0000899140-01-500332.txt : 20011018
0000899140-01-500332.hdr.sgml : 20011018
ACCESSION NUMBER: 0000899140-01-500332
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 6
FILED AS OF DATE: 20011010
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: PARTY CITY CORP
CENTRAL INDEX KEY: 0001005972
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940]
IRS NUMBER: 223033692
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-48035
FILM NUMBER: 1756135
BUSINESS ADDRESS:
STREET 1: 450 COMMONS WAY
STREET 2: BLDG C
CITY: ROCKAWAY
STATE: NJ
ZIP: 07860
BUSINESS PHONE: 9739830888
MAIL ADDRESS:
STREET 1: 400 COMMONS WAY
CITY: ROCKAWAY
STATE: NJ
ZIP: 07866
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: FUTTERMAN JACK
CENTRAL INDEX KEY: 0001047993
STANDARD INDUSTRIAL CLASSIFICATION: []
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 16315 VINTAGE OAK LANE
CITY: DELRAY BEACH
STATE: FL
ZIP: 33484
BUSINESS PHONE: 5616379967
MAIL ADDRESS:
STREET 1: 16315 VINTAGE OAK LANE
CITY: DELRAY BEACH
STATE: FL
ZIP: 33484
SC 13D/A
1
jf952834.txt
AMENDMENT NO. 2 TO SCHEDULE 13D
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
PARTY CITY CORPORATION
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------------------------------------------------
(Title of Class of Securities)
702145103
--------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Jack Futterman
c/o Party City Corporation
400 Commons Way
Rockaway, NJ 07886
(973) 983-0888
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Lawrence E. Rouslin, Esq.
Wolf, Block, Schorr and Solis-Cohen LLP
250 Park Avenue
New York, NY 10177
(212) 986-1116
September 19, 2001
--------------------------------------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box: [ ]
SCHEDULE 13D
------------------- ------------------
CUSIP No. 702145103 Page 2 of 15 Pages
------------------- ------------------
----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jack Futterman
----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
----------- --------------------------------------------------------------------
3 SEC USE ONLY
----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
--------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
337,500
--------- ------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY
OWNED BY --------- ------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 337,500
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,037,500 (See Item 5)
----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.6%
----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
This Amendment No. 2 to Schedule 13D (this "Amendment") is being filed on
behalf of Jack Futterman (the "Reporting Person") to amend the Schedule 13D
filed with the Securities and Exchange Commission (the "SEC") on June 17, 1999
(the "Original Schedule 13D" and, collectively with this Amendment, the
"Schedule 13D").(1) This Schedule 13D relates to the common stock, par value
$.01 per share (the "Company Common Stock"), of Party City Corporation, a
Delaware corporation (the "Company").
Item 1. Security and Issuer.
The information in Item 1 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
This Schedule 13D relates to the Company Common Stock and is being filed
pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The address of the principal executive offices of the
Company is 400 Commons Way, Rockaway, New Jersey 07886.
Item 2. Identity and Background.
The information in Item 2 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
(a) This Schedule 13D is filed by the Reporting Person.
----------
(1) The Original Schedule 13D, which was filed on June 17, 1999, was mistakenly
labeled as "Amendment No. 1." In order to avoid confusion with the Original
Schedule 13D, this Amendment, which in effect is the first amendment to the
original filing made on June 17, 1999, is being labeled as "Amendment No.
2."
-3-
(b) The address of the residence of the Reporting Person is 16315 Vintage
Oaks Lane, Delray Beach, Florida 33484.
(c) The Reporting Person is retired and has no principal occupation or
employment.
(d) During the last five years, the Reporting Person has not been convicted
in a criminal proceeding (excluding traffic violations or similar infractions or
misdemeanors).
(e) During the last five years, the Reporting Person has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) The Reporting Person is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
The information in Item 3 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
On September 19, 2001, the Reporting Person paid $900,000 to Steven
Mandell, the Company's former Chief Executive Officer, as the aggregate exercise
price with respect to an option to acquire 300,000 shares of Company Common
Stock pursuant to an Option Agreement, dated June 8, 1999 (the "Mandell Option
Agreement"), between Mr. Mandell and the Reporting Person, under which Mr.
Mandell granted to the Reporting
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Person an option (the "Mandell Option") to purchase, in whole or in part,
1,000,000 shares of Company Common Stock owned by Mr. Mandell at an exercise
price of $3.00 per share. (See Item 4 for a description of the Mandell Option
Agreement and the Mandell Option.) The $900,000 paid to Mr. Mandell in
connection with the Reporting Person's acquisition of the 300,000 shares of
Company Common Stock pursuant to the partial exercise of the Mandell Option was
provided by the Jack Futterman Trust (the "Futterman Trust"), a Delaware asset
protection trust. By virtue of the Reporting Person's position as the investment
advisor of the Futterman Trust, the Futterman Trust is an affiliate of the
Reporting Person. The Reporting Person used personal funds to acquire all other
shares of Company Common Stock beneficially owned by him, other than (a) the
remaining 700,000 shares of Company Common Stock subject to the Mandell Option
and (b) options issued to the Reporting Person by the Company, for which no
funds have been expended by the Reporting Person.
Item 4. Purpose of Transaction.
The information in Item 4 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
From June 8, 1999 to December 10, 1999, the Reporting Person was the Chief
Executive Officer and Chairman of the Board of Directors of the Company. As an
incentive for the Reporting Person to assume his position as Chief Executive
Officer, and to more fully align the Reporting Person's interest with the
shareholders' interest, Mr. Mandell, the Chief Executive Officer of the Company
prior to the Reporting Person's appointment to such position, and the Reporting
Person entered into the Mandell Option Agreement. A copy of the Mandell Option
Agreement is attached as Exhibit 1 to the
-5-
Original Schedule 13D. Under the Mandell Option Agreement, Mr. Mandell granted
the Mandell Option to the Reporting Person. The Mandell Option expires on June
8, 2004. The number of shares and the exercise price of the Company Common Stock
subject to the Mandell Option shall be adjusted accordingly in the event that
the Company effects a corporate reorganization, recapitalization, stock split,
stock dividend, stock combination or any other similar transaction. On September
19, 2001, the Reporting Person exercised the Mandell Option in part and acquired
300,000 shares of Company Common Stock from Mr. Mandell for investment purposes.
The Reporting Person also (i) holds options (the "Company Options" and,
collectively with the Mandell Option, the "Outstanding Options") to purchase
36,000 shares of Company Common Stock granted by the Company at various times
under its Amended and Restated 1994 Stock Option Plan and 1999 Stock Incentive
Plan which are exercisable within sixty (60) days after the date of this
Schedule 13D and (ii) beneficially owns 1,500 shares of Company Common Stock
which are held by the Futterman Trust, of which the Reporting Person is the
investment advisor.
Except as set forth above in this Schedule 13D, the Reporting Person has no
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional securities of the Company, or the disposition of
securities of the Company; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
board; (e)
-6-
any material change in the present capitalization or dividend policy of the
Company; (f) any other material change in the Company's business or corporate
structure; (g) changes in the Company's charter, By-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person; (h) causing a class of securities of the
Company to be de-listed from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
The information in Item 5 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
(a) The Reporting Person beneficially owns 1,037,500 shares of Company
Common Stock, of which 300,000 shares of Company Common Stock are owned by the
Reporting Person outright, 700,000 shares of Company Common Stock are owned by
Mr. Mandell and subject to the Mandell Option (which is exercisable within sixty
(60) days after the date of this Schedule 13D) and 36,000 shares of Company
Common Stock are subject to the Company Options (which are exercisable within
sixty (60) days after the date of this Schedule 13D), representing, in the
aggregate (assuming the full exercise of the Outstanding Options), 7.6% of the
total outstanding class of Company Common Stock.
-7-
This percentage of the outstanding class of Company Common Stock was
calculated by: (i) adding the total number of shares of Company Common Stock
that the Reporting Person owns outright (300,000) and the Reporting Person
beneficially owns by virtue of the Reporting Person's relationship to the
Futterman Trust (1,500) to the total number of shares of Company Common Stock
that the Reporting Person has the right to acquire within sixty (60) days after
the date of this Schedule 13D pursuant to the Outstanding Options (736,000) (the
"Total Adjusted Owned Shares"); (ii) adding the total number of shares of
Company Common Stock that are not currently outstanding which the Reporting
Person has the right to acquire within sixty (60) days after the date of this
Schedule 13D pursuant to the Company Options (36,000) to 13,002,017 (the total
number of shares of Company Common Stock outstanding as of October 5, 2001, as
represented to the Reporting Person by the Company) (the "Total Adjusted
Outstanding Shares"); and then (iii) dividing the Total Adjusted Shares Owned by
the Total Adjusted Outstanding Shares (the "Ownership Quotient"); and then (iv)
expressing the Ownership Quotient in terms of a percentage (i.e., 7.6%).
(b) The Reporting Person has the sole power to vote and dispose of only
337,500 shares of the 1,037,500 shares of Company Common Stock that are reported
as beneficially owned by the Reporting Person in this Schedule 13D. Mr. Mandell
has the power to vote and dispose of the remaining 700,000 shares of Company
Common Stock (which are subject to the Mandell Option) that are reported as
beneficially owned by the Reporting Person in this Schedule 13D.
(c) On September 26, 2001, the Company granted to the Reporting Person an
option to purchase 3,000 shares of Company Common Stock at an exercise price of
$6.55
-8-
per share. Except for the transactions described in Items 3 and 4 and this Item
5 of this Schedule 13D, during the last sixty (60) days there were no
transactions effected by the Reporting Person with respect to the Company Common
Stock.
(d) Unless and until the Reporting Person exercises the Mandell Option with
respect to the remaining 700,000 shares of Company Common Stock subject to such
Mandell Option, Mr. Mandell has the right to receive all dividends with respect
to such 700,000 shares of Company Common Stock. Except as set forth in this Item
5, no person other than each respective record owner referred to in this
Schedule 13D of securities is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
The information in Item 6 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
Pursuant to the terms of the Mandell Option Agreement, Mr. Mandell, among
other things, granted the Mandell Option to the Reporting Person. The foregoing
summary is qualified in its entirety by reference to the Mandell Option
Agreement, a copy of which is filed as Exhibit 1 to the Original Schedule 13D
and incorporated in this Schedule 13D by reference.
Pursuant to the terms of a Stock Pledge Agreement, dated as of June 8, 1999
(the "Pledge Agreement"), by and between Mr. Mandell and the Reporting Person,
Mr. Mandell, among other things, pledged the 1,000,000 shares of Company Common
Stock
-9-
subject to the Mandell Option to the Reporting Person to secure Mr. Mandell's
obligations under the Mandell Option. The number of shares of Company Common
Stock subject to the Pledge Agreement is subject to appropriate adjustments in
connection with any partial exercise of the Mandell Option. The foregoing
summary is qualified in its entirety by reference to the Pledge Agreement, a
copy of which is filed as Exhibit 2 to the Original Schedule 13D and
incorporated in this Schedule 13D by reference.
Pursuant to the terms of an Employment Agreement, dated June 8, 1999 (the
"Employment Agreement"), between the Company and the Reporting Person, the
Company, among other things, granted the Reporting Person certain demand and
piggy-back registration rights with respect to any shares of Company Common
Stock held by the Reporting Person which are not registered with the SEC
pursuant to the Securities Act of 1933, as amended (the "Act"). The foregoing
summary is qualified in its entirety by reference to the Employment Agreement, a
copy of which is filed as Exhibit 3 to the Original Schedule 13D and
incorporated in this Schedule 13D by reference.
Pursuant to the terms of an Incentive Stock Option Agreement, dated
September 8, 1997 (the "1997 Option Agreement"), between the Company and the
Reporting Person, the Company, among other things, granted to the Reporting
Person an option to purchase 15,000 shares of Company Common Stock at an
exercise price of $24.00 per share. The foregoing summary is qualified in its
entirety by reference to the 1997 Option Agreement, a copy of which is filed as
Exhibit 4 to this Schedule 13D and incorporated in this Schedule 13D by
reference.
-10-
Pursuant to the terms of an Incentive Stock Option Agreement, dated
December 9, 1998 (the "December 1998 Option Agreement"), between the Company and
the Reporting Person, the Company, among other things, granted to the Reporting
Person an option to purchase 5,000 shares of Company Common Stock at an exercise
price of $15.00 per share. The foregoing summary is qualified in its entirety by
reference to the December 1998 Option Agreement, a copy of which is filed as
Exhibit 5 to this Schedule 13D and incorporated in this Schedule 13D by
reference.
Pursuant to the terms of a Stock Option Grant Agreement, dated July 30,
1998 (the "July 1998 Option Agreement"), between the Company and the Reporting
Person, the Company, among other things, granted to the Reporting Person an
option to purchase 2,500 shares of Company Common Stock at an exercise price of
$23.1875 per share. The foregoing summary is qualified in its entirety by
reference to the July 1998 Option Agreement, a copy of which is filed as Exhibit
6 to this Schedule 13D and incorporated in this Schedule 13D by reference.
Pursuant to the terms of an Investor Rights Agreement, dated as of August
16, 1999 (the "Investor Rights Agreement"), by and among the Company, Tennenbaum
& Co., LLC, TCO/Party City, LLC, Goldman, Sachs & Co., Goldman Sachs Credit
Partners, L.P., Enhanced Retail Funding, LLC, Richmond Associates, L.P.
(collectively, as substituted or otherwise replaced as parties to the Investor
Rights Agreement, the "Investors") and the Reporting Person, as amended pursuant
to the First Amendment to Investor Rights Agreement, dated as of October 11,
2000 (the "First Amendment"), as further amended pursuant to the Second
Amendment to Investor Rights Agreement, dated as of November 20, 2000 (the
"Second Amendment"), the Company, among other things,
-11-
granted the Investors and the Reporting Person certain demand and piggy-back
registration rights with respect to any shares of Company Common Stock held by
the Investors and the Reporting Person which are not registered with the SEC
pursuant to the Securities Act. The foregoing summary is qualified in its
entirety by reference to the Investor Rights Agreement, the First Amendment and
the Second Amendment, a copy of each of which is filed as Exhibits 7, 8 and 9,
respectively, to this Schedule 13D and incorporated in this Schedule 13D by
reference.
Pursuant to the terms of a Stock Option Agreement, dated as of September
26, 2000 (the "2000 Option Agreement"), by and between the Company and the
Reporting Person, the Company, among other things, granted to the Reporting
Person an option to purchase 3,000 shares of Company Common Stock at an exercise
price of $3.40 per share. The foregoing summary is qualified in its entirety by
reference to the 2000 Option Agreement, a copy of which is filed as Exhibit 10
to this Schedule 13D and incorporated in this Schedule 13D by reference.
Pursuant to the terms of a Stock Option Agreement, dated as of September
26, 2001 (the "2001 Option Agreement"), by and between the Company and the
Reporting Person, the Company, among other things, granted to the Reporting
Person an option to purchase 3,000 shares of Company Common Stock at an exercise
price of $6.55 per share. The foregoing summary is qualified in its entirety by
reference to the 2001 Option Agreement, a copy of which is filed as Exhibit 11
to this Schedule 13D and incorporated in this Schedule 13D by reference.
-12-
Except as referred to above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the person named in
Item 2 and any other person with respect to any securities of the Company.
Item 7. Material to be Filed as Exhibits.
The information in Item 7 of the Original Schedule 13D is hereby amended
and restated in its entirety as follows:
1. Option Agreement, dated June 8, 1999, between Steven Mandell and the
Reporting Person (incorporated by reference to Exhibit 1 to the Original
Schedule 13D of Jack Futterman filed with the SEC on June 17, 1999).
2. Stock Pledge Agreement, dated as of June 8, 1999, by and between Steven
Mandell and the Reporting Person (incorporated by reference to Exhibit 1 to the
Original Schedule 13D of Jack Futterman filed with the SEC on June 17, 1999).
3. Employment Agreement, dated June 8, 1999, between the Company and the
Reporting Person (incorporated by reference to Exhibit 1 to the Original
Schedule 13D of Jack Futterman filed with the SEC on June 17, 1999).
4. Incentive Stock Option Agreement, dated September 8, 1997, between the
Company and the Reporting Person.
5. Incentive Stock Option Agreement, dated December 9, 1998, between the
Company and the Reporting Person.
6. Stock Option Grant Agreement, dated July 30, 1998, between the Company
and the Reporting Person.
-13-
7. Investor Rights Agreement, dated as of August 16, 1999, by and among the
Company, the Investors and the Reporting Person (incorporated by reference to
Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on
August 25, 1999).
8. First Amendment to Investor Rights Agreement, dated as of October 11,
2000, by and among the Company, the Investors and the Reporting Person
(incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on
Form 10-Q filed with the SEC on May 15, 2001).
9. Second Amendment to Investor Rights Agreement, dated as of November 20,
2000, by and among the Company, the Investors and the Reporting Person
(incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on
Form 10-Q filed with the SEC on May 15, 2001).
10. Stock Option Agreement, dated as of September 26, 2000, by and between
the Company and the Reporting Person.
11. Stock Option Agreement, dated as of September 26, 2001, by and between
the Company and the Reporting Person.
-14-
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 10, 2001 JACK FUTTERMAN
By: /s/ Jack Futterman
------------------------------
Name: Jack Futterman
-15-
EX-4
4
jf956536.txt
INCENTIVE STOCK OPTION AGREEMENT
PARTY CITY CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
PARTY CITY CORPORATION, a Delaware corporation (the "Company"), has granted
to Jack Futterman (the "Optionee"), an Option to purchase a total of fifteen
thousand (15,000) shares (the "Shares") of the Company's common stock, $.01 par
value per share ("Common Stock"), at the price set forth in Paragraph 2 hereof,
and in all respects subject to the terms, definitions and provisions of the
Company's Amended and Restated 1994 Stock Option Plan (the "Plan"), which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.
1. NATURE OF THE OPTION. This Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. EXERCISE PRICE. The exercise price is equal to $24.00 per share of
Common Stock subject to this Option.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term as
follows:
(a) Rights to Exercise.
(i) This option shall be exercisable as follows:
(a) five thousand (5,000) shares shall vest and be exercisable
on the first anniversary date of the date hereof; and
(b) an additional five thousand (5,000) shares shall vest and be
exercisable on the second anniversary date of the date
hereof; and
(c) an additional five thousand (5,000) shares shall vest and be
exercisable on the third anniversary date of the date
hereof.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of Optionee's other termination of employment,
disability or death, the exercisability of the Option is
governed by Section 9 of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written notice
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with respect to such shares
of Common Stock as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price.
No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
4. METHOD OF PAYMENT. Payment of the exercise price shall be by cash,
check, promissory note (if approved by the Company as an accepted method of
payment) or Shares of the Company's Common Stock having a fair market value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option shall be exercised, or any combination of such payment methods.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. TERMINATION OF STATUS AS AN EMPLOYEE. If Optionee ceases to serve as an
Employee, he may, but only within thirty (30) days after the date he ceased to
be an Employee of the Company, exercise this Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise this Option at the date of such termination, or if
he does not exercise this Option within the time specified herein, the Option
shall terminate.
7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, if Optionee is unable to continue his employment with the Company as a
result of his total and permanent disability (within the meaning of Section
22(e)(3) of the Code), he may, but only within twelve (12) months from the date
of termination of employment, exercise his Option to the extent he was entitled
to exercise it at the date of such termination, or if he does not exercise such
Option (which he was entitled to exercise) within the time specified herein, the
Option shall terminate.
8. DEATH OF OPTIONEE. In the event of the death of Optionee:
(a) during the term of this Option and while an Employee of the Company and
having been in Continuous Status as an Employee since the date of grant of the
Option, the Option may be exercised, at any time within twelve (12) months
followed the date of death, by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that would have accrued had Optionee continued living
one (1) month after the date of death; or
(b) within thirty (30) days after the termination of Optionee's Continuous
Status as an Employee, the Option may be exercised, at any time within three (3)
months following the date of death, by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, or otherwise transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
10. TERM OF OPTION. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
term only in accordance with the Plan and the terms of this Option.
11. EARLY DISPOSITION OF STOCK. Optionee understands that if he disposes of
any Shares received under this Option within two (2) years after the date of
this Agreement or within one (1) year after such Shares were transferred to
him/her, he/she will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal to
the positive difference between the exercise price for the Shares and the lower
of the fair market value of the Shares at the date of option exercise and the
sales price of the Shares. Optionee hereby agrees to notify the Company in
writing within thirty (30) days after the date of any such disposition. Optionee
understands that if he disposes of such Shares at any time after the expiration
of such two-year and one-year holding periods, any gain on such sale will be
taxed at capital gain rates.
DATE OF GRANT: September 8, 1997 PARTY CITY CORPORATION
A Delaware corporation
BY: /s/ Steven Mandell
-----------------------------
Steven Mandell
President
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that he is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions arising
under the Plan.
Dated: 10/20/97
/s/ Jack Futterman
Jack Futterman
EX-5
5
jf956519.txt
INCENTIVE STOCK OPTION AGREEMENT
PARTY CITY CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
PARTY CITY CORPORATION, a Delaware corporation (the "Company"), has granted
to Jack Futterman (the "Optionee"), an Option to purchase a total of Five
Thousand (5,000) shares (the "Shares") of the Company's common stock, $.01 par
value per share ("Common Stock"), at the price set forth in Paragraph 2 hereof,
and in all respects subject to the terms, definitions and provisions of the
Company's Amended and Restated 1994 Stock Option Plan (the "Plan"), which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.
1. NATURE OF OPTION. This Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. EXERCISE PRICE. The exercise price is equal to $15.00 per share of
Common Stock subject to this Option.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term as
follows:
(a) Right to Exercise.
(i) This Option shall be exercisable as follows:
(a) Two Thousand Five Hundred (2,500) of the Shares shall
vest and be exercisable on June 15, 2001; and
(b) an additional Two Thousand Five Hundred (2,500) of the
Shares shall vest and be exercisable on June 15, 2001.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of the Optionee's termination of employment
due to disability, death or as otherwise provided for in Section 9 of
the Plan, the exercisability of this Option is governed by Section 9
of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written notice
which shall state the election to exercise this Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with respect to such Shares
of Common Stock as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the Exercise Price.
No shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by cash,
check, promissory note (if approved by the Company as an accepted method of
payment) or Shares of the Company's Common Stock having a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option shall be exercised, or any combination of such payment methods.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. TERMINATION OF STATUS AS AN EMPLOYEE. If the Optionee ceases to serve as
an Employee, he may, but only within thirty (30) days after the date he ceased
to be an Employee of the Company, exercise this Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise this Option at the date of such termination, or if
he does not exercise this Option within the time specified herein, this Option
shall terminate.
7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, if the Optionee is unable to continue his employment with the Company as
a result of his total and permanent disability (within the meaning of Section
22(e)(3) of the Code), he may, but only within twelve (12) months from the date
of termination of employment due to such disability, exercise this Option to the
extent he was entitled to exercise it at the date of such termination, or if he
does not exercise this Option (which he was entitled to exercise) within the
time specified herein, this Option shall terminate.
8. DEATH OF OPTIONEE. In the event of the death of the Optionee:
(a) during the term of this Option and while an Employee of the Company and
having been in Continuous Status as an Employee since the date of grant of this
Option, this Option may be exercised, at any time within twelve (12) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise this Option by bequest or inheritance, but only
to the extent of the right to exercise that would have accrued had the Optionee
continued living until one (1) month after the date of death; or
(b) within thirty (30) days after the termination of the Optionee's
Continuous Status as an Employee, this Option may be exercised, at any time
within three (3) months following the date of death, by the Optionee's estate or
by a person who acquired the right to exercise this Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned hypothecated, or otherwise transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of the Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
10. TERM OF OPTION. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
term only in accordance with the Plan and the terms of this Option.
11. EARLY DISPOSITION OF SHARES. The Optionee understands that if he
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to him, he will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to the
positive difference between the exercise price for the Shares and the lower of
the Fair Market Value of the Shares at the date of exercise of this Option and
the sales price of the Shares. The Optionee hereby agrees to notify the Company
in writing within thirty (30) days after the date of any such disposition. The
Optionee understands that if he disposes of such Shares at any time after the
expiration of such two-year and one-year periods, any gain on such sale will be
taxed at applicable capital gain rates.
12. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate to him for such Shares.
13. NO OBLIGATION TO EXERCISE OPTION. The granting of this Option shall
impose no obligation upon the Optionee to exercise such Option.
14. VARIATIONS IN PRONOUNS. All pronouns and any variations thereof used
herein refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
15. HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
16. GOVERNING LAW. This Option shall be governed by and construed in
accordance with the laws of the State of Delaware, except to the extent
pre-empted by federal law.
DATE OF GRANT: December 9, 1998 PARTY CITY CORPORATION
By: /s/David E. Lauber
---------------------------
Name: David E. Lauber
------------------------
Title: Executive Vice President
------------------------
Acknowledgment and Acceptance of Optionee
-----------------------------------------
The Optionee acknowledges receipt of a copy of the Plan, a copy of
which is annexed hereto, and represents that he is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.
Dated: 1/25/99
/s/Jack Futterman
-----------------
Jack Futterman
EX-6
6
jf956525.txt
STOCK OPTION GRANT AGREEMENT
PARTY CITY CORPORATION
STOCK OPTION GRANT
PARTY CITY CORPORATION, a Delaware corporation (the "Company"), has granted
to Jack Futterman (the "Optionee"), an Option to purchase a total of Two
Thousand Five Hundred (2500) shares (the "Shares") of the Company's common
stock, $.01 par value per share ("Common Stock"), at the price set forth in
Paragraph 2 hereof, and in all respects subject to the terms, definitions and
provisions of the Company's Amended and Restated 1994 Stock Option Plan (the
"Plan"), which is incorporated herein by reference. The terms defined in the
Plan shall have the same defined meanings herein.
1. NATURE OF OPTION. This Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. EXERCISE PRICE. The exercise price is equal to $23.1875 per share of
Common Stock subject to this Option.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term as
follows:
(a) Right to Exercise.
(i) This Option shall be exercisable as follows:
(a) Full amount of shares shall vest and be exercisable at
one year anniversary of June 22, 1998 Annual Shareholders
Meeting.
(ii) This Option may not be exercised for a fraction of a share.
(iii) In the event of the Optionee's termination of service as a
Director due to disability, death or as otherwise provided in Section
9 of the Plan, the exercisability of this Option is governed by
Section 9 of the Plan.
(b) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number
of Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with
respect to such Shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be signed
by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The written notice shall be accompanied by
payment of the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by cash,
check, promissory note (if approved by the Company as an accepted method of
payment) or Shares of the Company's Common Stock having a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the Option shall be exercised, or any combination of such payment methods.
5. RESTRICTIONS ON EXERCISE. This Option may be exercised if the issuance
of such Shares upon such exercise or the method of payment of consideration for
such Shares would constitute a violation of any applicable federal or state
securities or other law regulation, including any rule under Part 207 of Title
12 of the Code of Federal Regulations ("Regulation G") as promulgated by the
Federal Reserve Board. As a condition to the exercise of this Option, the
Company may require the Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. TERMINATION OF STATUS AS A DIRECTOR. If the Opionee ceases to serve as a
Director, he may, but only within thirty (30) days after the date he ceased to
be a Director of the Company, exercise this Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise this Option at the date of such termination, or if
he does not exercise this Option within the time specified herein, this Option
shall terminate.
7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6
above, if the Optionee is unable to continue his service with the Company as a
result of his total and permanent disability (within the meaning of Section
22(e)(3) of the Code), he may, but only within twelve (12) months from the date
of termination of service due to such disability, exercise this Option to the
extent he was entitled to exercise it as the date of such termination, of if he
does not exercise this Option (which he was entitled to exercise) within the
time specified herein, this Option shall terminate.
8. DEATH OF OPTIONEE. In the event of the death of the Optionee:
(a) during the term of this Option and while a Director of the Company and
having been in Continuous Status as a Director since the date of grant of this
Option, this Option may be exercised, at any time within twelve (12) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise this Option by bequest of inheritance, but only
to the extent of the right to exercise that would have accrued had the Optionee
continued living until one (1) month after the date of death; or
(b) within thirty (30) days after the termination of the Optinee's
Continuous Status as a Director, this Option may be exercised, at any time
within three (3) months following the date of death, by the Optionee's estate or
by a person who acquired the right to exercise this Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, or otherwise transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of the Optionee only by
the Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
10. TERM OF OPTION. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, any may be exercised during such
term only in accordance with the Plan and the terms of this Option.
11. EARLY DISPOSITION OF SHARES. The Optionee understands that if he
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to him, he will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to the
positive difference between the exercise price for the Shares and the lower of
the Fair Market Value of the Shares at the date of exercise of this Option and
the sales price of the Shares. The Optionee hereby agrees to notify the Company
in writing within thirty (30) days after the date of any such disposition. The
Optionee understands that if he disposes of such Shares at any time after the
expiration of such two-year and one-year periods, any gain on such sale will be
taxed at applicable capital gain rates.
12. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate to him for such Shares.
13. NO OBLIGATION TO EXERCISE OPTION. The granting of this Option shall
impose no obligation upon the Optionee to exercise such Option.
14. VARIATIONS IN PRONOUNS. All pronouns and any variations thereof used
herein refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
15. HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
16. GOVERNING LAW. This Option shall be governed by and construed in
accordance with the laws of the State of Delaware, except to the extent
pre-empted by federal law.
DATE OF GRANT: July 30, 1998 PARTY CITY CORPORATION
By: /s/ David E. Lauber
---------------------------
Name: David E. Lauber
------------------------
Title: Executive Vice President
------------------------
Acknowledgment and Acceptance of Optionee
The Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that he is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof. The Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: 10/27/98
/s/Jack Futterman
-----------------
Jack Futterman
EX-10
7
jf956580.txt
STOCK OPTION AGREEMENT
DIRECTOR
STOCK OPTION AGREEMENT
UNDER THE
PARTY CITY CORPORATION
1999 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of the 26th of September, 2000, by and between
Party City Corporation, a Delaware corporation (the "Company"), and Jack
Futterman (the "Optionee").
WHEREAS, the Optionee serves as a member of the Company's Board of
Directors (the "Board"), and the Company desires to afford the Optionee the
opportunity to acquire, or enlarge, Optionee's ownership of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), so that Optionee may have
a direct proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall have the
same meaning as set forth in Company's 1999 Stock Incentive Plan (the "Plan");
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
W I T N E S S E T H:
-------------------
1. Grant of Option. Subject to the terms and conditions set forth herein
and in the Plan, the Company hereby grants to the Optionee, during the period
commencing on the date of this Agreement and ending on the date that is ten
years from the date hereof (the "Option Period"), the right and option (the
right to purchase any one share of Common Stock hereunder being an "Option") to
purchase from the Company, at a purchase price equal to $3.40 (U.S. Three
Dollars and Forty Cents) per share (the "Option Price") (the Fair Market Value
of one share of Common Stock on the date hereof), an aggregate of 3,000 (Three
Thousand) shares of Common Stock. The Options are not intended to be "incentive
stock options", as defined in Section 422 of the Internal Revenue Code of 1986,
as amended.
2. Exercise of Option. The Options shall be immediately vested and
exercisable and, except as otherwise stated in this agreement, the Options shall
expire on the tenth anniversary of the date hereof.
3. Termination of Status as a Director.
(a) If prior to the end of the Option Period, the Optionee shall
terminate status as a director for any reason, all outstanding Options that
have not vested and become exercisable as of the date of such termination
shall immediately expire and all outstanding Options vested and exercisable
at the time of such termination shall remain exercisable by the Optionee
until their expiration as set forth below.
(b) In the event the Optionee's status as a director terminates on
account of a Normal Termination, all outstanding vested and exercisable
Options as of the date of such
termination may be exercised at any time within the three (3) months immediately
following the date of such termination.
(c) In the event of the death of the Optionee during the Optionee's
term as a director or within there months after the Optionee's termination
of service as a director on account of a Normal Termination, all
outstanding vested and exercisable Options as of the date of the Optionee's
death may be exercised, at any time within the twelve (12) months
immediately following the date of death, by the Optionee's estate or by any
person who acquired the right to exercise the Option by bequest or
inheritance; or
(d) In the event the Optionee's status as a director terminates for
any reason other than death or on account of a Normal Termination, all
outstanding vested and exercisable Options as of the date of such
termination shall immediately expire.
(e) Notwithstanding anything herein to the contrary, no Option may be
exercised beyond the date that is the tenth anniversary of the date hereof.
(f) After the expiration of any exercise period described in this
paragraph 3, all unexercised Options shall expire together with all of the
Optionee's rights hereunder.
(g) For purposes of this Agreement, "Normal Termination" means
termination of service as a director of the Company:
(i) If applicable, upon retirement pursuant to the retirement
plan of the Company;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the stockholders of the Company without Cause, including
on account of the Optionee's failure to be reelected to the Board.
4. Method of Exercising Option. (a) Options which have become exercisable
may be exercised by delivery of a written notice of exercise to the Committee
accompanied by payment of the Option Price. The Option Price may be payable (i)
in cash, (ii) by bank check acceptable to the Committee, and/or (iii) by
delivery of Mature Shares (valued at the Fair Market Value at the time the
Option is exercised), having in the aggregate a value equal to the aggregate
Option Price, or any combination of such methods of payment. In addition, at the
discretion of the Committee, the Option Price may be payable by delivering to
the Committee a copy of irrevocable instructions to a stockholder to deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay the
aggregate Option Price. For purposes of this paragraph, the term "Mature Shares"
shall mean shares of Common Stock for which the Optionee has good title, free
and clear of all liens and encumbrances, and which the Optionee either (i) has
held for at least six months or (ii) has purchased on the open market.
(b) At the time of exercise, (i) the Company shall have the right to
withhold from the number of shares of Stock to be issued upon exercise or (ii)
at the discretion of the
Committee, the Optionee shall be obligated to pay to the Company such amount, as
the Company deems necessary to satisfy its obligation, if any, to withhold
Federal, state and local income or other taxes incurred by reason of the
exercise or the transfer of shares thereupon.
5. Issuance of Shares. As promptly as practical after receipt of such
written notification and full payment of such aggregate Option Price and any
required income tax withholding amount, the Company shall issue or transfer to
the Optionee the number of shares with respect to which Options have been so
exercised, and shall deliver to the Optionee a certificate or certificates
therefor, registered in the Optionee's name.
6. Non-Transferability. Except as otherwise determined by the Committee in
its sole discretion, the Options are not transferable by the Optionee otherwise
than by will or the laws of descent and distribution and are exercisable during
the Optionee's lifetime only by Optionee. Unless such assignment or transfer is
consented to by the Committee, no assignment or transfer of the Options, or of
the rights represented hereby, whether voluntary or involuntary, by operation of
law or otherwise (except by will or the laws of descent and distribution), shall
vest in the assignee or transferee any interest or right herein whatsoever, but
immediately upon such assignment or transfer the Options shall terminate and
become of no further effect.
7. Rights as Stockholder. The Optionee or a transferee of the Options shall
have no rights as a stockholder with respect to any share covered by the Options
until Optionee shall have become the holder of record of such share, and no
adjustment shall be made for dividends or distributions or other rights in
respect of such share for which the record date is prior to the date upon which
Optionee shall become the holder or record thereof.
8. Changes in Capital Structure.
(a) The Options granted under this Agreement shall be subject to
adjustment or substitution, as determined by the Committee in its sole
discretion, as to the number, price of kind of a share of Common Stock or
other consideration subject to such Options or as otherwise determined by
the Committee to be equitable (i) in the event of changes in the
outstanding Common Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the
date hereof, (ii) in the event of any change in applicable laws or any
change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights granted to, or available for,
participants in the Plan or (iii) upon the occurrence of any other event
which otherwise warrants equitable adjustment because it interferes with
the intended operation of the Plan.
(b) Notwithstanding the above, in the event of (i) a merger or
consolidation such that after such merger or consolidation the Company is
not the surviving entity or the ultimate parent of the surviving entity,
(ii) the sale of all or substantially all of the assets of the Company, or
(iii) the reorganization or liquidation of the Company, the Committee may,
in its sole discretion and upon at least 10 days advance notice to the
Optionee, cancel any outstanding Options and pay to the Optionee, in cash
or Stock, the value of such Options based upon the
price per share of Stock received or to be received by other shareholders of the
Company in the event.
9. Compliance with Law. Notwithstanding any of the provisions hereof, the
Optionee hereby agrees that Optionee will not exercise the Options, and that the
Company will not be obligated to issue or transfer any shares to the Optionee
hereunder, if the exercise hereof or the issuance or transfer of such shares
shall constitute a violation by the Optionee or the Company of any provisions of
any law or regulation of any governmental authority. Any determination in this
connection by the Committee shall be final, binding and conclusive. The Company
shall in no event be obliged to register any securities pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended) or to take any
other affirmative action in order to cause the exercise of the Options or the
issuance or transfer of shares pursuant thereto to comply with any law or
regulation of any governmental agency.
10. Notice. Every notice or other communication relating to this Agreement
shall be in writing, and shall be mailed to or delivered to the party for whom
it is intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided, provided that,
unless and until some other address be so designated, all notices or
communications by the Optionee to the Company shall be mailed or delivered to
the Company at its principal executive office, and all notices or communications
by the Company to the Optionee may be given to the Optionee personally or may be
mailed to Optionee at the Optionee's last known address, as reflected in the
Company's records.
11. Binding Effect. Subject to Section 6 hereof, this Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties
hereto.
12. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
13. Plan. The terms and provisions of the Plan are incorporated herein by
reference. Capitalized terms used herein which are not defined herein shall have
the meanings attributable thereto in the Plan. In the event of a conflict or
inconsistency between discretionary terms and provisions of the Plan and the
express provisions of this Agreement, this Agreement shall govern and control.
In all other instances of conflicts or inconsistencies or omissions, the terms
and provisions of the Plan shall govern and control.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PARTY CITY CORPORATION
By: /s/ Thomas E. Larson
------------------------------
Name: Thomas E. Larson
Title: C.F.O.
/s/ Jack Futterman
-------------------------------------
Jack Futterman
EX-11
8
jf956516.txt
STOCK OPTION AGREEMENT
DIRECTOR STOCK OPTION AGREEMENT
UNDER THE PARTY CITY CORPORATION
1999 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of the 26th of September 2001, by and between Party
City Corporation, a Delaware corporation (the "Company"), and Jack Futterman
(the "Optionee").
WHEREAS, the Optionee serves as a member of the Company's Board of
Directors, and the Company desires to afford the Optionee the opportunity to
acquire, or enlarge, Optionee's ownership of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), so that Optionee may have a direct
proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall have the
same meaning as set forth in the Company's 1999 Stock Incentive Plan (as amended
from time to time) (the "Plan");
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
W I T N E S S E T H:
-------------------
1. Grant of Option. Subject to the terms and conditions set forth herein
and in the Plan, the Company hereby grants to the Optionee, during the period
commencing on the date of this Agreement and ending on the date that is ten
years from the date hereof (the "Option Period"), the right and option (the
right to purchase any one share of Common Stock hereunder being an "Option") to
purchase from the Company, at a purchase price equal to $6.55 per share (the
"Option Price") (the Fair Market Value of one share of Common Stock on the date
hereof), an aggregate of 3,000 shares of Common Stock. The Options are not
intended to be "incentive stock options", as defined in Section 422 of the
Internal Revenue Code of 1986, as amended.
2. Limitations on Exercise of Option.
(a) Subject to the terms and conditions set forth herein, the Options
shall vest immediately and become exercisable immediately.
(b) Except as otherwise stated in this agreement, the Options shall
expire on the tenth anniversary of the date hereof.
3. Termination of Shares as a Director.
(a) If prior to the end of the Option Period, the Optionee shall
terminate status as a director for any reason, all outstanding Options that
have not vested and become exercisable as of the date of such termination
shall immediately expire and all outstanding Options vested and exercisable
at the time of each termination shall remain exercisable by the Optionee
until their expiration as set forth below.
(b) In the event the Optionee's status as a director terminates on
account of a Normal Termination, all outstanding vested and exercisable
Options as of the date of such termination may be exercised at any time
within the three (3) months immediately following the date of such
termination.
(c) In the event of the death of the Optionee during the Optionee's
term as a director or within three months after the Optionee's termination
of service as a director on account of a Normal Termination, all
outstanding vested and exercisable Options as of the date of the Optionee's
death may be exercised, at any time within the twelve (12) months
immediately following the date of death, by the Optionee's estate or by any
person who acquired the right to exercise the Option by bequest or
inheritance; or
(d) In the event the Optionee's status as a director terminates for
any reason other than death or on account of a Normal Termination, all
outstanding vested and exercisable Options as of the date of such
termination shall immediately expire.
(e) Notwithstanding anything herein to the contrary, no Option may be
exercised beyond the date that is the tenth anniversary of the date hereof.
(f) After the expiration of any exercise period described in this
paragraph 3, all unexercised Options shall expire together with all of the
Optionee's rights hereunder.
(g) For purposes of this agreement, "Normal Termination" means
termination of service with the Company:
(i) Upon retirement pursuant to the retirement plan of the
Company;
(ii) On account of Disability;
(iii) With the written approval of the Committee; or
(iv) By the Company or a Subsidiary without Cause.
4. Method of Exercising Option. (a) Options which have become exercisable
may be exercised by delivery of a written notice of exercise to the Committee
accompanied by payment of the Option Price. The Option Price may be payable (i)
in cash, (ii) by bank check acceptable to the Committee, and/or (iii) by
delivery of Mature Shares (valued at the Fair Market Value at the time the
Option is exercised), having in the aggregate a value equal to the aggregate
Option Price, or any combination of such methods of payment. In addition, at the
discretion of the Committee, the Option Price may be payable by delivering to
the Committee a copy of irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay the
aggregate Option Price. For purposes of this paragraph, the term "Mature Shares"
shall mean shares of Common Stock for which the Optionee has good title, free
and clear of all liens and encumbrances, and which the Optionee either (i) has
held for at least six months or (ii) has purchased on the open market.
(b) At the time of exercise, (i) the Company shall have the right to
withhold from the number of shares of Stock to be issued upon exercise or (ii)
at the discretion of the
Committee, the Optionee shall be obligated to pay to the Company such amount, as
the Company deems necessary to satisfy its obligation to withhold Federal, state
and local income or other taxes incurred by reason of the exercise or the
transfer of shares thereupon.
5. Issuance of Shares. As promptly as practical after receipt of such
written notification and full payment of such aggregate Option Price and any
required income tax withholding amount, the Company shall issue or transfer to
the Optionee the number of shares with respect to which Options have been so
exercised, and shall deliver to the Optionee a certificate or certificates
therefor, registered in the Optionee's name.
6. Non-Transferability. Except as otherwise determined by the Committee in
its sole discretion, the Options are not transferable by the Optionee otherwise
than by will or the laws of descent and distribution and are exercisable during
the Optionee's lifetime only by Optionee. No assignment or transfer of the
Options, or of the rights represented thereby, whether voluntary or involuntary,
by operation of law or otherwise (except by will or the laws of descent and
distribution), shall vest in the assignee or transferee any interest or right
herein whatsoever, but immediately upon such assignment or transfer the Options
shall terminate and become of no further effect.
7. Rights as Stockholder. The Optionee or a transferee of the Options shall
have no rights as a stockholder with respect to any share covered by the Options
until Optionee shall have become the holder of record of such share, and no
adjustment shall be made for dividends or distributions or other rights in
respect of such share for which the record date is prior to the date upon which
Optionee shall become the holder or record thereof.
8. Changes in Capital Structure.
(a) The Options granted under this Agreement shall be subject to adjustment
or substitution, as determined by the Committee in its sole discretion, as to
the number, price or kind of a share of Common Stock or other consideration
subject to such Options or as otherwise determined by its Committee to be
equitable (i) in the event of changes in the outstanding Common Stock or in the
capital structure of the Company by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, reorganizations, mergers,
consoldiations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date hereof, (ii) in the event of any change
in applicable laws or any change in circumstances which results in or would
result in any substantial dilution or enlargement of the rights granted to, or
available for, participants in the Plan or (iii) upon the occurrence of any
other event which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan.
(b) Notwithstanding the above, in the event of (i) a merger or
consolidation such that after such merger or consolidation the Company is not
the surviving entity or the ultimate parent of the surviving entity, (ii) the
sale of all or substantially all of the assets of the Company, or (iii) the
reorganization or liquidation of the Company, the Committee may, in its
discretion and upon at least 10 days advance notice to the Optionee, cancel any
outstanding Options and pay to the Optionee, in cash or Stock, the value of such
Options based upon the
price per share of Stock received or to be received by other shareholders of the
Company in the event.
9. Compliance with Law. Notwithstanding any of the provisions hereof, the
Optionee hereby agrees that Optionee will not exercise the Options, and that the
Company will not be obligated to issue or transfer any shares to the Optionee
hereunder, if the exercise hereof or the issuance or transfer of such shares
hall constitute a violation by the Optionee or the Company of any provisions of
any law or regulation of any governmental authority. Any determination in this
connection by the Committee shall be final, binding and conclusive. The Company
shall in no event be obliged to register any securities pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended) or to take any
other affirmative action in order to cause the exercise of the Options or the
issuance or transfer of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
10. Notice. Every notice or other communication relating to this Agreement
shall be in writing, and shall be mailed to or delivered to the party for whom
it is intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided, provided that,
unless and until some other address be so designated, all notices or
communications by the Optionee to the Company shall be mailed or delivered to
the Company at its principal executive office, and all notices or communications
by the Company to the Optionee may be given to the Optionee personally or may be
mailed to Optionee at the Optionee's last known address, as reflected in the
Company's records.
11. Binding Effect. Subject to Section 6 hereof, this Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties
hereto.
12. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
13. Plan. The terms and provisions of the Plan are incorporated herein by
reference. Capitalized terms used herein which are not defined herein shall have
the meanings attributable thereto in the Plan. In the event of a conflict or
inconsistency between discretionary terms and provisions of the Plan and the
express provisions of this Agreement, this Agreement shall govern and control.
In all other instances of confli-+cts or inconsistencies or omissions, the terms
and provisions of the Plan shall govern and control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PARTY CITY CORPORATION
By: /s/ Thomas E. Larson
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Name: Thomas E. Larson
Title: Senior Vice President and CEO
/s/ Jack Futterman
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Jack Futterman