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Exhibit 1
OPTION AGREEMENT
AGREEMENT, dated June 8, 1999, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, having an
address at ▇.▇. ▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller") and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, residing at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Purchaser").
WHEREAS, the Seller is presently the Chief Executive Officer of Party
City Corporation, a Delaware corporation (the "Company"), and is the beneficial
owner of 2,457,500 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), and the record owner of at least 1,000,000 of such
shares; and
WHEREAS, the Purchaser is becoming the Chief Executive Officer of the
Company on the date hereof; and
WHEREAS, the Seller wishes to grant to Purchaser an option to purchase
certain of his shares of Common Stock on the terms set forth herein, as an
inducement for Purchaser to take on the responsibility of Chief Executive
Officer of the Company; and
WHEREAS, Seller's inducement to grant this option is that by virtue of
Purchaser's new position as Chief Executive Officer, the value of Sellers's
shares that are not subject to the option may increase in value.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree as follows:
I. OPTION.
1.01. Grant of the Option; Term. Subject to the terms of this
Agreement, in reliance on the representations, warranties and agreements of the
Purchaser contained herein, the Seller hereby grants to the Purchaser an option
to purchase, in whole or in part, 1,000,000 shares of Common Stock at any time
during the period commencing on the date hereof and ending on the fifth
anniversary of the date hereof, at the exercise price per share of $3.00 (the
"Purchase Price"). The option shall be evidenced by one or more option
certificates substantially in the form attached hereto as Exhibit A (the
"Option").
1.02. Exercise of the Option and Purchase of the Shares. The Option
shall be exercised upon receipt by the Seller of a duly executed and completed
facsimile of the form for such purpose attached hereto as Exhibit A, accompanied
by a bank or certified check issued by any domestic office of a bank organized
under the laws of the United States of America or any state thereof, which has
net assets of not less than $100 million, in the amount of the Purchase Price
for the number of shares being purchased in accordance with the terms set forth
below. Notwithstanding the foregoing the Option may not be exercised at any time
for less than 100,000 Option Shares (as hereinafter defined and as the same may
be adjusted under Section 1.04 hereof), and the Option shall not be exercised
more than six times over the course of the five-year term, unless the same shall
be waived in writing by Seller.
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1.03. Delivery by the Seller of the Option Shares. As promptly as
practicable after any exercise of the Option, the Seller shall do all things
necessary or appropriate and execute and deliver all documents and instruments
necessary or appropriate, including without limitation, duly executed stock
powers, to cause certificate(s) registered in the name of the Purchaser to be
delivered to Purchaser, or his permitted transferees, for the shares of Common
Stock so purchased.
1.04. Adjustment. The price and number of shares subject to the Option
shall be appropriately adjusted in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares or similar
change in the Company's shares. Upon the subdivision or combination of the
outstanding shares of Common Stock or the issuance of a stock dividend, payable
in shares, to holders of Common Stock, the Purchase Price shall be adjusted by
multiplying the Purchase Price by a fraction, the numerator of which is equal to
the number of issued and outstanding shares of Common Stock immediately prior to
such subdivision, combination or stock dividend, and the denominator of which is
equal to the number of issued and outstanding shares of Common Stock immediately
following such subdivision, combination or stock dividend. If the Company shall
be reorganized, consolidated, or merged with another corporation, or if all or
substantially all of the assets of the Company shall be sold or exchanged, or if
there is a recapitalization, stock split, stock dividend, combination of shares
or similar change in the Company's shares, the Purchaser shall at the time of
issuance of the stock under such corporate event be entitled to receive, upon
the exercise of his Option, the same number and kind of shares of stock or the
same amount of property, cash or securities as the Purchaser would have been
entitled to receive upon the occurrence of any such corporate event as if the
Purchaser had been, immediately prior to such event, the holder of the number of
shares covered by his Option so exercised.
1.05. Pledge of Shares. The Option evidenced hereby shall be secured by
Seller's pledge of 1,000,000 shares of Common Stock to Purchaser, upon the terms
and subject to the conditions contained in a Stock Pledge Agreement (the "Stock
Pledge Agreement") mutually agreed to by the parties. As and when the option is
exercised, the Option Shares, deliverable upon such exercise shall be released
from the pledge.
II. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Seller as follows:
2.01. Authority. The Purchaser has the power and authority to enter
into and perform his obligations under this Agreement and the Option and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by the Purchaser.
2.02. Valid and Binding Obligations. This Agreement and the Option
constitute the valid and binding obligations of the Purchaser enforceable
against the Purchaser in accordance with their respective terms, except that the
remedy of specific performance and other forms of
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equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.03. Investment Intent. The Purchaser represents, warrants and agrees
that he is acquiring the Option and upon the exercise of the Option, he will
acquire the shares of common stock issued pursuant thereto (the "Option Shares")
for his own account and not with a view to the sale or distribution thereof
other than in accordance with the Securities Act of 1933, as amended, (the
"Securities Act") or pursuant to this Agreement and that there will be placed on
the certificate or certificates representing the Option, and/or the Option
Shares or any certificates delivered in substitution for any of the foregoing, a
legend stating in substance:
"This option and the securities issuable
upon exercise of this option are
restricted securities, as defined in Rule
144 promulgated under the Securities Act
of 1933, as amended, and have not been
registered under such Act. Accordingly, in
the absence of such registration, these
securities may only be sold or transferred
pursuant to that rule or under another
exemption from registration under said
Act."
2.04. No Violation. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby will not violate or conflict with the terms, conditions or provisions of
any agreement or obligation or any order, arbitration award, judgment or decree
or (to the knowledge of Purchaser) any law, rule or regulation to which the
Purchaser is subject, or by which his assets may be bound, which would prohibit
the Purchaser from consummating the transactions contemplated hereby.
2.05. No Consents. No approval, consent, order, authorization of or
exemption by any governmental authority or any person not a party to this
Agreement is required by or with respect to the Purchaser in connection with the
execution, delivery and performance of this Agreement by the Purchaser or the
consummation by the Purchaser of the transactions contemplated hereby.
2.06. No Brokers or Finders. The Purchaser has not engaged or agreed to
pay any commission, fee or like remuneration to any finder, broker or agent in
connection with this Agreement, or the performance by the parties of any of
their obligations under this Agreement which could result in any obligation of
the Seller or the Company.
2.07. No Reliance on Seller. Purchaser represents and warrants that he
has made his own independent evaluation of the Company before entering into this
Agreement and has not and is not relying on any representations or warranties
made by the Seller relating to the Company. In no event shall Purchaser be
entitled to assert any claim against Seller, except for any breach by Seller of
any of his express representations and warranties contained in this Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Purchaser as follows:
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3.01. Authority of the Seller. The Seller has the power and authority
to enter into and perform his obligations under this Agreement and the Option
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Seller.
3.02. Option Valid and Binding Obligations. This Agreement and the
Option constitute the valid and binding obligations of the Seller enforceable
against the Seller in accordance with their respective terms, except that the
remedy of specific performance and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.03. Option Shares. The Option Shares owned by the Seller are fully
paid and non-assessable to the Seller, and are free and clear of any lien,
encumbrance or claim whatsoever, other than those created in favor of Purchaser
pursuant to the Stock Pledge Agreement. There is no outstanding agreement,
option, warrant or right to purchase or otherwise acquire by or from the Seller
any shares or securities of the Company or any calls thereon or commitments
relating thereto.
3.04. No Violation. The execution and delivery of this Agreement and
the Option by the Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby will not violate the terms, conditions or
provisions of any agreement or obligation or any order, arbitration award,
judgment or decree or (to the knowledge of the Seller) any law, rule or
regulation to which the Seller is subject, or by which any of his assets may be
bound, which would prohibit the Seller from consummating the transactions
contemplated hereby and thereby.
3.05. No Consents. No approval, consent, order, authorization of or
exemption by any governmental authority or any person not a party to this
Agreement or the Option is required by or with respect to the Seller in
connection with the execution, delivery and performance of this Agreement or the
Option by the Seller or the consummation by the Seller of the transactions
contemplated hereby or thereby except for filings required under Federal
securities laws or state securities or "blue sky" laws which have been made or
which, according to such applicable law, may be made following the date hereof
and which the Seller has committed to make within the prescribed time period.
3.06. Solvency. As of the date hereof and after giving effect to the
transactions contemplated by this Agreement and the Seller is able to pay his
debts as they become due and the value of the Seller's assets valued at fair
market value exceeds his liabilities excluding any contingent liabilities on
account of pending shareholder suits, copies of which have been supplied to
Seller.
3.07. No Brokers or Finders. The Seller has not engaged or agreed to
pay any commission, fee or like remuneration to any finder, broker or agent in
connection with this Agreement or the Option or the performance by the parties
of any of their obligations under this Agreement or the Option which could
result in any obligation of the Purchaser.
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3.08. Seller's Consideration. The Seller acknowledges that he has made
the business decision to enter into this Option for the consideration set forth
in the recitals.
IV. COVENANTS OF THE PARTIES.
4.01. Restrictions on Transferability.(a)The Purchaser covenants and
agrees that so long as the Purchaser is the record or beneficial owner of the
Option, any Option Shares or any other securities of the Company which are
entitled to vote or which are convertible into securities of the Company which
are entitled to vote ("Voting Securities") (collectively the Option, upon
exercise, the Option Shares and Voting Securities are referred to as the
"Securities"), the Purchaser shall not, directly or indirectly (by operation of
law or otherwise) sell, assign, mortgage, hypothecate, transfer, pledge, create
a security interest in or lien upon, encumber, give or otherwise dispose of any
of such Securities (a "Transfer") except:
(i) Purchaser's Transfer of all or a portion of the Securities
following Purchaser's death by will or intestacy to Purchaser's legal
representative, heir or legatee;
(ii) Purchaser's Transfer of any or all of the Securities
owned by Purchaser as a gift or gifts during Purchaser's lifetime to Purchaser's
spouse, children (including stepchildren), grandchildren or a trust or other
legal entity for the benefit of Purchaser or any of the foregoing;
(iii) sales of Securities pursuant to a distribution to the
public, registered under the Securities Act;
(iv) sales of Securities pursuant to Rule 144 of the General
Rules and Regulations under the Securities Act;
(v) sales of any Securities to the Company or the Seller or to
any person, corporation, entity or group designated by the Seller;
(vi) sales of Securities pursuant to a private placement in
accordance with the provisions of Regulation D under the Securities Act in which
each of the proposed purchasers agrees in advance in writing to be bound by the
provisions of this Agreement as if such person were the Purchaser; or
(vii) sales of Securities pursuant to an exemption from
registration under the Securities Act.
The Purchaser shall notify the Seller, for his records, of all
Transfers of all or a portion of the Option as and when the Transfers are
effected. Promptly upon Purchaser's written request, Seller shall execute one or
more option certificates in the name of one or more of Purchaser's permitted
transferees, in such amounts as shall be requested by Purchaser (so long as in
the aggregate all of the Option Shares represented by all outstanding option
certificates plus all shares purchased upon exercise of option certificates do
not exceed 1,000,000 Option Shares, as the same may be adjusted under the terms
of this Agreement).
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4.02. Transferee's Rights. Any transferee of any of Purchaser's rights
in the Option or this Agreement shall be deemed to have agreed to be bound by
and be subject to all of the provisions of this Agreement (including but not
limited to Section 2.07).
V. INDEMNITY.
5.01. Indemnification by Seller. Seller shall indemnify Purchaser, his
successors and assigns and permitted transferees and hold Purchaser and the
foregoing named persons harmless from any charges, claims, damages, settlements,
costs, judgments, decrees, expenses (including reasonable counsel fees and
expenses), penalties and liabilities of any kind or nature whatsoever which may
be sustained or suffered by or secured against Purchaser and/or any of the
foregoing named persons, arising out of or as a result of any breach by Seller
of any of his covenants, agreements, representations or warranties under any of
the provisions of this Agreement.
5.02. Indemnification by Purchaser. Purchaser shall indemnify Seller,
his successors and assigns, and hold Seller and the foregoing named persons
harmless from any charges, claims, damages, settlements, costs, judgments,
decrees, expenses (including reasonable counsel fees and expenses), penalties
and liabilities of any kind or nature whatsoever which may be sustained or
suffered by or secured against Seller and/or any of the foregoing named persons,
arising out of or as a result of any breach by Purchaser of any of his
covenants, agreements, representations or warranties under any of the provisions
of this Agreement.
VI. MISCELLANEOUS.
6.01. Assignment. This Agreement and the Option granted hereby is
assignable, in whole or in part, by the Purchaser to the permitted transferees
only to the extent permitted in Section 4.01(a).
6.02. Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of, and shall be
enforceable by and against the respective heirs, devisees, legal
representatives, successors, permitted assigns and other permitted transferees
of the parties hereto, including without limitation, the Stock Pledge Agreement.
6.03. Survival of Representations. All representations, warranties and
agreements made by the Seller and Purchaser in this Agreement shall survive the
exercise of the Option.
6.04. Further Assurances. The parties hereto will execute and deliver
any and all documents and will take any and all actions in addition to those
provided for herein that may be appropriate or necessary to effectuate the
provisions of this Agreement, whether at or after the Closing.
6.05. Entire Agreement; Amendments. This Agreement and the other
agreements delivered simultaneously herewith, including, without limitation, the
Stock Pledge Agreement, contain the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those
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expressly set forth herein. This Agreement may be amended only by a written
instrument duly executed by the parties or their respective successors or
assigns.
6.06. Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.07. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given on the date of delivery, if by personal
delivery, or on the next day if delivered by overnight mail by a nationally
recognized courier service, or on the third business day after mailing if sent
by mail (registered or certified mail, postage prepaid, return receipt
requested) to the respective parties as follows:
to the Seller:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
If to the Purchaser:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to
Prior to 7/4/99 After ▇/▇/▇▇
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇-▇▇▇▇▇ LLP ▇▇▇▇, Block, ▇▇▇▇▇▇ & ▇▇▇▇▇-▇▇▇▇▇ LLP
12th Floor, Packard Building ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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6.08. Arbitration. Any dispute or controversy arising out of or
relating to this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, including without
limitation, the Stock Pledge Agreement, or any breach of this Agreement or any
such document or instrument shall be settled by arbitration to be held in Essex
County in New Jersey in accordance with the rules then in effect of the American
Arbitration Association or any successor thereto. The arbitrator may grant
injunction or other relief in such dispute or controversy and may, if requested
by either of the parties, determine which or both of the parties shall bear the
costs of the arbitration (other than the costs of each party's legal fees which
costs shall be borne by the party incurring same) and, if both parties shall
bear the costs, then the allocation of such costs between them. The decision of
the arbitrator shall be final, conclusive, and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction, and the parties irrevocably consent to the jurisdiction of
the United States District Court for the District of New Jersey for this
purpose. In any such arbitration, the parties waive personal service of any
process or other papers and agree that service thereof may be made in accordance
with Paragraph 6.07.
6.09. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
6.10. Governing Law. This Agreement shall be and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto through duly authorized officers on the day and
year first above written.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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EXHIBITS
Exhibit A: Option Certificate
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SCHEDULE A
List of share certificates to be pledged:
1. Certificate No. ____ evidencing 500,000 shares
2. Certificate No. ____ evidencing 100,000 shares
3. Certificate No. ____ evidencing 100,000 shares
4. Certificate No. ____ evidencing 100,000 shares
5. Certificate No. ____ evidencing 100,000 shares
6. Certificate No. ____ evidencing 100,000 shares
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EXHIBIT A
THE SECURITIES REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THESE OPTIONS ARE RESTRICTED SECURITIES, AS DEFINED IN RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933 AND HAVE NOT BEEN REGISTERED UNDER
SUCH ACT. ACCORDINGLY, IN THE ABSENCE OF SUCH REGISTRATION, THESE SECURITIES MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO THAT RULE OR UNDER ANOTHER EXEMPTION
FROM REGISTRATION UNDER SAID ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY UPON COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THAT CERTAIN OPTION AGREEMENT DATED JUNE 8, 1999, BY AND BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, A COPY OF WHICH IS ON FILE AT THE OFFICE OF
THE SECRETARY OF PARTY CITY CORPORATION.
OPTION CERTIFICATE
1,000,000 SHARES OF COMMON STOCK
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, having an address at ▇.▇. ▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
hereby certifies that, for value received, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, with a residence at
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and/or any of his
permitted transferees (the "Option Holder"), is entitled, subject to the terms
of this Option Certificate, to purchase from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in whole or in
part, at any time during the five-year period commencing on the date hereof (the
"Commencement Date") and ending on the fifth anniversary from the Commencement
Date, 1,000,000 shares of the common stock, par value $.01 per share (the
"Common Stock") of Party City Corporation (the "Company"), at a purchase price
per share equal to $3.00 per share (the "Purchase Price"). The number of shares
of Common Stock that may be purchased upon the exercise of the Option (the
"Option Shares") and payment of the Purchase Price, as set forth in the
preceding sentence, are subject to adjustment as provided in this Option
Certificate.
1. Exercise of Option. This Option Certificate may be exercised at any
time or from time to time, in whole or in part, during the period commencing on
the Commencement Date and ending at 5:00 p.m. on the fifth anniversary of the
Commencement Date by delivery of this Option Certificate to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at
the address listed above (or such other address as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may designate
in writing to the Option Holder in accordance with Section 8), together with an
Exercise Form in the form attached hereto and payment in an amount equal to the
Purchase Price multiplied by the number of shares being acquired (the "Aggregate
Purchase Price"). Notwithstanding the foregoing, the Option Holder may not
exercise the Option evidenced hereby at any time for less than 100,000 Option
Shares (as the same may be adjusted
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under the terms of Section 4 hereof) and the Option Holder, together with any
and all other Option Holders, may not exercise the Option evidenced by this
Option Certificate and by any other Option Certificate issued pursuant to the
Option Agreement dated June 8, 1999, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
in the aggregate, more than six (6) times over the course of the five-year term,
unless the same shall be waived in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Payment shall be
made by delivery to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of a certified check or bank check issued by
any domestic office of a bank organized under the laws of the United States of
America or any state thereof, which has net assets of not less than $100
million, payable to the order of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in an amount equal to the
Aggregate Purchase Price. As promptly as practicable after any exercise of the
Option evidenced by this Option Certificate, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall do all things
necessary or appropriate and execute and deliver all documents and instruments
necessary or appropriate, including without limitation, stock powers duly
executed, to cause a certificate or certificates registered in the name of the
Option Holder for the shares of Common Stock so purchased to be delivered to the
Option Holder. If the Option Holder exercises the Option to purchase fewer than
all the Option Shares subject to this Option Certificate, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall,
on the date of delivery of the certificate representing the Option Shares so
purchased, deliver to the Option Holder a new Option Certificate evidencing an
option to purchase the number of Option Shares resulting from the subtraction of
the number of Option Shares purchased from the number of Option Shares evidenced
by this Option Certificate immediately prior to the exercise.
2. Fractional Shares and Options. The Option Holder may not exercise
the option to purchase a fraction of an Option Share, but may purchase only an
integral number of Option Shares. If, at the time of exercise of the Options
evidenced by this Option Certificate, a fractional share of the Common Stock
would be deliverable to the Option Holder, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, at his option, may
pay the Option Holder an amount equal to the current market price of the Common
Stock on the date of exercise multiplied by the same fraction.
3. Transferability. By acceptance of this Option, (a) the Option Holder
confirms his representations and agreements set forth in the Option Agreement of
even date herewith between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Option Holder relating to the
Option Holder's investment intent and restrictions on transferability of the
Options and the Option Shares and (b) any transferee of this Option agrees to be
subject to the Option Agreement as if he or it were the Purchaser thereunder.
4. Adjustment in Number of Shares and Purchase Price. If the total
number of outstanding shares of Common Stock of the Company is hereafter changed
by reason of any stock dividend, stock split, combination, subdivision or
recapitalization, an appropriate adjustment will be made in the number of shares
that can be purchased hereunder and the exercise price. Upon the subdivision or
combination of the outstanding shares of Common Stock or the issuance of a stock
dividend, payable in shares, to holders of Common Stock, the Purchase Price
shall be adjusted by multiplying the Purchase Price by a fraction, the numerator
of which is equal to the number of issued and outstanding shares of Common Stock
immediately prior to such subdivision, combination or stock dividend, and the
denominator of which is equal to the number of issued and outstanding shares of
Common Stock immediately following such subdivision,
CUSIP No. ▇▇▇▇▇▇▇▇▇ Page 22 of 30
combination or stock dividend. If the Company shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, or if there is a
recapitalization, stock split, stock dividend, combination of shares or similar
change in the Company's shares, the Purchaser shall at the time of issuance of
the stock under such corporate event be entitled to receive, upon the exercise
of his or her Option, the same number and kind of shares of stock or the same
amount of property, cash or securities as the Purchaser would have been entitled
to receive upon the occurrence of any such corporate event as if the Optionee
had been, immediately prior to such event, the holder of the number of shares
covered by his or her Option so exercised.
5. No Rights as Stockholder. The Option Holder, by virtue of holding
the Option evidenced by this Option Certificate, shall not be entitled to vote
or receive dividends or be deemed to be or be entitled to any rights of a
stockholder of the Company and the Option Holder shall have no rights other than
those specifically set forth herein.
6. Complete Agreement; Modification and Termination. This Option
Certificate contains, or otherwise makes reference to, a complete statement of
all the arrangements with respect to the Options evidenced by this Option
Certificate and cannot be changed or terminated orally.
7. Notice. All notices and other communications relating to the Options
shall be in writing and shall be deemed to have been duly given when delivered
personally or mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
if to the Option Holder, then to
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
if to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as the party to whom notice is to be given shall have
previously furnished the other party in writing in the manner set forth above.
8. Governing Law. The Options evidenced by this Option
Certificate shall be governed by and construed in accordance with the laws of
the State of New York.
9. Headings. The headings in this Option Certificate are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Option Certificate.
CUSIP No. ▇▇▇▇▇▇▇▇▇ Page 23 of 30
Dated: June 8, 1999
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXERCISE FORM
(To be executed by the Option Holder to exercise the Option evidenced by the
attached Option Certificate)
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇:
The undersigned, pursuant to and in accordance with the terms and
conditions of the option certificate (the "Option Certificate") issued by you,
on ____________________, hereby irrevocably exercises his option evidenced by
the Option Certificate, and requests that a certificate for ____ shares of Party
City Corporation Common Stock, par value $____ per share ("Common Stock"),
issuable upon the exercise of the option be issued in the name of the
undersigned and delivered to the undersigned at the address stated below.
Pursuant to Section 1 of the Option Certificate and in complete
satisfaction of the Aggregate Purchase Price for the shares of Common Stock
specified herein issuable upon the exercise of the option, the undersigned is
delivering to you herewith, a certified or bank cashier's check payable to your
order in the amount of $__________.
The undersigned agrees that the undersigned shall not offer, sell,
transfer or otherwise dispose of any shares of Common Stock issuable upon the
exercise of the option evidenced by the Option Certificate except in accordance
with the terms of that certain Option Agreement dated as of June 8, 1999, by and
between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Dated:
By:___________________________
Registered Holder
Address: