, and Family LLC (and thereby indirectly the Family Shareholders) will own 100% of the common equity and voting equity of Parent. The following table sets forth, among other things, the percentage ownership of the Company by Family LLC and each of the Family Shareholders pre- and post-merger, as well as the interest in the net book value and net earnings of the Company of Family LLC and each of the Family Shareholders pre-and post-merger.


	Ownership Prior to the Merger
	*Net Book Value*								*Net Income*
	*2/29/12*				*2/28/13*				*2/29/12*				*2/28/13*
	%		$(000’s)		%		$(000’s)		%		$(000’s)		%		$(000’s)
Family Shareholders		6.0		43,647		7.2		49,095		6.0		3,432		7.2		3,594

	Ownership Immediately After the Merger
	*Net Book Value*								*Net Income*
	*2/29/12*				*2/28/13*				*2/29/12*				*2/28/13*
	%		$(000’s)		%		$(000’s)		%		$(000’s)		%		$(000’s)
Family Shareholders		100		727,458		100		681,877		100		57,198		100		49,918

At the closing, Koch AG Investment will hold between $215.6 million and $254.8 million in aggregate stated value of non-voting preferred stock of Parent. The preferred stock is non-voting and does not include a right to any board seats in Parent or the Company, but does have limited consent rights with respect to certain significant corporate actions proposed to be taken by Parent and the Company. Subject to certain conditions, all or part of the preferred stock can be redeemed by the Family Shareholders, at their election, at any time and from time to time, by paying a specified preference amount. For more information, see “Special Factors—Financing—Koch AG Investment Non-Voting Preferred Equity Financing” beginning on page 57.

The primary benefit of the merger to the unaffiliated shareholders of the Company will be the right of those shareholders to receive a cash payment of $18.20, without interest, for each Class A common share held by those shareholders as described above, representing a premium of 26.9% to the closing price of the Class A common shares on September 25, 2012, the last trading day before the announcement by the Weiss Family of its proposal to acquire all outstanding common shares not owned by it, and a premium of approximately 27.5% over the average closing price of the Company’s Class A common shares for the 45 trading days prior to that date.

The primary detriments of the merger to the unaffiliated shareholders of the Company will include the lack of interest of such shareholders in our potential future earnings, growth or value. Additionally, the receipt of cash in exchange for common shares pursuant to the merger will generally be a taxable sale transaction for U.S. federal income tax purposes to many of our shareholders who surrender their common shares in the merger.

In connection with the merger, the Family Shareholders and their permitted assignees or designees will receive benefits and be subject to obligations that are different from, or in addition to, the benefits received by

our shareholders generally. The primary benefits of the merger to the Family Shareholders, based on their indirect ownership of all of the common equity interests in Parent, will include their interest in our potential future earnings and growth which, if they successfully execute their business strategies, could be substantial. Additionally, following the merger, we will be a private company, and as such will be relieved of the burdens imposed on companies with publicly traded equity, including the requirements and restrictions on trading that our directors, officers and beneficial owners of more than 10% of our common shares face as a result of the provisions of Section 16 of the Exchange Act and the requirement of furnishing a proxy statement in connection with shareholders’ meetings pursuant to Section 14(a) of the Exchange Act. Termination of registration of our common shares under the Exchange Act also will reduce substantially the information required to be furnished by the Company to our shareholders and the SEC; the Company expects, however, that it will continue to file reports with the SEC pursuant to requirements contained in the 2021 senior notes indenture. It is estimated that the Company will have reduced expenses of approximately $1.4 million per year as a result of no longer being a publicly traded company. Additionally, following the merger, the Weiss Family will control the surviving corporation. Additional anticipated benefits to the Weiss Family include receiving tax-free treatment with respect to the contribution of common shares in the transaction pursuant to the rollover and contribution agreement discussed under “Agreements Involving Common Shares – Rollover and Contribution Agreement” beginning on page 94.

The primary detriments of the merger to the Family Shareholders include that all of the risk of any possible decrease in our earnings, growth or value, and all of the risks related to our additional indebtedness, following the merger will be borne by Parent. Additionally, the investment by the Weiss Family and the other investors in Parent and the Company will not be liquid, with no public trading market for such securities, and the equity securities of Parent and the Company will be subject to contractual restrictions on transfer.

In connection with the merger, certain members of the Company’s management will receive benefits and be subject to obligations that are different from, or in addition to, the benefits and obligations of the Company’s shareholders generally, as described in more detail under “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 62. Those incremental benefits are expected to include, among others, certain executive officers continuing as executive officers of the surviving corporation.

The Class A common shares and the Class B common shares are currently registered under the Exchange Act and the Class A common shares are quoted on the NYSE under the symbol “AM”. As a result of the merger, the Company will be a privately held corporation and there will be no public market for its shares. After the merger, the Class A common shares will cease to be quoted on the NYSE and price quotations with respect to sales of Class A common shares in the public market will no longer be available. In addition, registration of the Class A common shares and the Class B common shares under the Exchange Act will be terminated.

At the effective time of the merger, the articles of incorporation and code of regulations of the Company will be amended and restated to be in the form of (except with respect to the name of the Company) the articles of incorporation and code of regulations of Merger Sub, and, as so amended, will be the articles of incorporation and code of regulations of the Company following the merger until thereafter amended in accordance with their respective terms and Ohio law.

Parent anticipates that the Company’s executive officers as of the effective time of the merger will continue as the initial officers of the Company following the merger.

Projected Financial Information

As part of its annual financial planning process, the Company prepares management projections and budgets for its upcoming fiscal year and multi-year treasury models, which the Company then updates from time to time. At the time of its receipt of the Family Shareholders’ proposal in September 2012, the Company did not have a consolidated set of projections that would suit the needs of the special committee or its advisors or otherwise be useful for purposes of evaluating a potential transaction. Management does not generally update multi-year projections throughout the year, and the projections established earlier in the year were no longer accurate because of intervening significant changes resulting from the Company’s acquisition of the Clinton Cards business. The Company’s management determined that the treasury model was the most up to date and, together with PJSC, determined that it was the appropriate basis for preparing consolidated projections for purposes of the special

committee’s evaluation of a potential transaction. From October through the end of November 2012, the Company’s financial management worked to update the model for recent events, incorporate information from the Company’s fiscal 2013 operating and financial plan, and otherwise confirm that the various assumptions underlying the model were appropriate for purposes of presenting a consolidated set of projections useful for purposes of evaluating a potential transaction. The Company’s management also extended the model to five years from the previously existing three years. On November 30, 2012, the updated treasury model was provided to the special committee and its advisors, and the projections derived therefrom are included below. This updated treasury model was also provided to the advisors to the Family Shareholders and their potential financing sources. From November 2012 through February 2013, the Company’s management provided the special committee with information and estimates regarding developments with respect to fiscal 2013 that may affect PJSC’s analyses, which are reflected in the projections set forth below for fiscal 2013 EBITDA and EBIT and discussed in the accompanying footnote. All financial documentation and information referenced above also was provided to the special committee’s financial advisor, PJSC. The Company does not, as a matter of course, publicly disclose projected financial information.

We have included these projections solely for the purpose of giving our shareholders access to certain nonpublic information considered by the special committee in evaluating the merger. The projections are, in general, prepared solely for internal use in assessing strategic direction, related capital and resource needs and allocations and other management decisions. Projections of this type are based on estimates and assumptions that, in many cases, reflect subjective judgment, and which are subject to significant uncertainties and contingencies, including greeting card and other social expression industry performance, general business, economic, regulatory, market and financial conditions, as well as changes to the business, financial condition and results of operations of the Company. In addition, the Company’s financial results in recent years have been significantly affected by non-recurring, one-time and other special items, which makes it difficult to identify clear trends in the Company’s business and the Company’s financial future. These factors, which may prevent the financial projections or underlying assumptions from being realized, are difficult to predict, and many of them are beyond the Company’s control. Therefore, the projections are forward-looking statements and should be read with caution. See “Cautionary Statement Concerning Forward-Looking Information,” beginning on page 69.

The projections cover multiple years and such information is necessarily less predictive with each successive year. Consequently, there can be no assurance that the underlying assumptions will prove to be accurate, that the projected results will be realized or that actual results will not be significantly different than projected. These projections were prepared solely for internal use and not for publication or with a view toward complying with the published guidelines of the SEC regarding projections or with guidelines established by the American Institute of Certified Public Accountants or any other organization for preparation and presentation of prospective financial information. Our independent registered public accounting firm has not examined, compiled or otherwise applied procedures to the financial projections presented herein and, accordingly, has not, and does not, express an opinion or any other form of assurance with respect to them. The merger agreement includes no representations by the Company or its management as to this projected financial information. In light of the uncertainties inherent in projections of this type, neither the Company nor any other person has expressed any opinion or assurance to shareholders on this information or its achievability, and the inclusion of this information should not be regarded as an indication that the Company, the special committee, the Family Shareholders, any of their representatives or anyone who received this information then considered, or now considers, it necessarily to be predictive of actual future events.

The projections do not reflect any impact of the merger, nor do they take into account the effect of any failure of the merger to occur. None of the Company, the special committee, the Family Shareholders or any of their respective representatives intends to update or revise the summary projected financial information set forth below to reflect circumstances existing after the date when made, except as may be required by applicable securities laws.

Summary Projected Financial Performance


(Amounts in Millions)
	Projected Fiscal Year Ended February 28,
	2013E			2014E			2015E			2016E			2017E			2018E
Total Revenue	$	1,840.6		$	1,935.1		$	1,939.9		$	1,944.8		$	1,949.6		$	1,954.5
Gross Profit		1,028.9			1,083.6			1,088.3			1,093.0			1,097.6			1,102.3
EBITDA^(a)		201.0			208.5			221.4			230.5			238.0			244.2
EBIT^(a)		155.5			150.8			157.0			163.3			169.5			175.8
Net Income	$	37.3		$	83.4		$	87.8		$	91.4		$	95.4		$	99.4
Depreciation and Amortization	$	45.5		$	57.7		$	64.4		$	67.2		$	68.4		$	68.4
Capital Expenditures^(b)		(127.8	)		(169.2	)		(139.1	)		(46.0	)		(46.0	)		(46.0	)
Operating Free Cash Flow^(c)		16.4			(9.5	)		34.7			137.1			137.9			142.0

(a)

In connection with the analyses performed by the special committee and its advisors, adjustments were made from the model projections for fiscal 2013 to account for the estimated impacts of certain unusual or nonrecurring items or events. The total amount of such adjustments increased projected earnings by $75.7 million, which adjustments, together with the associated projected increase in earnings, are reflected in estimated fiscal 2013 EBITDA and EBIT in the above table. The material adjustments include certain charges associated with the Clinton Cards transaction, an estimated loss associated with the potential sale of the world headquarters (which had been assumed for purposes of the treasury model), the impact of scan-based trading conversions and certain legal expenses.

(b)

The projections assume the completion of the Company’s world headquarters project. Capital expenditures in this table include $18.3 million (2013), $91.5 million (2014) and $65.5 million (2015) of estimated capital expenditures for a new world headquarters. On November 28, 2012, the Company published a press release announcing that it was temporarily delaying the project in light of the proposal from the Family Shareholders, but that it still intends to develop the headquarters. The projections do not include capital expenditures that would be required to refurbish and update the current headquarters facility if the new headquarters were not pursued.

(c)	Defined as Cash Flow from Operating Activities Less Capital Expenditures.

Financing

•

the rollover of the Class A common shares and Class B common shares held by the Family Shareholders immediately prior to the merger (representing approximately 2,311,499 common shares, the equivalent of an investment of approximately $42,069,282 based upon the $18.20 per share merger consideration), which is described in the “Special Factors – Financing – Rollover Financing” section beginning on page 56;

•

a non-voting preferred equity investment in Parent by Koch AG Investment, in an amount between $215.6 million and $254.8 million, referred to herein as the “Non-Voting Preferred Equity Investment”, which is described in the “Special Factors—Financing—Koch AG Investment Non-Voting Preferred Equity Financing” section beginning on page 57; and

•

debt financing in the form of a $400.0 million term loan and a $200.0 million revolving credit facility (which revolving credit facility may be used for the merger only in respect of Parent’s obligation to pay certain contingent financing fees), referred to herein as the “Debt Financing”, which is described in the “Special Factors – Financing – Debt Financing” section beginning on page 60;

together with cash of the Company at the closing of the merger.

Rollover Financing

On March 29, 2013, the Family Shareholders entered into the rollover and contribution agreement with Family LLC and Parent (the “rollover and contribution agreement”), pursuant to which the Family Shareholders collectively committed to contribute, immediately prior to the consummation of the merger, an aggregate amount of 2,311,499 Class A common shares and Class B common shares (including 30,432 Class A common shares and Class B common shares issued on May 2, 2013 and May 3, 2013, to Morry Weiss, Zev Weiss, Jeffrey Weiss and Gary Weiss in respect of 55,889 restricted stock units granted to them under the 2007 plan) to Family LLC (the equivalent of a $42,069,282 investment based on the $18.20 per share merger consideration) in exchange for certain

equity securities of Family LLC. Also pursuant to the rollover and contribution agreement, Family LLC agreed to contribute the shares described above to Parent, in exchange for all of the common shares of Parent.

The obligations of the Family Shareholders, Family LLC and Parent pursuant to the rollover and contribution agreement are conditioned upon the satisfaction or waiver of the conditions to the obligations of Parent, Merger Sub and the Company under the merger agreement described in the “Merger Agreement – Conditions to the Merger” section beginning on page 90. If the transactions provided for in the rollover and contribution agreement are consummated but the merger agreement is terminated in accordance with its terms as described in the “Merger Agreement – Termination” section beginning on page 91, then the transactions provided for in the rollover and contribution agreement will be void and deemed not to have occurred.

The Company is an express third-party beneficiary of the rollover and contribution agreement solely with respect to a right to seek specific performance of the rollover and contribution agreement by Parent if (i) the conditions to Parent’s and Merger Sub’s obligations under the merger agreement have been satisfied, (ii) the conditions to funding under each of the Non-Voting Preferred Equity Investment and the Debt Financing have been satisfied, (iii) Parent and Merger Sub fail to complete the closing of the merger in accordance with the merger agreement and (iv) the Company has irrevocably confirmed that if specific performance is granted and the Non-Voting Preferred Equity Investment and the Debt Financing is funded then the Company will take the actions required of it by the merger agreement to cause the closing of the merger to occur.

Koch AG Investment Non-Voting Preferred Equity Financing

On March 29, 2013, Koch AG Investment entered into a Series A Preferred Stock Purchase Agreement, which we refer to as the “Preferred Stock Purchase Agreement,” with Parent, and with Morry Weiss, Zev Weiss and Jeffrey Weiss as the guarantors of certain of Parent’s obligations thereunder and with Koch Industries, Inc. as the guarantor of certain of Koch AG Investment’s obligations thereunder. Pursuant to the Preferred Stock Purchase Agreement, Koch AG Investment committed to purchase, immediately prior to the consummation of the merger, between $215.6 million and $254.8 million of non-voting preferred equity securities of Parent. The amount of the non-voting preferred equity securities to be sold to Koch AG Investment will be elected at the discretion of Parent at least 15 days prior to the anticipated closing date of the merger, but in no event will be less than $215.6 million nor greater than $254.8 million without the consent of Koch AG Investment.

The obligations of Koch AG Investment and Parent to consummate the Non-Voting Preferred Equity Investment are subject to satisfaction or waiver by Koch AG Investment and Parent at or prior to the closing of the condition that no restraining order, preliminary or permanent injunction or other order, decision, opinion, decree or ruling issued by a court of competent jurisdiction or other governmental entity be in effect, and no laws have been enacted, entered or enforced since the date of the Preferred Stock Purchase Agreement, preventing, or making illegal, the issuance and sale of the non-voting preferred stock of Parent and the consummation of the other transactions contemplated by the Preferred Stock Purchase Agreement.

The obligation of Parent to consummate the transactions contemplated by the Preferred Stock Purchase Agreement is further subject to the satisfaction or waiver in writing by Parent at or prior to the closing of the following conditions:

•

A stockholders agreement (in the form previously agreed between Parent and Koch AG Investment, which we refer to as the “Stockholders Agreement”) will have been executed and delivered by Koch AG Investment (with such changes as are agreed to by Parent and the other parties thereto);

•

All of (i) the conditions to closing of the merger and the other transactions expressly contemplated by the merger agreement will have been satisfied or waived in accordance with the terms of the merger agreement and (ii) the merger and the other transactions contemplated by the merger agreement (other than those transactions that by their nature are to be consummated following the closing of the merger) will be consummated concurrently with the closing in accordance with the terms of the merger agreement;

•

The representations and warranties of Koch AG Investment contained in Article IV of the Preferred Stock Purchase Agreement will be true and correct in all material respects (other than representations and

warranties that are qualified by materiality, material adverse effect or words of similar import, which representations and warranties will be true and correct in all respects) at and as of the date of the Preferred Stock Purchase Agreement and at and as of the closing date as though made at and as of the closing date, and Koch AG Investment will have delivered to Parent a certificate, dated as of the closing date and signed by its Chief Executive Officer or another senior executive officer of Koch AG Investment, certifying that this condition has been satisfied; and

•

Koch AG Investment will have in all material respects performed all obligations and complied with all covenants required by the Preferred Stock Purchase Agreement to be performed or complied with by it at or prior to the closing, and Koch AG Investment will have delivered to Parent a certificate, dated as of the closing date and signed by its Chief Executive Officer or another senior executive officer of Koch AG Investment, certifying that this condition has been satisfied.

The obligation of Koch AG Investment to consummate the transactions contemplated by the Preferred Stock Purchase Agreement is further subject to the satisfaction or waiver in writing by Koch AG Investment at or prior to the closing of the following conditions:

•

The Stockholders Agreement will have been executed and delivered by Parent and the other parties thereto (other than Koch AG Investment) (with such changes as are agreed to by Koch AG Investment and the other parties thereto);

•

The amended and restated certificate of incorporation of Parent, in the form previously agreed between Parent and Koch AG Investment, which we refer to as the “Charter” will have been filed with the Secretary of State of the State of Delaware;

•

Koch AG Investment will have received from Parent (i) a copy of the Charter, certified by the Secretary of State of the State of Delaware to be true and complete as of a date no more than five days prior to the closing date; (ii) a certificate, dated not more than five days prior to the closing date, of the Secretary of State of the State of Delaware as to Parent’s good standing; and (iii) certificates representing the non-voting preferred shares of Parent purchased by Koch AG Investment, signed in accordance with the bylaws of Parent;

•

Koch AG Investment will have received from Jones Day a favorable opinion (in the form previously agreed between Parent and Koch AG Investment), dated as of the closing date, concerning certain aspects of the Non-Voting Preferred Equity Investment;

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The representations and warranties of Parent contained in Article III of the Preferred Stock Purchase Agreement (excluding (a) those regarding certain violations, authorizations, investigations and litigation, (b) the representations of the Company, Parent and Merger Sub in the merger agreement and (c) certain representations regarding the Company’s SEC filings, internal controls, compliance with certain laws and absence of changes, which will not have any effect on Koch AG Investment’s obligation to consummate the transactions contemplated by the Preferred Stock Purchase Agreement with respect to the condition described in this paragraph) will be true and correct in all material respects (other than representations and warranties that are qualified by materiality, material adverse effect or words of similar import, which representations and warranties will be true and correct in all respects) at and as of the date of the Preferred Stock Purchase Agreement and at and as of the closing date as though made at and as of the closing date; provided, however, that the representations and warranties regarding capital stock of Parent will be so true and correct in all respects; provided, further, however, that representations and warranties that are made as of a specified date or period will be so true and correct as described above only as of such specified date or period, and Parent will have delivered to Koch AG Investment a certificate, dated as of the closing date and signed by its Chief Executive Officer or another senior executive officer of Parent, certifying that this condition has been satisfied;

•

Parent will have in all material respects performed all obligations and complied with all covenants required by the Preferred Stock Purchase Agreement to be performed or complied with by it at or prior to the closing, and Parent will have delivered to Koch AG Investment a certificate, dated as of the closing date and signed by its Chief Executive Officer or another senior executive officer of Parent, certifying that this condition has been satisfied;

•

Since March 29, 2013, there will not have been any material adverse effect with respect to the Company, subject to certain exceptions contained in the disclosure schedules to the merger agreement;

•

(i) All of the conditions to closing of the merger and the other transactions contemplated by the merger agreement will have been satisfied in accordance with the terms of the merger agreement, without any amendment or waiver of any provision thereof that has not been consented to by Koch AG Investment, (ii) the merger will be consummated concurrently with the closing in accordance with the terms of the merger agreement, without any amendment or waiver of any provision thereof that has not been consented to by Koch AG Investment, and (iii) (x) all of the Class A common shares and Class B common shares subject to the rollover and contribution agreement will have been contributed to Parent in accordance with the terms of the rollover and contribution agreement or otherwise and (y) the Family Shareholders will own all of the issued and outstanding membership units in Family LLC;

•

The proceeds of the Debt Financing will have been received by Parent and Merger Sub (or will be received concurrently with the closing and the consummation of the merger) in all material respects on the terms set forth in the Debt Commitment Letter as in effect on March 29, 2013 (or as amended with the consent of Koch AG Investment) and pursuant to such documentation in the form contemplated by the Debt Commitment Letter or pursuant to any alternate financing entered into in accordance with the merger agreement without regard to any Parent approval that would result in such alternative financing otherwise failing to be in accordance with the merger agreement;

•

Either (i) after giving pro forma effect to the consummation of the merger and the other transactions contemplated by the merger agreement, the net leverage ratio of the Company (as determined pursuant to the 2021 senior notes indenture) will not be greater than 3.0 to 1.0, and Koch AG Investment will have received a certificate from the chief financial officer (or other responsible officer reasonably satisfactory to Koch AG Investment) of Parent certifying (and demonstrating to the reasonable satisfaction of Koch AG Investment) that this condition has been satisfied, or (ii) the Company will have obtained a waiver, consent or amendment under the 2021 senior notes indenture so as to permit the consummation of the merger and the other transactions contemplated by the merger agreement in a manner that does not result in a breach of Section 4.11(b)(vi) of the 2021 senior notes indenture; and

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Koch AG Investment will have received certification (in the form previously agreed between Parent and Koch AG Investment) as to the financial condition and solvency of Parent, Merger Sub, the Company and the Company’s subsidiaries (determined on a consolidated basis after giving effect to the transactions contemplated by the Preferred Stock Purchase Agreement, the merger agreement, the rollover and contribution agreement and the Debt Commitment Letter (and the incurrence of indebtedness related thereto) from the chief financial officer (or other responsible officer reasonably satisfactory to Koch AG Investment) of Parent.

The Preferred Stock Purchase Agreement will automatically terminate if the merger agreement is terminated in accordance with its terms as described in the “Merger Agreement – Termination” section beginning on page 91. In addition, the Preferred Stock Purchase Agreement may be terminated at any time prior to the closing:

•

by either Koch AG Investment or Parent if the closing has not occurred on or before 11:59 p.m. on September 30, 2013, but this right to terminate the Preferred Stock Purchase Agreement is not available to any party whose failure to perform any of its obligations under the Preferred Stock Purchase Agreement has been the primary cause of the failure of the closing to have occurred by that time;

•

by either Koch AG Investment or Parent if any governmental entity of competent jurisdiction enters an order or takes other action, or any law becomes enacted, entered or enforced after March 29, 2013, that has the effect of permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Preferred Stock Purchase Agreement and, in the case of any such order or other action, that order or other action has become final and non-appealable; or

•

by the mutual written consent of Koch AG Investment and Parent.

and Merger Sub is obligated to use its reasonable best efforts to do all things reasonably necessary, proper or advisable to arrange and obtain the Non-Voting Preferred Equity Investment on the terms and conditions described in the Preferred Stock Purchase Agreement, and to (A) maintain in effect the Preferred Stock Purchase Agreement until the merger is consummated, (B) negotiate and enter into definitive agreements with respect to the Preferred Stock Purchase Agreement (where applicable) on the terms and conditions contemplated by the Preferred Stock Purchase Agreement subject to certain limitations, (C) satisfy on or prior to the closing all of the conditions precedent applicable to Parent in the Preferred Stock Purchase Agreement, (D) consummate the Non-Voting Preferred Equity Investment at or prior to the closing, (E) enforce the rights of Parent under the Preferred Stock Purchase Agreement and (F) comply in all material respects with Parent’s covenants and other obligations under the Preferred Stock Purchase Agreement.

Debt Financing

In connection with Parent’s entry into the merger agreement, Parent received a debt commitment letter, referred to as the “Debt Commitment Letter,” dated March 29, 2013, from Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., PNC Bank, National Association, PNC Capital Markets LLC, KeyBank National Association, Macquarie Capital (USA), Inc. and MIHI LLC, referred to, together, as the “Debt Commitment Parties.” The Debt Commitment Letter provides an aggregate of $600.0 million in debt financing to Merger Sub, consisting of a $400.0 million senior secured term loan facility (all of which is expected to be used for the merger) and a $200.0 million senior secured revolving credit facility (which may be used for the merger only in respect of Parent’s and Merger Sub’s obligation to pay certain contingent financing fees), referred to, together, as the “Senior Secured Facilities.”

The Debt Commitment Parties may invite other financial institutions to participate in the debt financing described in the Debt Commitment Letter and to undertake portions of the Debt Financing.

Interest under the senior term loan facility will be payable, at the option of the borrower, either at LIBOR (subject to a floor of 1.25%) plus an applicable margin rate of 3.75%, or at a base rate (based on the highest of the prime rate, the Federal Funds rate plus 0.50% and LIBOR plus 1.0%, in each case subject to a floor of 2.25%) plus an applicable margin rate of 2.75%. Interest under the senior revolving credit facility will be payable, at the option of the borrower, either at LIBOR plus an applicable margin rate of 3.5%, or at a base rate (based on the highest of the prime rate, the Federal Funds rate plus 0.50% and LIBOR plus 1.0%) plus an applicable margin rate of 2.5%. The borrower may select interest periods of one, two, three or six months for LIBOR borrowings.

The senior secured term loan facility will mature six years from the closing of the Senior Secured Facilities. The senior secured revolving credit facility will mature five years from the closing of the Senior Secured Facilities.

The borrower under the Senior Secured Facilities will be Merger Sub, and upon consummation of the merger, the Company. The Senior Secured Facilities will be guaranteed by Parent and each of the existing and future direct and indirect material domestic subsidiaries of Parent including, after the consummation of the merger, certain of the Company’s applicable subsidiaries. The Senior Secured Facilities will be secured by first-priority liens and security interests (subject to certain customary exceptions) in substantially all the assets of the borrowers and the guarantors.

The Debt Financing provided for by the Senior Secured Facilities is subject to the following conditions precedent:

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The merger will be consummated pursuant to the merger agreement concurrently with the consummation of the Debt Financing;

•

Parent will receive not less than $240.0 million in cash proceeds under the Non-Voting Preferred Equity Investment (subject to certain exceptions) pursuant to the Preferred Stock Purchase Agreement, and those cash proceeds will have been contributed to Merger Sub in cash as common equity, concurrently with the consummation of the Debt Financing;

•

The merger agreement and the Preferred Stock Purchase Agreement will not have been altered, amended or otherwise changed or supplemented or any condition therein waived without the prior written consent of the Debt Commitment Parties to the extent any such alteration, amendment, or other change would be adverse to the lending syndicate;

•

Since March 1, 2012, there will not have been any facts, circumstances, events, changes, effects or occurrences that have had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect with respect to the Company, subject to certain exceptions;

•

The Debt Commitment Parties will have received certification as to the financial condition and solvency of Parent, Merger Sub, the Company and the other guarantors (determined on a consolidated basis after giving effect to the merger and the incurrence of indebtedness related thereto) from a responsible officer of Parent;

•

The Debt Commitment Parties will have received (a) customary opinions of counsel to the borrower and the other guarantors customary for financings of the type and reasonably acceptable to the lead arrangers and such corporate resolutions, customary secretary certificates, officer’s certificates and other corporate documents as the lenders will reasonably require and (b) satisfactory evidence that (subject to certain customary exceptions) the lenders will have a valid and perfected first priority lien and security interest in the collateral of the Senior Secured Facilities;

•

Subject to certain customary exceptions, all customary filings, recordations and searches necessary or desirable in connection with the liens and security interests in the collateral will have been duly made. The lenders will be reasonably satisfied that the amount, types and terms and conditions of all insurance maintained by the borrower and its subsidiaries comply with the requirements of the final documentation of the Senior Secured Facilities, and, subject to certain customary exceptions, the lenders will have received endorsements naming the administrative agent, on behalf of the lenders, as an additional insured or loss payee, as the case may be, under all insurance policies to be maintained with respect to the properties of the borrower and its subsidiaries forming part of the collateral;

•

The Debt Commitment Parties will have received: (A) audited consolidated financial statements of the Company for the three fiscal years ended at least 90 days prior to the closing date of the merger, unaudited consolidated financial statements of the Company for any interim quarterly periods that have ended at least 45 days prior to the closing date of the merger since the most recent of such audited financial statements, and pro forma financial statements as to the borrowers giving effect to the merger for the most recently completed fiscal year and the period commencing with the end of the most recently completed fiscal year and ending with the most recently completed month; (B) forecasts prepared by management of the the Company, each in form satisfactory to the lead arrangers, of balance sheets, income statements and cash flow statements for each year commencing with the first fiscal year following the closing date of the merger for the term of the Senior Secured Facilities, presented both on an annual and, with respect to the fiscal year ending February 28, 2014, on a quarterly basis consistent with certain projections; and (C) a certificate from the chief financial officer (or other responsible officer reasonably satisfactory to the lead arrangers) of Parent certifying that the pro forma financial statements delivered pursuant to clause (A) above and the forecasts delivered pursuant to clause (B) above were prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed by the preparer thereof to be reasonable at the time prepared;

•

The Debt Commitment Parties will have received satisfactory evidence that concurrently with the closing of the Senior Secured Facilities, the Non-Voting Preferred Equity Investment will be consummated;

•

After giving effect to the merger, the borrowers will have outstanding no indebtedness or preferred stock other than (a) the loans and other extensions of credit under the Senior Secured Facilities, (b) the Non-Voting Preferred Equity Investment, (c) the existing 7.375% senior notes due 2021 and 6.10% senior notes due 2028 and (d) other indebtedness in limited amounts to be mutually agreed upon (including, at the borrower’s election, the Company’s existing accounts receivable facility);

•

The administrative agent will have received reasonably satisfactory evidence of repayment of all indebtedness to be repaid on the closing date of the merger and the discharge (or the making of arrangements for discharge) of all liens other than liens permitted to remain outstanding under the definitive documentation of the Senior Secured Facilities;

•

Parent will have assisted in the preparation of certain information relating to the syndication of the Senior Secured Facilities in accordance with the terms of the Debt Commitment Letter;

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Either (i) after giving pro forma effect to the merger, the net leverage ratio of the Company (as determined pursuant to the 2021 senior notes indenture) will not be greater than 3.0 to 1.0, and the lead arrangers will have received a certificate from the chief financial officer (or other responsible officer reasonably satisfactory to the lead arrangers) of Parent certifying (and demonstrating to the reasonable satisfaction of the lead arrangers) that such condition has been satisfied, or (ii) the Company will have obtained a waiver, consent or amendment under the 2021 senior notes indenture so as to permit the consummation of the Non-Voting Preferred Equity Investment in a manner that does not result in a breach of Section 4.11(b)(vi) of the 2021 senior notes indenture;

•

Parent will have paid, or caused to be paid, all applicable fees and expenses (including the reasonable fees and disbursements of the Debt Commitment Parties’ counsel) that are due pursuant to the fee letter delivered with the Debt Commitment Letter; and

•

Parent and the Debt Commitment Parties will have negotiated, executed and delivered definitive documentation with respect to the Senior Secured Facilities.

The Debt Commitment Letter will expire on the earliest of (a) September 30, 2013, unless the closing date of the merger occurs on or prior thereto, (b) the closing of the merger and (c) the acceptance by Parent or the Company or any of their affiliates of an offer for all or any substantial part of the capital stock or property and assets of the Company other than as part of the merger and related transactions contemplated by the merger agreement.

Although the debt financing described in this proxy statement is not subject to due diligence or a “market out” provision, which allows lenders not to fund their commitments if certain conditions in the financial markets prevail, there is still a risk that such debt financing may not be funded when required. As of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event the debt financing described in this proxy statement is not available as anticipated.

Pursuant to the merger agreement and subject to certain additional terms and exceptions as further described in “Merger Agreement – Other Covenants and Agreements – Financing” beginning on page 87, each of Parent and Merger Sub is obligated to use its reasonable best efforts to do all things reasonably necessary, proper or advisable to arrange and obtain the Senior Secured Facilities on the terms and conditions described in the Debt Commitment Letter, and to (A) maintain in effect the Debt Commitment Letter until the merger is consummated, (B) negotiate and enter into definitive agreements with respect to the Senior Secured Facilities on the terms and conditions contemplated by the Debt Commitment Letter, subject to certain limitations, (C) satisfy on or prior to the closing of the merger all of the conditions precedent applicable to Parent or Merger Sub in the Debt Commitment Letter, (D) consummate the funding of the applicable portions of the Senior Secured Facilities at or prior to the closing of the merger, (E) enforce the rights of Parent and Merger Sub under the Debt Commitment Letter and (F) comply in all material respects with its covenants and other obligations under the Debt Commitment Letter.

According to (i) the most recent Form 13F disclosure by Bank of America Corporation, the parent company of Bank of America, N.A and Merrill Lynch, Pierce, Fenner & Smith Incorporated (two of the Debt Commitment Parties), on December 31, 2012, affiliates of Bank of American Corporation had voting power over 98,052 Class A common shares as at that date, of which Bank of America, N.A. had voting power over 7,218 Class A common shares and Merrill Lynch, Pierce, Fenner & Smith Incorporated had voting power over 90,834 Class A common shares; and (ii) the most recent Form 13F disclosure by Deutsche Bank AG, the parent company of Deutsche Bank AG New York Branch and Deutsche Bank Securities Inc. (two of the Debt Commitment Parties), on December 31, 2012, affiliates of Deutsche Bank AG had voting power over 91,237 Class A common shares as at that date, of which Deutsche Bank AG had voting power over 69,837 Class A common shares, Deutsche Bank Securities Inc. had voting power over 100 Class A common shares and Deutsche Investment Management Americas Inc. has voting power over 21,300 Class A common shares.

Interests of the Company’s Directors and Executive Officers in the Merger

In considering the recommendation of the board of directors that you vote to adopt the merger agreement, you should be aware that aside from their interests as shareholders of the Company, the Company’s directors and

executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. The members of the special committee were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to the board of directors, which was also aware of and took into account these interests, among other matters, when making its recommendation to the shareholders of the Company that the merger agreement be adopted. See “Special Factors – Background of the Merger” beginning on page 17, and “Special Factors –Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board of Directors; Fairness of the Merger” beginning on page 33.

The Company’s shareholders should take these interests into account in deciding whether to vote “FOR” the adoption of the merger agreement. These interests are described in more detail below, and certain of them are quantified in the narrative and the table below.

Family Shareholders

As of the closing of the merger, the Company will be owned by Parent. The Family Shareholders will own all of the common stock of Parent, and Koch AG Investment will own between $215.6 million and $254.8 million in non-voting preferred stock of Parent. For a description of the treatment of the common shares beneficially owned by the Family Shareholder directors in the merger and a discussion of their continuing interest in the Company, see “Special Factors – Certain Effects of the Merger” beginning on page 52.

Although he is not a Family Shareholder, Erwin Weiss, an executive officer of the Company, is the brother of Morry Weiss and the uncle of Zev Weiss and Jeffrey Weiss.

Company Stock Options, Company Restricted Stock Units and Company Performance Shares

If the merger is completed, each Company stock option, restricted stock unit and performance share held by any Family Shareholder that has not otherwise been cancelled, forfeited or exercised prior to or as of the effective time of the merger will, without any further action on the part of that holder, be cancelled at the effective time of the merger without the payment of any consideration. Other than with respect to a Company stock option, restricted stock unit or performance share held by a Family Shareholder:

•

Each Company stock option held by a director or executive officer that is outstanding immediately prior to the closing of the merger will be cancelled at the closing of the merger in exchange for a cash payment. For any such option with a per share exercise price less than $18.20, the cash payment will equal the product of the excess of $18.20 over the per share exercise price and the number of common shares subject to that option immediately prior to its cancellation, and for any such option with a per share exercise price that equals or exceeds $18.20 (which we refer to as an “out-of-the-money option”), the amount of the cash payment will be based on the Black-Scholes value of the option based on a value calculated promptly after the closing of the merger by a valuation advisor to be selected by the special committee and Parent. The valuation of the out-of-the-money options will use the following assumptions:

•

an assumed price of $18.20 per common share;

•

the actual exercise price under each out-of-the-money option;

•

an option term equal to 50% of the remaining contractual term of the particular out-of-the-money option as of the effective time (as defined below) (which we refer to as the “remaining option term”);

•

the expected volatility of the Class A common shares over the remaining option term of the particular out-of-the-money option, estimated using the historical volatility of the Class A common shares over a period beginning on the grant date of the respective out-of-the-money option and ending on March 29, 2013;

•

a risk-free rate of interest over the remaining option term of the particular out-of-the-money option equal to the United States Treasury Note rate as of March 29, 2013, as reported in The Wall Street Journal (interpolated between reported rates where applicable); and

•

an expected dividend rate over the remaining option term of the particular out-of-the-money option equal to the quotient of the most recent periodic annualized dividend payment, divided by $18.20.

•

Each restricted stock unit held by a director (other than a Family Shareholder director) and outstanding immediately prior to the closing of the merger will fully vest and be settled for a cash payment equal to $18.20 and paid at the time provided under the applicable restricted stock unit award agreement and/or Company equity plan.

•

Each restricted stock unit and performance share held by an executive officer will continue to be subject to the same terms and conditions (including vesting terms) as applied immediately before the closing of the merger, except that the applicable award will represent only the right to receive an amount of cash calculated by reference to a per share reference price of $18.20.

We estimate that the aggregate amount that will be payable to the Company’s executive officers (other than the Family Shareholders) on settlement of their stock options as a result of the merger is $1,023,398. This amount includes $657,001 as a result of cash payments for “in-the-money” vested stock options and $366,397 as a result of cancellation payments for “out-of-the-money” vested stock options. While the merger agreement provides for accelerated vesting of outstanding options, none of our executive officers currently holds unvested stock options.

We estimate the aggregate amount that would be payable to the Company’s directors (other than the Family Shareholder directors) as a result of the full vesting and settlement of outstanding restricted stock units is $845,754.

For additional information about beneficial ownership of common shares by directors and executive officers, see “Important Information Regarding American Greetings – Security Ownership of Management and Certain Beneficial Owners” beginning on page 101.

Benefits to Executive Officers Pursuant to Employment Plans and Agreements

Certain of the Company’s named executive officers (as defined under SEC rules) may be entitled additional benefits under the Company’s Supplemental Executive Retirement Plan and/or individual employment agreements as a result of the merger. For a description of these additional benefits and quantification of their value, see “Advisory Vote on Merger Related Compensation” below.

In October and November 2012, the Company entered into retention agreements with Christopher W. Haffke, Vice President, General Counsel and Secretary, and Robert D. Tyler, Corporate Controller and Chief Accounting Officer. Pursuant to these agreements, Mr. Haffke and Mr. Tyler will be entitled to retention payments of $125,000 and $75,000, respectively, payable on the earlier of June 1, 2013 or the completion of the merger, subject only to continued employment as of that earlier date.

Continuing Employment

The Company’s executive officers as of the effective time of the merger will become the initial officers of the surviving corporation until their successors are duly elected or appointed and qualified.

Indemnification/ Insurance

The Company’s Code of Regulations provides for indemnification of directors and executive officers against certain liabilities that may arise by reason of their status or service as directors or officers. In addition, pursuant to the merger agreement, the Company’s directors and executive officers will be entitled to certain ongoing indemnification from Parent and the surviving corporation and coverage under directors’ and officers’ liability insurance policies. The indemnification and insurance provisions in the merger agreement are further described in the section entitled “The Merger Agreement – Other Covenants and Agreements – Indemnification; Directors’ and Officers’ Insurance” on page 86.

Compensation of the Special Committee

The special committee consists of four independent members of the board of directors, Dr. Cowen and Messrs. Dunn, MacDonald and Merriman. At a meeting of the board of directors held on October 13, 2012, the

board of directors adopted resolutions providing for the following compensation structure for the special committee:

•

A quarterly retainer of $37,500, paid in cash in advance, for the chair of the special committee (Dr. Cowen); and

•

A quarterly retainer of $25,000, paid in cash in advance, for each member of the special committee other than the chair (Messrs. Dunn, MacDonald and Merriman).

In recommending and approving the compensation structure, the board of directors considered, among other things, precedent compensation structures for special committees formed for purposes comparable to those for which the special committee was formed. The board considered the nature and scope of the proposed transaction and the time expected to be required by the special committee members and chair. The board of directors also considered the advantages and disadvantages of alternative arrangements, including flat fees, retainers and per-meeting fees, and determined that the fee structure chosen was consistent with the precedent for comparable transactions that it reviewed with counsel.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of common shares whose shares are exchanged for cash pursuant to the merger. This discussion does not address U.S. federal income tax consequences with respect to non-U.S. holders. This discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury regulations, judicial opinions, and administrative rulings and published positions of the Internal Revenue Service, each as in effect as of the date hereof. These authorities are subject to change, possibly on a retroactive basis, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax considerations under state, local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax. This discussion is not binding on the Internal Revenue Service or the courts and therefore could be subject to challenge, which could be sustained. We do not intend to seek any ruling from the Internal Revenue Service with respect to the merger.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of common shares that is:

•

a citizen or individual resident of the United States;

•

a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

•

a trust if (1) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (2) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or

•

an estate, the income of which is subject to U.S. federal income tax regardless of its source.

This discussion applies only to U.S. holders of common shares who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a U.S. holder in light of its particular circumstances, or that may apply to a U.S. holder that is subject to special treatment under the U.S. federal income tax laws, including, for example, insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, U.S. holders subject to the alternative minimum tax, persons that have a functional currency other than the U.S. dollar, tax-exempt organizations, banks and certain other financial institutions, mutual funds, certain expatriates, partnerships or other pass-through entities or investors in partnerships or such other entities, U.S. holders who hold common shares as part of a hedge, straddle, constructive sale or conversion transaction, U.S. holders who will hold, directly or indirectly, an equity interest in the surviving corporation, and U.S. holders who acquired their common shares through the exercise of employee stock options or other compensation arrangements.

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds common shares, the tax treatment of a partner in that partnership will generally depend on the status of the partners and the activities of the partnership. If you are a partner of a partnership holding common shares, you should consult your tax advisor.

Holders of common shares are urged to consult their own tax advisors to determine the particular tax consequences to them of the merger, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws.

The receipt of cash by U.S. holders in exchange for common shares pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder who receives cash in exchange for common shares pursuant to the merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. holder’s adjusted tax basis in those shares.

If a U.S. holder’s holding period in the common shares surrendered in the merger is greater than one year as of the effective date of the merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S. holder acquired different blocks of common shares at different times and different prices, that holder must determine its adjusted tax basis and holding period separately with respect to each block of common shares.

Medicare Tax on Unearned Income

For taxable years beginning after December 31, 2012, certain taxable U.S. holders who are individuals, trusts, or estates with adjusted gross income in excess of certain thresholds are subject to a 3.8% tax on all or a portion of “net investment income,” which includes gains recognized upon a disposition of stock. U.S. holders who are individuals, estates or trusts are urged to consult their tax advisors regarding the applicability of the Medicare tax to any gain recognized pursuant to the merger.

Information Reporting and Backup Withholding

Payments made to U.S. holders in exchange for common shares pursuant to the merger may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 28%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption should complete and return Internal Revenue Service Form W-9, certifying the holder is a U.S. person, the taxpayer identification number provided is correct and the holder is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax liability, if any, if that holder furnishes the required information to the Internal Revenue Service in a timely manner.

Regulatory Approvals

Under the terms of the merger agreement, the merger cannot be consummated until the waiting period applicable to the consummation of the merger under the HSR Act has expired or been terminated.

Under the HSR Act and the rules promulgated thereunder by the Federal Trade Commission, or the FTC, the merger cannot be consummated until each of the Company and Parent files a notification and report form with the FTC and the Antitrust Division of the Department of Justice under the HSR Act and the applicable waiting period has expired or been terminated. Each of the Company and Parent filed such a notification and report form on April 18, 2013 and requested early termination of the waiting period. The request for early termination of the waiting period was granted effective May 6, 2013.

Fees and Expenses

Except as described under “The Merger Agreement – Fees and Expenses – Expense Reimbursement Provisions,” if the merger is not completed, all fees and expenses incurred in connection with the merger will be

paid by the party incurring those fees and expenses, except that the Company will pay the costs of proxy solicitation and printing and mailing this proxy statement and the Schedule 13E-3 and all SEC filing fees with respect to the transaction, and Parent and Merger Sub will pay the filing fees associated with the Company’s, Parent’s, and Merger Sub’s filings under the HSR Act. If the merger is completed, all costs and expenses incurred by Parent or Merger Sub in connection with the transaction will be paid by the surviving corporation. Total fees and expenses incurred or to be incurred by the Company in connection with the merger are estimated at this time to be as follows:


	Amount to be Paid
Financial advisory fee and expenses	$	[—]
Legal, accounting and other professional fees	$	[—]
SEC filing fees	$	80,218
Proxy solicitation, printing and mailing costs	$	[—]
Transfer agent and paying agent fees and expenses	$	[—]

Total	$	[—]

Anticipated Accounting Treatment of the Merger

Litigation

On September 26, 2012, the Company announced that the board of directors had received a non-binding proposal dated September 25, 2012 from Zev Weiss, our Chief Executive Officer, and Jeffrey Weiss, our President and Chief Operating Officer, on behalf of themselves and certain other members of the Weiss Family and related parties, to acquire all of the outstanding Class A common shares and Class B common shares not then owned by them for $17.18 per share. On September 27, 2012, Dolores Carter, a purported shareholder, filed a putative shareholder derivative and class action lawsuit (the “Carter Action”) in the Court of Common Pleas in Cuyahoga County, Ohio (the “Cuyahoga County Court”), against American Greetings Corporation and all of the members of the board of directors. The Carter Action alleged, among other things, that the directors of the Company breached their fiduciary duties owed to shareholders in evaluating and pursuing the proposal. The Carter Action further alleged claims for aiding and abetting breaches of fiduciary duty. Among other things, the Carter Action sought declaratory, injunctive, and other equitable relief.

things, declaratory, injunctive, and other equitable relief. Shortly thereafter, on November 9, 2012, the Louisiana Municipal Police Employees’ Retirement System also filed a purported class action in the Federal Court (the “LMPERS Action”) asserting substantially similar claims against the same defendants and seeking substantially similar relief.

On April 17, 2013, R. David Wolfe filed a new putative shareholder derivative and class action lawsuit in the Federal Court (the “Wolfe II Action”) against certain members of the Weiss Family, the Irving I. Stone Oversight Trust, the Irving Stone Limited Liability Company, the Irving I. Stone Support Foundation, the Irving I. Stone Foundation, and the members of the Company’s board of directors, as well as American Greetings as nominal defendant, challenging the merger as financially and procedurally unfair to the Company and its minority shareholders. The complaint alleged, among other things, that Article Seventh of the Company’s articles of incorporation prohibited the special committee from, among other things, evaluating the merger, that the board breached its fiduciary duties in considering and approving the merger, and that certain members of the Weiss Family and related entities breached fiduciary duties owed to the Company’s minority shareholders. On April 29, 2013, an amended complaint was filed incorporating additional allegations and a claim that the director defendants also have breached their fiduciary duties by failing to disclose certain information to shareholders. Among other things, the Wolfe II Action seeks substantially the same declaratory, injunctive, and other equitable relief as the Wolfe I Action, the LMPERS Action, and In re American Greetings Corp. Shareholder Litigation.

The Company believes that the allegations in these actions, including the claims in the litigation concerning the Company’s articles of incorporation, are without merit.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents incorporated by reference in this proxy statement, include “forward-looking statements” that reflect our current views as to future events and financial performance with respect to our operations, the expected completion and timing of the merger and other information relating to the merger. These statements can be identified by the fact that they do not relate strictly to historical or current facts. There are forward-looking statements throughout this proxy statement, including under the headings, among others, “Summary Term Sheet,” “Questions and Answers About the Special Meeting and the Merger,” “The Special Meeting,” “Special Factors,” and “Important Information Regarding American Greetings,” and in statements containing the words “aim,” “anticipate,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance or other future events. You should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the actual results or developments we anticipate will be realized, or even if realized, that they will have the expected effects on the business or operations of the Company. These forward-looking statements speak only as of the date on which the statements were made and we undertake no obligation to update or revise any forward-looking statements made in this proxy statement or elsewhere as a result of new information, future events or otherwise, except as required by law. In addition to other factors and matters referred to or incorporated by reference in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

•

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

•

the outcome of any legal proceedings that have been or may be instituted against the Company or others relating to the merger agreement;

•

the inability to complete the merger because of the failure to obtain shareholder approval, failure by Parent and Merger Sub to receive the proceeds of the financing as contemplated by the financing commitments or the failure to satisfy other conditions to consummation of the merger;

•

the failure of the merger to close for any other reason;

•

the risk that the pendency of the merger disrupts current plans and operations and potential difficulties in employee retention as a result of the pendency of the merger;

•

the effect of the announcement of the merger on our business relationships, operating results and business generally;

•

the amount of the costs, fees, expenses and charges related to the merger;

and other risks detailed in our filings with the SEC, including our most recent filing on Form 10-K. See “Where You Can Find Additional Information” beginning on page 117. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We cannot guarantee any future results, levels of activity, performance or achievements.

THE PARTIES TO THE MERGER

American Greetings

For information about the Company, see “Important Information Regarding American Greetings –Company Background” beginning on page 95 and “Where You Can Find Additional Information” beginning on page 117.

Century Intermediate Holding Company

Parent is a Delaware corporation. Parent is currently a wholly owned subsidiary of Family LLC, which is currently owned by Zev Weiss, a Director and the Chief Executive Officer of the Company. Neither Parent nor Family LLC has engaged in any business other than in connection with the merger and related transactions. For more information, see “Important Information Regarding the Family Shareholders, Parent, Merger Sub and Family LLC” beginning on page 110. In connection with the closing of the merger, Koch AG Investment will make an investment in Parent of between $215.6 million and $254.8 million in non-voting preferred stock of Parent. For more information, see “Special Factors – Financing – Koch AG Investment Non-Voting Preferred Equity Financing” beginning on page 57.

Century Merger Company

Merger Sub is an Ohio corporation. Merger Sub is a wholly owned subsidiary of Parent and was formed solely for the purpose of engaging in the merger and other related transactions. Merger Sub has not engaged in any business other than in connection with the merger and other related transactions. For more information, see “Important Information Regarding the Family Shareholders, Parent, Merger Sub and Family LLC” beginning on page 110.

THE SPECIAL MEETING

Date, Time and Place

This proxy statement is being furnished to our shareholders as part of the solicitation of proxies by the board of directors for use at the special meeting to be held on [—], 2013, starting at [—], Cleveland, Ohio time, at our world headquarters, which are located at One American Road, Cleveland, Ohio 44144, or at any adjournment or postponement thereof.

The purpose of the special meeting is for our shareholders to consider and vote upon the adoption of the merger agreement. Both the Company shareholder approval and the majority of the minority shareholder approval must be obtained for the merger to occur. A copy of the merger agreement is attached to this proxy statement as Annex A. This proxy statement and the enclosed form of proxy are first being mailed to our shareholders on or about [—], 2013.

In addition, in accordance with Section 14A of the Exchange Act, the Company is providing its shareholders with the opportunity to cast an advisory (non-binding) vote on the compensation that may be payable to its named executive officers in connection with the merger, the value of which is disclosed in the table in the section of the proxy statement entitled “Advisory Vote on Merger Related Compensation” beginning on page 114. The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve the merger. Accordingly, a shareholder may vote to approve the executive compensation and vote not to approve the merger, or vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either the Company or Parent. Accordingly, because the Company is contractually obligated to pay the compensation if the merger is approved, the compensation will become payable if the merger closes, subject only to the conditions applicable thereto, regardless of the outcome of the advisory vote.

Record Date and Quorum

The holders of record of common shares as of the close of business on [—], 2013, the record date for the determination of shareholders entitled to notice of and to vote at the special meeting, are entitled to receive notice of and to vote at the special meeting. On the record date, [—] Class A common shares and [—] Class B common shares were issued and outstanding.

The presence at the special meeting, in person or by proxy, of the holders of common shares entitled to exercise at least 25% of the outstanding voting power of the Company on the record date will constitute a quorum, permitting the Company to conduct its business at the special meeting. Proxies received but marked as abstentions will be included in the calculation of the number of shares considered to be present at the special meeting. Broker non-votes, as described below under “The Special Meeting – Required Vote – Broker Non-Votes,” will not be considered to be present for purposes of determining whether a quorum exists.

Required Vote

The merger cannot be completed unless holders of our issued and outstanding Class A common shares and Class B common shares, voting together as a single class, representing at least two-thirds of the outstanding voting power of the Company, vote in favor of the adoption of the merger agreement. Pursuant to our articles of incorporation, the Class A common shares are entitled to one vote per share and the Class B common shares are entitled to ten votes per share. In addition, the merger agreement makes it a condition to the parties’ obligations to consummate the merger that at least a majority of our issued and outstanding Class A common shares and Class B common shares, excluding all Class A common shares and Class B common shares beneficially owned by the Family Shareholders, the Irving I. Stone Foundation or any director or executive officer of the Company or any of its subsidiaries, voting together as a single class, vote in favor of the adoption of the merger agreement. For purposes of this majority of the minority shareholder approval condition only, Class B common shares will be entitled to one vote per share. A failure to vote your common shares on the merger or an abstention from voting on the merger will have the same effect as a vote against the merger.

special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval, requires the affirmative vote of the majority of the votes cast at the special meeting. The Class A common shares are entitled to one vote per share, and the Class B common shares are entitled to ten votes per share on each of these proposals. Abstentions will not count as votes cast, and therefore will have no effect on the outcome of either of these proposals.

Except in their capacities as members of the board of directors or the special committee, as applicable, no executive officer or director of the Company has made any recommendation either in support of or in opposition to the merger or the merger agreement or the advisory (non-binding) proposal on executive compensation payable to the Company’s named executive officers in connection with the merger. Based in part on the unanimous recommendation of the special committee, the board of directors (with the Family Shareholder directors abstaining) voted to approve and recommend the merger agreement and the merger.

Each of the directors and executive officers of the Company has informed the Company that, as of date of this proxy statement, he or she intends to vote in favor of the adoption of the merger agreement.

Broker Non-Votes

In accordance with the rules of the NYSE, banks, brokers and other nominees who hold common shares in “street name” for their customers do not have discretionary authority to vote those shares with respect to the adoption of the merger agreement, the advisory (non-binding) proposal on executive compensation payable to the Company’s named executive officers in connection with the merger, or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval. Accordingly, if banks, brokers or other nominees do not receive specific voting instructions from the beneficial owners of those shares, they are not permitted to vote those shares with respect to any of the proposals to be presented at the special meeting (this is known as a “broker non-vote”). As a result, if you hold your common shares in “street name” and you do not provide voting instructions, your common shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the approval of the merger agreement. Assuming a quorum is present, however, “broker non-votes” will have no effect on the advisory (non-binding) proposal on executive compensation payable to the Company’s named executive officers in connection with the merger or the adjournment proposal.

Abstentions

Abstentions will be included in the calculation of the number of common shares represented at the special meeting for purposes of determining whether a quorum is present. Abstaining from voting will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. Abstentions will not count as votes cast, and therefore will have no effect on the outcome of the advisory (non-binding) vote on the compensation that may be payable to the named executive officers in connection with the merger or the proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval.

Voting; Proxies; Revocation

Attendance

All holders of common shares as of the close of business on [—], 2013, the record date for voting at the special meeting, including shareholders of record and beneficial owners of common shares registered in the “street name” of a bank, broker or other nominee, are invited to attend the special meeting. If you are a shareholder of record, please be prepared to provide proper identification, such as a driver’s license. If you hold

your shares in “street name,” you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other nominee, along with proper identification.

Voting in Person

Shareholders of record will be able to vote in person at the special meeting. If you are not a shareholder of record, but instead hold your shares in “street name” through a bank, broker or other nominee, you must provide a proxy executed in your favor from your bank, broker or other nominee in order to be able to vote in person at the special meeting. If you are a participant in the American Greetings Retirement Profit Sharing and Savings Plan, because your plan shares are held in a qualified plan, you are not able to vote the shares allocated to your account in the plan in person at the special meeting. However, you may provide voting instructions as described below.

Providing Voting Instructions by Proxy

To ensure that your shares are represented at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the special meeting in person.

Record Holders

If you are a shareholder of record, you may provide voting instructions by proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy and voting instruction card with instructions for submitting voting instructions. You may vote by telephone by calling the toll-free number or via the Internet by accessing the Internet address as specified on the enclosed proxy and voting instruction card by the deadlines set forth on the card. Your shares will be voted as you direct in the same manner as if you had completed, signed, dated and returned your proxy and voting instruction card, as described below.

Submit a Proxy and Voting Instruction Card. If you complete, sign, date and return the enclosed proxy and voting instruction card by mail so that it is received before the special meeting, your shares will be voted in the manner directed by you on your proxy and voting instruction card.

If you sign, date and return your proxy and voting instruction card without indicating how you wish to vote, your proxy will be voted in favor of the proposal to adopt the merger agreement, the proposal to approve specified compensation that may become payable to the named executive officers of the Company in connection with the merger, and the proposal to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval. If you fail to return your proxy and voting instruction card, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting (unless you are a record holder as of the record date and attend the special meeting in person) and will have the same effect as a vote against the approval of the merger agreement, but will not affect the vote regarding the advisory (non-binding) proposal on executive compensation payable to the Company’s named executive officers in connection with the merger or the vote regarding the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval.

If you sign, date and return the proxy and voting instruction card, the proxies named on the proxy and voting instruction card will be authorized to take any action, in their discretion, upon any other business that may properly come before the special meeting, or any reconvened meeting following an adjournment or postponement of the special meeting, so long as the board of directors is not aware of any such other business a reasonable time before the special meeting. The board of directors is not aware of any such other business as of the date of this proxy statement.

“Street Name” Shares

If your shares are held by a bank, broker or other nominee on your behalf in “street name,” your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your shares by

proxy. Many banks and brokerage firms have a process for their customers to provide voting instructions by telephone or via the Internet, in addition to providing voting instructions by proxy card.

American Greetings Retirement Profit Sharing and Savings Plan

If you are a participant in the American Greetings Retirement Profit Sharing and Savings Plan and you invest in the American Greetings stock fund of the Retirement Profit Sharing and Savings Plan, the plan’s independent trustee, Vanguard Fiduciary Trust Company, will vote the Class A common shares allocated to your account according to your directions. Participants may give voting directions to the plan trustee in any one of the ways set forth above under “Providing Voting Instructions by Proxy – Record Holders.” Participants should be refer to the proxy and voting instruction card for specific instructions, including the deadlines for submitting voting directions by telephone and internet. The trustee will vote shares for which it has not received instructions in accordance with instructions that it receives from us. We will direct the trustee based on the direction of the plan’s administrative committee, which is a committee consisting of our employees.

Revocation of Proxies

Your proxy is revocable. If you are a shareholder of record, you may revoke your proxy at any time before the vote is taken at the special meeting by:

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submitting a new proxy with a later date, by using the telephone or Internet proxy submission procedures described above, or by completing, signing, dating and returning a new proxy and voting instruction card by mail to the Company;

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attending the special meeting and voting in person; or

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giving written notice of revocation to the Secretary of the Company at One American Road, Cleveland, Ohio 44144 or by giving notice of revocation in open meeting.

Attending the special meeting without taking one of the actions described above will not revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy and voting instruction card to the Company or by sending a written notice of revocation to the Company, you should ensure that you send your new proxy and voting instruction card or written notice of revocation in sufficient time for it to be received by the Company before the day of the special meeting.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by it in order to revoke your proxy or submit new voting instructions.

If you are a participant in the American Greetings Retirement Profit Sharing and Savings Plan and you invest in the American Greetings stock fund of the Retirement Profit Sharing and Savings Plan, you may revoke a proxy in the manner described above with respect to shareholders of record, except that you may not revoke a proxy by voting in person at the special meeting.

Adjournments and Postponements

The special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to obtain the Company shareholder approval or obtain the majority of the minority shareholder approval, although this is not currently expected. If there is present, in person or by proxy, sufficient favorable voting power to secure the vote of the shareholders of the Company necessary to adopt the merger agreement, the Company does not anticipate that it will adjourn or postpone the special meeting. Any signed proxies received by the Company in which no voting instructions are provided on the adjournment proposal will be voted in favor of adjournment, if the proposal is introduced.

Solicitation of Proxies

We will bear the cost of our solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding common shares. We may solicit proxies by mail, personal interview, e-mail, telephone, or via the Internet. The Company has retained Georgeson Inc. (“Georgeson”), a proxy solicitation firm, to assist it in the solicitation of proxies for the special meeting and will pay Georgeson a fee of $12,500, plus reimbursement of out-of-pocket expenses. In addition, the Company has agreed to indemnify Georgeson against certain liabilities including liabilities arising under the federal securities laws. Brokerage houses, nominees, fiduciaries and other custodians will be requested to forward soliciting materials to beneficial owners and will be reimbursed for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners.

THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement, a copy of which is attached to this proxy statement as Annex A, and which we incorporate by reference into this proxy statement. The provisions of the merger agreement are extensive and not easily summarized. We encourage you to read carefully the merger agreement in its entirety, as the rights and obligations of the parties to the merger agreement are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement. In addition, you should read “Agreements Involving Common Shares” beginning on page 94, which summarizes the guaranty and voting agreement and rollover and contribution agreement, as certain provisions of these agreements relate to certain provisions of the merger agreement.

Explanatory Note Regarding the Merger Agreement

The following summary of the merger agreement, and the copy of the merger agreement attached as Annex A to this proxy statement, are intended to provide information regarding the terms of the merger agreement. The merger agreement contains representations and warranties by the Company, Parent and Merger Sub, which were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosure. The Company will provide additional disclosure as necessary to comply with its obligations under federal securities laws. The representations and warranties in the merger agreement and the description of them in this proxy statement should not be read alone but instead should be read in conjunction with the other information contained in this proxy statement and the other reports, statements and filings the Company files publicly with the SEC.

The description of the merger agreement below does not purport to describe all of the terms of that agreement, and is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached as Annex A and is incorporated in this proxy statement by reference.

Additional information about the Company may be found elsewhere in this proxy statement and in the Company’s other public filings. See “Where You Can Find Additional Information” beginning on page 117.

Structure of the Merger

At the effective time of the merger, Merger Sub will merge with and into the Company and the separate corporate existence of Merger Sub will cease. The Company will be the surviving corporation in the merger and will continue to be an Ohio corporation after the merger. At the closing of the merger, the articles of incorporation and code of regulations of the Company, as amended and restated pursuant to the merger agreement, will be the articles of incorporation and code of regulations of the surviving corporation.

The directors of the Company immediately prior to the effective time of the merger will be the initial directors of the surviving corporation and will serve until their resignations become effective as contemplated by the merger agreement (which is expected to occur on the effective date of the merger) or until their earlier death, resignation or removal in accordance with the articles of incorporation and the code of regulations of the surviving corporation. The officers of the Company immediately prior to the effective time will be the initial officers of the surviving corporation and will serve until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the articles of incorporation and the code of regulations of the surviving corporation.

When the Merger Becomes Effective

The closing of the merger will take place on the third business day after the satisfaction or waiver of the conditions to closing provided for in the merger agreement (other than any condition that by its nature cannot be satisfied until the closing of the merger, but subject to satisfaction of any such condition), or at such other place, date and time as the Company and Parent may agree in writing. The merger will become effective at the time (which we refer to as the “effective time”) when the parties file a certificate of merger with the Secretary of State of the State of Ohio, to be executed, acknowledged and filed in accordance with the relevant provisions of Ohio law, or at such later date or time as may be agreed by Parent and the Company in writing and specified in the certificate of merger in accordance with Ohio law.

Effect of the Merger on the Common Shares of the Company and Merger Sub

At the effective time, each outstanding common share of the Company (other than any cancelled shares (as described below), any dissenting shares and any rolled shares) will be converted automatically into and will represent the right to receive $18.20 in cash, without interest. At the effective time, all common shares of the Company will be cancelled automatically and will cease to exist.

Each common share of the Company that is held by the Company or Merger Sub immediately prior to the effective time (which we refer to as a “cancelled share”) will be cancelled automatically and will cease to exist, and no consideration will be delivered in exchange for such cancellation.

Each common share of the Company that is issued and outstanding immediately prior to the effective time that is held by any shareholder who delivers to the Company, in accordance with Ohio law, a written demand for payment of the fair cash value for that dissenting share will not be converted into the right to receive the per share merger consideration, unless and until the shareholder loses its rights as a dissenting shareholder.

At the effective time, each issued and outstanding common share of the Company that is owned by Family LLC, Parent or any Family Shareholder (all of which will, immediately prior to the effective time, be held by Parent pursuant to the rollover and contribution agreement) immediately prior to the effective time, will cease to be outstanding and will be cancelled automatically and will cease to exist, and no consideration will be delivered in exchange for that cancellation.

At the effective time, each common share of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one common share of the surviving corporation.

Treatment of Company Equity Awards

The description under this “The Merger Agreement – Treatment of Company Equity Awards” section does not address certain equity awards held by certain Family Shareholders and certain members of the board of directors. For a description of that treatment, see “Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger – Company Stock Options, Company Restricted Stock Units and Company Performance Shares” beginning on page 63.

Each outstanding stock option held by a person who is, as of the effective time, an officer, director or employee of the Company or any of its subsidiaries and that has not otherwise been cancelled, forfeited or exercised prior to or as of the effective time will, without any further action on the part of that holder, vest.

Other than with respect to stock options, restricted stock units and performance shares held by a Family Shareholder or member of the board of directors (discussed under Special Factors – Interests of the Company’s Directors and Executive Officers in the Merger – Company Stock Options, Company Restricted Stock Units and Company Performance Shares” beginning on page 63), as of the effective time:

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All stock options and any other stock options that have not otherwise been cancelled, forfeited or exchanged prior to the effective time will be, without any further action, cancelled in consideration of payment of the option value. With respect to any stock option with a per share exercise price that is less than the $18.20 per share merger consideration, the option value will equal (i) the excess of $18.20 over the per share exercise price multiplied by (ii) the number of common shares subject to that stock option immediately prior to its cancellation. With respect to any stock option with a per share exercise price that equals or exceeds $18.20,

the option value will be calculated as promptly as practicable after the effective time by a valuation advisor to be reasonably agreed upon by the special committee and Parent, based on the application of a Black-Scholes option valuation methodology and applying certain valuation assumptions.

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Each restricted stock unit issued under the Company’s equity plans that is outstanding immediately prior to the effective time will continue to have, and be subject to, the same terms and conditions (including vesting terms) as were applicable to that restricted stock unit immediately before the effective time, except that each such restricted stock unit will represent only the right to receive an amount of cash calculated by reference to a per common share reference price of $18.20.

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Each grant of performance shares under the Company’s equity plans that is outstanding immediately prior to the effective time will continue to have, and be subject to, the same terms and conditions (including vesting terms) as were applicable to that grant of performance shares immediately before the effective time, except that (i) each such grant of performance shares will represent only the right to receive an amount of cash equal to (A) the number of common shares that would have been delivered as of the end of the applicable performance period under any applicable terms and conditions multiplied by (B) $18.20, and (ii) subject to the Company’s equity plans, the board of directors (or a committee of the board of directors) of the surviving corporation may modify or adjust any performance goals relating to a grant of performance shares following the closing date of the merger.

All amounts payable with respect to stock options, restricted stock units and performance shares will be subject to any required withholding of taxes and will be paid by the surviving corporation (i) with respect to stock options with a per share exercise price that is less than $18.20, no later than 30 days after the closing date of the merger, (ii) with respect to stock options with a per share exercise price that equals or exceeds $18.20, no later than December 31, 2013 and (iii) with respect to restricted stock units and performance shares, on the date the applicable amounts become payable pursuant to their terms.

Payment for the Common Shares in the Merger

At the effective time, Parent will deposit, or will cause to be deposited, with a U.S. bank or trust company appointed by Parent (with the Company’s prior approval) as the paying agent, in trust for the benefit of holders of the common shares (other than any cancelled shares, dissenting shares and rolled shares), cash in U.S. dollars in immediately available funds sufficient to pay the $18.20 per share merger consideration.

As soon as reasonably practicable and not later than the third business day following the effective time, the paying agent will mail to each holder of record of common shares whose common shares were converted into the right to receive the per share merger consideration a letter of transmittal and instructions for use in effecting the surrender of certificates (or affidavits of loss in lieu of certificates) that formerly represented common shares or non-certificated shares represented by book-entry in exchange for the per share merger consideration.

Representations and Warranties

The merger agreement contains representations and warranties of the Company as to, among other things:

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corporate organization, existence and good standing, including with respect to the Company’s subsidiaries;

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the capitalization of the Company, including in particular the number of Class A common shares and Class B common shares outstanding and the number of stock options, restricted stock units and performances shares outstanding;

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ownership of the Company’s subsidiaries;

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corporate power and authority to enter into the merger agreement and to consummate the transactions contemplated by it (other than Parent’s and Merger Sub’s financing transactions);

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the absence of certain defaults under certain contracts, including arising out of the execution and delivery of, and the consummation of the transactions contemplated by, the merger agreement (other than Parent and Merger Sub’s financing transactions);

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required regulatory filings and authorizations, consents or approvals of government entities and consents or approvals required of other third parties;

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the accuracy of the Company’s and its subsidiaries’ filings with the SEC and of the financial statements included in the SEC filings;

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the absence of certain undisclosed liabilities of the Company and its subsidiaries;

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compliance with laws and possession of the necessary permits and authorizations by the Company and its subsidiaries;

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environmental matters and compliance with environmental laws by the Company and its subsidiaries;

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the Company’s employee benefit plans;

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the absence of certain events or changes since November 23, 2012 and the absence of any material adverse effect with respect to the Company since March 1, 2012;

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the absence of certain investigations, proceedings, actions, suits, inquiries, orders judgments or decrees with respect to the Company and its subsidiaries;

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matters relating to information to be included in required filings with the SEC in connection with the merger;

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material contracts of the Company and its subsidiaries;

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the payment of taxes, the filing of tax returns and other tax matters related to the Company and its subsidiaries;

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labor matters relating to the Company and its subsidiaries;

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title to all owned real property and title to all of the personal property owned by the Company or its subsidiaries, leasehold interests under enforceable leases in all of the properties leased by the Company or its subsidiaries and other matters pertaining to real and personal property;

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intellectual property owned, licensed or used by the Company or its subsidiaries;

•

insurance policies covering the Company and its subsidiaries;

•

the receipt by the special committee and the board of directors of an opinion of the financial advisor to the special committee;

•

the shareholder vote required under Ohio law to adopt the merger agreement;

•

the absence of any fees or commission owed to investment bankers, finders or brokers in connection with the merger, other than the fee to be paid to PJSC;

•

the absence of any Company rights agreements; and

•

the Company’s use of all necessary action to ensure that anti-takeover provisions of applicable law will not apply to the merger.

The merger agreement also contains representations and warranties of Parent and Merger Sub as to, among other things:

•

corporate (or limited liability company) organization and good standing, including with respect to Family LLC;

•

power and authority to enter into the merger agreement and, including with respect to Family LLC, to consummate the transactions contemplated by it;

•

the absence of certain defaults under certain contracts, including arising out of the execution and delivery of, and the consummation of the transactions contemplated by, the merger agreement;

•

required regulatory filings and authorizations, consents or approvals of government entities and consents or approvals required of other third parties;

•

matters relating to information to be included in required filings with the SEC in connection with the merger;

•

the valid and binding nature of the rollover and contribution agreement and the guaranty and voting agreement;

•

the valid and binding nature of the Debt Commitment Letter and the Preferred Stock Purchase Agreement (which we refer to collectively as the “financing commitments”) and other matters pertaining to the financing commitments;

•

the absence of any fees or commission owed to investment bankers, finders or brokers in connection with the merger, other than KeyBanc Capital Markets Inc. and Macquarie Capital (USA) Inc.;

•

the fees and expenses incurred by the Family Shareholders, Family LLC or Parent incurred prior to signing the merger agreement and expected to be incurred prior to the closing of the merger;

•

the solvency of Family LLC, Parent and the surviving corporation as of the effective time and immediately after consummation of the merger;

•

the absence of arrangements between Family LLC, Parent, Merger Sub or any of their respective affiliates and any member of the Company’s management or directors related to the Company or any of its subsidiaries or the merger;

•

the absence of arrangements though which any shareholder of the Company would be entitled to receive consideration of a different amount or nature than the $18.20 per share of merger consideration;

•

the absence of arrangements through which any Company shareholder agrees to vote to adopt the merger agreement or the merger or to vote against any superior proposal (other than as provided in the guaranty and voting agreement);

•

the absence of certain investigations, proceedings, actions, suits, inquiries, orders judgments or decrees with respect to Family LLC, Parent or Merger Sub;

•

the ownership and operation of Family LLC, Parent and Merger Sub; and

•

the acknowledgement of uncertainties inherent in Company estimates, projections, forecasts and other forward-looking information regarding the Company and its business and operations and agreement that neither Parent nor Merger Sub will have any claim against the Company, any of its subsidiaries or any other person with respect to those matters.

Many of the representations and warranties in the merger agreement are qualified by knowledge or materiality qualifications or a “material adverse effect” clause.

For purposes of the merger agreement, a “material adverse effect,” with respect to the Company and its subsidiaries means any fact, circumstance, event, change, effect or occurrence (whether or not constituting any breach of a representation, warranty, covenant or agreement set forth in the merger agreement) that (i) has had or would reasonably be expected to have a material adverse effect on the assets, properties, liabilities, business, results of operation or financial condition of the Company and its subsidiaries, taken as a whole, but will not include facts, circumstances, events, changes, effects or occurrences to the extent, or to the extent attributable to: (A) generally affecting the greeting card or social expressions industry in the geographies in which the Company operates, (B) generally affecting the economy, credit or financial markets in the geographies in which the Company operates, (C) changes after the date of the merger agreement in law or in generally accepted accounting principles or in accounting standards, or any regulatory and political conditions or developments, (D) the announcement of the merger agreement or the consummation of the merger (other than for purposes of any representation or warranty contained in sections 3.3(b)-(c) of the merger agreement), (E) acts of war or military action, sabotage or terrorism, or any escalation or worsening of any such acts of war or military action, sabotage or terrorism, (F) earthquakes, hurricanes, tornados or other natural disasters, except, in the case of each of clauses (A), (B), (C), (E) and (F), to the extent any fact, circumstance, event, change, effect or occurrence disproportionately impacts the assets, properties, business, results of operation or financial condition of the Company and its subsidiaries, taken as a whole, relative to other participants in the industries in which the

Company and its subsidiaries operate (G) any action taken by the Company or its subsidiaries (1) that is expressly required by the merger agreement (other than with respect to the Company’s obligations to comply with section 5.1(a) or section 5.5 of the merger agreement), (2) taken with Parent’s written consent, or (3) resulting from any action taken at the written request of Parent, (H) resulting from any change in the market price or trading volume of securities of the Company in and of itself, except that a fact, circumstance, event, change, effect or occurrence causing or contributing to the change in market price or volume will not be disregarded from the determination of a Company material adverse effect, or (I) the fact of any failure to meet revenue or earnings projections, forecasts, estimates or guidance for any period, whether relating to financial performance or business metrics, including revenues, net incomes, cash flows or cash positions, except that a fact, circumstance, event, change, effect or occurrence causing or contributing to such failure will not be disregarded from the determination of a Company material adverse effect; or (ii) that would reasonably be expected to prevent or materially delay or impair the ability of the Company to perform its obligations under the merger agreement or to consummate the transactions contemplated thereby (other than Parent’s and Merger Sub’s financing transactions).

For the purpose of the merger agreement, a “material adverse effect,” with respect to Parent or Merger Sub, means circumstances that would, individually or in the aggregate, prevent or materially delay or materially impair the ability of Family LLC, Parent or Merger Sub to consummate the merger and the other transactions contemplated thereby.

Conduct of Business Pending the Merger

The merger agreement provides that, subject to certain exceptions or Parent’s consent, during the period from the signing of the merger agreement to the effective time, the Company must, and will cause each of its subsidiaries to, conduct its business in all material respects in the ordinary course consistent with past practice, use commercially reasonable efforts to maintain its business organization and advantageous business relationships and to retain the services of its key officers and key employees, and take no action that would materially and adversely affect or delay the ability of any of the parties to the merger agreement to obtain any necessary governmental approvals or otherwise materially delay or prohibit the merger and transactions related to the merger. In addition, subject to certain exceptions or Parent’s written consent, the Company must not and shall cause each of its subsidiaries not to:

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adjust, split, combine or reclassify any capital stock or otherwise amend the terms of its capital stock;

•

make, declare or pay any dividend or other distribution on, or directly or indirectly redeem, purchase or otherwise acquire or encumber, any of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, subject to certain exceptions, including one regular quarterly dividend paid by the Company on its common shares not to exceed $0.15 per share, declared and paid consistent with prior timing;

•

grant any rights to acquire any shares of its capital stock;

•

issue any shares of its capital stock, subject to certain exceptions;

•

purchase, sell, transfer, mortgage, encumber or otherwise dispose of any properties or assets having a value in excess of $1,000,000 in the aggregate (other than to a wholly owned Company subsidiary), other than pursuant to existing contracts or in the ordinary course of business consistent with past practice;

•

incur, assume, guarantee, prepay or become obligated with respect to any indebtedness for borrowed money (other than as is already in existence at the signing of the merger agreement, is in the ordinary course of business consistent with past practice and would not reasonably be expected to delay, adversely affect or impede Parent’s ability to obtain the financing);

•

make any investment in excess of $5,000,000 in the aggregate, other than in accordance with certain exceptions;

•

make any acquisitions, whether by purchase of stock or securities or contributions to capital in excess of $5,000,000 in the aggregate, other than pursuant to existing contracts;

•

except in the ordinary course of business consistent with past practice, enter into, renew, extend, amend or terminate any material contract or contract that if entered into prior to the date of the merger agreement would be a material contract; or enter into, renew, extend, amend or terminate any contracts not in the ordinary course, involving the commitment or transfer of value in excess of $1,000,000 in the aggregate in any year;

•

except to the extent required by law or any Company benefit plan in effect as of the date of the merger agreement: increase in any manner the compensation or benefits of any employees, officers, directors, consultants or independent contractors of the Company or any of its subsidiaries, except for increases in base salary in the ordinary course of business consistent with past practice; pay any severance or retirement benefits to any employees, directors, consultants or independent contractors of the Company or any of its subsidiaries, except with respect to officers, directors and consultants in the ordinary course of business consistent with past practice; accelerate the vesting of, or the lapsing of forfeiture restrictions or conditions with respect to, any equity or equity-based awards; establish or cause the funding of any “rabbi trust” or similar arrangement; establish, adopt, amend or terminate any arrangement that would be a benefit plan of the Company if in effect on the date of the merger agreement; or enter into, amend, alter, adopt, implement or otherwise make any commitment to do any of the foregoing;

•

except in the ordinary course of business consistent with past practice, waive, release, assign, settle or compromise any claim, action or proceeding, other than those that involve only the payment of monetary damages not in excess of $1,000,000, or any obligation or liability of the Company in excess of that amount;

•

amend or waive any provision of its articles of incorporation or regulations;

•

take any action that is intended or would reasonably be expected to result in any of the conditions described in “The Merger Agreement – Conditions to the Merger” beginning on page 90 not to be satisfied;

•

enter into any “non-compete” or similar agreement that would materially restrict the businesses of the surviving corporation, its subsidiaries or its current or future affiliates following the effective time;

•

adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries;

•

implement or adopt any material change in its tax or financial accounting principles, practices or methods, other than as may be required by GAAP or applicable law; make, change or revoke any material tax election; change any method of reporting for tax purposes; settle or compromise any material tax claim, audit or dispute in excess of $1,000,000; or make or surrender any claim for a material refund of taxes in excess of $1,000,000;

•

other than in the ordinary course of business consistent with past practice, enter into any new, or materially amend or otherwise materially alter any current, agreement or obligation with any affiliate of the Company; or

•

agree or commit to do any of the foregoing.

For the purposes of the foregoing, the consent of any Family Shareholder director will be deemed to be the consent of Parent.

Other Covenants and Agreements

Access and Information

During normal business hours throughout the period prior to the effective time and subject to the requirements of applicable law and the confidentiality agreement between the Company and certain of the Family Shareholders, the Company must provide Parent, Parent’s financing sources and their respective representatives, reasonable access to the Company’s offices, properties, books and records and such other

information as Parent reasonably requests. Prior to the effective time, the Company must provide to Parent, Parent’s financing sources and their respective representatives, consolidated financial statements of the Company and its subsidiaries for each month through the effective time, as prepared by management for internal use, and any update of quarterly projections.

No Solicitation

•

initiate, solicit, encourage (including by providing information) or knowingly facilitate any inquiry, proposal or offer with respect to, or the making or completion of, an “alternative proposal” (as defined below) and will immediately cease any discussions, negotiations or communications with any party that has made or indicated an intention to make an alternative proposal;

•

approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any alternative proposal;

•

resolve to propose or agree to do any of the foregoing.

If, prior to the receipt of the Company shareholder approval and the majority of the minority shareholder approval, (i) the Company receives an unsolicited alternative proposal, (ii) the Company has not breached its obligations under the non-solicitation provisions of the merger agreement (except where such breaches did not contribute to the making of the alternative proposal), (iii) the board (acting through the special committee) determines in good faith that the alternative proposal constitutes or is reasonably likely to result in a “superior proposal” (as defined below), and (iv) after consultation with its counsel, the board (acting through the special committee) determines in good faith that failure to take action concerning an alternative proposal would be inconsistent with the directors’ fiduciary duties under applicable Ohio law, then the Company may:

•

furnish information to the person making the alternative proposal and its representatives pursuant to a confidentiality agreement on terms no less restrictive than those contained in the existing confidentiality agreement between the Company and certain of the Family Shareholders; provided that such confidentiality agreement will not contain any provisions that would prevent the Company from complying with its obligation to provide certain required disclosures to Parent as set forth in this “The Merger Agreement – Other Covenants and Agreements – No Solicitation” section; and

•

participate in discussions or negotiations with that person and its representatives regarding the alternative proposal.

alternative proposal and (ii) any inquiry or request for discussion or negotiation regarding an alternative proposal including, in each case, the identity of the party making the alternative proposal or inquiry and the material terms of the alternative proposal or inquiry (including, if applicable, copies of any document or correspondence evidencing the alternative proposal or inquiry). The Company, upon the request of Parent, will keep Parent reasonably informed of the status (including any material change to the terms) of any such alternative proposal or inquiry.

Except as described below, neither the board of directors nor any committee thereof is permitted to:

•

approve or recommend, or publicly propose to approve, endorse or recommend, any alternative proposal; or

•

approve any letter of intent, agreement in principle, merger agreement, acquisition agreement or similar agreement relating to any alternative proposal.

At any time prior to obtaining the Company shareholder approval and the majority of the minority shareholder approval, the special committee may:

•

make a recommendation change in response to an “intervening event” (as defined below) if the special committee determines in good faith, after consultation with its counsel, that the failure to do so would be inconsistent with the directors’ fiduciary duties under Ohio law; or

•

terminate the merger agreement in response to a superior proposal if (i) the superior proposal did not result from a breach by the Company of its covenants under the non-solicitation provisions of the merger agreement and is not withdrawn, (ii) the board of directors (acting through the special committee) determines, in good faith after consultation with counsel, that the failure to terminate the merger agreement would be inconsistent with the directors’ fiduciary duties under Ohio law, (iii) the Company provides Parent five business days prior written notice of its intention to terminate the merger agreement, which notice includes the information that is specified in the preceding paragraph of this “The Merger Agreement – Other Covenants and Agreements – No Solicitation” section, (iv) after providing such notice and prior to terminating the merger agreement and entering into a definitive transaction agreement providing for the consummation of the transaction contemplated by the superior proposal, (iv) the Company negotiates in good faith with Parent (to the extent Parent desires to negotiate) during the five business days to make revisions to the terms of the merger agreement as would permit the board of directors and the special committee not to terminate the merger agreement, and (v) the board of directors and the special committee consider in good faith any changes to the merger agreement offered in writing by Parent and determine in good faith, after consultation with outside legal counsel and financial advisors, that the superior proposal would continue to constitute a superior proposal if the changes offered in writing by Parent were implemented, provided that in the event that the superior proposal is then modified by the party making the superior proposal, the Company provides written notice of the modified superior proposal to Parent and again complies with the requirements described in this paragraph of this “The Merger Agreement – Other Covenants and Agreements – No Solicitation” section, except that the Company’s advance written notice obligation will be reduced to three business days.

For purposes of this proxy statement:

•

An “alternative proposal” refers to any inquiry, proposal or offer from a third party (other than Parent and its subsidiaries) relating to any:

•

direct or indirect acquisition or purchase of a business that constitutes 20% or more of the net sales, net income or total assets of the Company and its subsidiaries, taken as a whole;

•

direct or indirect acquisition or purchase of 20% or more of any class of equity securities of the Company;

•

tender offer or exchange offer that if consummated would result in any third party beneficially owning 20% or more of the outstanding shares of any class of equity securities of the Company;

•

merger, consolidation, business combination, asset purchase, recapitalization or similar transaction involving the Company, or any of its subsidiaries constituting 20% or more of the value of the Company and its subsidiaries, taken as a whole; or

•

related combination of the foregoing types of transactions if the sum of any of the (i) percentage of net sales, (ii) net income, or (iii) total assets, in each case taken separately, of the Company and its subsidiaries (on a consolidated basis) that is subject to the related combination is 20% or more.

•

A “superior proposal” refers to any bona fide written alternative proposal (except that the references to “20%” in the definition of alternative proposal will be deemed to be “50%”) that the special committee determines in its good faith judgment (after consulting with outside counsel and its financial advisor), taking into account all legal, financial and regulatory and other aspects of the proposal (including any break-up fees, expense reimbursement provisions and conditions to consummation), the likelihood and timing of required governmental approvals and consummation and the party making the proposal, would be more favorable to the shareholders of the Company (other than the Family Shareholders, Parent and Merger Sub) (solely in their capacity as such) from a financial point of view than the merger (including any adjustment to the terms and conditions of the merger proposed by Parent in response to the alternative proposal, including with respect to the merger consideration).

•

An “intervening event” refers to any event, change, development, effect, occurrence or state of facts relating to the Company’s prospects that:

•

was not known to the board of directors or the special committee on the date of the merger agreement but becomes known to the board of directors or the special committee before the receipt of the Company shareholder approval and the majority of the minority shareholder approval; and

•

if it had occurred prior to the date of the merger agreement, would have improved the Company’s prospects such that the special committee determines in good faith, after consulting with its legal and financial advisors, that the merger and other transactions contemplated by the merger agreement (other than the financing) are less favorable to the shareholders than the Company continuing to pursue its business as a publicly traded company, but in no event will the receipt, existence of or terms of an alternative proposal or any inquiry relating to an alternative proposal constitute an intervening event, and a potential leveraged recapitalization of the Company will not constitute an intervening event if the conditions in credit markets generally (including interest rates) as of the time in question are substantially similar to those conditions as of the date of the merger agreement.

Shareholder Approval

The Company will take all action necessary in accordance with Ohio law and its articles of incorporation and code of regulations to duly call, give notice of, convene and hold a meeting of its shareholders as promptly as practicable following the mailing of this proxy statement for the purpose of obtaining the Company shareholder approval and the majority of the minority shareholder approval and, subject to certain limitations described in “The Merger Agreement – Other Covenants and Agreements – No Solicitation” beginning on page 83, use reasonable best efforts to solicit from its shareholders proxies in favor of the adoption of the merger agreement.

Reasonable Best Efforts

Subject to the terms and conditions of the merger agreement, each of the parties to the merger agreement will use its reasonable best efforts (subject to, and in accordance with, applicable law) to do or cause to be done

promptly all things reasonably necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement, including:

•

obtaining all necessary actions or nonactions, waivers, consents and approvals from applicable governmental entities, making all necessary registrations and filings and taking all necessary steps to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental entity;

•

obtaining all necessary consents, approvals or waivers from third parties;

•

defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging the merger agreement or the consummation of the transactions contemplated by the merger agreement; and

•

executing and delivering any additional instruments reasonably necessary to consummate the transactions contemplated by the merger agreement.

In addition to the foregoing, subject to the terms and conditions in the merger agreement, the Company and Parent will:

•

promptly make their respective filings and any other required submissions under the HSR Act;

•

cooperate with each other in determining whether any other filings are required to be made with, or consents, permits, authorizations, waivers or approvals are required to be obtained from, any third parties or governmental entities in connection with the execution and delivery of the merger agreement and the consummation of the transactions contemplated by the merger agreement and timely make all such filings or seek all such consents, permits, authorizations or approvals;

•

subject to applicable law, keep each other apprised of the status of matters relating to the completion of the transactions contemplated by the merger agreement, including promptly furnishing the other with true and complete copies of notices or other material communications sent or received by the Company or Parent or their subsidiaries to or from any third party or governmental entity with respect to those transactions, and permit the other to review in advance any proposed material communication by that party to any supervisory or governmental entity; and

•

give the other reasonable notice of, and, to the extent permitted by such governmental entity, allow the other to attend and participate at any meeting with any governmental entity in respect of any filings, investigation or other inquiry or proceeding relating to the merger.

Each of the Company and Parent will permit counsel for the other party reasonable opportunity to review in advance, and consider in good faith the views of the other party in connection with, any proposed written communication to any governmental entity.

Indemnification; Directors’ and Officers’ Insurance

From and after the effective time until the sixth anniversary of the effective time, Parent and the surviving corporation will indemnify and hold harmless any individual who is a current or former director or officer of the Company or any of its subsidiaries and each such person who serves or served at the request of the Company as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise, together with such person’s heirs, executors or administrators (each of whom we refer to as an “indemnified party”) with respect to all losses in connection with any claim, suit, action, proceeding or investigation, whenever asserted, based on or arising out of, in whole or in part, (i) the fact that the indemnified party was a director or officer of the Company or any of its subsidiaries or (ii) acts or omissions by the indemnified party in his or her capacity as a director, officer, employee or agent of the Company or one of its subsidiaries or taken at the request of the Company or one of its subsidiaries, in each case to the fullest extent permitted under Ohio law, to the extent that the indemnified party may be indemnified pursuant to the organizational documents of the Company or its subsidiaries or any written agreement in existence as of the date of the merger agreement.

Parent guarantees, and the surviving corporation will assume, all obligations of the Company and any of its subsidiaries in respect of rights of exculpation, indemnification and advancement of expenses for acts or omissions occurring at or prior to the effective time, whether asserted or claimed prior to, at or after the effective time, existing in favor of any indemnified party as provided in the organizational documents of the Company or its subsidiaries or in certain written agreements. From and after the effective time until the sixth anniversary of the effective time, Parent will cause, unless otherwise required by law, the organizational documents of the surviving corporation to contain provisions no less favorable to the indemnified parties with respect to limitation of liabilities of directors and officers and indemnification than are set forth as of the date of the merger agreement in the organizational documents of the Company or available under Ohio law, which provisions will not be amended, repealed or otherwise modified in a manner that would adversely affect the rights of the indemnified parties. In addition, from and after the effective time until the sixth anniversary of the effective time, Parent will, and will cause the surviving corporation to, advance any expenses of any indemnified party to the fullest extent permitted under applicable law, so long as the individual to whom expenses are advanced provides an undertaking to repay those advances if that individual is not entitled to indemnification under the merger agreement.

From and after the effective time until six years from the effective time, Parent will either cause to be maintained the current directors’ and officers’ liability insurance maintained by the Company or will purchase a “tail policy” with the same coverage, scope, amounts and terms as are in effect as of the date of the merger agreement (subject to a price cap of 250% of the cost of the current directors’ and officers’ liability insurance).

Financing

Each of Parent and Merger Sub must use its reasonable best efforts to do all things reasonably necessary, proper or advisable to obtain the financing on the terms and conditions described in the financing commitments, and must use reasonable best efforts to:

•

maintain in effect the financing commitments until the merger is consummated;

•

negotiate and enter into definitive agreements with respect to the financing on the terms and conditions contemplated by the financing commitments or on certain other terms that are acceptable to Parent and could not reasonably be expected to reduce the aggregate amount of net cash proceeds available from the financing, introduce new or additional conditions or otherwise be reasonably likely to prevent, impede, delay or impair the availability of the financing or the ability of Parent or Merger Sub to consummate the merger as of the closing of the merger or adversely impact the ability of Parent or Merger Sub to enforce its rights against the other parties to the financing commitments;

•

satisfy on or prior to the closing of the merger all conditions precedent applicable to Parent and Merger Sub in the financing commitments;

•

consummate the financing at or prior to the closing of the merger;

•

enforce the rights of Parent and Merger Sub under the financing commitments; and

•

comply in all material respects with its covenants and other obligations under the financing commitments.

Neither Parent nor Merger Sub will permit any amendment, supplement or other modification of, or waiver of any provision or remedy under, the financing commitments to the extent that amendment, supplement, other modification or waiver could reasonably be expected to reduce the aggregate amount of net cash proceeds available from the financing, introduce new or additional conditions or otherwise be reasonably likely to prevent, impede, delay or impair the availability of the financing or the ability of Parent or Merger Sub to consummate the merger as of the closing of the merger, or adversely impact the ability of Parent or Merger Sub to enforce its rights against the other parties to the financing commitments.

Upon request, Parent must keep the Company reasonably informed of the status of its efforts to arrange the financing. Parent must give the Company prompt notice of:

•

any actual or alleged breach or default by any party to any financing commitment or definitive document related to the financing;

•

the receipt of any written notice or other written communication from a financing source for the financing with respect to any actual or alleged breach, default, termination or repudiation related to the financing or material dispute or disagreement between or among any parties to any financing commitments or any definitive document related to the financing with respect to the obligation to fund the financing or the amount of the financing to be funded at the closing of the merger; and

•

any determination by Parent and Merger Sub in good faith that they will not be able to satisfy any of the obligations to, or otherwise be able to obtain, all or any portion of the financing on the terms, in the manner or form the sources contemplated by the financing commitments or the definitive documents related to the financing.

If any portion of the financing becomes unavailable on the terms and conditions contemplated by the financing commitments and that portion is reasonably required to fund the amounts contemplated to be paid by Parent or Merger Sub pursuant to the merger agreement, Parent and Merger Sub must promptly (and in any event within two business days) notify the Company and use their respective reasonable best efforts to arrange and obtain replacement alternative financing from alternative sources as promptly as practicable following the occurrence of that event but no later than the business day immediately prior to the end date in an amount sufficient, and on terms that will enable Parent and Merger Sub, to consummate the merger and on terms and conditions, taken as a whole, not materially less favorable to the Company or Parent than the terms set forth in the financing commitments or that are otherwise approved by the Company. Parent and Merger Sub must deliver to the Company true and complete copies of all agreements pursuant to which any such alternative source has committed to provide Parent, Merger Sub or the surviving corporation with any portion of the financing. Any such alternative financing must be in an amount sufficient to consummate the merger and must not impose new or additional conditions or otherwise expand, amend or modify any of the conditions to the receipt of the financing in a manner that would reasonably be expected to delay or prevent the closing date or make the funding of the financing less likely to occur.

Prior to the closing of the merger, upon the request of Parent, the Company must use reasonable best efforts to provide and cause its subsidiaries and its and their respective officers, directors, managers, employees, accountants, consultants, legal counsel, agents and other representatives to provide all cooperation reasonably requested by Parent that is customary in connection with arranging, obtaining and syndicating the financing (so long as certain confidentiality requirements are met, the Company’s obligations described in this paragraph under any agreement or to incur any cost do not begin until the effective time, the requested cooperation does not unreasonably interfere with the ongoing operations of the Company and its subsidiaries, and the Company will be permitted a reasonable period to comment on documents and information circulated to potential financing sources) including, among other things:

•

participating in a reasonable number of meetings, presentations, road shows, drafting sessions, due diligence sessions with prospective lenders and investors and sessions with rating agencies in connection with the financing;

•

furnishing all financial statements required by the financing commitments (as in effect on the date of the merger agreement);

•

assisting with the preparation and entering into as of the effective time of definitive agreements with respect to the financing (including review of any disclosure schedules related to such definitive agreements for completeness and accuracy) or the amendment of any of the Company’s or its Subsidiaries’ currency or interest hedging agreements, in each case, on terms reasonably satisfactory to Parent and that are reasonably requested by Parent in connection with the financing, but no such agreements or amendments may take effect until the effective time and no obligation of the Company or any of its subsidiaries under any such agreements or amendments may be effective until the effective time;

•

assisting with the preparation of customary materials for rating agency presentations, offering and syndication documents (including public and private information memoranda and lender presentations), business projections and similar marketing documents required in connection with the financing;

•

furnishing Parent and the financing sources as promptly as practicable following Parent’s request with financial and other pertinent information regarding the Company and its subsidiaries;

•

cooperating reasonably with the financing sources for compliance with applicable “know your customer” and anti-money laundering rules and regulations, including U.S.A. Patriot Act of 2001;

•

cooperating reasonably with the financing sources’ due diligence to the extent customary;

•

executing customary authorization letters;

•

reasonably cooperating in respect of the conditions precedent set forth in the financing commitments or any definitive document relating to the financing, subject to the occurrence of the effective time;

•

using commercially reasonable efforts to obtain legal opinions, accountants’ comfort letters and consents to the use of accountants’ audit reports relating to the Company, in each case to the extent customary for financings similar to the financing and reasonably requested by Parent;

•

executing and delivering any guarantees, pledge and security documents, other definitive financing documents, or other certificates or documents contemplated by the senior commitment letter and hedging agreements as may be reasonably requested by Parent or Merger Sub (none of which may become effective prior to the effective time);

•

using commercially reasonable efforts to obtain consents, approvals, authorizations and instruments that may reasonably be requested by Parent or Merger Sub to be delivered at the closing of the merger to permit the consummation of the financing;

•

cooperating reasonably with the marketing efforts of Parent and its financing sources for any portion of any financing;

•

using commercially reasonable efforts to ensure that the financing sources benefit from the existing lending relationships of the Company and its subsidiaries; and

•

as of the effective time, taking all corporate actions necessary and reasonably requested by Parent to authorize the consummation of the financing and to permit the proceeds of the financing to be made available to the surviving corporation immediately after the effective time.

Except as otherwise set forth in the merger agreement, the Company will promptly take such actions as may be reasonably requested by Parent in respect of the Company’s (i) 2021 senior notes indenture and indenture governing the 6.10% notes due 2028 (which we collectively refer to as the “senior notes indentures”) and the notes issued pursuant to the senior notes indentures and (ii) amended and restated credit agreement (including taking actions necessary to repay in full and terminate all obligations under the credit agreement at the time of the closing of the merger), in each case as directed by and in accordance with the terms and conditions specified in writing by Parent, but (i) no such action may be effective prior to the effective time and all costs in respect of any such action will be borne by Parent, (ii) Parent may not request the Company to take any actions or deliver any notices to repay, refinance, redeem, retire, cancel or terminate, as applicable, the senior notes indentures or the notes issued pursuant to the senior notes indentures and (iii) the Company may obtain a reasonable waiver, consent or amendment under the 2021 senior notes indenture as the Company determines in good faith to be necessary to permit the consummation of the transactions contemplated by the Debt Financing in a manner that does not result in a breach of the 2021 senior notes indenture.

Shareholder Litigation

The Company will give Parent the opportunity to participate in the defense or settlement of any shareholder litigation against the Company or its directors relating to the merger or any other transactions contemplated by the merger agreement, whether commenced prior to or after the execution and delivery of the merger agreement, and the Company will not settle any such litigation without Parent’s prior written consent.

Conditions to the Merger

The obligations of the Company, Parent and Merger Sub to effect the merger are subject to the fulfillment or waiver, at or before the effective time, of the following conditions:

•

that the Company shareholder approval has been obtained;

•

that the majority of the minority shareholder approval has been obtained;

•

that any applicable waiting period under the HSR Act has expired or been terminated.

The obligation of the Company to effect the merger is subject to the fulfillment or waiver, at or before to the effective time, of the following conditions:

•

that the representations and warranties of Parent and Merger Sub set forth in the merger agreement are true and correct at and as of the date of the merger agreement and at and as of the closing date of the merger as though made at and as of the closing date of the merger, except where the failure of such representations and warranties to be true and correct (in each case without giving effect to any materiality or material adverse effect qualifier) does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect with respect to Parent and except that representations and warranties that are made as of a specified date or period need be true and correct only as of that specified date or period;

•

The obligation of Parent and Merger Sub to effect the merger is subject to the fulfillment or waiver, at or before the effective time, of the following conditions:

•

that the Company has have delivered to Parent a certificate, dated the effective time and signed by a senior executive officer of the Company (other than any affiliate of Parent), certifying that the conditions set forth in the two items described immediately above have been satisfied;

•

that Parent and Merger Sub have received the proceeds of the financing as contemplated by the Preferred Stock Purchase Agreement and the Debt Commitment Letter; and

•

that since the date of the merger agreement, there has not been any material adverse effect on the Company, subject to certain exceptions.

Termination

•

the merger has not been completed by the end date, provided that this termination right is not available to a party whose failure to perform any of its obligations under the merger agreement has been the primary cause of the failure of the merger to be consummated by the end date;

•

The Company (with the prior approval of the special committee) may terminate the merger agreement:

•

prior to the approval of the merger agreement by our shareholders, in order to concurrently enter into a definitive agreement with respect to a superior proposal, but only if the Company has otherwise complied in all material respects with its obligations under the merger agreement, including those described in “The Merger Agreement – Other Covenants and Agreements – No Solicitation” above.

Parent may terminate the merger agreement:

•

if prior to the approval of the merger agreement by our shareholders, the Company materially breaches (i) its non-solicitation obligations as described in “The Merger Agreement – Other Covenants and Agreements – No Solicitation” above or (ii) its filing obligations as described in “The Merger Agreement – Other Covenants and Agreements – Shareholder Approval” above and such breach is not cured within five business days following written notice by Parent to the Company.

Fees and Expenses

Except as otherwise provided in the merger agreement, as described in this “The Merger Agreement – Fees and Expenses” section, whether or not the merger is consummated, all costs and expenses incurred in connection with the merger will be paid by the party incurring or required to incur them, but if the merger is consummated, all costs and expenses incurred by Parent or Merger Sub in connection with the merger, the merger agreement and the transactions contemplated by the merger agreement will be paid by the surviving corporation. However, all costs and expenses related to the filing and other fees paid to the SEC in connection with the merger will be borne by the Company and the filing fees under the HSR Act will be borne by Parent.

Expense Reimbursement Provisions

The Company will pay to Parent an amount equal to the sum of Parent’s and Merger Sub’s expenses up to $7.3 million if:

•

Parent terminates the merger agreement because of a recommendation change or failure to make a recommendation by the board of directors or the special committee;

•

Parent, prior to obtaining the Company shareholder approval and the majority of the minority shareholder approval, terminates the merger agreement because the Company materially breaches its non-solicitation covenant under the merger agreement or fails to take necessary steps to obtain approval for the merger and that breach is not cured within five business days following written notice by Parent to the Company;

•

either the Company or Parent terminates the merger agreement because the merger agreement is not approved by the Company’s shareholders at the special meeting; or

•

Amendments and Waivers

Except as described in the next paragraph, at any time prior to the effective time, any provision of the merger agreement may be amended or waived if, and only if, the amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Sub, or in the case of a waiver, by the party against whom the waiver is to be effective, but after receipt of the Company shareholder approval and the majority of the minority shareholder approval, if any amendment or waiver, by applicable law or in accordance with the rules and regulations of the NYSE, requires further approval of the shareholders of the Company, the effectiveness of that amendment or waiver will be subject to the approval of the shareholders of the Company.

However, no amendment, waiver or other modification may be made to certain sections of the merger agreement that would be adverse to Parent and Merger Sub’s financing sources without the consent of the Parent and Merger Sub’s financing sources (which consent may not be unreasonably withheld, delayed or conditioned).

Equitable Remedies and Specific Performance

The parties will be entitled to an injunction or injunctions to prevent breaches of the merger agreement or to enforce specifically the performance of its terms without proof of damages or otherwise, in addition to any other remedies to which they are entitled at law or in equity. Except as otherwise provided in the merger agreement, all remedies, at law or otherwise, will be cumulative and not alternative or exclusive of other remedies.

Each party waives any defenses in any action for specific performance. However, the Company’s right to seek specific performance of Parent’s obligation to cause the transactions contemplated by the rollover and contribution agreement to be effected and to consummate the merger is subject to the requirements that:

•

all of the conditions to Parent’s and Merger Sub’s obligations to effect the merger, as described in “The Merger Agreement – Conditions to the Merger” above have been satisfied;

•

the conditions to the funding of the financing have been satisfied (other than any conditions related to Parent or its obligations under the financing);

•

Parent and Merger Sub have failed to complete the closing of the merger in accordance with the terms of the merger agreement; and

•

the Company has irrevocably confirmed that if specific performance is granted and the financing is funded, then it will take the actions required of it by the merger agreement to cause the closing of the merger to occur.

Governing Law

The merger agreement is governed by and construed in accordance with the laws of the State of Ohio without reference to that state’s principles of conflict of laws.

AGREEMENTS INVOLVING COMMON SHARES

Guaranty and Voting Agreement

In connection with the execution of the merger agreement, on March 29, 2013, the Family Shareholders, the Irving I. Stone Foundation and the Company entered into the guaranty and voting agreement. Pursuant to the guaranty and voting agreement, the Family Shareholder directors, jointly and severally, guaranteed to the Company certain obligations of Parent and Merger Sub under the merger agreement, subject to a maximum aggregate liability of $7.3 million. In addition, subject to certain terms and conditions in the guaranty and voting Agreement, the Family Shareholders and the Irving I. Stone Foundation agreed to vote the common shares over which they have voting power (representing 43.2% of the Company’s total outstanding voting power as of May 3, 2013) in favor of the adoption of the merger agreement. The obligation to vote those common shares will terminate upon the occurrence of certain events, including a change of recommendation or failure to make a recommendation regarding the merger by the board or the special committee and the termination of the merger agreement.

The votes in respect of the common shares voted by the Family Shareholders and the Irving I. Stone Foundation will be excluded for purposes of tabulating the vote with respect to the majority of the minority shareholder approval.

Rollover and Contribution Agreement

On March 29, 2013, the Family Shareholders entered into the rollover and contribution agreement with Family LLC and Parent, pursuant to which the Family Shareholders collectively committed to contribute, immediately prior to the consummation of the merger, an aggregate amount of 2,311,499 shares of Class A common shares and Class B common shares (including 30,432 Class A common shares and Class B common shares issued on May 2, 2013 and May 3, 2013, to Morry Weiss, Zev Weiss, Jeffrey Weiss and Gary Weiss in respect of 55,889 restricted stock units granted to them under the 2007 plan) to Family LLC (the equivalent of a $42,069,282 investment based on the $18.20 per share merger consideration) in exchange for certain equity securities of Family LLC. Also pursuant to the rollover and contribution agreement, Family LLC agreed to contribute the shares described above to Parent in exchange for all of the common shares of Parent.

The rollover and contribution agreement is further described in the section “Special Factors – Financing –Rollover Financing” beginning on page 56.

PROVISIONS FOR UNAFFILIATED SHAREHOLDERS

No provision has been made (i) to grant the Company’s unaffiliated shareholders access to the corporate files of the Company, any other party to the merger or any of their respective affiliates, or (ii) to obtain counsel or appraisal services at the expense of the Company, or any other such party or affiliate.

IMPORTANT INFORMATION REGARDING AMERICAN GREETINGS

Company Background

Founded in 1906, American Greetings operates predominantly in a single industry: the design, manufacture and sale of everyday and seasonal greeting cards and other social expression products. We manufacture and sell greeting cards, gift packaging, party goods, stationery and giftware in North America, primarily in the United States and Canada, and throughout the world, primarily in the United Kingdom, Australia and New Zealand. In addition, our subsidiary, AG Interactive, Inc., distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals and electronic mobile devices. We also engage in design and character licensing and manufacture custom display fixtures for our products and products of others. We also operate approximately 400 card and gift retail stores throughout the United Kingdom. If the merger agreement is adopted by American Greetings shareholders at the special meeting and the merger is completed as contemplated, American Greetings will survive the merger and will continue its operations as a private company and a wholly owned subsidiary of Parent. The Company’s principal offices are located at One American Road, Cleveland, Ohio 44144.

During the past five years, neither the Company nor any of the Company directors or executive officers listed below has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). In addition, during the past five years, neither the Company nor any of the Company directors or executive officers listed below has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Each of the individuals listed below is a citizen of the United States and can be reached care of American Greetings, One American Road, Cleveland, Ohio 44144.

Directors and Executive Officers

The board of directors presently consists of nine members. The persons listed below are the directors and executive officers of American Greetings as of the date of this proxy statement.


Name	Age		Current Position and Office
Morry Weiss		73	Director, Chairman of the Board
Zev Weiss		46	Director, Chief Executive Officer
Jeffrey Weiss		49	Director, President and Chief Operating Officer
Scott S. Cowen		66	Director
Jeffrey D. Dunn		58	Director
William E. MacDonald, III		66	Director
Michael J. Merriman, Jr.		57	Director
Charles A. Ratner		71	Director
Jerry Sue Thornton		66	Director
John W. Beeder		53	Senior Vice President, Executive Sales and Marketing Officer
Christopher W. Haffke		43	Vice President, General Counsel and Secretary
Thomas H. Johnston		65	Senior Vice President, Creative/Merchandising
Brian T. McGrath		62	Senior Vice President, Human Resources
Douglas W. Rommel		57	Senior Vice President, Chief Information Officer
Stephen J. Smith		49	Senior Vice President and Chief Financial Officer
Robert D. Tyler		48	Corporate Controller and Chief Accounting Officer
Erwin Weiss		64	Senior Vice President

Morry Weiss and Erwin Weiss are brothers. Jeffrey Weiss and Zev Weiss are the sons of Morry Weiss.

Morry Weiss joined American Greetings in 1961 and has had various responsibilities with American Greetings, including Group Vice President of Sales, Marketing and Creative. In June 1978, Mr. Weiss was

appointed President and Chief Operating Officer. From 1987 until 2003, Mr. Weiss was Chief Executive Officer of American Greetings. In 1992, Mr. Weiss became our Chairman. Mr. Weiss served as a director of National City Corporation (a publicly-held financial holding company) from 1991 until its sale in 2008.

Zev Weiss became Chief Executive Officer of American Greetings in 2003. Prior to becoming Chief Executive Officer, Mr. Weiss had various responsibilities with American Greetings since joining in 1992, including most recently, Executive Vice President, A.G. Ventures and Enterprise Management from 2001 to 2003.

Jeffrey Weiss is President and Chief Operating Officer of American Greetings, a position he has held since 2003. Prior to becoming President and Chief Operating Officer, Mr. Weiss has had various responsibilities with American Greetings since joining in 1988, including most recently, Executive Vice President, North American Greeting Card Division of American Greetings from 2000 until 2003.

Scott S. Cowen is President and Seymour S Goodman Professor of Management and Professor of Economics, Tulane University, a position he has held since 1998. Dr. Cowen has served as a director of Forest City Enterprises, Inc. (a publicly-held conglomerate corporation engaged in real estate development, sales, investment and construction) since 1989 and Newell Rubbermaid Inc. (a publicly-held consumer home products company) since 1999. He was a director of Jo-Ann Stores, Inc. (a publicly-held specialty store retailer) from 1987 until its sale in 2011. Dr. Cowen has been a member of the Board of Overseers of TIAA-CREF (a private financial services company) since 2010.

Jeffrey D. Dunn served as president and chief executive officer and was a director of HIT Entertainment Limited (a children’s entertainment company), from 2008 until the company was sold in February 2012.

William E. MacDonald, III, was Vice Chairman and a member of the Office of the Chairman of National City Corporation from 2001 until his retirement in 2006. Prior to that, Mr. MacDonald held various management positions within National City over more than 30 years, including Senior Executive Vice President of National City Corporation and President and Chief Executive Officer of National City’s Ohio Bank. Mr. MacDonald has served as a director of Lincoln Electric Holdings, Inc. (a publicly-held manufacturer and reseller of welding and cutting products) since 2007.

Michael J. Merriman, Jr. has been an operating advisor with Resilience Capital Partners, LLC (a private equity firm) since 2008, and has been the chairman of CR Brands, Inc. (a manufacturer and marketer of household cleaning and laundry products and a portfolio company of Resilience Capital Partners) since October 2012. Mr. Merriman served as a director of RC2 Corporation (a publicly-held manufacturer of pre-school toys and infant products) from 2004 until its sale in 2011. Mr. Merriman has served as a director of Nordson Corporation (a publicly-held manufacturer of equipment used for precision dispensing, testing and inspection, surface preparation and curing) since 2008; OMNOVA Solutions Inc. (a publicly-held innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces) since 2008; and Regis Corporation (a publicly-held operator of beauty salons in North America and Europe, including Supercuts, Smart Style Salons in Wal-Mart stores and Regis Salons in malls) since 2011.

Charles A. Ratner is the Chairman of the Board of Forest City Enterprises, Inc., a position that he has held since 2011, and has been a member of its board of directors since 1972. Prior to 2011, Mr. Ratner was Chief Executive Officer and President of Forest City Enterprises, Inc., positions he held for 15 and 17 years, respectively. Mr. Ratner has served as a director of RPM International, Inc. (a publicly-held specialty coatings manufacturer) since 2005.

Jerry Sue Thornton is the President of Cuyahoga Community College, Cleveland, Ohio (the largest community college in northeast Ohio), a position she has held since 1992. Dr. Thornton has announced that she will retire from Cuyahoga Community College in June 2013. Dr. Thornton served as a director of National City Corporation from 2004 until its sale in December 2008. Dr. Thornton has served as a director of Applied Industrial Technologies, Inc. (a publicly-held distributor of industrial products and services) since 1994 and RPM International, Inc. since 1999.

John W. Beeder held various positions with Hallmark Cards, Inc. from 1983 to 2006, most recently as Senior Vice President and General Manager–Greeting Cards from 2002 to 2006. Thereafter, Mr. Beeder served

as the President and Chief Operating Officer of Handleman Corporation (international music distribution company) in 2006 and the Managing Partner and Chief Operating Officer of Compact Clinicals (medical publishing company) in 2007. He became Senior Vice President, Executive Sales and Marketing Officer of the Corporation in April 2008.

Christopher W. Haffke joined American Greetings in October 2004 as Executive Director and Assistant General Counsel. He was promoted to the position of Vice President, Deputy General Counsel and Assistant Secretary in June 2010 and served in that capacity until his promotion in December 2012 to Vice President, General Counsel and Secretary of the Company.

Thomas H. Johnston was Managing Director of Gruppo, Levey & Co., an investment banking firm focused on the direct marketing and specialty retail industries, from November 2001 until May 2004, when he became Senior Vice President and President of Carlton Cards Retail, a position he held until May 2009, shortly after the sale of the Company’s Retail Operations segment in April 2009. Mr. Johnston became Senior Vice President, Creative/Merchandising in December 2004.

Brian T. McGrath has held various positions with the Company since joining in 1989, including most recently Vice President, Human Resources from November 1998 until July 2006, when he became Senior Vice President, Human Resources.

Douglas W. Rommel has held various positions with the Company since joining in 1978, including most recently Vice President, Information Services from November 2001 until March 2010, when he became Senior Vice President, Chief Information Officer.

Stephen J. Smith was Vice President and Treasurer of General Cable Corporation, a wire and cable company, from 1999 until 2002. He became Vice President, Treasurer and Investor Relations of the Corporation in April 2003, and became Senior Vice President and Chief Financial Officer in November 2006.

Robert D. Tyler joined American Greetings in 2004 as Director, Corporate Accounting and Reporting. In 2005, Mr. Tyler was promoted to Assistant Corporate Controller and held that position until he was promoted to Corporate Controller in 2010. In 2012, Mr. Tyler assumed the additional role of Chief Accounting Officer.

Erwin Weiss has held various positions with the Company since joining in 1977, including serving in various senior vice president roles since 1991, including most recently Senior Vice President, Program Realization from June 2001 to June 2003, and Senior Vice President, Specialty Business from June 2003 and Senior Vice President, Enterprise Resource Planning from February 2007 until February 2012.

Prior Public Offerings

During the past three years, the Company has not made any underwritten public offering of common shares for cash that was registered under the Securities Act of 1933 or exempt from registration under Regulation A.

Historical Selected Financial Information

Set forth below is certain historical selected financial information relating to the Company. The historical selected financial data as of and for the fiscal years ended 2013, 2012, 2011, 2010 and 2009 have been derived from the Company’s historical audited consolidated financial statements. This information is only a summary and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 28, 2013, which is incorporated by reference into this proxy statement. More comprehensive financial information is included in that report, including management’s discussion and analysis of financial condition and results of operations, and the following summary is qualified in its entirety by reference to that report and all of the financial information and notes contained therein. For additional information, see “Where You Can Find Additional Information” beginning on page 117. Historical results are not necessarily indicative of results to be expected in any future period.


	Fiscal Year Ended
	Feb 28, 2013		Feb 29, 2012		Feb 28, 2011		Feb 28, 2010		Feb 28, 2009
	(In thousands except per share amounts)
Consolidated Statement of Operations
Net sales	$	1,842,544	$	1,663,281	$	1,565,539	$	1,603,285	$	1,646,399
Total revenue		1,868,739		1,695,144		1,597,894		1,640,851		1,690,738
Goodwill impairment		—		27,154		—		—		290,166
Interest expense		17,896		53,073		25,389		26,311		22,854
Net income (loss)		49,918		57,198		87,018		81,574		(227,759	)
Earnings (loss) per share:
Earnings (loss) per share		1.50		1.44		2.18		2.07		(4.89	)
Earnings (loss) per share – assuming dilution		1.47		1.42		2.11		2.03		(4.89	)
Cash dividends declared per share		0.60		0.60		0.56		0.36		0.60
Fiscal year end market price per share		16.20		15.00		21.65		19.07		3.73
Average number of shares outstanding		33,225,354		39,624,694		39,982,784		39,467,811		46,543,780


	As of end of Fiscal Year Ended
	Feb 28, 2013			Feb 29, 2012			Feb 28, 2011			Feb 28, 2010			Feb 28, 2009
	(In thousands except per share amounts and percentages)
Consolidated Statement of Financial Position
Inventories	$	242,447		$	208,945		$	179,730		$	163,956		$	194,945
Working capital		293,310			331,679			380,555			331,803			241,149
Total assets		1,583,463			1,549,464			1,547,249			1,544,498			1,462,895
Property, plant and equipment additions		114,149			78,207			39,762			29,065			61,266
Long-term debt		286,381			225,181			232,688			328,723			389,473
Shareholders’ equity		681,877			727,458			763,758			650,911			544,035
Shareholders’ equity per share		21.33			19.74			18.90			16.49			13.42
Net return on average shareholders’ equity from continuing operations		7.1	%		7.7	%		12.3	%		13.7	%		(30.3	)%

Ratio of Earnings to Fixed Charges

The following table presents our ratio of earnings to fixed charges for the fiscal periods indicated.


	Fiscal Year Ended
	Feb 28, 2013			Feb 29, 2012			Feb 28, 2011			Feb 28, 2010		Feb 28, 2009
	(In thousands)
Earnings
Pretax income from continued operations before adjustment for income or loss from equity investees	$	85,914		$	97,815		$	156,007		$	120,954	$	(274,933	)
Fixed charges		39,945			60,647			31,087			33,838		38,811
Amortization of capitalized interest		—			—			—			—		—
Distributed income of equity investees		—			—			—			—		—
Share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges		—			—			—			—		—

Subtotal		125,859			158,462			187,094			154,792		(236,122	)
Less: Interest capitalized		(2,355	)		(1,138	)		(10	)		—		—
Less: Preference security dividend requirements of consolidated subsidiaries		—			—			—			—		—
Less: Non-controlling interest in pre-tax income of subsidiaries that have not incurred fixed charges		—			—			—			—		—

Total Earnings		123,504			157,324			187,084			154,792		(236,122	)
Fixed Charges
Interest capitalized		2,355			1,138			10			—		—
Interest expense, amortized premiums, discounts and capitalized expenses related to indebtedness		17,896			53,073			25,389			26,311		22,854
Interest portion of rental expense		19,694			6,436			5,688			7,527		15,957
Preference security dividend requirements of consolidated subsidiaries		—			—			—			—		—

Total Fixed Charges		39,945			60,647			31,087			33,838		38,811
Ration of earnings to fixed charges		3.09			2.59			6.02			4.57		*

*	The ratio is less than one to one coverage. The deficiency was $274,933.

Book Value Per Share

Our net book value per share as of February 28, 2013 was approximately $21.33 (calculated based on 31,970,841 common shares outstanding).

Market Price of the Company’s Common Shares

The Class A common shares are traded on the NYSE under the symbol “AM.” The following table sets forth the high and low sales prices per share of Class A common shares for the fiscal years ended February 29, 2012 and February 28, 2013 and first quarter of the fiscal year ending February 28, 2014:


	Market Price
	High		Low
2014
First Quarter (through May 17, 2013)	$	18.50	$	15.96
2013
First Quarter	$	16.55	$	13.96
Second Quarter	$	15.16	$	12.53
Third Quarter	$	17.44	$	13.98
Fourth Quarter	$	17.49	$	15.06
2012
First Quarter	$	24.75	$	21.11
Second Quarter	$	24.84	$	17.81
Third Quarter	$	21.68	$	15.20
Fourth Quarter	$	17.85	$	12.47

The closing price of our Class A common shares on March 28, 2013, which was the last trading day before the merger was publicly announced, was $16.10 per share. The closing price of our Class A common shares on September 25, 2012, which was the last trading day before the announcement by the Weiss Family of their initial proposal to acquire the Company, was $14.34 per share.

There is no public market for our Class B common shares.

Dividends

The following table sets forth the dividends on our Class A common shares and Class B common shares declared by us in the fiscal years ended February 28, 2013 and February 29, 2012, respectively.


Dividends per share declared in	2013		2012
1^st Quarter	$	0.15	$	0.15
2^nd Quarter		0.15		0.15
3^rd Quarter		0.15		0.15
4^th Quarter		0.15		0.15

Total	$	0.60	$	0.60

Our borrowing arrangements, including our senior secured credit facility and the 2021 senior notes indenture, restrict our ability to pay dividends. Under the merger agreement, if the board of directors so determines prior to the completion of the merger, the Company is permitted to declare and pay one quarterly dividend on its common shares up to $0.15 per share, consistent with prior timing. For further information, see the section entitled “The Merger Agreement – Conduct of Business Pending the Merger” starting on page 81. Our borrowing arrangements also contain certain other restrictive covenants that are customary for similar credit arrangements. There are also financial covenants that require us to maintain a maximum leverage ratio (consolidated indebtedness minus unrestricted cash over consolidated EBITDA) and a minimum interest coverage ratio (consolidated EBITDA over consolidated interest expense).

100

Security Ownership of Management and Certain Beneficial Owners

Security Ownership of Management

At the close of business on May 3, 2013, our directors, the named executive officers and the directors and executive officers as a group beneficially owned and had sole voting and dispositive power (except as otherwise indicated) of our common shares as set forth in the following table:

Name

Title of Class

Amount &
Nature of
Beneficial
Ownership

Percent of Class
Outstanding

Deferred
Compensation
Plan Share
Equivalents⁽⁵⁾

Scott S. Cowen

Class A common

68,443

⁽¹⁾

—

Class B common

2,069

⁽⁶⁾

—

Jeffrey D. Dunn

Class A common

50,643

⁽¹⁾

—

Class B common

—

William E. MacDonald, III

Class A common

51,715

⁽¹⁾

—

Class B common

—

Michael J. Merriman, Jr.

Class A common

57,715

⁽¹⁾

—

Class B common

—

Charles A. Ratner

Class A common

83,047

⁽¹⁾

—

Class B common

16,219

—

Jerry Sue Thornton

Class A common

67,643

⁽¹⁾

—

Class B common

14,317

⁽⁶⁾

—

Morry Weiss

Class A common

—

Class B common

292,078

⁽¹⁾⁽²⁾

9.81%

—

Zev Weiss

Class A common

—

Class B common

572,847

⁽¹⁾⁽⁴⁾

16.85%

49,540

Jeffrey Weiss

Class A common

4,533

⁽³⁾

—

Class B common

370,697

⁽¹⁾⁽⁴⁾

11.51%

—

Stephen J. Smith

Class A common

117,230

⁽¹⁾