Exhibit 4.1
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WARRANT AGREEMENT
by and between
FACTORY CARD & PARTY OUTLET CORP.
and
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
as Warrant Agent
38,462 Series A Warrants
46,392 Series B Warrants
38,462 Series C Warrants
30,612 Series D Warrants
Dated as of April 9, 2002
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS................................................................................1
Article 2 ISSUANCE OF WARRANTS.......................................................................4
2.1 Initial Issuance...............................................................................4
2.2 Initial Share Amount...........................................................................4
2.3 Form of Warrant Certificates...................................................................4
2.4 Execution of Warrant Certificates..............................................................5
2.5 Countersignature of Warrant Certificates.......................................................5
Article 3 EXERCISE PERIOD............................................................................5
Article 4 EXERCISE OF WARRANTS.......................................................................6
4.1 The Exercise Price.............................................................................6
4.2 Manner of Exercise.............................................................................6
4.3 When Exercise Effective........................................................................6
4.4 Delivery of Certificates, Etc..................................................................6
4.5 Fractional Shares..............................................................................7
Article 5 ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE EXERCISE PRICE UPON EXERCISE.....8
5.1 (a) Adjustment for Change in Capital Stock....................................................8
5.2 Distributions..................................................................................9
5.3 Adjustments for Mergers and Consolidations....................................................10
5.4 No Adjustment of Exercise Price...............................................................10
5.5 No De Minimis Adjustments; Calculation to Nearest Cent and One-hundredth of Share.............10
5.6 Notice of Adjustment; Warrant Agent's Disclaimer..............................................10
5.7 Other Notices.................................................................................11
5.8 No Change in Warrant Terms on Adjustment......................................................11
Article 6 MERGER, CONSOLIDATION, ETC................................................................11
Article 7 NOTIFICATION OF CERTAIN EVENTS............................................................12
7.1 Corporate Action..............................................................................12
7.2 Available Information.........................................................................13
Article 8 RESERVATION OF STOCK......................................................................13
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TABLE OF CONTENTS
(continued)
Page
Article 9 LOSS OR MUTILATION........................................................................13
Article 10 WARRANT REGISTRATION......................................................................14
10.1 Registration..................................................................................14
10.2 Transfer or Exchange..........................................................................14
10.3 Valid and Enforceable.........................................................................14
10.4 Endorsement...................................................................................14
10.5 No Service Charge.............................................................................14
10.6 Treatment of Holders of Warrant Certificates..................................................15
10.7 Cancellation..................................................................................15
Article 11 WARRANT AGENT.............................................................................15
11.1 Obligations Binding...........................................................................15
11.2 No Liability..................................................................................15
11.3 Instructions..................................................................................15
11.4 Agents........................................................................................16
11.5 Cooperation...................................................................................16
11.6 Agent Only....................................................................................16
11.7 Right to Counsel..............................................................................16
11.8 Compensation..................................................................................16
11.9 Accounting....................................................................................16
11.10 No Conflict...................................................................................17
11.11 Resignation; Termination......................................................................17
11.12 Change of Warrant Agent.......................................................................17
11.13 Successor Warrant Agent.......................................................................18
Article 12 REMEDIES, ETC.............................................................................18
Article 13 MISCELLANEOUS.............................................................................18
13.1 Notices.......................................................................................18
13.2 Governing Law and Consent to Forum............................................................19
13.3 Benefits of this Agreement....................................................................19
13.4 Agreement of Holders of Warrant Certificates..................................................20
13.5 Counterparts..................................................................................20
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TABLE OF CONTENTS
(continued)
Page
13.6 Amendments....................................................................................20
13.7 Consent to Jurisdiction.......................................................................20
13.8 Headings......................................................................................21
EXHIBITS
Exhibit A: Form of Warrant Certificate For Series A
Exhibit B: Form of Warrant Certificate For Series B
Exhibit C: Form of Warrant Certificate For Series C
Exhibit D: Form of Warrant Certificate For Series D
Schedule I: Warrants to be Issued
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made and entered into as of April 9,
2002 by and between Factory Card & Party Outlet Corp. (f/k/a Factory Card Outlet
Corp.), a Delaware corporation (the "Company"), and ▇▇▇▇▇ Fargo Bank Minnesota,
N.A., as Warrant Agent (the "Warrant Agent").
WITNESSETH:
WHEREAS, in connection with the financial restructuring of the
Company, pursuant to the Amended Joint Plan of Reorganization of the Company,
and certain of its subsidiaries, dated as of February 5, 2002 (as amended, the
"Plan"), the Company is issuing the Series A Warrants, the Series B Warrants,
the Series C Warrants and the Series D Warrants which are exercisable to
purchase up to an aggregate 153,928 shares of Common Stock (as defined herein),
subject to adjustment as provided herein (the "Warrants"), to the holders of
Factory Card Equity Interests (the "Interests") in partial exchange for such
Interests and in accordance with the Plan;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company and the Warrant Agent is willing to act in connection with
the issuance, transfer, exchange, replacement and exercise of the Warrant
Certificates (as defined herein) and other matters as provided herein; and
WHEREAS, the Company desires to enter into this Agreement to
set forth the terms and conditions of the Warrants and the rights of the holders
thereof;
NOW, THEREFORE, in consideration of the foregoing premises and
of the mutual agreements set forth herein, the Company and the Warrant Agent
hereby agree as follows:
ARTICLE 1
DEFINITIONS
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Capitalized terms which are used in this Agreement but not
defined below shall have the meaning given to such terms in the Plan. As used
herein, the following terms have the following respective meanings:
"Agreement" means this Warrant Agreement, as the same may be
amended or modified from time to time hereafter.
"Bankruptcy Court" means the United States Bankruptcy Court
for the District of Delaware that has jurisdiction of the chapter 11 case of the
Company under title 11 of the United States Code.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which commercial banking institutions in New York City, New York are
authorized or required by law to be closed; provided, that, in determining the
period within which certificates or Warrants are to be issued and delivered at a
time when shares of Common Stock (or Other Securities) are listed or admitted to
trading on any national securities exchange or in the over-the-counter market
and in determining the Fair Value of any securities listed or admitted to
trading on any national securities exchange or in the over-the-counter market,
"Business Day" shall mean any day when the principal exchange on which such
securities are then listed or admitted to trading is open for trading or, if
such securities are traded in the over-the-counter market in the United States,
such market is open for trading; and provided, further, that any reference in
this Agreement to "days" (unless Business Days are specified) shall mean
calendar days.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Fair Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Fair Value per share of the Common Stock on the
Exercise Date.
"Certificate of Incorporation" means the Company's Amended and
Restated Certificate of Incorporation dated as of the Effective Date.
"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act of 1933,
as amended, or the Exchange Act, whichever is the relevant statute for the
particular purpose.
"Common Stock" means the Common Stock, par value $0.01 per
share, to be issued pursuant to the Certificate of Incorporation.
"Company" has the meaning specified in the preamble hereof.
"Exchange Act" means the Securities Exchange Act of 1934, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be amended and in effect at the time. Any
reference herein to a particular section of the Securities Exchange Act of 1934
shall include a reference to the comparable section, if any, of any such
successor Federal statute.
"Exercise Date" means, for a given Warrant, the day on which
such Warrant is exercised pursuant to Article 4.
"Exercise Period" means the period commencing on the Effective
Date (as defined in the Plan) and ending at 5:00 P.M., New York time, on the
Expiration Date.
"Exercise Price" has the meaning specified in Section 4.1
hereof.
"Expiration Date" means the date set forth for each series of
Warrant on Schedule I hereto.
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"Fair Value" means (i) with respect to Common Stock or any
Other Security, in each case, if such security is listed on one or more stock
exchanges or quoted on the National Market System or Small Cap Market of NASDAQ
(the "NASDAQ Market"), the average of the closing or last reported sales prices
of a share of Common Stock or, if an Other Security, in the minimum denomination
in which such security is traded, on the primary national or regional stock
exchange on which such security is listed or on the NASDAQ Market if quoted
thereon or (ii) if the Common Stock or Other Security, as the case may be, is
not so listed or quoted but is traded in the over-the-counter market (other than
the NASDAQ Market), the average of the closing bid and asked prices of a share
of such Common Stock or Other Security, in each case quoted for the 30 Business
Days (or such lesser number of Business Days as such Common Stock (or Other
Security) shall have been so listed, quoted or traded) next preceding the date
of measurement; provided, however, that if no such sales price or bid and asked
prices have been quoted during the preceding 30-day period or there is otherwise
no established trading market for such security, then "Fair Value" means the
value of such Common Stock or Other Security as determined reasonably and in
good faith by the Board of Directors of the Company. If the Common Stock and
Other Security is not registered under the Exchange Act, the value of the Common
Stock or Other Security shall be as determined reasonably and in good faith by
the Board of Directors and certified in a board resolution adopted by the Board
of Directors, if the recipients of a majority of such Common Stock or Other
Securities are not affiliates of the Company, or, if the recipients of a
majority of such securities are affiliates of the Company, as mutually agreed
upon by the Company and Holders of at least a majority of the Warrants
outstanding; provided, however, that if the Company and such Holders are unable
to mutually agree upon such value, an Independent Financial Expert shall
determine the value of such Security. Anything herein to the contrary
notwithstanding, in case the Company shall issue any shares of Common Stock,
rights, options, or Other Securities in connection with the acquisition by the
Company of the stock or assets of any other Person or the merger of any other
Person into the Company, the Fair Value of the Common Stock or Other Securities
so issued shall be determined as of the date the number of shares of Common
Stock, rights, options or Other Securities was determined (as set forth in a
written agreement between the Company and the other party to the transaction)
rather than on the date of issuance of such shares of Common Stock, rights,
options or Other Securities.
"Independent Financial Expert" shall mean a nationally or
regionally recognized investment banking firm selected by the Company and
approved by holders of a majority of the outstanding Warrants (i) that does not
(and whose directors, officers, employees or affiliates do not) have a direct or
indirect financial interest in the Company, (ii) that has not been, and, at the
time it is called upon to serve as an Independent Financial Expert under this
Agreement is not (and none of whose directors, officers, employees or affiliates
is) a director or officer of the Company, (iii) that has not been retained by
the Company for any purpose, other than to perform an equity valuation, within
the preceding twelve months, and (iv) that, in the reasonable judgment of the
Board of Directors, is otherwise qualified to serve as an independent financial
advisor. Any such person may receive customary compensation and indemnification
by the Company for opinions or services it provides as an Independent Financial
Expert.
"Original Issue Date" means the Effective Date (as defined in
the Plan).
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"Other Securities" has the meaning specified in Section 5.2
hereof.
"Person" means any individual, partnership, association, joint
venture, corporation, limited liability company, business trust, unincorporated
organization, government or department, agency or subdivision thereof, or other
person or entity.
"Plan" has the meaning specified in the recitals hereto.
"Series A Warrant" means a Warrant having the terms and
conditions described herein and substantially as set forth on Exhibit A hereto.
"Series B Warrant" means a Warrant having the terms and
conditions described herein and substantially as set forth on Exhibit B hereto.
"Series C Warrant" means a Warrant having the terms and
conditions described herein and substantially as set forth on Exhibit C hereto.
"Series D Warrant" means a Warrant having the terms and
conditions described herein and substantially as set forth on Exhibit D hereto.
"Warrant Agent" has the meaning specified in the preamble
hereof.
"Warrant Certificates" has the meaning specified in Section
2.3 hereof.
"Warrants" means the Series A Warrants, the Series B Warrants,
the Series C Warrants and the Series D Warrants, collectively, each in the
applicable form as attached to this Agreement.
ARTICLE 2
ISSUANCE OF WARRANTS
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2.1 Initial Issuance. On the Original Issue Date, the Company
shall, pursuant to the Plan, deliver to the Company's disbursing agent under the
Plan for re-distribution to each of the holders of certain interests in the
Company, certificates representing such number of Series A Warrants, Series B
Warrants, Series C Warrants or Series D Warrants that such holder is entitled to
receive pursuant to the Plan, the aggregate number of such Warrants for Common
Stock being set forth opposite each such series on Schedule I hereto.
2.2 Initial Share Amount. The number of shares of Common Stock
purchasable upon exercise of the Warrants shall be one (1) share of Common Stock
to one (1) Warrant, subject to adjustments from and after the Original Issue
Date as provided in Article 5 of this Agreement.
2.3 Form of Warrant Certificates. The Warrants shall be
evidenced by certificates substantially in the form attached hereto as Exhibit
A, Exhibit B, Exhibit C or Exhibit D, (the "Warrant Certificates"). Each Warrant
Certificate shall be dated as of the Original Issue Date or, in the event of a
4
division, exchange, substitution or transfer of any of the Warrants, on the date
of such event. The Warrant Certificate may have such further legends and
endorsements stamped, printed, lithographed or engraved thereon as the Company
may deem reasonably appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with the Certificate of
Incorporation, the Plan, any law or with any rule or regulation pursuant thereto
or with any rule or regulation of any securities exchange, market or trading
facility on which the Warrants may be listed or admitted for trading.
2.4 Execution of Warrant Certificates. Warrant Certificates
shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President, any Senior Vice President, any Vice President, its
Treasurer or its Secretary, either manually or by facsimile signature printed
thereon. In case any such officer of the Company whose signature shall have been
placed upon any Warrant Certificate shall cease to be such officer of the
Company before countersignature by the Warrant Agent or issuance and delivery
thereof, such Warrant Certificate nevertheless may be countersigned by the
Warrant Agent and issued and delivered with the same force and effect as though
such person had not ceased to be such officer of the Company.
The term "holder" or "holder of a Warrant Certificate" as used
herein shall mean any Person in whose name at the time any Warrant Certificate
shall be registered upon the books to be maintained by the Warrant Agent for
that purpose.
2.5 Countersignature of Warrant Certificates. Warrant
Certificates shall be manually countersigned by an authorized signatory of the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
Such manual countersignature shall constitute conclusive evidence of such
authorization. No Warrant Certificate shall be valid for any purpose, and no
Warrant evidenced thereby shall be exercisable, until such Warrant Certificate
has been countersigned by the manual signature of the Warrant Agent. The Warrant
Agent is hereby authorized to countersign, in accordance with the provisions of
this Section 2.5, and deliver any new Warrant Certificates, as directed by the
Company pursuant to Section 2.1 and as and when required pursuant to the
provisions of Articles 9 and 10. Each Warrant Certificate shall, when manually
countersigned by an authorized signatory of the Warrant Agent, entitle the
registered holder thereof to exercise the rights as the holder of the number of
Warrants set forth thereon, subject to the provisions of this Agreement.
ARTICLE 3
EXERCISE PERIOD
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Each Warrant shall entitle the holder thereof to purchase from
the Company one (1) share of Common Stock (subject to the adjustments provided
herein), at any time during the Exercise Period. Any Warrant not exercised
during the Exercise Period shall become void, and all rights of the holder of
the Warrant Certificate evidencing such Warrant under the Warrant Certificate or
this Agreement shall cease.
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ARTICLE 4
EXERCISE OF WARRANTS
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4.1 The Exercise Price. The exercise price per share of Common
Stock for the Warrants of each Series (the "Exercise Price") shall be as
provided in Schedule I hereto and in the applicable form of Warrant. The
Exercise Price is subject to adjustment pursuant to Article 5 hereof.
4.2 Manner of Exercise. (a) During the Exercise Period, all or
any whole number of Warrants represented by a Warrant Certificate may be
exercised by the registered holder thereof during normal business hours on any
Business Day, by surrendering such Warrant Certificate, with the subscription
form set forth therein duly completed and executed by such holder, by hand, by
overnight courier or by mail to the Warrant Agent at its address set forth in
Section 13.1. Such Warrant Certificate shall be accompanied by payment in full
in respect of each Warrant that is exercised, which shall be made either by (i)
certified or official bank or bank cashier's check payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of the Company, or (ii) without
the payment of cash, by reducing the number of shares of Common Stock obtainable
upon the exercise of a Warrant so as to yield a number of shares of Common Stock
upon the exercise of such Warrant equal to the product of (a) the number of
shares of Common Stock issuable as of the Exercise Date upon the exercise of
such Warrant (if payment of the Exercise Price were being made in cash) and (b)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with clause
(ii) of the immediately preceding sentence is herein called a "Cashless
Exercise". The Warrant Agent shall promptly notify the Company of the election
of Cashless Exercise by a Holder. The Company shall bear sole responsibility for
ascertaining whether the calculation pursuant to such clause (ii) complies with
this Agreement or for determining or verifying the accuracy of the Cashless
Exercise Ratio. The Warrant Agent may rely conclusively on any notice,
certificate or other document furnished to it by the Company as evidence of the
foregoing. Upon surrender of a Warrant Certificate representing more than one
Warrant in connection with the holder's option to elect a Cashless Exercise, the
number of shares of Common Stock deliverable upon a Cashless Exercise shall be
equal to the number of shares of Common Stock issuable upon the exercise of
Warrants that the Holder specifies are to be exercised pursuant to a Cashless
Exercise multiplied by the Cashless Exercise Ratio. Upon such surrender and
payment prior to the expiration of the Exercise Period, such holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
registered, fully paid and nonassessable shares of Common Stock (or Other
Securities) determined as provided in Articles 2 and 4, and as and if adjusted
pursuant to Article 5.
4.3 When Exercise Effective. Each exercise of any Warrant
pursuant to Section 4.2 shall be deemed to have been effected immediately prior
to the close of business on the Business Day on which the Warrant Certificate
representing such Warrant, duly executed, with accompanying payment, shall have
been delivered as provided in Section 4.2, and at such time the Person or
Persons in whose name or names the certificate or certificates for Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 4.4 shall be deemed to have become the holder or holders of record
thereof.
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4.4 Delivery of Certificates, Etc. (a) As promptly as
practicable after the exercise of any Warrant, and in any event within seven (7)
Business Days thereafter, the Company at its expense (other than as to payment
of transfer taxes which will be paid by the holder) will cause to be issued and
delivered to such holder, or as such holder may otherwise direct in writing
(subject to Article 9),
(i) a certificate or certificates for the number of
shares of Common Stock (or Other Securities) to which
such holder is entitled, and
(ii) if less than all the Warrants represented by a
Warrant Certificate are exercised, a new Warrant
Certificate or Certificates of the same tenor and for
the aggregate number of Warrants that were not
exercised, executed and countersigned in accordance
with Sections 2.4 and 2.5.
(b) The Warrant Agent shall countersign any new Warrant
Certificate, register it in such name or names as may be directed in writing by
such holder, and shall deliver it to the Person entitled to receive the same in
accordance with this Section 4.4. The Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrant Certificates executed on
behalf of the Company for such purpose.
(c) Upon any exercise of Warrants, the Warrant Agent shall,
from time to time, as promptly as practicable, advise the Treasurer of the
Company or his or her designee of (i) the number of Warrants exercised, (ii) the
instruction of each holder of the Warrant Certificates evidencing such Warrants
with respect to delivery of the Common Stock to which such holder is entitled
upon such exercise, (iii) the timing of delivery of Warrant Certificates
evidencing the balance, if any, of the Warrants remaining after such exercise,
and (iv) such other information as the Company shall reasonably require.
(d) The Company shall not be required to pay any stamp or
other tax or other governmental charge required to be paid in connection with
any transfer involved in the issue of the Common Stock to a Person other than a
registered holder; and in the event that any such transfer is involved, the
Company shall not be required to issue or deliver any Warrant Certificate or
share of Common Stock until such tax or other charge shall have been paid or it
has been established to the Company's reasonable satisfaction that no such tax
or other charge is due.
4.5 Fractional Shares. No fractional shares of Common Stock
(or Other Securities) shall be issued upon the exercise of any Warrant. If more
than one Warrant Certificate shall be delivered for exercise at one time by the
same holder, the number of full shares or securities that shall be issuable upon
exercise shall be computed on the basis of the aggregate number of Warrants
exercised. As to any fraction of a share of Common Stock (or Other Securities),
the Company shall pay a cash adjustment in respect thereto in an amount equal to
the product of the Fair Value per share of Common Stock (or Other Securities) as
of the Business Day next preceding the date of such exercise multiplied by such
fraction of a share.
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ARTICLE 5
ADJUSTMENT OF THE AMOUNT OF COMMON STOCK
ISSUABLE AND THE EXERCISE PRICE UPON EXERCISE
---------------------------------------------
5.1 (a) Adjustment for Change in Capital Stock. If the Company
shall (i) declare or pay a dividend on its outstanding shares of Common Stock or
make a distribution to holders of its Common Stock, in either case in shares of
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, or (iv) issue
by reclassification of its shares of Common Stock other securities of the
Company, then (x) the number of shares of Common Stock issuable for each Warrant
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which each Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive after the
happening of such event, and (y) the Exercise Price shall be adjusted to equal
(A) the Exercise Price multiplied by the number of shares of Common Stock for
which each Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares for which each Warrant is exercisable immediately after
such adjustment.
An adjustment made pursuant to this Section 5.1(a) shall
become effective on the date of the dividend payment, subdivision, combination
or issuance retroactive to the record date with respect thereto, if any, for
such event.
(b) Adjustment of Exercise Price Upon Issuance of Additional
Shares of Common Stock. In the event the Company, after the Original Issue Date,
shall issue (or shall be deemed to have issued as provided in clause (B) below)
Additional Shares of Common Stock without consideration (except for a common
stock dividend as to which an adjustment is made pursuant to Section 5.1(a)) or
for a consideration per share less than the Fair Market Value of the Common
Stock, then and in such event, the Exercise Price with respect to a series of
Warrants shall be reduced, concurrently with such issue, to a price (calculated
to the nearest cent) determined by multiplying the then-applicable Exercise
Price by a fraction, (i) the numerator of which shall be the number of shares of
Common Stock issued and outstanding (on a fully-diluted basis) immediately prior
to such issuance plus the quotient obtained by dividing (x) the aggregate
consideration received by the Company for the total number of Additional Shares
of Common Stock so issued by (y) the consideration per share for such Additional
Shares, and (ii) the denominator of which shall be the number of shares of
Common Stock issued and outstanding (on a fully-diluted basis) immediately prior
to such issuance plus the number of Additional Shares of Common Stock so issued.
Upon each such adjustment of the then-applicable Exercise Price with respect to
such series of Warrants pursuant to the provisions of this Section 5.1(b), the
number of shares of Common Stock purchasable upon the exercise of each Warrant
of such series shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price with respect to such series in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
upon the exercise of each Warrant of such series immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price
with respect to such series.
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(i) Determination of Consideration. For purposes of this
Section 5.1(b) the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) insofar as it consists of cash, be computed at the net
amount of cash received by the Company without deducting expenses, discounts and
commissions payable by the Company in connection with such issuance or sale and
amounts paid or payable for accrued interest.
(B) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as reasonably
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Company for
consideration that covers both cash and property other than cash, the proportion
of such consideration so received, computed as provided in clauses (i) and (ii)
above, shall be as reasonably determined in good faith by the Board of
Directors.
(D) Additional Shares of Common Stock. For purposes of this
Section 5.1(b), "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company on or after the Original Issue Date, other
than shares of Common Stock issued as contemplated by clauses (i) or (ii) of
Section 5.4 or shares of Common Stock issued pursuant to the Warrants. In case
the Company shall issue any warrant, options or other rights to acquire Common
Stock or obligations or securities convertible into or exercisable or
exchangeable for Common Stock (other than those contemplated by such clauses (i)
or (ii)) the Company shall be deemed to have immediately issued the maximum
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of the warrant, option, right, obligation or security for consideration
equal to the amount received by the Company for such warrant, option, right,
obligation or security, together with any additional consideration that would be
received by the Company for such exercise, conversion or exchange, so that
adjustments shall be made pursuant to Section 5.1(b) to the same extent as they
would have been made if such shares of Common Stock actually had been issued.
5.2 Distributions. If after the date hereof the Company shall
distribute to all holders of its shares of Common Stock evidences of its
indebtedness, shares of another class of capital stock ("Other Securities"),
assets (excluding cash distributions made as a dividend payable out of the
lesser of the undistributed earnings for the fiscal year during which the
dividend is declared and the retained earnings of the Company) or rights to
subscribe to shares of Common Stock, then in each such case, unless the Company
elects to reserve such indebtedness, assets, rights or shares for distribution
to each holder of a Warrant upon the exercise of the Warrants so that such
holder will receive upon such exercise, in addition to the shares of Common
Stock to which such holder is entitled, the amount and kind of such
indebtedness, assets, rights or shares which such holder would have received if
such holder had, immediately prior to the record date for the distribution of
such indebtedness, assets, rights or shares, exercised the Warrants and received
Common Stock, the Exercise Price in effect immediately prior to such
9
distribution shall be decreased to an amount determined by multiplying such
Exercise Price by a fraction, the numerator of which is the Fair Value of a
share of the Common Stock at the date of such distribution less the Fair Value
of the evidences of indebtedness, Other Securities, assets or subscription
rights as the case may be, so distributed and the denominator of which is the
Fair Value of a share of Common Stock at such date. Such adjustment shall be
made whenever any such distribution is made, and shall become effective
retroactively on the date immediately after the record date for the
determination of stockholders entitled to receive such distribution.
5.3 Adjustments for Mergers and Consolidations. In case the
Company, after the date hereof, shall merge or consolidate (other than a merger
or consolidation in which the Company is the continuing corporation and which
does not result in any change in the shares of Common Stock) with another
Person, then, in the case of any such transaction, proper provision shall be
made so that, upon the basis and terms and in the manner provided in this
Warrant Agreement, the holders of the Warrants, upon the exercise thereof at any
time after the consummation of such transaction (subject to the Exercise
Period), shall be entitled to receive (at the aggregate Exercise Price in effect
at the time of the transaction for all Common Stock or Other Securities issuable
upon such exercise immediately prior to such consummation), in lieu of the
Common Stock or Other Securities issuable upon such exercise prior to such
consummation, the greatest amount of securities, cash or other property to which
such holder would have been entitled as a holder of Common Stock (or Other
Securities) upon such consummation if such holder had exercised the rights
represented by the Warrants held by such holder immediately prior thereto.
5.4 No Adjustment of Exercise Price. No adjustment in the
number of shares of Common Stock issuable upon the exercise of the Warrants
shall be required by reason of the issuance of: (i) any additional shares of
Common Stock upon the exercise of warrants or options to acquire Common Stock
heretofore or hereafter granted to officers, directors and employees (as such)
of the Company or any subsidiary pursuant to the Plan; or (ii) any additional
shares of Common Stock upon the redemption, conversion or exchange of any
convertible bond, note, debenture or other instrument evidencing indebtedness of
the Company heretofore or hereafter granted by the Company to holders of Claims
pursuant to the Plan, and such additional shares shall not be taken into account
in any of the computations under Sections 5.1, 5.2 or 5.3 of this Article V,
including the determination of the number of shares outstanding at any time.
5.5 No De Minimis Adjustments; Calculation to Nearest Cent and
One-hundredth of Share. No adjustment in the Exercise Price or number of shares
of common stock issuable hereunder shall be required under this Article 5 unless
such adjustment would require an increase or decrease of at least one percent
(1%) of such price or number of shares of Common Stock; provided, that any
adjustments which by reason of this Article 5 are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Article 5 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
5.6 Notice of Adjustment; Warrant Agent's Disclaimer. 5.3
Whenever the Exercise Price or number of shares of Common Stock issuable
hereunder shall be required to be adjusted as provided in this Article 5, the
10
Company shall forthwith file with the Warrant Agent a statement, signed by the
Chairman of the Board, Chief Executive Officer, President, any Senior Vice
President, any Vice President, the Treasurer or the Secretary of the Company,
stating in detail the facts requiring such adjustment, the method of calculation
thereof, the Exercise Price that will be effective after such adjustment and the
impact of such adjustment on the number and kind of securities issuable upon
exercise of the Warrants. The Company shall also cause the Warrant Agent to mail
(first class, postage prepaid) a notice setting forth any such adjustments to
each registered holder of Warrants at its last address appearing on the Warrant
register.
(b) Except as provided in paragraph (a) above, the Warrant
Agent shall have no duty with respect to any statement filed with it except to
keep the same on file and available for inspection by registered holders of
Warrants during reasonable business hours. The Warrant Agent shall not at any
time be under any duty or responsibility to any holder of a Warrant to determine
whether any facts exist which may require any adjustment to the Exercise Price
or securities issuable, or with respect to the nature or extent of any
adjustment of the Exercise Price or securities issuable when made or with
respect to the method employed in making such adjustment. The Warrant Agent
shall not be responsible for the Company's failure to comply with any provision
of this Article 5.
5.7 Other Notices. In case the Company after the date hereof
shall propose to take any action of the type described in Sections 5.1 or 5.2 of
this Article 5, the Company shall give notice to the Warrant Agent and to each
registered holder of a Warrant in the manner set forth in subsection 5.6 of this
Article 5, which notice shall specify the date on which a record shall be taken
with respect to any such action. Such notice shall be given at least ten (10)
days prior to the record date with respect thereto. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed under the provision of
subsection 5.6 of this Article 5.
5.8 No Change in Warrant Terms on Adjustment. Irrespective of
any adjustments in the Exercise Price or the number of shares of Common Stock
(or any inclusion of Other Securities) issuable upon exercise, Warrants
theretofore or thereafter issued may continue to express the same prices and
number of shares as are stated in the similar Warrants issuable initially, or at
some subsequent time, pursuant to this Agreement, and the Exercise Price and
such number of shares issuable upon exercise specified thereon shall be deemed
to have been so adjusted.
5.9 The adjustments made pursuant to this Article 5 shall be
made successively whenever any such issuance is made, and shall become effective
immediately after such issuance.
ARTICLE 6
MERGER, CONSOLIDATION, ETC.
---------------------------
Notwithstanding anything contained herein to the contrary, the
Company will not effect a merger or consolidation unless, prior to the
consummation of such transaction, each Person (other than the Company) which may
11
be required to deliver any Common Stock, Other Securities, securities, cash or
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to the Warrant Agent, the obligations of the
Company under this Warrant Agreement and under each of the Warrants, including,
without limitation, the obligation to deliver such shares of Common Stock, Other
Securities, cash or property as may be required pursuant to Article 5 hereof or
the certificate or articles of incorporation or other constituent document that
are equivalent to the adjustments provided for in Article 5 hereof.
ARTICLE 7
NOTIFICATION OF CERTAIN EVENTS
------------------------------
7.1 Corporate Action. In the event of:
(a) 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 (excluding cash distributions made as a
dividend payable out of the lesser of the undistributed earnings for the fiscal
year during which the dividend is declared and the retained earnings of the
Company) or other distribution of any kind, 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 interest of any kind;
or
(b) (i) any capital reorganization of the Company, (ii) any
reclassification of the capital shares of the Company (other than a change in
par value or from par value to no par value or from no par value to par value or
as a result of a split-up or combination), (iii) the consolidation or merger of
the Company with or into any other corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any change in the shares of Common Stock), (iv) the sale or transfer
of the properties and assets of the Company as, or substantially as, an entirety
to another Person, or (v) an exchange offer for Common Stock (or Other
Securities); or
(c) the voluntary or involuntary dissolution, liquidation, or
winding up of the Company,
the Company shall cause to be filed with the Warrant Agent and mailed to each
holder of a Warrant a notice specifying (x) the date or expected date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of any such dividend, distribution or right
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, or right are to
be determined, and the amount and character of such dividend, distribution or
right, or (y) the date or expected date on which any such reorganization,
reclassification, consolidation, merger, sale, transfer, exchange offer,
dissolution, liquidation or winding up is expected to become effective, and the
time, if any such time is to be fixed, as of which holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
transfer, exchange offer, dissolution, liquidation or winding up. Such notice
12
shall be delivered not less than twenty (20) days prior to such date therein
specified, in the case of any such date referred to in clause (x) of the
preceding sentence, and not less than thirty (30) days prior to such date
therein specified, in the case of any such date referred to in clause (y) of the
preceding sentence. Failure to give such notice within the time provided or any
defect therein shall not affect the legality or validity of any such action.
7.2 Available Information. The Company shall promptly file
with the Warrant Agent copies of its annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) that the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. If the Company is not required to make such filings, the Company
shall promptly deliver to the Warrant Agent and make available to the holders of
Warrants or underlying Common Stock, copies of any annual, quarterly or other
reports and financial statements(which need not be audited) that are generally
provided to holders of equity or debt securities of the Company (other than bank
or other institutional debt) and, if not otherwise included in the materials
otherwise distributed pursuant to this Section 7.2, copies of annual audited
financial statements (not later than 45 days after the end of each fiscal
quarter), which statements meet the requirement for annual or quarterly
financial statements, as the case may be, included in periodic filings under
Section 13 of the Exchange Act.
ARTICLE 8
RESERVATION OF STOCK
--------------------
The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock (or
out of authorized Other Securities), solely for issuance and delivery upon
exercise of Warrants, the full number of shares of Common Stock (and Other
Securities) from time to time issuable upon the exercise of all Warrants and any
other outstanding warrants, options or similar rights, from time to time
outstanding. All shares of Common Stock (and Other Securities) shall be duly
authorized and, when issued upon such exercise, shall be duly and validly
issued, and (in the case of shares) fully paid and nonassessable, and free from
all taxes, liens, charges, security interests, encumbrances and other
restrictions created by or through the Company.
ARTICLE 9
LOSS OR MUTILATION
------------------
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and of an indemnity bond
reasonably satisfactory to them in form or amount, and (in the case of
mutilation) upon surrender and cancellation thereof, then, in the absence of
notice to the Company or the Warrant Agent that the Warrants represented thereby
have been acquired by a bona fide purchaser, the Company shall execute and
deliver to the Warrant Agent and, upon the Company's request, an authorized
signatory of the Warrant Agent shall manually countersign and deliver, to the
registered holder of the lost, stolen, destroyed or mutilated Warrant
13
Certificate, in exchange for or in lieu thereof, a new Warrant Certificate of
the same tenor and for a like aggregate number of Warrants. Upon the issuance of
any new Warrant Certificate under this Article 9, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Article 9
in lieu of any lost, stolen or destroyed Warrant Certificate shall be entitled
to the same benefits of this Agreement equally and proportionately with any and
all other Warrant Certificates, whether or not the allegedly lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone. The
provisions of this Article 9 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates.
ARTICLE 10
WARRANT REGISTRATION
--------------------
10.1 Registration. The Warrant Certificates shall be issued in
registered form only and shall be registered in the names of the record holders
of the Warrant Certificates to whom they are to be delivered. The Warrant Agent
shall maintain or cause to be maintained a register in which, subject to such
reasonable regulations as it may prescribe, the Warrant Agent shall provide for
the registration of Warrants and of transfers or exchanges of Warrant
Certificates as provided in this Agreement. Such register shall be maintained at
the office of the Warrant Agent located at the address therefor as provided in
Section 13.1. Such register shall be open for inspection upon notice at all
reasonable times by the Warrant Agent and each holder of a Warrant.
10.2 Transfer or Exchange. At the option of the holder,
Warrant Certificates may be exchanged or transferred for other Warrant
Certificates for a like aggregate number of Warrants, upon surrender of the
Warrant Certificates to be exchanged at the office of the Warrant Agent
maintained for such purpose at the address therefor as provided in Section 13.1,
and upon payment of the charges herein provided. Whenever any Warrant
Certificates are so surrendered for exchange or transfer, the Company shall
execute, and an authorized signatory of the Warrant Agent shall manually
countersign and deliver, the Warrant Certificates that the holder making the
exchange is entitled to receive.
10.3 Valid and Enforceable. All Warrant Certificates issued
upon any registration of transfer or exchange of Warrant Certificates shall be
the valid obligations of the Company, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.
10.4 Endorsement. Every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Company or the
Warrant Agent) be duly endorsed, or be accompanied by an instrument of transfer
in form reasonably satisfactory to the Company and the Warrant Agent and duly
executed by the registered holder thereof or such holder's officer or
representative duly authorized in writing.
14
10.5 No Service Charge. No service charge shall be made to the
Warrant Holder for any registration of transfer or exchange of Warrant
Certificates.
10.6 Treatment of Holders of Warrant Certificates. The Company
and the Warrant Agent may treat the registered holder of a Warrant Certificate
as the absolute owner thereof for any purpose and as the person entitled to
exercise the rights represented by the Warrants evidenced thereby, any notice to
the contrary notwithstanding.
10.7 Cancellation. Any Warrant Certificate surrendered for
registration of transfer, exchange or the exercise of the Warrants represented
thereby shall, if surrendered to the Company, be delivered to the Warrant Agent,
and all Warrant Certificates surrendered or so delivered to the Warrant Agent
shall be promptly cancelled by the Warrant Agent. Any such Warrant Certificate
shall not be reissued and, except as provided in this Article 10 in case of an
exchange or transfer, in Article 9 in case of a mutilated Warrant Certificate
and in Article 4 in case of the exercise of less than all the Warrants
represented thereby, no Warrant Certificate shall be issued hereunder in lieu
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of such cancelled Warrant Certificates in a manner reasonably
satisfactory to the Company.
ARTICLE 11
WARRANT AGENT
-------------
11.1 Obligations Binding. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the terms and conditions
set forth in this Article 11. The Company, and the holders of Warrants by their
acceptance thereof, shall be bound by all of such terms and conditions.
11.2 No Liability. The Warrant Agent shall not by
countersigning Warrant Certificates or by any other act hereunder be accountable
with respect to or be deemed to make any representations as to the validity or
authorization of the Warrants or the Warrant Certificates (except as to its
countersignature thereon), as to the validity, authorization or value (or kind
or amount) of any Common Stock or of any Other Securities or other property
delivered or deliverable upon exercise of any Warrant, or as to the purchase
price of such Common Stock, securities or other property. The Warrant Agent
shall not (i) be liable for any recital or statement of fact contained herein or
in the Warrant Certificates or for any action taken, suffered or omitted by the
Warrant Agent in good faith in the belief that any Warrant Certificate or any
other document or any signature is genuine or properly authorized, (ii) be
responsible for determining whether any facts exist that may require any
adjustment of the purchase price and the number of shares of Common Stock
purchasable upon exercise of Warrants, or with respect to the nature or extent
of any such adjustments when made, or with respect to the method of adjustment
employed, (iii) be responsible for any failure on the part of the Company to
issue, transfer or deliver any Common Stock or Other Securities or property upon
the surrender of any Warrant for the purpose of exercise or to comply with any
other of the Company's covenants and obligations contained in this Agreement or
in the Warrant Certificates or (iv) be liable for any act or omission in
15
connection with this Agreement except for its own bad faith, negligence or
willful misconduct.
11.3 Instructions. The Warrant Agent is hereby authorized to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, Chief Executive Officer, President, any Senior Vice
President, any Vice President, Treasurer or any Assistant Treasurer of the
Company and to apply to any such officer for advice or instructions. The Warrant
Agent shall not be liable for any action taken, suffered or omitted by it in
accordance with the instructions of any such officer, except to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such action or omission resulted directly from the Warrant Agent's negligence,
bad faith or willful misconduct.
11.4 Agents. The Warrant Agent may execute and exercise any of
the rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, provided reasonable
care has been exercised in the selection and in the continued employment of any
such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in, or defend any action, suit or legal
proceeding in respect hereof, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider proper.
The Warrant Agent shall promptly notify the Company in writing of any claim made
or action, suit or proceeding instituted against the Warrant Agent arising out
of or in connection with this Agreement.
11.5 Cooperation. The Company will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further acts, instruments and assurances as may reasonably be
required by the Warrant Agent in order to enable the Warrant Agent to carry out
or perform its duties under this Agreement.
11.6 Agent Only. The Warrant Agent shall act solely as agent.
The Warrant Agent shall not be liable except for the performance of such duties
as are specifically set forth herein, and no implied covenants or obligations
shall be read into this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express provisions hereof.
11.7 Right to Counsel. The Warrant Agent may at any time
consult with legal counsel satisfactory to it (who may be legal counsel for the
Company), and the Warrant Agent shall incur no liability or responsibility to
the Company or to any Warrant holder for any action taken, suffered or omitted
by the Warrant Agent in good faith in accordance with the opinion or advice of
such counsel.
11.8 Compensation. The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder to be agreed upon and to
reimburse the Warrant Agent for its reasonable expenses hereunder; and further
agrees to indemnify the Warrant Agent and hold it harmless against any and all
liabilities, including, but not limited to, judgments, costs and reasonable
counsel fees, for anything done, suffered or omitted by the Warrant Agent in the
execution of its duties and powers hereunder, except for any such liabilities
that arise as a result of the Warrant Agent's bad faith, negligence or willful
misconduct.
16
11.9 Accounting. The Warrant Agent shall account promptly to
the Company with respect to Warrants exercised and concurrently pay to the
Company all moneys received by the Warrant Agent on behalf of the Company on the
purchase of shares of Common Stock (or Other Securities) through the exercise of
Warrants. The Warrant Agent shall advise the Company by telephone at the end of
each day on which a payment for the exercise of Warrants is received of the
amount so deposited to such account. The Warrant Agent shall promptly confirm
such telephone advice to the Company in writing.
11.10 No Conflict. The Warrant Agent and any stockholder,
director, officer or employee of the Warrant Agent may buy, sell or deal in any
of the Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
11.11 Resignation; Termination. The Warrant Agent may resign
its duties and be discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's bad faith,
negligence or willful misconduct), after giving thirty (30) days' prior written
notice to the Company. The Company may remove the Warrant Agent upon thirty (30)
days' written notice, and the Warrant Agent shall thereupon in like manner be
discharged from all further duties and liabilities hereunder, except as to
liabilities arising as a result of the Warrant Agent's bad faith, negligence or
willful misconduct. The Company shall cause to be mailed promptly (by first
class mail, postage prepaid) to each registered holder of a Warrant at such
holder's last address as shown on the register of the Company, at the Company's
expense, a copy of such notice of resignation or notice of removal, as the case
may be. Upon such resignation or removal the Company shall promptly appoint in
writing a new warrant agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after it has been notified in writing of
such resignation by the resigning Warrant Agent or after such removal, then the
holder of any Warrant may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such a court, the duties of the
Warrant Agent shall be carried out by the Company. Any successor warrant agent,
whether appointed by the Company or by such a court, shall be a corporation,
incorporated under the laws of the United States or of any state thereof and
authorized under such laws to exercise corporate trust powers, be subject to
supervision and examination by Federal or state authority, and have a combined
capital and surplus of not less than $100,000,000 as set forth in its most
recent published annual report of condition. After acceptance in writing of such
appointment by the new warrant agent it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the Warrant Agent, without any further assurance, conveyance, act or deed; but
if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning or removed Warrant Agent. Not later than the effective date of
any such appointment the Company shall file notice thereof with the resigning or
removed Warrant Agent and shall forthwith cause a copy of such notice to be
mailed (by first class, postage prepaid) to each registered holder of a Warrant
at such holder's last address as shown on the register of the Company. Failure
to give any notice provided for in this Section 11.11, or any defect in any such
17
notice, shall not affect the legality or validity of the resignation of the
Warrant Agent or the appointment of a new warrant agent, as the case may be.
11.12 Change of Warrant Agent. If at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrant Certificates
shall have been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and if at that time any of the Warrant Certificates shall not
have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force and effect provided in
the Warrant Certificates and this Agreement.
11.13 Successor Warrant Agent. Any corporation or entity into
which the Warrant Agent or any new warrant agent may be merged or any
corporation or entity resulting from any consolidation to which the Warrant
Agent or any new warrant agent shall be a party or any corporation or entity
succeeding to all or substantially all the agency business of the Warrant Agent
or any new warrant agent shall be a successor Warrant Agent under this Agreement
without any further act, provided that such corporation would be eligible for
appointment as a new warrant agent under the provisions of Section 11.11 of this
Article 11. The Company shall promptly cause the successor Warrant Agent to mail
notice of its succession as Warrant Agent (by first class mail, postage prepaid)
to each registered holder of a Warrant at its last address as shown on the
register of the Company.
ARTICLE 12
REMEDIES, ETC.
--------------
Prior to the exercise of the Warrants represented thereby, no
holder of a Warrant Certificate, as such, shall be entitled to any rights of a
stockholder of the Company, including, but not limited to, the right to vote, to
receive dividends or other distributions, to exercise any preemptive right or to
receive any notice of meetings of stockholders, and no such holder shall be
entitled to receive notice of any proceedings of the Company except as provided
in this Agreement. Nothing contained in this Agreement shall be construed as
imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
ARTICLE 13
MISCELLANEOUS
-------------
Notices. Any notice, demand or delivery authorized by this
Agreement shall be sufficiently given or made if sent by first class mail,
postage prepaid, delivered by hand or delivered by overnight courier, in each
case addressed to any registered holder of a Warrant at such holder's last known
address appearing on the register of the Company or the Warrant Agent, and to
the Company or the Warrant Agent as follows, or delivered by facsimile (in the
18
case of notices to any registered holder, to the last known facsimile number of
such holder appearing on the register of the Company or the Warrant Agent):
If to the Company:
Factory Card & Party Outlet Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇,
President and COO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
If to the Warrant Agent:
▇▇▇▇▇ Fargo Bank Minnesota, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall have been furnished in writing, in accordance
with this Section 13.1, to the party giving or making such notice, demand or
delivery.
13.1 Governing Law and Consent to Forum. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY AND THE
WARRANT AGENT EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY DELAWARE
STATE COURT SITTING IN THE CITY OF WILMINGTON OR ANY FEDERAL COURT SITTING IN
THE CITY OF WILMINGTON IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
13.3 Benefits of this Agreement. The Company shall promptly
file with the Warrant Agent copies of its annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may, by rules and regulations, prescribe) that the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. If the Company is not required to make such filings, the Company
19
shall promptly deliver to the Warrant Agent and make available to the holders of
Warrants or underlying Common Stock, copies of any annual, quarterly or other
reports and financial statements (which need not be audited) that are generally
provided to holders of equity or debt securities of the Company (other than bank
or other institutional debt) and, if not otherwise included in the materials
otherwise distributed pursuant to this Section 13.3, copies of annual audited
financial statements (not later than 45 days after the end of each fiscal
quarter), which statements meet the requirement for annual or quarterly
financial statements, as the case may be, included in periodic filings under
Section 13 of the Exchange Act. This Agreement shall be binding upon and inure
to the benefit of the Company and the Warrant Agent and their respective
successors and assigns, and the registered and beneficial holders from time to
time of the Warrants and of holders of the Common Stock, where applicable.
Nothing in this Agreement is intended or shall be construed to confer upon any
other Person, any right, remedy or claim under or by reason of this Agreement or
any part hereof.
13.4 Agreement of Holders of Warrant Certificates. Every
holder of a Warrant Certificate, by accepting the same, covenants and agrees
with the Company, the Warrant Agent and with every other holder of a Warrant
Certificate that the Warrant Certificates are transferable on the registry books
of the Warrant Agent only upon the terms and conditions set forth in this
Agreement, and the Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner for
all purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
13.5 Counterparts. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
13.6 Amendments. This Agreement may be amended by the parties
hereto, without the consent of the holder of any Warrant Certificate, for the
purpose of curing any manifest error, or of curing, correcting or supplementing
any defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable; provided, that such action
shall not adversely affect the interests of the holders of the Warrant
Certificates. Any other amendment shall require the consent of the holders of
Warrants representing a majority in number of the then outstanding Warrants.
Any such modification or amendment will be conclusive and
binding on all present and future holders of Warrant Certificates whether or not
they have consented to such modification or amendment or waiver and whether or
not notation of such modification or amendment is made upon such Warrant
Certificates. Any instrument given by or on behalf of any holder of a Warrant
Certificate in connection with any consent to any modification or amendment will
be conclusive and binding on all subsequent holders of such Warrant Certificate.
13.7 Consent to Jurisdiction. Notwithstanding anything to the
contrary contained in Section 13.2 hereof, (a) the parties hereby expressly
acknowledge and agree that, to the extent permitted by applicable law, the
Bankruptcy Court shall have exclusive jurisdiction to hear and determine any and
all disputes concerning the distribution of Warrants hereunder to holders of
20
Claims pursuant to the Plan, and (b) the Warrant Agent hereby consents to the
jurisdiction of the Bankruptcy Court with respect to any such disputes and
waives any argument of lack of such jurisdiction.
13.8 Headings. The table of contents hereto and the
descriptive headings of the several sections hereof are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
FACTORY CARD & PARTY OUTLET CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------
Title: Executive Vice President
------------------------
▇▇▇▇▇ FARGO MINNESOTA, N.A.,
as Warrant Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------
Title: Assistant Vice President
------------------------
EXHIBIT A
FORM OF WARRANT CERTIFICATE FOR SERIES A
[FORM OF FACE OF WARRANT CERTIFICATE]
CUSIP No. ▇▇▇▇▇▇▇▇▇
Warrant No. A- Number of Warrant(s): ______
-------------
Exercisable During the Period that Commences at 9:00 a.m., New York City time,
on April 9, 2002 and Terminates at 5:00 p.m., New York City time, on April 9,
2006 except as provided below.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
FACTORY CARD & PARTY OUTLET CORP.
This certifies that
or registered assigns, is the registered owner of the number
of warrants set forth above (the "Warrants"), each of which represents the
right, at any time after April 9, 2002 (the "Original Issue Date") and on or
before 5:00 p.m., New York City time, on April 9, 2006 (the "Exercise Period"),
to purchase from Factory Card Outlet Corp., a Delaware corporation (the
"Company"), at the price per share of $11.00 (the "Exercise Price"), one share
of Common Stock, par value $0.01 per share (the "Common Stock"), of the Company
as such stock was constituted as of the Original Issue Date, subject to
adjustment as provided in the Warrant Agreement hereinafter referred to, upon
surrender hereof, with the subscription form on the reverse hereof duly
executed, by hand or by mail to ▇▇▇▇▇ Fargo Bank Minnesota, N.A., or to any
successor thereto, as the warrant agent under the Warrant Agreement, at the
office of such successor maintained for such purpose (any such warrant agent
being herein called the "Warrant Agent") (or, if such exercise shall be in
connection with an underwritten public offering of shares of such Common Stock
(or Other Securities) (as such term and other capitalized terms used herein are
defined in the Warrant Agreement) subject to the Warrant Agreement, at the
location at which the Company shall have agreed to deliver such securities), and
simultaneous payment in full (which shall be made either by (i) certified or
official bank or bank cashier's check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the
22
Warrant Agent for the benefit of the Company, or (ii) or by Cashless Exercise
referred to below, all subject to the terms and conditions hereof and of the
Warrant Agreement.
Upon any partial exercise of the Warrants represented by this
Warrant Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and with
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of the Common Stock on the Exercise Date over the Exercise Price per
share as of the Exercise Date and the denominator of which is the Fair Value per
share of the Common Stock on the Exercise Date.
No fractional shares may be issued upon the exercise of rights
to purchase hereunder, and as to any fraction of a share otherwise issuable, the
Company will make a cash payment in lieu of such issuance, as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of April 9, 2002 (the "Warrant Agreement"),
between the Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as Warrant Agent, and
is subject to the terms and provisions contained therein. The Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the registered holders of the Warrants. The holder of this Warrant
Certificate consents to all terms and provisions of the Warrant Agreement by
acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent and may be obtained by writing to
the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
A-2
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent.
Dated: April 9, 2002
FACTORY CARD & PARTY OUTLET CORP.
By:
-------------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
Countersigned:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
By:
-------------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
A-3
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FACTORY CARD & PARTY OUTLET CORP.
The transfer of this Warrant Certificate and all rights
hereunder is registrable by the registered holder hereof, in whole or in part,
on the register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at ________ ______________________ ______, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form
satisfactory to the Company and the Warrant Agent, by the registered holder
hereof or his attorney duly authorized in writing and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer
or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such holder a new Warrant Certificate or Certificates with respect
to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or
agency of the Company or the office of the Warrant Agent maintained for such
purpose at ________ ______________________ ______, attention: Compliance
Department, for Warrant Certificates representing the same aggregate number of
Warrants, each new Warrant Certificate to represent such number of Warrants as
the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the
holder of this Warrant Certificate, as such, shall not be entitled to any rights
of a stockholder of the Company, including, but not limited to, the right to
vote, to receive dividends or other distributions, to exercise any preemptive
right or to receive any notice of meetings of stockholders, and shall not be
entitled to receive notice of any proceedings of the Company except as provided
in the Warrant Agreement. Nothing contained herein shall be construed as
imposing any liabilities upon the holder of this Warrant Certificate to purchase
any securities or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors or stockholders of the Company or
otherwise.
This Warrant Certificate shall be void and all rights
represented hereby shall cease unless exercised before the close of business on
April 9, 2006.
This Warrant Certificate shall not be valid for any purpose
until it shall have been manually countersigned by an authorized signatory of
the Warrant Agent.
Witness the facsimile seal of the Company and the signature of
its duly authorized officer.
A-4
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
TO FACTORY CARD & PARTY OUTLET CORP.
▇▇▇▇▇ FARGO SHAREOWNER SERVICES, as Warrant Agent
Attention: ____________________
The undersigned:
(i) irrevocably exercises ___ Warrants represented by the
within Warrant Certificate,
(ii) irrevocably elects to (check one of the following):
|_| purchase____ shares of common stock, par value $0.01 per
share, of Factory Card & Party Outlet Corp. (before giving effect to the
adjustments provided in the Warrant Agreement referred to in the within Warrant
Certificate) for each Warrant so exercised and herewith makes payment in full of
the purchase price of $ ____ per share, in respect of each Warrant so exercised
as provided in the Warrant Agreement which shall be made either by certified or
official bank or bank cashier's check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the
Warrant Agent for the benefit of the Company, or
|_| acquire in a Cashless Exercise ____ shares of common stock
par value $0.01 per share of Factory Card & Party Outlet Corp. pursuant to the
terms of Section 4.2 of the Warrant Agreement.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of Common Stock on the Exercise Date over the Exercise Price per share
as of the Exercise Date and the denominator of which is the Fair Value per share
of the Common Stock on the Exercise Date, all on the terms and conditions
specified in the Warrant Certificate and the Warrant Agreement,
(iii) surrenders this Warrant Certificate and all right, title
and interest therein to Factory Card Outlet & Party Corp. and
(iv) directs that the securities or other property deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Dated: , 200_
------------ -----
A-5
-----------------------------------------------
(Owner)*
-----------------------------------------------
(Signature of Authorized Representative)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
A-6
Securities or property to be
issued and delivered to:
--------------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
--------------------
Name
--------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
------------------------------------------------------
*The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
**The signature must be guaranteed by a Securities Transfer
Association medallion program ("stamp") participant or an institution receiving
prior approval from the Warrant Agent.
A-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant Certificate hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of warrants set forth below:
Name of Address No. of
Assignee ------- Warrants
-------- --------
Please insert social
security or other
identifying number
of Assignee
--------------------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Factory Card & Party Outlet Corp. maintained for
the purpose, with full power of substitution in the premises.
Dated: ____________, 200_
Name *
----------------------------------
Signature of Authorized
Representative
Signature Guaranteed **
---------------------
* The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
** The signature must be guaranteed by a Securities Transfer
Association medallion program ("stamp") participant or an institution receiving
prior approval from the Warrant Agent.
A-8
EXHIBIT B
FORM OF WARRANT CERTIFICATE FOR SERIES B
[FORM OF FACE OF WARRANT CERTIFICATE]
CUSIP No. ▇▇▇▇▇▇▇▇
Warrant No. B- Number of Warrant(s): ______
-------------
Exercisable During the Period that Commences at 9:00 a.m., New York City time,
on April 9, 2002 and Terminates at 5:00 p.m., New York City time, on April 9,
2008 except as provided below.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
FACTORY CARD & PARTY OUTLET CORP.
This certifies that
or registered assigns, is the registered owner of the number
of warrants set forth above (the "Warrants"), each of which represents the
right, at any time after April 9, 2002 (the "Original Issue Date") and on or
before 5:00 p.m., New York City time, on April 9, 2008 (the "Exercise Period"),
to purchase from Factory Card & Party Outlet Corp (f/k/a Factory Card Outlet
Corp.)., a Delaware corporation (the "Company"), at the price per share of
$16.00 (the "Exercise Price"), one share of Common Stock, par value $0.01 per
share (the "Common Stock"), of the Company as such stock was constituted as of
the Original Issue Date, subject to adjustment as provided in the Warrant
Agreement hereinafter referred to, upon surrender hereof, with the subscription
form on the reverse hereof duly executed, by hand or by mail to ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., or to any successor thereto, as the warrant agent under the
Warrant Agreement, at the office of such successor maintained for such purpose
(any such warrant agent being herein called the "Warrant Agent") (or, if such
exercise shall be in connection with an underwritten public offering of shares
of such Common Stock (or Other Securities) (as such term and other capitalized
terms used herein are defined in the Warrant Agreement) subject to the Warrant
Agreement, at the location at which the Company shall have agreed to deliver
such securities), and simultaneous payment in full (which shall be made either
by (i) certified or official bank or bank cashier's check payable to the order
of the Company, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of the Company, or (ii) or by
Cashless Exercise referred to below, all subject to the terms and conditions
hereof and of the Warrant Agreement.
Upon any partial exercise of the Warrants represented by this
Warrant Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and with
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of the Common Stock on the Exercise Date over the Exercise Price per
share as of the Exercise Date and the denominator of which is the Fair Value per
share of the Common Stock on the Exercise Date.
No fractional shares may be issued upon the exercise of rights
to purchase hereunder, and as to any fraction of a share otherwise issuable, the
Company will make a cash payment in lieu of such issuance, as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of April 9, 2002 (the "Warrant Agreement"),
between the Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as Warrant Agent, and
is subject to the terms and provisions contained therein. The Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the registered holders of the Warrants. The holder of this Warrant
Certificate consents to all terms and provisions of the Warrant Agreement by
acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent and may be obtained by writing to
the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent.
B-2
Dated: April 9, 2002
FACTORY CARD & PARTY OUTLET CORP.
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Countersigned:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.,
as Warrant Agent
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
B-3
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FACTORY CARD & PARTY OUTLET CORP.
The transfer of this Warrant Certificate and all rights
hereunder is registrable by the registered holder hereof, in whole or in part,
on the register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at ________ ______________________ ______, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form
satisfactory to the Company and the Warrant Agent, by the registered holder
hereof or his attorney duly authorized in writing and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer
or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such holder a new Warrant Certificate or Certificates with respect
to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or
agency of the Company or the office of the Warrant Agent maintained for such
purpose at ________ ______________________ ______, attention: Compliance
Department, for Warrant Certificates representing the same aggregate number of
Warrants, each new Warrant Certificate to represent such number of Warrants as
the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the
holder of this Warrant Certificate, as such, shall not be entitled to any rights
of a stockholder of the Company, including, but not limited to, the right to
vote, to receive dividends or other distributions, to exercise any preemptive
right or to receive any notice of meetings of stockholders, and shall not be
entitled to receive notice of any proceedings of the Company except as provided
in the Warrant Agreement. Nothing contained herein shall be construed as
imposing any liabilities upon the holder of this Warrant Certificate to purchase
any securities or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors or stockholders of the Company or
otherwise.
This Warrant Certificate shall be void and all rights
represented hereby shall cease unless exercised before the close of business on
April 9, 2008.
This Warrant Certificate shall not be valid for any purpose
until it shall have been manually countersigned by an authorized signatory of
the Warrant Agent.
Witness the facsimile seal of the Company and the signature of
its duly authorized officer.
B-4
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
TO FACTORY CARD & PARTY OUTLET CORP.
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A., as Warrant Agent
Attention: ____________________
The undersigned:
(i) irrevocably exercises ___ Warrants represented by the
within Warrant Certificate,
(ii) irrevocably elects to (check one of the following):
|_| purchase____ shares of common stock, par value $0.01 per
share, of Factory Card & Party Outlet Corp. (before giving effect to the
adjustments provided in the Warrant Agreement referred to in the within Warrant
Certificate) for each Warrant so exercised and herewith makes payment in full of
the purchase price of $ _____ per share, in respect of each Warrant so exercised
as provided in the Warrant Agreement which shall be made either by certified or
official bank or bank cashier's check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the
Warrant Agent for the benefit of the Company, or
|_| acquire in a Cashless Exercise ____ shares of common stock
par value $0.01 per share of Factory Card & Party Outlet Corp. pursuant to the
terms of Section 4.2 of the Warrant Agreement.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of Common Stock on the Exercise Date over the Exercise Price per share
as of the Exercise Date and the denominator of which is the Fair Value per share
of the Common Stock on the Exercise Date, all on the terms and conditions
specified in the Warrant Certificate and the Warrant Agreement,
(iii) surrenders this Warrant Certificate and all right, title
and interest therein to Factory Card & Party Outlet Corp. and
(iv) directs that the securities or other property deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Dated: , 200_
------------ -----
B-5
-----------------------------------------------
(Owner)*
-----------------------------------------------
(Signature of Authorized Representative)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
B-6
Securities or property to be
issued and delivered to:
-----------------------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
--------------------
Name
-------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
-----------------------------------------------------
*The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
**The signature must be guaranteed by a Securities Transfer
Association medallion program ("stamp") participant or an institution receiving
prior approval from the Warrant Agent.
B-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant Certificate hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of warrants set forth below:
Name of Address No. of
Assignee ------- Warrants
-------- --------
Please insert social
security or other
identifying number
of Assignee
--------------------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Factory Card & Party Outlet Corp. maintained for
the purpose, with full power of substitution in the premises.
Dated: ____________, 200_
Name *
------------------------------------
Signature of Authorized
Representative
Signature Guaranteed **
-----------------------
* The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
** The signature must be guaranteed by a Securities Transfer Association
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
B-8
EXHIBIT C
FORM OF WARRANT CERTIFICATE FOR SERIES C
[FORM OF FACE OF WARRANT CERTIFICATE]
CUSIP No. ▇▇▇▇▇▇▇▇▇
Warrant No. C- Number of Warrant(s): 38,462
-------------
Exercisable During the Period that Commences at 9:00 a.m., New York City time,
on April 9, 2002 and Terminates at 5:00 p.m., New York City time, on April 9,
2010 except as provided below.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
FACTORY CARD & PARTY OUTLET CORP.
This certifies that
or registered assigns, is the registered owner of the number
of warrants set forth above (the "Warrants"), each of which represents the
right, at any time after April 9, 2002 (the "Original Issue Date") and on or
before 5:00 p.m., New York City time, on April 9, 2010 (the "Exercise Period"),
to purchase from Factory Card & Party Outlet Corp.(f/k/a Factory Card Outlet
Corp.), a Delaware corporation (the "Company"), at the price per share of $16.00
(the "Exercise Price"), one share of Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company as such stock was constituted as of the
Original Issue Date, subject to adjustment as provided in the Warrant Agreement
hereinafter referred to, upon surrender hereof, with the subscription form on
the reverse hereof duly executed, by hand or by mail to ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., or to any successor thereto, as the warrant agent under the
Warrant Agreement, at the office of such successor maintained for such purpose
(any such warrant agent being herein called the "Warrant Agent") (or, if such
exercise shall be in connection with an underwritten public offering of shares
of such Common Stock (or Other Securities) (as such term and other capitalized
terms used herein are defined in the Warrant Agreement) subject to the Warrant
Agreement, at the location at which the Company shall have agreed to deliver
such securities), and simultaneous payment in full (which shall be made either
by (i) certified or official bank or bank cashier's check payable to the order
of the Company, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of the Company, or (ii) or by
Cashless Exercise referred to below, all subject to the terms and conditions
hereof and of the Warrant Agreement.
Upon any partial exercise of the Warrants represented by this
Warrant Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and with
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of the Common Stock on the Exercise Date over the Exercise Price per
share as of the Exercise Date and the denominator of which is the Fair Value per
share of the Common Stock on the Exercise Date.
No fractional shares may be issued upon the exercise of rights
to purchase hereunder, and as to any fraction of a share otherwise issuable, the
Company will make a cash payment in lieu of such issuance, as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of April 9, 2002 (the "Warrant Agreement"),
between the Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as Warrant Agent, and
is subject to the terms and provisions contained therein. The Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the registered holders of the Warrants. The holder of this Warrant
Certificate consents to all terms and provisions of the Warrant Agreement by
acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent and may be obtained by writing to
the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent.
C-2
Dated: April 9, 2002
FACTORY CARD & PARTY OUTLET CORP.
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Countersigned:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.,
as Warrant Agent
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
C-3
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FACTORY CARD & PARTY OUTLET CORP.
The transfer of this Warrant Certificate and all rights
hereunder is registrable by the registered holder hereof, in whole or in part,
on the register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at ________ ______________________ ______, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form
satisfactory to the Company and the Warrant Agent, by the registered holder
hereof or his attorney duly authorized in writing and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer
or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such holder a new Warrant Certificate or Certificates with respect
to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or
agency of the Company or the office of the Warrant Agent maintained for such
purpose at ________ ______________________ ______, attention: Compliance
Department, for Warrant Certificates representing the same aggregate number of
Warrants, each new Warrant Certificate to represent such number of Warrants as
the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the
holder of this Warrant Certificate, as such, shall not be entitled to any rights
of a stockholder of the Company, including, but not limited to, the right to
vote, to receive dividends or other distributions, to exercise any preemptive
right or to receive any notice of meetings of stockholders, and shall not be
entitled to receive notice of any proceedings of the Company except as provided
in the Warrant Agreement. Nothing contained herein shall be construed as
imposing any liabilities upon the holder of this Warrant Certificate to purchase
any securities or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors or stockholders of the Company or
otherwise.
This Warrant Certificate shall be void and all rights
represented hereby shall cease unless exercised before the close of business on
April 9, 2010.
This Warrant Certificate shall not be valid for any purpose
until it shall have been manually countersigned by an authorized signatory of
the Warrant Agent.
Witness the facsimile seal of the Company and the signature of
its duly authorized officer.
C-4
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
TO FACTORY CARD & PARTY OUTLET CORP.
________________________________, as Warrant Agent
Attention: ____________________
The undersigned:
(i) irrevocably exercises ___ Warrants represented by the
within Warrant Certificate,
(ii) irrevocably elects to (check one of the following):
|_| purchase____ shares of common stock, par value $0.01 per
share, of Factory Card & Party Outlet Corp. (before giving effect to the
adjustments provided in the Warrant Agreement referred to in the within Warrant
Certificate) for each Warrant so exercised and herewith makes payment in full of
the purchase price of $ ____ per share, in respect of each Warrant so exercised
as provided in the Warrant Agreement which shall be made either by certified or
official bank or bank cashier's check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the
Warrant Agent for the benefit of the Company, or
|_| acquire in a Cashless Exercise ____ shares of common stock
par value $0.01 per share of Factory Card & Party Outlet Corp. pursuant to the
terms of Section 4.2 of the Warrant Agreement.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of Common Stock on the Exercise Date over the Exercise Price per share
as of the Exercise Date and the denominator of which is the Fair Value per share
of the Common Stock on the Exercise Date, all on the terms and conditions
specified in the Warrant Certificate and the Warrant Agreement,
(iii) surrenders this Warrant Certificate and all right, title
and interest therein to Factory Card & Party Outlet Corp. and
(iv) directs that the securities or other property deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Dated: , 200_
------------ -----
C-5
-----------------------------------------------
(Owner)*
-----------------------------------------------
(Signature of Authorized Representative)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
C-6
Securities or property to be
issued and delivered to:
-----------------------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
--------------------
Name
-------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
-----------------------------------------------------
*The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
**The signature must be guaranteed by a Securities Transfer
Association medallion program ("stamp") participant or an institution receiving
prior approval from the Warrant Agent.
C-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant Certificate hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of warrants set forth below:
Name of Address No. of
Assignee ------- Warrants
-------- --------
Please insert social
security or other
identifying number
of Assignee
--------------------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Factory Card & Party Outlet Corp. maintained for
the purpose, with full power of substitution in the premises.
Dated: ____________, 200_
Name *
-------------------------------
Signature of Authorized
Representative
Signature Guaranteed **
------------------
* The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
** The signature must be guaranteed by a Securities Transfer Association
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
C-8
EXHIBIT D
FORM OF WARRANT CERTIFICATE FOR SERIES D
[FORM OF FACE OF WARRANT CERTIFICATE]
CUSIP No. ▇▇▇▇▇▇▇▇▇
Warrant No. D- Number of Warrant(s): 30,612
-------------
Exercisable During the Period that Commences at 9:00 a.m., New York City time,
on April 9, 2002 and Terminates at 5:00 p.m., New York City time, on April 9,
2010 except as provided below.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
FACTORY CARD & PARTY OUTLET CORP.
This certifies that
or registered assigns, is the registered owner of the number
of warrants set forth above (the "Warrants"), each of which represents the
right, at any time after April 9, 2002 (the "Original Issue Date") and on or
before 5:00 p.m., New York City time, on April 9, 2010 (the "Exercise Period"),
to purchase from Factory Card & Party Outlet Corp. (F/k/a Factory Card Outlet
Corp.), a Delaware corporation (the "Company"), at the price per share of $34.00
(the "Exercise Price"), one share of Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company as such stock was constituted as of the
Original Issue Date, subject to adjustment as provided in the Warrant Agreement
hereinafter referred to, upon surrender hereof, with the subscription form on
the reverse hereof duly executed, by hand or by mail to ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., or to any successor thereto, as the warrant agent under the
Warrant Agreement, at the office of such successor maintained for such purpose
(any such warrant agent being herein called the "Warrant Agent") (or, if such
exercise shall be in connection with an underwritten public offering of shares
of such Common Stock (or Other Securities) (as such term and other capitalized
terms used herein are defined in the Warrant Agreement) subject to the Warrant
Agreement, at the location at which the Company shall have agreed to deliver
such securities), and simultaneous payment in full (which shall be made either
by (i) certified or official bank or bank cashier's check payable to the order
of the Company, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of the Company, or (ii) or by
Cashless Exercise referred to below, all subject to the terms and conditions
hereof and of the Warrant Agreement.
Upon any partial exercise of the Warrants represented by this
Warrant Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole or in part (i) by presentation of this Warrant
Certificate with the Election to Purchase attached hereto duly executed and with
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of the Common Stock on the Exercise Date over the Exercise Price per
share as of the Exercise Date and the denominator of which is the Fair Value per
share of the Common Stock on the Exercise Date.
No fractional shares may be issued upon the exercise of rights
to purchase hereunder, and as to any fraction of a share otherwise issuable, the
Company will make a cash payment in lieu of such issuance, as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of April 9, 2002 (the "Warrant Agreement"),
between the Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as Warrant Agent, and
is subject to the terms and provisions contained therein. The Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the registered holders of the Warrants. The holder of this Warrant
Certificate consents to all terms and provisions of the Warrant Agreement by
acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent and may be obtained by writing to
the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent.
D-2
Dated: April 9, 2002
FACTORY CARD & PARTY OUTLET CORP.
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Countersigned:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.,
as Warrant Agent
By:
---------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
D-3
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FACTORY CARD & PARTY OUTLET CORP.
The transfer of this Warrant Certificate and all rights
hereunder is registrable by the registered holder hereof, in whole or in part,
on the register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at ________ ______________________ ______, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form
satisfactory to the Company and the Warrant Agent, by the registered holder
hereof or his attorney duly authorized in writing and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer
or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such holder a new Warrant Certificate or Certificates with respect
to any portion not so transferred.
This Warrant Certificate may be exchanged at the office or
agency of the Company or the office of the Warrant Agent maintained for such
purpose at ________ ______________________ ______, attention: Compliance
Department, for Warrant Certificates representing the same aggregate number of
Warrants, each new Warrant Certificate to represent such number of Warrants as
the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the
holder of this Warrant Certificate, as such, shall not be entitled to any rights
of a stockholder of the Company, including, but not limited to, the right to
vote, to receive dividends or other distributions, to exercise any preemptive
right or to receive any notice of meetings of stockholders, and shall not be
entitled to receive notice of any proceedings of the Company except as provided
in the Warrant Agreement. Nothing contained herein shall be construed as
imposing any liabilities upon the holder of this Warrant Certificate to purchase
any securities or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors or stockholders of the Company or
otherwise.
This Warrant Certificate shall be void and all rights
represented hereby shall cease unless exercised before the close of business on
April 9, 2010.
This Warrant Certificate shall not be valid for any purpose
until it shall have been manually countersigned by an authorized signatory of
the Warrant Agent.
Witness the facsimile seal of the Company and the signature of
its duly authorized officer.
D-4
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
TO FACTORY CARD OUTLET CORP.
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A., as Warrant Agent
Attention: ____________________
The undersigned:
(i) irrevocably exercises ___ Warrants represented by the
within Warrant Certificate,
(ii) irrevocably elects to (check one of the following):
|_| purchase____ shares of common stock, par value $0.01 per
share, of Factory Card & Party Outlet Corp. (before giving effect to the
adjustments provided in the Warrant Agreement referred to in the within Warrant
Certificate) for each Warrant so exercised and herewith makes payment in full of
the purchase price of $ per share, in respect of each Warrant so exercised as
provided in the Warrant Agreement ((which shall be made either by (a) certified
or official bank or bank cashier's check payable to the order of the Company, or
by wire transfer of immediately available funds to an account designated by the
Warrant Agent for the benefit of the Company, or
|_| acquires in a Cashless Exercise ____ shares of common
stock par value $0.01 per share of Factory Card & Party Outlet Corp. pursuant to
the terms of Section 4.2 of the Warrant Agreement.
Payment of the Exercise Price in cash shall be made by
certified or official bank check payable to the order of the Company or by wire
transfer of funds to an account designated by the Company for such purpose.
Payment by Cashless Exercise shall be made without the payment
of cash by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Fair Value
per share of Common Stock on the Exercise Date over the Exercise Price per share
as of the Exercise Date and the denominator of which is the Fair Value per share
of the Common Stock on the Exercise Date, all on the terms and conditions
specified in the Warrant Certificate and the Warrant Agreement,
(iii) surrenders this Warrant Certificate and all right, title
and interest therein to Factory Card Outlet Corp. and
D-5
(iv) directs that the securities or other property deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Dated: , 200_
------------ -----
-----------------------------------------------
(Owner)*
-----------------------------------------------
(Signature of Authorized Representative)
-----------------------------------------------
(Street Address)
-----------------------------------------------
(City) (State) (Zip Code)
D-6
Securities or property to be
issued and delivered to:
-----------------------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
--------------------
Name
-------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
-----------------------------------------------------
*The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
**The signature must be guaranteed by a Securities Transfer
Association medallion program ("stamp") participant or an institution receiving
prior approval from the Warrant Agent.
D-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the
within Warrant Certificate hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within Warrant
Certificate, with respect to the number of warrants set forth below:
Name of Address No. of
Assignee ------- Warrants
-------- --------
Please insert social
security or other
identifying number
of Assignee
--------------------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Factory Card & Party Outlet Corp. maintained for
the purpose, with full power of substitution in the premises.
Dated: ____________, 200_
Name *
-------------------------------
Signature of Authorized
Representative
Signature Guaranteed **
------------------
* The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
** The signature must be guaranteed by a Securities Transfer Association
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
D-8
SCHEDULE I
SCHEDULE OF WARRANTS
AGGREGATE NUMBER.
OF SHARES ISSUABLE UPON
WARRANT EXERCISE PRICE EXPIRATION DATE EXERCISE
------- -------------- --------------- --------
Series A $ 11.00/Share April 9, 2006 38,462
Series B $ 16.00/Share April 9, 2008 46,392
Series C $ 16.00/Share April 9, 2010 38,462
Series D $ 34.00/Share April 9, 2010 30,612
-------------
TOTAL 153,928