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EXHIBIT 10.5
FACTORY CARD OUTLET CORP.
Right to Purchase 71,666.66 Shares of Common Stock
of Factory Card Outlet Corp.
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS. FURTHERMORE,
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT MAY BE
SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN SECTION 10 OF THE WARRANT PURCHASE AGREEMENT REFERRED TO HEREINAFTER,
COMPLETE AND CORRECT COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF FACTORY CARD OUTLET CORP., AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER OF THIS WARRANT UPON WRITTEN REQUEST.
This Warrant is issued pursuant to the Warrant Purchase Agreement and if
any provision of this Warrant is found to conflict with the Warrant Purchase
Agreement, the provisions of the Warrant Purchase Agreement shall prevail.
No. 2
Factory Card Outlet Corp.
Common Stock Purchase Warrant
Factory Card Outlet Corp., a Delaware corporation (together with any
corporation which shall succeed to or assume the obligations of Factory Card
Outlet Corp. hereunder, the "COMPANY"), hereby certifies that, for value
received, Xxxxxxx Xxxxx & Co., a New York limited partnership, or its assigns,
is entitled, subject to the terms set forth below, to purchase from the Company
at any time or from time to time after the date hereof, until the expiration
hereof pursuant to Section 2.4 hereof, up to 71,666.66 fully paid and
non-assessable shares of Common Stock (as defined in Section 12 hereof), at an
initial purchase price per share of $7.50 (such price per share as adjusted
from time to time as provided herein is referred to herein as the "EXERCISE
PRICE"). The number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein.
This Warrant is issued pursuant to the Warrant Purchase Agreement (as
amended and in effect from time to time, the "SECURITIES PURCHASE AGREEMENT"),
dated as of July 17, 1998, between the Company and the Participants (as defined
in the Securities Purchase Agreement), a copy of
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which is on file at the principal office of the Company. The holder of this
Warrant shall be entitled to all of the benefits and shall be subject to all of
the obligations of the Securities Purchase Agreement
1. DEFINITION. Terms defined in the Securities Purchase Agreement and not
otherwise defined herein are used herein with the meanings so defined. Certain
terms are used in this Warrant as specifically defined in Section 12 hereof.
2. EXERCISE OF WARRANT.
2.1. Exercise. This Warrant may be exercised prior to its expiration
pursuant to Section 2.4 hereof by the holder hereof at any time or from time to
time, by surrender of this Warrant, with the form of subscription at the end
hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, by certified or official bank check payable to the order
of the Company or by wire transfer to its account, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is then
being exercised by the Exercise Price then in effect. In the event the Warrant
is not exercised in full, the Company, at its expense, will forthwith issue and
deliver to or upon the order of the holder hereof a new Warrant or Warrants of
like tenor, in the name of the holder hereof or as such holder (upon payment by
such holder of any applicable transfer taxes) may request, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
equal (without giving effect to any adjustment therein) to the number of such
shares called for on the face of this Warrant minus the number of such shares
(without giving effect to any adjustment therein) for which this Warrant shall
have been exercised. Upon any exercise of this Warrant, in whole or in part,
the holder hereof may pay the aggregate Exercise Price with respect to the
shares of Common Stock for which this Warrant is then being exercised
(collectively, the "EXERCISE SHARES") by (a) in the event the holder of this
Warrant is also the holder of a promissory note of the Company, decreasing the
outstanding principal and/or interest amount of such note by such amount or (b)
surrendering its rights to a number of Exercise Shares having a Fair Market
Value (as defined herein) equal to or greater than the required aggregate
Exercise Price, in which case the holder hereof would receive the number of
Exercise Shares to which it would otherwise be entitled upon such exercise, less
the surrendered shares. For purposes of this Section 2.1, the fair market value
of one share of Common Stock (the "FAIR MARKET VALUE") shall be equal to, at any
date, the last reported sale price per share on the NASDAQ National Market
System (as defined herein) trading day preceding that date. The "last reported
sale price" for any day shall be (i) the last reported sale price of the Common
Stock on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System (the "NASDAQ NATIONAL MARKET SYSTEM"),
or any similar system of automated dissemination of quotations of securities
prices then in common use, if so quoted, or (ii) if not quoted as described in
clause (i), the last bid quotation for the Common Stock as reported by the
National Quotation Bureau Incorporated if at least two securities dealers have
inserted bid quotations for the Common Stock, or (iii) if the Common Stock is
listed or admitted for trading on any national securities exchange, the last
sale price, or the closing bid price if no sale occurred, of the Common Stock on
the principal securities exchange on which the Common Stock is listed. If none
of the conditions set forth above is met, the Fair Market Value of the Common
Stock on any day shall be the fair market value of the Common
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Stock as determined by an investment firm selected by the Company and which is
acceptable to the holder of this Warrant. All expenses of the determination of
the Fair Market Value shall be borne by the Company. In no event shall any
"minority discount" or other discount (based on voting control or lack thereof
or otherwise based on the percentage of issued securities of the Company that
the securities being valued represent) be used, factored in, or otherwise
considered or applied in determining Fair Market Value.
2.2. Conflict Any other provisions hereof to the contrary
notwithstanding, no Bank Affiliate or small business investment company, as
defined in the Small Business Act, shall be entitled to exercise the right under
this Warrant to purchase any share or shares of Common Stock if, under any law
or under any regulation, rule or other requirement of any governmental authority
at any time applicable to such Bank Affiliate or small business investment
company, (a) as a result of such purchase, such Bank Affiliate or small business
investment company would own, control or have power to vote a greater quantity
of securities of any kind than the Bank Affiliate or small business investment
company shall be permitted to own, control or have power to vote, or (b) such
purchase would not be permitted. For purposes of this Section 2.2, a written
statement of the Bank Affiliate or small business investment company exercising
this Warrant, delivered upon surrender of the Warrant pursuant to the Securities
Purchase Agreement, to the effect that the Bank Affiliate or small business
investment company is legally entitled to exercise its right under this Warrant
to purchase securities and that such purchase will not violate the prohibitions
set forth in the preceding sentence, shall be conclusive and binding upon the
Company and shall obligate the Company to deliver certificates representing the
shares of Common Stock so purchased in accordance with the other provisions
hereof and shall relieve the Company of any liability under this Section 2.2.
2.3. Warrant Agent In the event that a bank or trust company shall have
been appointed as trustee for the holder of the Warrant pursuant to Section 6.2
hereof, such bank or trust company shall have all the powers and duties of a
warrant agent appointed pursuant to Section 13 hereof and shall accept, in its
own name for the account of the Company or such successor entity as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 2.
2.4. Termination. This Warrant shall terminate upon the earliest to occur
of (i) exercise of this Warrant in full, (ii) July 31, 2001 in the event that
all loan obligations pursuant to the Tranche B Loan Agreement (unless waived
thereunder) have been paid in full prior to January 31, 1999, or (iii) July 31,
2003.
3. REGISTRATION RIGHTS AND CALL RIGHT. The holder of this Warrant has the
right to cause the Company to register shares of Warrant Stock, and any shares
issued upon exercise hereof, under the Securities Act and any blue sky or
securities laws of any jurisdictions within the United States at the time and
in the manner specified in Section 7 of the Securities Purchase Agreement;
provided, however, that such right is subject to a call right granted to the
Company pursuant to Section 7.13 of the Securities Purchase Agreement.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
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4.1. Delivery. As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within ten (10) days thereafter, the
Company, at its expense (including the payment by it of any applicable issue
taxes), will cause to be issued in the name of and delivered to the holder
hereof, or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock (or Other Securities) to
which such holder shall be entitled on such exercise, together with any other
stock or other securities and property (including cash, where applicable) to
which such holder is entitled upon such exercise.
4.2. Fractional Shares. In the event that the exercise of this Warrant,
in full or in part, results in the issuance of any fractional share of Common
Stock, then in such event the holder of this Warrant (but only at such holder's
option) shall be entitled to cash equal to the fair market value of such
fractional share determined in the same manner as for one share of Common Stock
pursuant to Section 2.1 hereof.
5. ADJUSTMENTS FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS. In case
at any time or from time to time, the holders of Common Stock shall have
received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive,
without payment therefor:
(1) other or additional stock or other securities or property (other
than cash) by way of dividend; or
(2) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate restructuring;
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 7
hereof), then and in each such case the holder of this Warrant, on the exercise
hereof as provided in Section 2 hereof, shall be entitled to receive the amount
of stock and other securities and property (including cash in the case referred
to in subsection (b) of this Section 5) which such holder would have received
prior to or would have held on the date of such exercise if on the date hereof
it had been the holder of record of the number of shares of Common Stock called
for on the face of this Warrant and had thereafter, during the period from the
date hereof to and including the date of such exercise, retained such shares
and all such other or additional stock and other securities and property
(including cash in the case referred to in subsection (b) of this Section 5)
receivable by such holder as aforesaid during such period, giving effect to all
further adjustments called for during such period by Sections 6 and 7 hereof.
6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
6.1. Certain Adjustments. In case at any time or from time to time, the
Company shall (i) effect a capital reorganization, reclassification or
recapitalization, (ii) consolidate with or merge
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into any other person, or (iii) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then in each such case, the holder
of this Warrant, on the exercise hereof as provided in Section 2 hereof at any
time after the consummation of such reorganization, recapitalization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or effective date, the
stock and other securities and property (including cash) to which such holder
would have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had so exercised this Warrant
immediately prior thereto, all subject to further adjustment thereafter as
provided in Sections 5 and 7 hereof.
6.2. Appointment of Trustee for Warrant Holders Upon Dissolution. In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall, at its expense, deliver or cause to be delivered the stock
and other securities and property (including cash, where applicable) receivable
by the holders of the Warrant after the effective date of such dissolution
pursuant to this Section 6 to a bank or trust company having its principal
office in Boston, Massachusetts, as trustee for the holder or holders of the
Warrant.
6.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 6, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 8 hereof.
7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF OUTSTANDING COMMON
STOCK.
7.1. General. If at any time there shall occur any stock split, stock
dividend, reverse stock split or other subdivision of the Company's Common Stock
("STOCK EVENT"), then the number of shares of Common Stock to be received by the
holder of this Warrant shall be appropriately adjusted such that the proportion
of the number of shares issuable hereunder to the total number of shares of the
Company (on a fully diluted basis) prior to such Stock Event is equal to the
proportion of the number of shares issuable hereunder after such Stock Event to
the total number of shares of the Company (on a fully diluted basis) after such
Stock Event. The Exercise Price shall be proportionately decreased or increased
upon the occurrence of any stock split, stock dividend, reverse stock split or
other subdivision of the Common Stock.
7.2. Other Issuances of Common Stock.
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(1) General. If the Company shall, at any time or from time to time
after the date hereof, other than pursuant to any employee stock option
plan approved by the Board of Directors of the Company or pursuant to
warrants, options or other rights granted prior to the date of this
Warrant, issue any shares (or the right to acquire any shares) of its
Common Stock without consideration or for a consideration per share of
Common Stock (the "ISSUANCE PRICE") which is less than the Fair Market
Value (after deducting any customary discount in a firm underwritten public
offering or a secondary offering or in connection with an acquisition from
a third party) on such issuance date (a "DILUTIVE ISSUANCE"), then in such
case, the Exercise Price shall be lowered to equal such Exercise Price
multiplied by a fraction of which (i) the numerator is the sum of (X) the
number of shares of Common Stock outstanding immediately prior to such
issue (on a fully diluted basis), multiplied by the Fair Market Value in
effect immediately prior to such Dilutive Issuance, plus (Y) the number of
shares of Common Stock that could have been acquired at such Fair Market
Value using the aggregate Issuance Price payable (or which would be
payable) in such Dilutive Issuance (as if exercised or converted upon
issuance) in connection with the Dilutive Issuance multiplied by the
Issuance Price, by (ii) the denominator of which is the number of shares of
Common Stock outstanding immediately after such Dilutive Issuance (on a
fully diluted basis) multiplied by the Fair Market Value in effect
immediately prior to such Dilutive Issuance. The number of shares of
Common Stock for which the Warrant is exercisable shall be adjusted to
equal the number of shares of Common Stock which would otherwise (but for
the provisions of this subsection 7.2(a)) would have been issuable upon
such exercise by the fraction of which (i) the numerator is the Exercise
Price in effect immediately prior to the most recent Dilutive Issuance and
(ii) the denominator is the Exercise Price in effect immediately after such
Dilutive Issuance.
(2) Issuance of Warrants, Other Rights and Convertible Securities.
For purposes of this Section 7.2:
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The issuance of any warrants, options, or other subscription or
purchase rights with respect to shares of Common Stock and the issuance of
any securities convertible into or exchangeable for shares of Common Stock
(or the issuance of any warrants, options, or any rights with respect to
such convertible or exchangeable securities) shall be deemed a Dilutive
Issuance at the time of such issuance if the Net Consideration Per Share to
be received by the Company for such Common Stock (as hereinafter
determined) shall be less than the Fair Market Value at the time of such
issuance and, except as hereinafter provided, an adjustment in the Exercise
Price and the number of shares of Common Stock issuable upon exercise of
this Warrant shall be made upon each such issuance in the manner provided
in subsection 7.2(a). Any obligation, agreement or undertaking to issue
warrants, options, or other subscription or purchase rights at any time in
the future shall be deemed to be an issuance at the time such obligation,
agreement, or undertaking is made or arises. No adjustment of the Exercise
Price and the number of shares of Common Stock issuable upon exercise of
this Warrant shall be made under subsection 7.2(a) upon the issuance of any
shares of Common Stock that are issued pursuant to the exercise of any
warrants, options, or other subscription or purchase rights or pursuant to
the exercise of any conversion or exchange rights in any convertible
securities if any adjustment shall previously have been made upon the
issuance of any such warrants, options, or other rights or upon the
issuance of any convertible securities (or upon the issuance of any
warrants, options, or any rights therefor) as above provided. Any
adjustment of the Exercise Price and the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to this subsection
7.2(b) that relates to warrants, options, or other subscription or purchase
rights with respect to shares of Common Stock shall be disregarded if, as,
when, and to the extent that such warrants, options, or other subscription
or purchase rights expire or are canceled without being exercised, so that
the Exercise Price in effect at the time of the issuance of the expired or
canceled warrants, options, or other subscriptions or purchase rights, with
such additional adjustments as would have been made to that Exercise Price
had the expired or canceled warrants, options, or other subscriptions or
purchase rights not been issued. For purposes of this subsection 7.2(b),
the "Net Consideration Per Share" to be received by the Company shall be
determined as follows:
(1) The "Net Consideration Per Share" shall mean the
amount equal to the total amount of consideration, if any,
received by the Company for the issuance of such warrants,
options, subscriptions, or other purchase rights or
convertible or exchangeable securities, plus the minimum
amount of consideration, if any, payable to the Company upon
exercise or conversion thereof, divided by the aggregate
number of shares of Common Stock that would be issued if all
such warrants, options, subscriptions, or other purchase
rights or convertible or exchangeable securities were
exercised, exchanged, or converted, in any case whether or not
the rights to exercise, exchange or convert are immediately
exercisable.
(2) The "Net Consideration Per Share" to be received by
the Company shall be determined in each instance as of the
date of issuance of
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warrants, options, subscriptions, or other purchase rights, or
convertible or exchangeable securities without giving effect
to any possible future price adjustments or rate adjustments
that may be applicable with respect to such warrants, options,
subscriptions, or other purchase rights or convertible
securities, in any case whether or not the rights to exercise,
exchange or convert are immediately exercisable.
For purposes of this Section 7.2, if a part or all of the consideration
received by the Company in connection with the issuance of shares of the Common
Stock or the issuance of any of the securities described in this Section 7.2
consists of property other than cash, such consideration shall be deemed to
have the same value as shall be determined in good faith by the Board of
Directors of the Company.
7.3. Other Securities. In case any Other Securities shall have been
issued, or shall then be subject to issue, upon the conversion or exchange of
any stock (or Other Securities) of the Company (or any other issuer of Other
Securities or any other entity referred to in Section 6 hereof) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or entity), the holder hereof shall
be entitled to receive upon exercise hereof such amount of Other Securities (in
lieu of or in addition to Common Stock) as is determined in accordance with the
terms hereof, treating all references to Common Stock herein as references to
Other Securities to the extent applicable, and the computations, adjustments and
readjustments provided for in this Section 7 with respect to the number of
shares of Common Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to determine the amount
of Other Securities from time to time receivable on the exercise of the Warrant,
so as to provide the holder of the Warrant with the benefits intended by this
Section 7 and the other provisions of this Warrant.
8. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of the Warrant against
dilution. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of stock receivable on the
exercise of the Warrant above the amount payable therefor on such exercise,
(ii) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock on the exercise of the Warrant from time to time outstanding, and
(iii) will not transfer all or substantially all of its properties and assets
to any other entity (corporate or otherwise), or consolidate with or merge into
any other entity or permit any such entity to consolidate with or merge into
the Company (if the Company is not the surviving entity), unless such other
entity shall expressly assume in writing and will be bound by all the terms of
this Warrant and the Securities Purchase Agreement.
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9. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of any event
that may require any adjustment or readjustment in the shares of Common Stock
issuable on the exercise of this Warrant, the Company at its expense will
promptly prepare a certificate setting forth such adjustment or readjustment,
or stating the reasons why no adjustment or readjustment is being made, and
showing, in detail, the facts upon which any such adjustment or readjustment is
based, including a statement of (i) the number of shares of the Company's
Common Stock then outstanding on a fully diluted basis, and (ii) the number of
shares of Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted and
readjusted on account thereof. The Company will forthwith mail a copy of each
such certificate to each holder of a Warrant, and will, on the written request
at any time of any holder of a Warrant, furnish to such holder a like
certificate setting forth the calculations used to determine such adjustment or
readjustment. At its option, the holders of a Warrant may confirm the
adjustment noted on the certificate by causing such adjustment to be computed
by the Company's independent accounting firm or another independent certified
public accountant at the expense of the Company.
10. NOTICES OF RECORD DATE. In the event of:
(1) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right;
or
(2) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of
all or substantially all the assets of the Company to or any consolidation
or merger of the Company with or into any other Person; or
(3) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(4) any proposed issue or grant by the Company of any shares of stock
of any class or any other securities, or any right or option to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities (other than the issue of Common Stock on the exercise of
this Warrant or pursuant to any employee stock option plan or employee
stock purchase plan),
then, and in each such event, the Company will mail or cause to be mailed to
the holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is anticipated to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or Other Securities) shall
be entitled to exchange their shares of Common Stock (or Other Securities) for
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securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall be mailed at least thirty (30) days prior to
the date specified in such notice on which any such action is to be taken.
11. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will at
all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, a number of shares of Common Stock equal to the total
number of shares of Common Stock from time to time issuable upon exercise of
this Warrant, and, from time to time, will take all steps necessary to amend
its Charter to provide sufficient reserves of shares of Common Stock issuable
upon exercise of this Warrant.
12. DEFINITIONS. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
12.1. The term COMMON STOCK includes (i) the Company's Common Stock, $0.01
par value, (ii) any other capital stock of any class or classes (however
designated) of the Company, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and (iii) any other
securities into which or for which any of the securities described in clauses
(i) or (ii) above have been converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
12.2. The term OTHER SECURITIES refers to any stock (other than Common
Stock) and other securities of the Company or any other entity (corporate or
otherwise) (i) which the holder of this Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant, in lieu of or
in addition to Common Stock, or (ii) which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock or
Other Securities, in each case pursuant to Section 5 or 6 hereof.
13. INTENTIONALLY OMITTED.
14. REMEDIES. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. NOTICES. All notices and other communications from the Company to the
holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, or sent by overnight courier at such address as may have
been furnished to the Company in writing by such
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holder or, until any such holder furnishes to the Company an address, then to,
and at the address of, the last holder of this Warrant who has so furnished an
address to the Company.
16. TRANSFER. Subject to the provisions of Section 10 of the Securities
Purchase Agreement, this Warrant and all rights hereunder are transferable, in
whole or in part, at the office or agency of the Company by the registered
holder thereof in person or by a duly authorized attorney, upon surrender of
this Warrant together with an assignment hereof properly endorsed. Until
transfer hereof on the registration books of the Company, the Company may treat
the registered holder hereof as the owner hereof for all purposes. Any
transferee of this Warrant and any rights hereunder, by acceptance thereof,
agrees to assume all of the obligations of a holder thereunder and to be bound
by all of the applicable terms and provisions of the Securities Purchase
Agreement.
17. MISCELLANEOUS. In case any provision of this Warrant shall be invalid,
illegal or unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be
enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This Warrant
and any term hereof may be changed, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant shall be
governed by and construed in accordance with the domestic substantive laws (and
not the conflict of law rules) of the State of Delaware. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. This Warrant shall take effect as an
instrument under seal.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer and its corporate seal to be impressed hereon and
attested by its Secretary.
Dated as of July 17, 1998
FACTORY CARD OUTLET CORP.
(Corporate Seal) By:_________________________________
Title:______________________________
Attest:
___________________________________
Secretary
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NOTICE OF EXERCISE OR CONVERSION
Date:____________________, 19__
Factory Card Outlet Corp.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
The undersigned hereby elects to exercise or convert the enclosed Warrant
issued to it by Factory Card Outlet Corp. (the "Company") and dated as of July
__, 1998.
The undersigned elects to:
[ ] Exercise the Warrant and to purchase thereunder_____________ shares
of the Common Stock of the Company (the "Shares") at an exercise
price of _________ per Share for an aggregate purchase price of
_____________ Dollars ($_______) (the "Purchase Price"). Pursuant
to the terms of the Warrant, the undersigned has delivered the
Purchase Price herewith in full.
[ ] Convert __% of the value of the Warrant at the current Exercise
Price (as defined in the Warrant) of $_______ per Share.
Very truly yours,
_____________________________
Receipt Acknowledged:
Factory Card Outlet Corp.
By __________________________
on ___________________ , 19__
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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto _____________________________ of ____________________________ the right
represented by the within Common Stock Purchase Warrant to purchase _____ shares
of Common Stock of Factory Card Outlet Corp., an Ohio corporation, to which the
within Common Stock Purchase Warrant relates, and appoints ___________________
Attorney to transfer such right on the books of Factory Card Outlet Corp., with
full power of substitution in the premises.
Dated: _________________________________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
_______________________________________
(Address)
Signed in the presence of:
____________________________________
