American Greetings Corp/Jeff Weiss SC 13D

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NqCQkEpaCH/ChghZ8AkELQEc3fkWJdoOubeq2n7Qn4Pjm5sptBG6zXDPSvBCS+pN Kbij6txHT9gJnh/sT64GMA== 0000950152-06-006979.txt : 20060814 0000950152-06-006979.hdr.sgml : 20060814 20060814163158 ACCESSION NUMBER: 0000950152-06-006979 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20060814 DATE AS OF CHANGE: 20060814 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GREETINGS CORP CENTRAL INDEX KEY: 0000005133 STANDARD INDUSTRIAL CLASSIFICATION: GREETING CARDS [2771] IRS NUMBER: 340065325 STATE OF INCORPORATION: OH FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-14133 FILM NUMBER: 061030961 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 BUSINESS PHONE: 2162527300 MAIL ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WEISS JEFFREY M CENTRAL INDEX KEY: 0001223162 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: C/O AMERICAN GREETING CORP STREET 2: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 SC 13D 1 l21890asc13d.htm AMERICAN GREETINGS CORP/JEFF WEISS SC 13D American Greetings Corp/Jeff Weiss SC 13D


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. ___)*

American Greetings Corporation

(Name of Issuer)

Class B Common Shares

(Title of Class of Securities)

026375-20-4

(CUSIP Number)

Jeffrey Weiss, One American Road
Cleveland, OH 44144
216-252-7300

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

August 4, 2006

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


CUSIP No.		026375-20-4		Page		2		of		6


1	NAMES OF REPORTING PERSONS: Jeff Weiss

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) þ

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	AF & OO

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	USA

		7	SOLE VOTING POWER:

NUMBER OF			158,792

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			0

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			158,792

WITH		10	SHARED DISPOSITIVE POWER:

			0

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	158,792

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	þ

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	3.8%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	IN

Page 2 of 6

TABLE OF CONTENTS


	Item 1. Security and Issuer
	Item 2. Identity and Background
	Item 3. Source and Amount of Funds or Other Consideration
	Item 4. Purpose of Transaction
	Item 5. Interest in Securities of the Issuer
	Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
	Item 7. Material to be Filed as Exhibits
SIGNATURE
EX-1
EX-2
EX-3

Schedule 13D

Item 1. Security and Issuer.

This Schedule 13D relates to the Class B common shares, par value $1.00 per share (“Class B Shares”), of American Greetings Corporation (the “Company”). The principal executive offices of the Company are located at One American Road, Cleveland, Ohio 44114.

Item 2. Identity and Background.

This Schedule 13D is filed on behalf of Jeffrey Weiss (the “Reporting Person” or “Mr. Weiss”). Mr. Weiss’ business address is One American Road, Cleveland, Ohio 44144. Mr. Weiss is the President and Chief Operating Officer of the Company. The Company designs, manufactures and sells everyday and seasonal greeting cards and other social expression products.

Mr. Weiss has not, during the last five years: (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Mr. Weiss is a citizen of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration.

On July 7, 2006, the Reporting Person entered into an agreement (“Purchase Agreement”) whereby he agreed to purchase 1,950 Class II membership interests and 500 Class III membership interests of the Irving I. Stone Limited Liability Company, an Ohio limited liability company (“Irving Stone LLC”), from the Irving I. Stone Trust (“Irving Stone Trust”) for a total consideration of $5,808,950 (the “Transaction”). Pursuant to the Purchase Agreement, the closing of the Transaction was contingent upon the prior receipt of approvals from both the Ohio Attorney General and the Probate Court for Cuyahoga County, Ohio. The last of such approvals was received on August 4, 2006, and Mr. Weiss consummated the Transaction and purchased the above-referenced membership interests on August 11, 2006.

As a result of the Transaction, Mr. Weiss owns membership interests in the Irving Stone LLC representing 24.5% of the equity in Irving Stone LLC, and since Irving Stone LLC owns 1,818,182 Class B Shares, Mr. Weiss may be deemed to be the beneficial owner of 445,454 Class B Shares. Mr. Weiss disclaims beneficial ownership of any Class B Shares held by the Irving Stone LLC including, but not limited to, the above-referenced 445,454 shares. The source of funds for the Transaction is a $2,500,000 loan from 540 Investment Company Limited Partnership, a Delaware limited partnership, of which the Reporting Person is a limited partner, and a $3,308,950 purchase money loan from the Irving Stone Trust, both of which loans are secured by a pledge of the membership interests acquired.

Item 4. Purpose of Transaction.

The Irving Stone LLC was formed primarily as a vehicle to facilitate business and estate planning goals of the late Irving I. Stone (“Mr. Stone”), grandfather of the Reporting Person. Mr. Stone held 98% of the membership interests in Irving Stone LLC during his life. Since Mr. Stone’s death in 2000, this 98% membership interest has been held by the Irving Stone Trust, a formerly revocable trust of Mr. Stone. Judith Stone Weiss, Mr. Stone’s daughter and

Trustee of the Irving Stone Trust, holds 1% of the membership interest in Irving Stone LLC, and the Irving I. Stone Oversight Trust (the “Oversight Trust”) holds the remaining 1% membership interest (such interest, the “Class I Interest”). Pursuant to the Operating Agreement of Irving Stone LLC, only the Oversight Trust, as the exclusive holder of the Class I Interest, has voting rights to control Irving Stone LLC’s business and affairs. The Oversight Trust is a trust created to manage the business and affairs of Irving Stone LLC upon Mr. Stone’s death. The Oversight Trust is governed by four trustees. The functions of the trustees of the Oversight Trust, including voting or directing a disposition of Class B Shares held by Irving Stone LLC, can be made only by agreement of at least 70% of the trustees. The trustees presently consist of the Reporting Person and his three brothers. The Reporting Person disclaims beneficial ownership over all of the Class B Shares held by Irving Stone LLC.

Under the terms of the Irving Stone Trust, and as a result of the death of Mr. Stone, the membership interests of Irving Stone LLC held by the Irving Stone Trust were to be contributed to the Irving I. Stone Foundation, a private foundation (the “Foundation”) established for charitable purposes. However, because it was believed that such contribution might create certain adverse tax consequences as well as potential adverse liquidity and distribution issues for the Foundation, the trustees for the Irving Stone Trust and Foundation determined that it would be in the Foundation’s best interests for the Irving Stone Trust to sell its membership interests in Irving Stone LLC to Mr. Weiss (and his three brothers) and contribute the sale proceeds to the Foundation.

Except as set forth in this Schedule 13D, Mr. Weiss does not have any present plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company’s business or corporate structure; (g) changes in the Company’s charter, by-laws, or other instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of common stock of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar to any of those enumerated above.

Item 5. Interest in Securities of the Issuer.

(a) Mr. Weiss has the sole power to vote and dispose of 158,792 Class B Shares (which includes 123,282 Class B Shares that he has the right to acquire within 60 days pursuant to outstanding stock options), or approximately 3.8% of the total number of Class B Shares outstanding as of June 29, 2006, as reported by the Company.

The number of Class B Shares beneficially owned by Mr. Weiss as described above does not include: (i) any of the 1,818,182 Class B Shares owned by Irving Stone LLC; (ii) 29,883 Class B Shares allocated to Mr. Weiss’ account in the American Greetings Executive Deferred Compensation Plan; (iii) 203,964 Class B Shares owned

by the Irving I. Stone Foundation, of which Mr. Weiss is a trustee; and (iv) 200,000 Class B Shares owned by the Irving Stone Support Foundation, of which Mr. Weiss is a trustee. Mr. Weiss disclaims beneficial ownership of all such Class B Shares.

(b) Mr. Weiss has no shared voting or dispositive powers with respect to the Class B Shares covered by this Schedule 13D.

(c) Except with respect to the Transaction, the Reporting Person has not effected any transactions in the Class B Shares in the past 60 days.

(d) No other person is known by the Reporting Person to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Class B Shares beneficially owned by the Reporting Person.

(e). Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Under the Company’s Amended Articles of Incorporation, each Class B Share is entitled to ten votes on all matters presented to shareholders and is convertible by the holder to one Class A Common Share; provided, however, that the holder must first offer the Class B Share to the Company pursuant to its right to repurchase the share at the then market value for the Class A Common Shares.

Item 7. Material to be Filed as Exhibits.

Exhibit 1. Purchase Agreement dated July 7, 2006, with attached exhibits.

Exhibit 2. Promissory Note in the amount of $2,500,000.

Exhibit 3. Security and Pledge Agreement.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: August 14, 2006


		/s/ Jeffrey Weiss
		Jeffrey Weiss

EX-1 2 l21890aexv1.htm EX-1 EX-1

Exhibit 1

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (“Agreement”) is entered into as of this 7th day of July, 2006, by and between JUDITH STONE WEISS, in her capacity as sole Trustee of the IRVING I. STONE TRUST originally dated April 21, 1947, as amended (“Seller”), and JEFFREY M. WEISS (“Buyer”).

R E C I T A L S

A. Seller is the owner of 7,800 Class II Membership Interests and 2,000 Class III Membership Interests of Irving I. Stone Limited Liability Company, an Ohio limited liability company (the “IISLLC”), which Class II Membership Interests and Class III Membership Interests represent, collectively, a 98% interest in the equity of IISLLC.

B. Seller desires to sell, and Buyer desires to purchase from Seller, upon the terms and subject to the conditions set forth in this Agreement, one thousand nine hundred and fifty (1,950) Class II Membership Interests and five hundred (500) Class III Membership Interests of IISLLC (collectively, the “Assigned Membership Interests”).

C. The sale of the Assigned Membership Interests is conditioned upon, and shall not be consummated, unless and until such sale and purchase is approved by both the Probate Division of the Court of Common Pleas for Cuyahoga County, Ohio (“Probate Court Approval”), and by the Ohio Attorney General (“Attorney General Approval”).

NOW THEREFORE, in consideration of the mutual promises and conditions herein contained, the parties hereto hereby agree as follows:

1. Purchase and Sale. Seller hereby agrees to sell the Assigned Membership Interests to Buyer, and Buyer hereby agrees to purchase the Assigned Membership Interests from Seller, upon the terms, provisions and conditions set forth herein.

2. Purchase Price. The purchase price (“Purchase Price”) for the Assigned Membership Interests shall be Five Million Eight Hundred Eight Thousand Nine Hundred Fifty Dollars ($5,808,950) payable as follows:

	(a)		Two Million Five Hundred Thousand Dollars ($2,500,000) shall be paid in cash at the Closing by wire transfer or other method agreed upon by Buyer and Seller; and

	(b)		Three Million Three Hundred Eight Thousand Nine Hundred Fifty Dollars ($3,308,950), together with interest thereon, shall be paid in accordance with the terms of and in the manner provided by the form of non-recourse promissory note (the “Note”) from Buyer to Seller attached hereto as Exhibit A and made a part hereof, which Note and the payments required thereby shall be secured by a security interest in and pledge of the Assigned Membership Interests in accordance with and upon the terms provided by and in

the form of the Security and Pledge Agreement (the “Pledge Agreement”) attached hereto as Exhibit B and made a part hereof. The Note and the Pledge Agreement shall be executed and delivered by Buyer to Seller at the Closing.

3. Closing. The closing (“Closing”) of the transaction contemplated hereby shall take place within five (5) business days after the last of the Probate Court Approval and Attorney General Approval has been provided by the Cuyahoga County Probate Court and Ohio Attorney General, respectively, and at such time, date and location as the parties may thereafter mutually agree.

4. Payment. At the Closing, Buyer shall pay to Seller the cash portion of the Purchase Price for the Assigned Membership Interests by wire transfer or other immediately available funds and execute and deliver to Seller the Note and Pledge Agreement.

5. Instruments of Transfer. At the Closing, Seller shall assign and transfer to Buyer all Seller’s right, title and interest in and to the Assigned Membership Interests pursuant to an instrument of transfer in substantially the same form as Exhibit C attached hereto and made a part hereof.

6. Representations and Warranties of Seller. Seller represents and warrants to Buyer that:

	(a)		The Assigned Membership Interests are owned by Seller, free and clear of liens, encumbrances, pledges, options, claims, charges, assessments and restrictions of any nature whatsoever, except such restrictions as are imposed by Operating Agreement of IISLLC and/or the Pledge Agreement.

	(b)		Seller has full power and authority to sell, assign and transfer the Assigned Membership Interests to Buyer, and that upon transfer of the Assigned Membership Interests to Buyer, Buyer will receive good title to the Assigned Membership Interests, free and clear of all liens, encumbrances, pledges, options, claims, charges, assessments and restrictions of any nature whatsoever, except such restrictions as may be imposed by the Operating Agreement of IISLLC and/or the Pledge Agreement.

	(c)		This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

7. Representations and Warranties of Buyer. Buyer represents and warrants to Seller that this Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

8. Consent of Probate Court and Ohio Attorney General. The Closing and the obligations of the parties hereunder are conditioned upon the receipt by Buyer and Seller of

both the Probate Court Approval and the Attorney General Approval approving and/or consenting to the sale, transfer and assignment of the Assigned Membership Interests from Seller to Buyer as contemplated by this Agreement.

9. Severability. All provisions of this Agreement are intended to be severable. If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had not been included.

10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

11. Governing Law. This Agreement will be governed by, construed and enforced in accordance with the laws of the State of Ohio.

12. Amendments. This Agreement may be amended or modified only by a written instrument signed by each of the parties hereto.

13. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, and by each of the parties on separate counterparts, each of which, when so executed, shall be deemed an original, and all of which shall together constitute but one and the same instrument.

14. Arbitration. Any dispute arising out of, or relating to or based upon this Agreement, a breach hereof, the transactions contemplated hereby or the exhibits attached hereto or otherwise, shall be settled by confidential, private arbitration in Cleveland, Ohio in accordance with the rules of the American Arbitration Association then existing; provided, however, that discovery as provided for under the Ohio Rules of Civil Procedure shall be available to all parties to the arbitration. This Agreement to arbitrate shall be specifically enforceable and the arbitration award shall be final and judgment may be entered upon it in any court having jurisdiction over the subject matter of the dispute. The cost of arbitration shall be divided equally by the parties unless the Arbitrator determines that equitable considerations require a different allocation.

15. Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the transaction contemplated hereby and supersedes all prior written and oral agreements, and all contemporaneous oral agreements, relating to such transaction.

[BALANCE OF DOCUMENT INTENTIONALLY LEFT BLANK.]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.


		/s/ Judith Stone Weiss

		Judith Stone Weiss, sole Trustee of the
		Irving I. Stone Trust originally dated
		April 21, 1947, as amended
				(“Seller”)

		/s/ Jeffrey M. Weiss

		Jeffrey M. Weiss
				(“Buyer”)

EXHIBIT A

PROMISSORY NOTE


$3,308,950		August 11, 2006 Cleveland, Ohio

FOR VALUE RECEIVED, the undersigned JEFFREY M. WEISS (“Maker”) promises to pay to the order of JUDITH STONE WEISS in her capacity as sole Trustee of the IRVING I. STONE TRUST originally dated April 21, 1947 (the “Trustee”), at c/o American Greetings Corporation, 10500 American Road, Brooklyn, Ohio 44144, or such other place as the holder hereof may designate, the principal amount of Three Million Three Hundred Eight Thousand Nine Hundred Fifty Dollars ($3,308,950) (the “Original Principal Amount”), with interest thereon from the date hereof, and interest on each Principal Addition (as defined below) from the date of each such Principal Addition, at the rate of five and twenty-nine hundredths percent (5.29%) per annum, in the manner specified below:

	A.		Maker owns Membership Interests in Irving I. Stone Limited Liability Company, an Ohio limited liability company (“IISLLC”), which in turn owns 1,818,182 Class B Common Shares of American Greetings Corporation (“AG”) (the “AG Class B Shares”). The Membership Interests owned by Maker in IISLLC constitute in the aggregate a twenty-four and one-half percent (24.5%) equity ownership in ISSLLC. Promptly following the receipt of any distribution from IISLLC with respect to the Maker’s Membership Interests representing a distribution of dividends (“Dividend Distribution”) received on the AG Class B Shares owned by IISLLC, Maker shall promptly make a payment to Trustee in an amount equal to the full amount of such Dividend Distribution, to be applied by the Trustee (i) first to any accrued but unpaid interest on this Note and any Principal Addition (collectively, “Accrued Interest”); (ii) second, to the principal amount of any Principal Addition; and (iii) third to the Original Principal Amount of the Note.

	B.		If the amount of a Dividend Distribution is less than the Accrued Interest, such Accrued Interest shortfall shall be added to the Original Principal Amount of this Note and shall be herein referred to as a “Principal Addition.”

	C.		Interest at the rate set forth herein shall be payable on each Principal Addition from the date of the shortfall which resulted in each such Principal Addition until each such Principal Addition is paid in full.

	D.		On that date (the “Maturity Date”) which is the tenth anniversary date of this Note the Original Principal Amount, all Principal Additions and any remaining Accrued Interest on the Original Principal Amount and/or the Principal Additions shall be due and payable in full.

The obligations evidenced by this Note are secured by that certain Security and Pledge Agreement (“Pledge Agreement”) between Maker and Trustee of even date.

This Note is issued pursuant to that certain Purchase Agreement by and between Trustee and Maker relating to the purchase by Maker of Membership Interests in IISLLC (the “Purchase Agreement”), and is subject to the terms and provisions of the Purchase Agreement including, but not by way of limitation, the provision requiring that any and all disputes relating to, or arising out of or based upon the Purchase Agreement or the transactions contemplated thereby or the Exhibits attached thereto must be arbitrated in accordance with the rules and regulations of the American Arbitration Association as set forth more fully in the Purchase Agreement.

Maker shall be in default under the terms of this Note upon the occurrence of any of the following events of default (the “Events of Default”): (i) Maker fails to make any interest or principal payment required by the terms of, and in the manner provided by, this Note within ten (10) days after Maker’s receipt of notice from the Trustee that any such payment is overdue; (ii) any occurrence that constitutes a default or, with the giving of notice of the passage of time or both, would constitute a default by the Maker under the Pledge Agreement; or (iii) Maker makes an assignment for the benefit of creditors, files a petition of bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver or trustee, commences any proceeding under the law or statute of any jurisdiction, whether now or hereinafter in effect, relating to reorganization, arrangement, readjustment of debt, dissolution or liquidation, or there is commenced against Maker any such proceeding which shall not be dismissed within a period of sixty (60) days, or Maker consents to, or approves of, or acquiesces in any such proceeding or the appointment of any receiver or any trustee for Maker or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of sixty (60) days.

Upon the occurrence of any Event of Default, (i) Trustee may declare all liabilities and obligations of Maker to Trustee under this Note immediately due and payable and the same shall thereupon become immediately due and payable without any further action on the part of Trustee, (ii) the then entire outstanding Original Principal Amount of this Note and any outstanding Principal Additions, together with any remaining Accrued Interest, shall at Trustee’s option (exercised then or thereafter) automatically and immediately accrue interest until such default is cured, payable on demand, at a rate per annum equal to the lesser of (x) 8% per annum, or (y) the maximum interest rate permitted under applicable law; and (iii) Trustee may exercise any rights and remedies available to Trustee by law.

No delay on the part of Trustee in the exercise of any remedy or right shall operate as a waiver thereof, and no single or partial exercise by Trustee of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.

Maker shall have the right at any time and from time to time to prepay the Original Principal Amount of this Note and/or any Principal Additions, in whole or in part, without premium or penalty. In the case of any such prepayment, Maker shall cause Accrued Interest in respect of the amount to be prepaid to be paid in full.

This Note shall bind Maker and his heirs, personal representatives and assigns, and the benefits hereof shall inure to the benefit of Trustee and her successors and assigns. All references herein to “Maker” and “Trustee” shall be deemed to apply to Maker and Trustee, respectively, and to their respective heirs, personal representatives, successors and assigns.

This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and interpreted in accordance with the internal substantive laws of the State of Ohio.

Maker expressly waives presentment, demand, protest and notice of dishonor.

Maker acknowledges that this Note was signed in Cuyahoga County in the State of Ohio.

Notwithstanding anything in this Note to the contrary, this Note is non-recourse, and Maker shall have no personal liability for any of the obligations evidenced by this Note. Rather, in the Event of Default, Trustee’s only recourse shall be to proceed against, foreclose upon, or otherwise take action with respect to the Membership Interests as provided in the Pledge Agreement.

IN WITNESS WHEREOF, Maker has executed this Note as of the date first above written.

EXHIBIT B

SECURITY AND PLEDGE AGREEMENT

This Security and Pledge Agreement (“Pledge Agreement” or “Agreement”) is dated as of August 11, 2006 by and between JUDITH STONE WEISS, in her capacity as sole Trustee of the IRVING I. STONE TRUST originally dated April 21, 1947, as amended (“Secured Party”), and JEFFREY M. WEISS (“Debtor”).

R E C I T A L S:

A. Debtor is the legal and beneficial owner of one thousand nine hundred fifty (1,950) Class II Membership Interests and five hundred (500) Class III Membership Interests in Irving I. Stone Limited Liability Company, an Ohio limited liability company (“IISLLC”), which Class II Membership Interests and Class III Membership Interests collectively constitute a twenty-four and one-half percent (24.5%) equity interest in IISLLC and are hereinafter referred to collectively as the “Assigned Membership Interests”.

B. Debtor is indebted to Secured Party in the original principal amount of Three Million Three Hundred Eight Thousand Nine Hundred Fifty Dollars ($3,308,950), which indebtedness is evidenced by a promissory note dated as of the date hereof from Debtor, as maker, in favor of Secured Party, as payee (the “Note”).

C. To secure Debtor’s obligations under the Note, Debtor has agreed to grant to Secured Party a security interest in the Assigned Membership Interests upon the terms and provisions set forth in this Pledge Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Debtor and Secured Party agree to the following:

1. Grant of Security Interest. To secure the Secured Obligations (as defined in Section 3), Debtor hereby pledges, assigns and grants to Secured Party a security interest in the Assigned Membership Interests, and all proceeds thereof and substitutions therefore (hereafter referred to as the “Pledged Interests”). During the term that this Pledge Agreement is in effect, Debtor shall not grant any party other than Secured Party a security interest in the Pledged Interests and shall not otherwise encumber the Pledged Interests or their proceeds.

2. IISLLC’s Agreement. Debtor shall cause IISLLC to sign this Agreement where indicated below to evidence IISLLC’s agreement, among other things, to comply with all instructions originated by the Secured Party to make distributions on account of the Pledged Interests to the Secured Party without further consent by Debtor following an Event of Default.

3. Secured Obligations. This Pledge Agreement secures the following obligations (the “Secured Obligations”): (a) the payment, performance and observance of all of Debtor’s covenants, agreements, obligations, terms and conditions under the Note, including without limitation, Debtor’s obligation to pay the Original Principal Amount and all Principal Additions (as defined in the Note) and all interest thereon; and (b) all obligations of Debtor under this Pledge Agreement.

4. Rights to Distributions and Other Sums.

(a) Except as provided in Subsection (b) below, prior to the occurrence of an Event of Default, Debtor shall be entitled to receive all amounts paid or distributed in cash on account of the Pledged Interests. After an Event of Default occurs, Secured Party shall be entitled to receive and hold all amounts paid or distributed on account of the Pledged Interests.

(b) Any sums paid upon or in respect of the Pledged Interests upon the liquidation or dissolution of IISLLC or the redemption of any of the Pledged Interests shall be paid over to Secured Party to be held by it as additional collateral for the Secured Obligations, subject to the terms hereof. All sums of money and property so paid or distributed in respect of the Pledged Interests upon the liquidation or dissolution of IISLLC or redemption of any of the Pledged Interests that are received by Debtor shall, until paid or delivered to Secured Party, be held by the Debtor in trust as additional collateral security for the Secured Obligations.

5. Substituted and Additional Securities. If during the term of this Pledge Agreement, any exchange, conversion, reclassification, readjustment or other change is declared or made with respect to the Pledged Interests, all new, substituted and additional securities or other property issued in respect to the Pledged Interests (whether certificated or uncertificated) shall be deemed pledged to the Secured Party under the terms of this Pledge Agreement in the same manner as the Pledged Interests originally pledged hereunder.

6. Events of Default. The occurrence of any event of default under the Note, the breach of any representation or warranty by Debtor or IISLLC hereunder, or the failure of Debtor or IISLLC to comply with any covenant or agreement hereunder shall constitute an event of default hereunder (each such event hereinafter referred to as an “Event of Default”).

7. Remedies. Upon the occurrence of an Event of Default, and at any time thereafter, Secured Party may do any one or more of the following:

(a) Exercise its rights as a secured party under Ohio law, including, without limitation, under the Ohio Uniform Commercial Code.

(b) Commence and prosecute an action to foreclose Debtor’ equity of redemption in the Pledged Interests or any portion thereof.

(d) Receive all cash and/or other distributions with respect to the Pledged Interests and apply them to payment of amounts due to Secured Party.

(e) Without waiving any prior or subsequent default, waive any default or, with or without waiving any default, remedy any default.

(f) Give instructions to IISLLC on account of the Pledged Interests, including, without limitation, to make distributions on the Pledged Interests to the Secured Party.

8. Powers of Secured Party. Secured Party shall have the following powers in exercising its rights under Section 7 above:

(a) Any sale of any of the Pledged Interests may be public or private, for cash, upon credit, or for future delivery.

(b) Secured Party may impose such restrictions on the sale of any Pledged Interests as Secured Party deems desirable to meet the requirements of federal or state securities laws or any exemptions thereto.

(c) Ten (10) days’ written notice of intention to make any sale that states the time and place of sale shall be conclusively deemed commercially reasonable, but shall not preclude any other commercially reasonable notice of sale.

(d) Any public sale shall be held at such time or times within the ordinary business hours and at such place or places as Secured Party may fix in the notice of sale.

(e) The Pledged Interests may be sold in one block or in separate blocks.

(f) Secured Party shall not be obligated to make any sale pursuant to any notice of sale. Secured Party may, without notice, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale. Any sale adjourned may be made at any time or place to which the same may have been adjourned.

(g) In any sale on credit or for future delivery, Secured Party may retain the Pledged Interests so sold until the sale price has been paid by the purchaser, but Secured Party shall not be liable for the failure of any purchaser to pay for the Pledged Interests. If any purchaser of the Pledged Interests fails to pay the purchase price in full, the Pledged Interests may again be sold.

(h) After deducting all costs and expenses of exercising any remedy, including the costs and expenses of any sale and delivery, reasonable attorneys’ fees and other costs and expenses of collection, Secured Party shall apply the residue of any proceeds first to the payment of any costs Secured Party may pay or incur in enforcing its rights hereunder and second to the payment of any sums otherwise due from Debtor to Secured Party pursuant to the Note, this Pledge Agreement or otherwise.

(i) Secured Party shall not be required to sell the Pledged Interests, except to the extent required by applicable law. Secured Party may purchase the Pledged Interests at any public sale.

9. Covenants. The Debtor covenants and agrees to (a) prevent IISLLC from amending its Operating Agreement, or other governing or organizational documents to provide that the ownership interests of IISLLC (including the Pledged Interests) are to be treated as securities governed by Article 8 of the Uniform Commercial Code (“UCC”); (b) prevent IISLLC from issuing any certificates evidencing any of the Pledged Interests; (c) defend the right, title and security interest of Secured Party in and to the Pledged Interests, and (d) not sell, assign,

transfer or otherwise dispose of the Pledged Interests unless such purchaser, assignee or transferee agrees to take the Pledged Interests subject to and be bound by this Pledge Agreement.

10. Representations. Debtor represents and warrants to the Secured Party that: (a) Debtor is and will be the sole legal and beneficial owner of the Pledged Interests free and clear of any adverse claim, lien or other right, title or interest of any party; (b) this Pledge Agreement creates a valid, perfected and first priority security interest in one hundred percent (100%) of the Pledged Interests in favor of the Secured Party securing payment of the Secured Obligations; (c) the Assigned Membership Interests constitutes 24.5% of all the fully diluted issued and outstanding capital ownership interests of IISLLC; (d) the Pledged Interests are not “securities” governed by Article 8 of the UCC; (e) Debtor has the full right and power to pledge the Pledged Interests hereunder; (f) Debtor has received good and valuable consideration for this Pledge Agreement and this Pledge Agreement is the legal, valid and binding obligation of Debtor, enforceable against it in accordance with its terms, (g) the Pledged Interests are not subject to any right of first refusal, option, or other restriction or right that prevents the grant of the security interests hereunder, and (h) Debtor’s exact legal name is “Jeffrey M. Weiss.”

11. Appointment as Attorney-in-Fact. Debtor hereby irrevocably constitutes and appoints Secured Party with the full power of substitution, as Debtor’s true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in Secured Party’s own name, from time to time in Secured Party’s discretion, for the purpose of carrying out the terms of this Pledge Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purpose of this Pledge Agreement. Debtor hereby ratifies all that Secured Party shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

12. Waivers. Debtor agrees that Secured Party assumes no responsibility and shall not be held liable for loss or damage for failure to collect or realize upon or to preserve any rights pertaining to the Pledged Interests. Further, Debtor waives presentment of any kind, notice of dishonor, payment and any other notice or demand of any kind whatsoever with respect to the Note or other Secured Obligations. Debtor waives acceptance of this Pledge Agreement.

13. Release of Pledged Interests. After all payments due under the Note and under this Pledge Agreement have been made and all covenants, agreements, obligations, terms and conditions under the Note and under this Pledge Agreement have been performed, satisfied or waived, Secured Party shall deliver to Debtor such instruments as may be necessary to cancel this Pledge Agreement and revest the Pledged Interests in Debtor free and clear of the lien hereof.

14. Notices. All notices or other communications required or permitted by this Pledge Agreement shall be in writing and delivered by certified mail or overnight courier, postage or delivery cost prepaid, or sent by electronic or facsimile transmission (with confirmation of transmittal), or delivered by hand to the address listed below.

15. Expenses. Debtor defends and holds Secured Party harmless from and against expenses arising in connection with the enforcement of this Pledge Agreement, including but not limited to, reasonable attorneys’ and professional fees and disbursements.

16. Applicable Law. This Pledge Agreement is being delivered and is to be construed and enforced under the laws of the State of Ohio, and all rights and remedies of Secured Party as a secured party under Ohio law (including under the Uniform Commercial Code of the State of Ohio) shall be cumulative to all other rights and remedies of Secured Party.

17. Successors and Assigns. This Pledge Agreement shall be binding and inure to the benefit of Secured Party and Debtor and their respective heirs, personal representatives, successors and assigns.

18. Security. This Pledge Agreement shall not prejudice the rights of Secured Party to enforce collection of amounts due under the Note or performance or observance of any covenants, agreements, obligations, terms or conditions under the Note by suit or in any lawful manner. The enumeration of certain rights and remedies in this Pledge Agreement shall not be construed as a waiver of, nor an impairment in any way of, other rights and remedies of Secured Party. No waiver or consent granted by Secured Party in respect of this Pledge Agreement shall be binding upon Secured Party unless specifically granted in writing, which writing shall be strictly construed. No course of dealing in respect of, nor omission or delay in the exercise of, any right, power or privilege by Secured Party shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any further or other exercise thereof, as each right, power and privilege may be exercised by Secured Party either independently or concurrently with other rights, powers and privileges and as often and in such order as Secured Party may deem expedient.

19. Further Assurances. Debtor agrees to take all further action that may be reasonably requested by Secured Party to perfect and protect the security interest granted hereby and to enable Secured Party to exercise its remedies hereunder, including, without limitation, causing IISLLC to comply with Secured Party’s instructions upon the occurrence of an Event of Default. Debtor authorizes Secured Party to file such financing statements as Secured Party deems necessary to perfect its security interest in the Pledged Interests.

20. Severability. The parties intend this Pledge Agreement to comply with all laws, and this Pledge Agreement shall be construed to be consistent with all laws to the extent possible. If any provision of this Pledge Agreement or the application of any provision to any party or circumstance cannot be so construed, and is adjudged invalid or unenforceable, the application of the provision to other parties or circumstances and the application of the remainder of this Pledge Agreement shall not be affected. Each provision of this Pledge Agreement shall be valid and enforceable to the fullest extent permitted by law. This Agreement shall be governed by the laws of the State of Ohio.

21. Purchase Agreement. This Pledge Agreement is entered into in connection with, and is subject to the terms and provisions of, that certain Purchase Agreement by and among Debtor and Secured Party relating to the purchase and sale of the Assigned Membership Interests, including, but not by way of limitation, the provisions of the Purchase Agreement

requiring that any dispute arising out of or relating to or based upon the Purchase Agreement or any of the transactions contemplated thereby or the Exhibits thereto, including this Pledge Agreement, shall be resolved through Arbitration by the American Arbitration Association as further provided in the Purchase Agreement.

22. Counterparts. This Pledge Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be but one and the same document.

23. Non-Recourse. Notwithstanding anything contained in this Pledge Agreement to the contrary, this Pledge Agreement is non-recourse, and Debtor shall have no personal liability for any of the obligations contained in this Pledge Agreement. Rather, in the Event of Default, Secured Party’s only recourse shall be to proceed against, foreclose upon or otherwise take action with respect to the Pledged Interests as provided in this Pledge Agreement.

IN WITNESS WHEREOF, Debtor and Secured Party have executed and delivered this Security and Pledge Agreement as of the date first above written.


Address:		Debtor:

One American Road
Cleveland, Ohio 44144		/s/ Jeffrey M. Weiss
		Jeffrey M. Weiss

		Secured Party:

Address:

One American Road
Cleveland, Ohio 44144		/s/ Judith Stone Weiss
		Judith Stone Weiss, in her capacity as sole
		Trustee of the Irving I. Stone Trust
		originally dated April 21, 1947, as amended

AGREEMENT OF IRVING I. STONE LIMITED LIABILITY COMPANY

Reference is hereby made to the foregoing Pledge Agreement (the “Pledge Agreement”) made of even date herewith. Each capitalized term used in this Agreement of Irving I. Stone Limited Liability Company (“IISLLC”) and defined in the Pledge Agreement shall have the meaning ascribed thereto in the Pledge Agreement. To induce the Secured Party to extend credit pursuant to the Note, and for other valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the undersigned IISLLC hereby (a) represents and warrants to Secured Party that (i) none of the Pledged Interests are represented by any certificate or instrument and none of the Pledged Interests are “securities” governed by Article 8 of the Uniform Commercial Code, (ii) Debtor is the registered owner of the Pledged Interests, (iii) other than the claims of Secured Party, IISLLC has no notice of any adverse claim to the Pledged Interests, and (iv) none of the Pledged Interests are subject to any right of first refusal or other restriction contained in IISLLC’s Certificate of Organization, Operating Agreement or any other agreement by which IISLLC is bound that would prevent Debtor from granting a security interests in the Pledged Interests to Secured Party, and (b) agrees with Secured Party that IISLLC will (i) not issue any certificate or instrument representing any Pledged Interests, (ii) not, without Secured Party’s prior written consent, comply or agree to comply with any notifications which direct the transfer of any of the Pledged Interests or which direct that the transfer of any of the Pledged Interests be registered or that any such interests be redeemed, (iii) give immediate notice to Secured Party whenever IISLLC has notice of any claim to any of the Pledged Interests other than the claims of Secured Party, (iv) not cause the Pledged Interests to become “securities” governed by Article 8 of the Uniform Commercial Code, and (v) comply with instructions originated by Secured Party without consent by the Debtor upon receipt of a notice from Secured Party of an Event of Default. This Agreement shall be governed by the law (excluding conflict of laws rules) of the State of Ohio.

Signed at Cleveland, Ohio, this 11^th day of August, 2006.

EXHIBIT C

ASSIGNMENT, ACCEPTANCE AND CONSENT

THIS ASSIGNMENT, ACCEPTANCE AND CONSENT (“Assignment”) is made and entered into as of the 11^th day of August, 2006, by JUDITH STONE WEISS, in her capacity as sole Trustee of the Irving I. Stone Trust originally dated April 21, 1947, as amended (“Assignor”); JEFFREY M. WEISS (“Assignee”); and IRVING I. STONE LIMITED LIABILITY COMPANY, an Ohio limited liability company (“IISLLC”).

RECITALS

A. Assignor is the owner of one thousand nine hundred fifty (1,950) Class II Membership Interests and five hundred (500) Class III Membership Interests in IISLLC, which Class II Membership Interests and Class III Membership Interests represent a twenty-four and one-half percent (24.5%) ownership interest in the equity of IISLLC and are hereinafter referred to collectively as the “Assigned Membership Interests”.

B. Assignor desires to transfer and assign to Assignee the Assigned Membership Interests.

C. Assignee desires to accept the transfer and assignment of the Assigned Membership Interests and become a Member of IISLLC with regard to the Assigned Membership Interests, and IISLLC is willing to consent to such transfer and assignment and admit Assignee as a Member of IISLLC.

ASSIGNMENT

For valuable consideration, the receipt and sufficient of which are hereby acknowledged, Assignor, for herself and her successors and assigns, hereby transfers and assigns to Assignee, its successors and assigns, all of Assignor’s right, title and interest in and to the

Assigned Membership Interests in IISLLC, including, but not by way of limitation, all of the right, title and interest in and to any profits, losses or distributions allocable to the Assigned Membership Interests. Without limiting the generality of the foregoing, any distributions made by IISLLC after the date of this Assignment with respect to the Assigned Membership Interests shall be owned by and belong to Assignee, even though such distributions were earned or accumulated prior to the date of this Assignment.

ACCEPTANCE

Assignee hereby accepts the transfer and assignment of the Assigned Membership Interests and agrees to be bound by all of the terms and conditions of the Operating Agreement of IISLLC dated September 6, 1995 (the “Operating Agreement”), and agrees to become a Member of IISLLC with respect to the Assigned Membership Interests upon the terms and subject to the conditions contained in the Operating Agreement, as the same may be further amended from time to time.

CONSENT

IISLLC hereby consents to the assignment and transfer of the Assigned Membership Interests and admits Assignee as a Member of IISLLC, with respect to the Assigned Membership Interests, subject to all of the terms and conditions of the Operating Agreement.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Assignment and Acceptance at Cleveland, Ohio as of the day and year first above written.


/s/ Judith Stone Weiss

Judith Stone Weiss, Trustee of the Irving I. Stone
Trust originally dated April 21, 1947, as amended
		(“Assignor”)

/s/ Jeffrey M. Weiss

Jeffrey M. Weiss
		(“Assignee”)

IRVING I. STONE LIMITED LIABILITY COMPANY

By:	/s/ Gary I. Weiss

	Gary I. Weiss, Manager
		(“IISLLC”)

EX-2 3 l21890aexv2.htm EX-2 EX-2

Exhibit 2

PROMISSORY NOTE


$2,500,000		Cleveland, Ohio August 11, 2006

FIFTEEN (15) YEARS AFTER THE DATE HEREOF, FOR VALUE RECEIVED, the undersigned JEFFREY M. WEISS (“Maker”) promises to pay to the order of 540 INVESTMENT COMPANY LIMITED PARTNERSHIP, a Delaware limited partnership (“540 Investment Company”), at c/o American Greetings Corporation, 10500 American Road, Brooklyn, Ohio 44144, or at such other place as the holder hereof may designate, the principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000) with interest thereon from the date hereof at the rate of five and twenty-nine hundredths percent (5.29%) per annum.

On that date (the “Maturity Date”) which is the fifteenth (15^th) anniversary date of this Note, the principal amount hereof, together with accrued interest thereon at the rate provided herein, shall be due and payable in full.

As used herein, “540 Investment Company” shall mean and include 540 Investment Company Limited Partnership, any subsequent holder of this Note, and their respective heirs, personal representatives, successors and assigns, as the case may be.

The obligations evidenced by this Note are secured by that certain Security and Pledge Agreement (“Pledge Agreement”) between Maker and 540 Investment Company of even date. The obligations evidenced by this Note are expressly subject and subordinate to the payment in full of all principal, interest and other amounts owed by Maker to Judith Stone Weiss in her capacity as sole Trustee of the Irving I. Stone Trust originally dated April 21, 1947 (the “Trustee”) as evidenced by that certain Promissory Note of even date in the original principal amount of Three Million Three Hundred Eight Thousand Nine Hundred Fifty Dollars ($3,308,950) from Maker to Trustee (the “Senior Note”) and secured by that certain Security and Pledge Agreement of even date from Maker to Trustee (the “Senior Pledge Agreement”), all as more fully set forth in the Pledge Agreement, the terms of which are incorporated herein by reference as if rewritten at length herein.

Maker shall be in default under the terms of this Note upon the occurrence of any of the following events of default (the “Events of Default”): (i) Maker fails to pay the principal amount of this Note and all interest accrued thereon as required by the terms of this Note within ten (10) days after Maker’s receipt of notice from 540 Investment Company that such payment is overdue; (ii) any occurrence that constitutes a default or, with the giving of notice of the passage of time or both, would constitute a default by Maker under the Pledge Agreement; or (iii) Maker makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver or trustee, commences any proceeding under the law or statute of any jurisdiction, whether now or hereinafter in effect, relating to reorganization, arrangement, readjustment of debt, dissolution or

liquidation, or there is commenced against Maker any such proceeding which shall not be dismissed within a period of sixty (60) days, or Maker consents to, or approves of, or acquiesces in any such proceeding or the appointment of any receiver or any trustee for Maker or any substantial part of his property, or suffers any such receivership or trusteeship to continue undischarged for a period of sixty (60) days.

Upon the occurrence of any Event of Default, (i) 540 Investment Company may declare all liabilities and obligations of Maker to 540 Investment Company under this Note immediately due and payable and the same shall thereupon become immediately due and payable without any further action on the part of 540 Investment Company, (ii) the then entire outstanding principal amount of this Note and all accrued interest shall, at 540 Investment Company’s option (exercised then or thereafter), automatically and immediately accrue interest until such default is cured, payable on demand, at a rate per annum equal to the lesser of (x) 8% per annum, or (y) the maximum interest rate permitted under applicable law; and (iii) 540 Investment Company may exercise any rights and remedies available to 540 Investment Company by law.

No delay on the part of 540 Investment Company in the exercise of any remedy or right shall operate as a waiver thereof, and no single or partial exercise by 540 Investment Company of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.

Maker shall have the right at any time and from time to time to prepay the principal amount of this Note and/or any interest accrued thereon, in whole or in part, without premium or penalty.

This Note shall bind Maker and his heirs, personal representatives and assigns, and the benefits hereof shall inure to the benefit of 540 Investment Company and its successors and assigns. All references herein to “Maker” and “540 Investment Company” shall be deemed to apply to Maker and 540 Investment Company, respectively, and to their respective heirs, personal representatives, successors and assigns.

Maker expressly waives presentment, demand, protest and notice of dishonor.

Maker acknowledges that this Note was signed in Cuyahoga County in the State of Ohio.

Notwithstanding anything in this Note or the Pledge Agreement to the contrary, this Note is non-recourse, and Maker shall have no personal liabllity for any of the obligations evidenced by this Note. Rather, in the event of default, 540 Investment Company’s only recourse shall be to proceed against, foreclose upon, or otherwise take

action with respect to the Pledged Interests as defined in and as provided by, and only in accordance with the terms of, the Pledge Agreement.

IN WITNESS WHEREOF, Maker has executed this Note at the place and as of the date first above written.

EX-3 4 l21890aexv3.htm EX-3 EX-3

Exhibit 3

SECURITY AND PLEDGE AGREEMENT

This Security and Pledge Agreement (“Pledge Agreement” or “Agreement”) is dated as of August 11, 2006 by and between 540 INVESTMENT COMPANY LIMITED PARTNERSHIP, a Delaware limited partnership (“Secured Party”), and JEFFREY M. WEISS (“Debtor”).

R E C I T A L S:

B. Debtor is indebted to Secured Party in the original principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000), which indebtedness is evidenced by a promissory note dated as of the date hereof from Debtor, as maker, in favor of Secured Party, as payee (the “Note”).

C. Debtor is also indebted to JUDITH STONE WEISS, in her capacity as sole Trustee of the Irving I. Stone Trust originally dated April 21, 1947, as amended (“Senior Secured Party”) in the amount of Three Million Three Hundred Eight Thousand Nine Hundred Fifty Dollars ($3,308,950), which indebtedness is evidenced by a promissory noted dated as of the date hereof from Debtor, as maker, in favor of Senior Secured Party, as payee (the “Senior Note”), which Senior Note is secured by a first security interest in and pledge of the Assigned Membership Interests in accordance with the terms and provisions set forth in that certain Security and Pledge Agreement dated as of the date hereof from Debtor in favor of Senior Secured Party (the “Senior Pledge Agreement”).

D. To secure Debtor’s obligations under the Note, Debtor has agreed to grant to Secured Party a second security interest in and pledge of the Assigned Membership Interests upon the terms and provisions set forth in this Pledge Agreement.

E. Debtor and Secured Party have agreed that the Note shall at all times be subject and subordinate to the payment of all obligations evidenced by the Senior Note and Senior Pledge Agreement and that the security interest granted by this Pledge Agreement in the Assigned Membership Interests shall be subject and subordinate to the security interest granted by Debtor to Senior Secured Party in the Senior Pledge Agreement.

1. Grant of Security Interest. To secure the Secured Obligations (as defined in Section 2), Debtor hereby pledges, assigns and grants to Secured Party a security interest in the Assigned Membership Interests, and all proceeds thereof and substitutions therefore (hereafter

referred to as the “Pledged Interests”), which security interest shall at all times be subject and subordinate to the security interest in the Pledged Interests (as defined in the Senior Pledge Agreement) granted to the Senior Secured Party pursuant to the Senior Pledge Agreement. .

2. Secured Obligations. This Pledge Agreement secures the following obligations (the “Secured Obligations”): (a) the payment, performance and observance of all of Debtor’s covenants, agreements, obligations, terms and conditions under the Note, including without limitation, Debtor’s obligation to pay the principal amount and all interest thereon; and (b) all obligations of Debtor under this Pledge Agreement.

3. Events of Default. The occurrence of any event of default under the Note, the breach of any representation or warranty by Debtor hereunder, or the failure of Debtor to comply with any covenant or agreement hereunder shall constitute an event of default hereunder (each such event hereinafter referred to as an “Event of Default”).

4. Remedies. Subject to the provisions of Section 18 below, upon the occurrence of an Event of Default, and at any time thereafter, Secured Party may do any one or more of the following:

(a) Exercise its rights as a secured party under Ohio law, including, without limitation, under the Ohio Uniform Commercial Code.

(b) Commence and prosecute an action to foreclose Debtor’ equity of redemption in the Pledged Interests or any portion thereof.

(d) Receive all cash and/or other distributions with respect to the Pledged Interests and apply them to payment of amounts due to Secured Party.

(e) Without waiving any prior or subsequent default, waive any default or, with or without waiving any default, remedy any default.

(f) Give instructions to IISLLC on account of the Pledged Interests, including, without limitation, to make distributions on the Pledged Interests to the Secured Party.

5. Powers of Secured Party. Subject to the provisions of Section 18 below, Secured Party shall have the following powers in exercising its rights:

(a) Any sale of any of the Pledged Interests may be public or private, for cash, upon credit, or for future delivery.

(d) Any public sale shall be held at such time or times within the ordinary business hours and at such place or places as Secured Party may fix in the notice of sale.

(e) The Pledged Interests may be sold in one block or in separate blocks.

(i) Secured Party shall not be required to sell the Pledged Interests, except to the extent required by applicable law. Secured Party may purchase the Pledged Interests at any public sale.

6. Covenants. Debtor covenants and agrees to (a) prevent IISLLC from amending its Operating Agreement, or other governing or organizational documents to provide that the ownership interests of IISLLC (including the Pledged Interests) are to be treated as securities governed by Article 8 of the Uniform Commercial Code (“UCC”); (b) prevent IISLLC from issuing any certificates evidencing any of the Pledged Interests; (c) defend the right, title and security interest of Secured Party in and to the Pledged Interests, and (d) not sell, assign, transfer or otherwise dispose of the Pledged Interests unless such purchaser, assignee or transferee agrees to take the Pledged Interests subject to and be bound by this Pledge Agreement.

7. Representations. Debtor represents and warrants to the Secured Party that: (a) Debtor is and will be the sole legal and beneficial owner of the Pledged Interests free and clear of any adverse claim, lien or other right, title or interest of any party, other than the security interest granted in favor of Senior Secured Party pursuant to the Senior Pledge Agreement; (b) this Pledge Agreement creates a valid, perfected and second priority security interest in one hundred percent (100%) of the Pledged Interests in favor of the Secured Party securing payment of the Secured Obligations; (c) the Assigned Membership Interests constitutes 24.5% of all the fully

diluted issued and outstanding capital ownership interests of IISLLC; (d) the Pledged Interests are not “securities” governed by Article 8 of the UCC; (e) Debtor has the full right and power to pledge the Pledged Interests hereunder; (f) Debtor has received good and valuable consideration for this Pledge Agreement and this Pledge Agreement is the legal, valid and binding obligation of Debtor, enforceable against it in accordance with its terms, (g) the Pledged Interests are not subject to any right of first refusal, option, or other restriction or right that prevents the grant of the security interests hereunder, and (h) Debtor’s exact legal name is “ Jeffrey M. Weiss.”

8. Appointment as Attorney-in-Fact. Debtor hereby irrevocably constitutes and appoints Secured Party with the full power of substitution, as Debtor’s true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in Secured Party’s own name, from time to time in Secured Party’s discretion, for the purpose of carrying out the terms of this Pledge Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purpose of this Pledge Agreement. Debtor hereby ratifies all that Secured Party shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

9. Waivers. Debtor agrees that Secured Party assumes no responsibility and shall not be held liable for loss or damage for failure to collect or realize upon or to preserve any rights pertaining to the Pledged Interests. Further, Debtor waives presentment of any kind, notice of dishonor, payment and any other notice or demand of any kind whatsoever with respect to the Note or other Secured Obligations. Debtor waives acceptance of this Pledge Agreement.

10. Release of Pledged Interests. After all payments due under the Note and under this Pledge Agreement have been made and all covenants, agreements, obligations, terms and conditions under the Note and under this Pledge Agreement have been performed, satisfied or waived, Secured Party shall deliver to Debtor such instruments as may be necessary to cancel this Pledge Agreement and revest the Pledged Interests in Debtor free and clear of the lien hereof.

11. Notices. All notices or other communications required or permitted by this Pledge Agreement shall be in writing and delivered by certified mail or overnight courier, postage or delivery cost prepaid, or sent by electronic or facsimile transmission (with confirmation of transmittal), or delivered by hand to the address listed below.

12. Expenses. Debtor defends and holds Secured Party harmless from and against expenses arising in connection with the enforcement of this Pledge Agreement, including but not limited to, reasonable attorneys’ and professional fees and disbursements.

13. Applicable Law. This Pledge Agreement is being delivered and is to be construed and enforced under the laws of the State of Ohio, and all rights and remedies of Secured Party as a secured party under Ohio law (including under the Uniform Commercial Code of the State of Ohio) shall be cumulative to all other rights and remedies of Secured Party.

14. Successors and Assigns. This Pledge Agreement shall be binding and inure to the benefit of Secured Party and Debtor and their respective heirs, personal representatives, successors and assigns.

15. Security. Subject to the provisions of Section 18 below, this Pledge Agreement shall not prejudice the rights of Secured Party to enforce collection of amounts due under the Note or performance or observance of any covenants, agreements, obligations, terms or conditions under the Note by suit or in any lawful manner. The enumeration of certain rights and remedies in this Pledge Agreement shall not be construed as a waiver of, nor an impairment in any way of, other rights and remedies of Secured Party. No waiver or consent granted by Secured Party in respect of this Pledge Agreement shall be binding upon Secured Party unless specifically granted in writing, which writing shall be strictly construed. No course of dealing in respect of, nor omission or delay in the exercise of, any right, power or privilege by Secured Party shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any further or other exercise thereof, as each right, power and privilege may be exercised by Secured Party either independently or concurrently with other rights, powers and privileges and as often and in such order as Secured Party may deem expedient.

16. Further Assurances. Debtor agrees to take all further action that may be reasonably requested by Secured Party to perfect and protect the security interest granted hereby and to enable Secured Party to exercise its remedies hereunder, including, without limitation, causing IISLLC to comply with Secured Party’s instructions upon the occurrence of an Event of Default. Debtor authorizes Secured Party to file such financing statements as Secured Party deems necessary to perfect its security interest in the Pledged Interests.

17. Severability. The parties intend this Pledge Agreement to comply with all laws, and this Pledge Agreement shall be construed to be consistent with all laws to the extent possible. If any provision of this Pledge Agreement or the application of any provision to any party or circumstance cannot be so construed, and is adjudged invalid or unenforceable, the application of the provision to other parties or circumstances and the application of the remainder of this Pledge Agreement shall not be affected. Each provision of this Pledge Agreement shall be valid and enforceable to the fullest extent permitted by law. This Agreement shall be governed by the laws of the State of Ohio.

18. Subordination. Secured Party covenants and agrees, and each holder of the Note and each assignee of this Pledge Agreement, by its acceptance of such Note and Pledge Agreement, covenants and agrees, that notwithstanding anything to the contrary contained in the Note or this Pledge Agreement, the payment of any and all of the indebtedness evidenced by the Note and/or Secured by this Pledge Agreement shall be subordinate and subject in right and time of payment, to the extent and in the manner herein set forth, to the final payment of the Senior Note and any and all amounts due under the Senior Pledge Agreement.

Notwithstanding anything contained in this Pledge Agreement to the contrary, unless the written consent of Senior Secured Party is first obtained, Debtor hereby agrees that it shall not make, and Secured Party agrees that it will not accept, any payment or distribution with respect to any indebtedness evidenced by the Note or the Pledge Agreement, until the indebtedness evidenced by the Senior Note and Senior Pledge Agreement is paid in full. Moreover, until the

indebtedness evidenced by the Senior Note and/or the Senior Pledge Agreement is paid in full, Secured Party shall not, without the prior written consent of Senior Secured Party, exercise any of the remedies provided herein.

19. Counterparts. This Pledge Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall be but one and the same document.

20. Non-Recourse. Notwithstanding anything contained in this Pledge Agreement to the contrary, this Pledge Agreement is non-recourse, and Debtor shall have no personal liability for any of the obligations contained in this Pledge Agreement. Rather, in the Event of Default, and subject to the provisions of Section 18 above, Secured Party’s only recourse shall be to proceed against, foreclose upon or otherwise take action with respect to the Pledged Interests as provided in this Pledge Agreement.

IN WITNESS WHEREOF, Debtor and Secured Party have executed and delivered this Security and Pledge Agreement as of the date first above written.


Address:	Debtor:

One American Road
Cleveland, Ohio 44144	/s/ Jeffrey M. Weiss

	Jeffrey M. Weiss

	Secured Party:

Address:	540 INVESTMENT COMPANY LIMITED
	PARTNERSHIP

One American Road
Cleveland, Ohio 44144	By:	540 General Corp., General Partner

	By:	/s/ Morry Weiss
		Morry Weiss, President

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/s/ Jeffrey M. Weiss

Jeffrey M. Weiss