As filed with the Securities and Exchange Commission on February 12, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FACTORY CARD OUTLET CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-3652087
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
745 Birginal Drive
Bensenville, Illinois 60106-1212
(Address, including zip code of registrant's principal executive offices)
FACTORY CARD OUTLET CORP.
1996 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plan)
Charles R. Cumello, President
Factory Card Outlet Corp.
745 Birginal Drive
Bensenville, Illinois 60106-1212
(630) 238-0010
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------
With a Copy to:
Lori J. Braender, Esq.
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, New Jersey 07962
(201) 966-6300
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered(1)(2) offering price aggregate offering registration fee
per share price(3)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 100,000 shares $9.875 $987,500 $340.52
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
- --------------
1 This registration statement also covers an indeterminate amount of interests
to be offered or sold pursuant to the employee benefit plan described herein.
2 This registration statement also covers an indeterminate number of shares of
Common Stock which may be issuable under the anti-dilution and other adjustment
provisions of the plan pursuant to Rule 416(a) of the Securities Act of 1933, as
amended (the "Securities Act").
3 Estimated in accordance with Rule 457(h) solely for purposes of calculating
the registration fee and based upon the average of the high and low sale prices
of the Common Stock on the Nasdaq National Market on February 10, 1997, as
reported in the Wall Street Journal.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1 Plan Information
Not filed with this Registration Statement.
ITEM 2 Registrant Information and Employee Plan Annual Information
Not filed with this Registration Statement.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3 Documents Incorporated By Reference
The following documents filed by Factory Card Outlet Corp. (the "Company")
or the Factory Card Outlet Corp. 1996 Employee Stock Purchase Plan (the "Plan")
with the Securities and Exchange Commission (the "Commission") are incorporated
by reference in this Registration Statement:
1. The Company's Prospectus, dated December 12, 1996 filed pursuant to
Rule 424(b) under the Securities Act of 1933.
2. The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A filed pursuant to Section
12 of the Exchange Act of 1934, and any amendment or report filed for
the purpose of updating such description.
In addition, all documents filed by the Company and the Plan pursuant
to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, hereby are incorporated herein by reference and shall be
deemed a part hereof from the date of filing of such documents.
ITEM 4 Description of Securities
Not applicable.
ITEM 5 Interests of Named Experts and Counsel
Not applicable.
ITEM 6 Indemnification of Directors and Officers
(a) Limitation of Liability of Directors and Officers. Section 102 of
the Delaware General Corporation Law permits a corporation to provide
in its Certificate of Incorporation that a director or officer shall
not be personally liable to the corporation or its shareholders for
breach of any duty owed to the corporation or its shareholders, except
that such provisions shall not relieve a director or officer from
liability for any breach of duty based upon an action or omission (a)
in breach of such person's duty of loyalty to the corporation or its
shareholders, (b) not in good faith or involving intentional misconduct
or a knowing violation of law, (c) involving the payment of unlawful
dividends or expenditure of funds for unlawful stock purchases or
redemptions, or (d) resulting in receipt by such person of any improper
personal benefit. Article EIGHTH of the Company's Certificate of
Incorporation includes limitation on the liability of officers and
directors to the fullest extent permitted by Delaware law.
(b) Indemnification of Directors, Officers, Employees and Agents. Under
Article SEVENTH of its Certificate of Incorporation, the Company may,
to the fullest extent permitted by law, indemnify its directors,
officers, employees and agents. Section 145 of the Delaware General
Corporation Law provides that a corporation may indemnify its
directors, officers, employees and agents against judgments, fines,
penalties, amounts paid in settlement and expenses, including
attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the
standards of conduct specified therein. Determinations concerning
whether or not the applicable standard of conduct has been met can be
made by (a) a disinterested majority of the Board of Directors, (b)
independent legal counsel, or (c) an affirmative vote of a majority of
shares held by the shareholders. No indemnification is permitted to be
made to or on behalf of a corporate director, officer, employee or
agent if a judgment or other final adjudication adverse to such person
establishes that his acts or omissions (a) were in breach of his duty
of loyalty to the corporation or its shareholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in receipt
by such person of an improper personal benefit.
(c) Insurance. The Company maintains insurance policies insuring the
Company's directors and officers against liability for wrongful acts or
omissions arising out of their positions as directors and officers,
subject to certain limitations.
ITEM 7 Exemption from Registration Claimed
Not applicable.
ITEM 8 Exhibits
5 Opinion of Pitney, Hardin, Kipp & Szuch
10 Factory Card Outlet Corp. 1996 Employee Stock Purchase Plan.
23(a) Consent of KPMG Peat Marwick LLP.
24 Power of Attorney
Undertaking number 2 in Item 9 below is hereby incorporated by
reference in this Item 8.
ITEM 9 Undertakings
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include
any material information with respect to the Plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bensenville, State of Illinois, on February 7,
1997.
FACTORY CARD OUTLET CORP.
By: *
-----------------------------------------
William E. Freeman, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* Chairman of the Board of February 7, 1997
- ------------------------- Directors
William E. Freeman
* President and Director February 7, 1997
- -------------------------
Charles Cumello
Executive Vice President and
Treasurer (principal financial and February 7, 1997
- ------------------------- accounting officer)
Glen J. Franchi
* Director February 7, 1997
- -------------------------
Michael I. Barach
* Director February 7, 1997
- -------------------------
Dr. Robert C. Blattberg
* Director February 7, 1997
- -------------------------
Bart A. Brown, Jr.
* Director February 7, 1997
- -------------------------
Richard A. Doppelt
Director February 7, 1997
- -------------------------
J. Bayard Kelly
*
- -------------------------
James L. Nouss, Jr. Director February 7, 1997
*
- -------------------------
Stewart M. Kasen Director February 7, 1997
/s/ LORI J. BRAENDER
- -------------------------
*By Lori J. Braender, Esq.,
as attorney-in-fact.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Plan
administrators have duly caused this Registration Statement to be signed on
behalf of the Plan by the undersigned, thereunto duly authorized, in the
Township of Bensenville, State of Illinois, on February 11, 1997.
FACTORY CARD OUTLET CORP.
1996 EMPLOYEE STOCK PURCHASE PLAN
By: /S/ MATTHEW ELLIS
-----------------
Matthew Ellis
Plan Administrator
By: /S/ GLEN FRANCHI
-------------------
Glen Franchi
Plan Administrator
<PAGE>
INDEX TO EXHIBITS
Exhibit 5 Opinion of Pitney, Hardin, Kipp & Szuch
Exhibit 10 Factory Card Outlet Corp. 1996 Employee Stock Purchase Plan
Exhibit 23(a) Consent of KPMG Peat Marwick LLP
Exhibit 24 Power of Attorney
PITNEY, HARDIN, KIPP & SZUCH
P.O. BOX 1945
MORRISTOWN, NEW JERSEY 07962-1945
February 11, 1997
Factory Card Outlet Corp.
745 Birginal Drive
Bensenville, Illinois 60106
Re: Registration Statement on Form S-8 for Shares
of Common Stock issuable pursuant to the
1996 Employee Stock Purchase Plan
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Factory Card Outlet Corp. (the
"Company") with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), of shares
of common stock of the Company, $.01 par value (the "Shares"), issuable pursuant
to the Company's 1996 Employee Stock Purchase Plan (the "Plan").
We have also examined originals, or copies certified or otherwise
identified to our satisfaction, of the Plan, the Certificate of Incorporation
and By-laws of the Company, as currently in effect, and relevant resolutions of
the Board of Directors of the Company; and we have examined such other documents
as we deemed necessary in order to express the opinion hereinafter set forth.
In our examination of such documents and records, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, and the conformity with the originals of all documents submitted
to us as copies.
Based on the foregoing, it is our opinion that the Shares, when issued
and paid for in accordance with the Plan, will be legally issued, fully paid and
non-assessable.
The foregoing opinion is limited to the laws of the State of New
Jersey, and we are expressing no opinion as to the effect of the laws of any
other jurisdiction.
We consent to use of this opinion as an Exhibit to the Registration
Statement. In giving this consent, we do not admit that we are within the
category of persons whose consent is required by Section 7 of the Securities
Act, as amended.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Exhibit 10
FACTORY CARD OUTLET CORP.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock Purchase
Plan of Factory Card Outlet Corp.
1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Factory Card Outlet Corp., a Delaware
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross earnings,
overtime and shift premiums, sales commissions, incentive compensation and
bonuses, but shall exclude other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean, with respect to the first Offering Period,
any individual who, as of the Enrollment Date, is an employee of the Company for
tax purposes whose customary employment with the Company is at least twenty (20)
hours per week and more than five (5) months in any calendar year. With respect
to all other Offering Periods, an Employee is any individual who, as of the
Enrollment Date, is an employee of the Company for tax purposes whose customary
employment with the Company is at least twenty (20) hours per week and more than
five (5) months in any calendar year, and who has at least one thousand (1,000)
hours of service with the Company. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds ninety (90) days and the individual's right to reemployment is
not guaranteed either by statute or by contract, the employment relationship
shall be deemed to have terminated on the ninety-first (91st) day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering Period.
(i) "Exercise Date" shall mean the last day of each Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:
(1) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sale
price for the Common Stock (or the mean of the closing bid and asked prices, if
no sales were reported), as quoted on such exchange (or the exchange with the
greatest volume of trading in Common Stock) or system on the date of such
determination (or the last Trading Day prior to the date of determination, if
the date of determination is not a Trading Day), as reported in The Wall Street
Journal or such other source as the Board deems reliable, or
(2) If the Common Stock is quoted on the Nasdaq System (but not on
the Nasdaq National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination (or the last Trading Day prior to the date of
determination, if the date of determination is not a Trading Day), as reported
in The Wall Street Journal or such other source as the Board deems reliable, or
(3) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board.
(4) For purposes of the Enrollment Date under the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final Prospectus included within the Registration
Statement on Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock.
(k) "Offering Period" shall mean the period beginning on the first
Trading Day of a calendar quarter and ending on the last Trading Day of that
calendar quarter. Notwithstanding the above sentence, the first Offering Period
shall begin on the effective date of the Company's initial public offering of
its Common Stock that is registered with the Securities and Exchange Commission
and shall end on the last Trading Day of the first calendar quarter of 1997. The
duration of Offering Periods may be changed pursuant to Section 4 of this Plan.
(1) "Plan" shall mean this 1996 Employee Stock Purchase Plan. ----
(m) "Purchase Price" shall mean an amount equal to ninety percent (90%)
of the Fair Market Value of a share of Common Stock on the Exercise Date.
Notwithstanding the above sentence, with respect to the first Offering Period,
the Purchase Price shall mean ninety percent (90%) of the Fair Market Value on
the Enrollment Date for that Offering Period, as set forth in Section 2(j)(4).
(n) "Reserve" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(o) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than fifty percent (50%) of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(p) "Trading Day" shall mean a day on which national stock exchanges and
the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who is employed by the Company on a given Enrollment
Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan to the extent, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company and/or hold outstanding options to purchase such
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or of any Subsidiary.
4. Offering Periods. The Plan shall be implemented through consecutive
Offering Periods.. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) without shareholder
approval if such change is announced at least fifteen (15) days prior to the
scheduled beginning of the first Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions and filing it
with the office designated by the Company to receive such agreements prior to
the applicable Enrollment Date.
(b) Payroll deductions for a participant in the Plan shall commence on
the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof. Unless
changed or terminated by a participant under Section 6(c) or Section 10, a
participant's subscription agreement for a given Offering Period will be given
continued effect for the next following Offering Period.
6. Payroll Deductions.
(a) At the time an eligible Employee participating in the Plan files his
or her subscription agreement, he or she shall elect to have payroll deductions
made during an Offering Period in an amount not exceeding ten percent (10%) of
the Compensation which he or she received during the Offering Period. The
aggregate total of all payroll deductions accumulated during an Offering Period
under this Plan and all other stock purchase plans of the Company may not exceed
$5,500.
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments in such account.
(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, and may increase or decrease the rate of his
or her payroll deductions during the Offering Period, except that during the
first Offering Period, a participant will not be permitted to increase the rate
of his or her payroll deductions.
(d) At the time the option (as hereinafter described) is exercised, in
whole or in part, or at the time some or all of the Company's Common Stock
issued under the Plan is disposed of, the participant must make adequate
provision for the Company's federal, state, or other tax withholding
obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but shall not be
obligated to, withhold from the participant's compensation the amount necessary
for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the participant's account as of the
Exercise Date by the applicable Purchase Price. In no event shall an Employee be
permitted to purchase during each Offering Period under this Plan and all other
employee stock purchase plans of the Company more than the number of shares
determined by dividing $5,500 by the applicable Purchase Price. All such
purchases shall be subject to the limitations set forth in Sections 3(b) and 12
hereof. Exercise of the option shall occur as provided in Section 8 hereof,
unless the participant has withdrawn pursuant to Section 10 hereof.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the number of shares
subject to such option shall be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account.
Fractional shares may be purchased and credited to a participant. During a
participant's lifetime, the participant's option to purchase shares hereunder is
exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the shares shall be credited to an account in the
participant's name with a brokerage firm selected by the Company to hold the
shares in its street name.
10. Withdrawal.
(a) A participant may withdraw all but not less than all of the payroll
deductions credited to his or her account and not yet used to exercise his or
her options under the Plan at any time by giving written notice of same to the
Company. All of the participant's payroll deductions credited to his or her
account shall be paid to such participant within two (2) weeks after the
Company's receipt of written notice of withdrawal. Such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made during the Offering Period.
If a participant withdraws during a given Offering Period, payroll deductions
shall not resume at the beginning of the succeeding Offering Period unless the
participant delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an active Employee for any
reason, he or she shall be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise such participant's options under
the Plan shall be returned to such participant, and such participant's options
shall be automatically terminated.
(c) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available to Employees eligible to participate under the Plan
shall be one million (1,000,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 17 hereof. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as the Board shall
determine to be equitable.
(b) The participant shall have no interest or voting right in shares
covered by his or her option until such option has been exercised and paid in
full.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant unless otherwise indicated.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the Board or
a committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection
(a) of this Section 13, in the event that Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be administered only by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.
14. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or the receipt
of shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will or the laws of descent and
distribution) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds from an Offering Period in
accordance with Section 10 hereof.
15. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
16. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the current amount of payroll
deductions and the number of shares purchased.
17. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number of price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Offering Period shall terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all or the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period then in progress by setting a new
Exercise Date (the "New Exercise Date") or to cancel each outstanding right to
purchase and refund all sums collected from participants during the Offering
Period then in progress. If the Board shortens the Offering Period then in
progress in lieu of assumption or substitution in the event of a merger or sale
of assets, the Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for his or
her option has been changed to the New Exercise Date and that his or her option
shall be exercised automatically on the New Exercise Date, unless prior to such
date he has withdrawn from the Offering Period as provided in Section 10 hereof.
For purposes of this paragraph, an option granted under the Plan shall be deemed
to be assumed if, following the sale of assets or merger, the option confers the
right to purchase or receive, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock held
on the effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event that the Company is consolidated with or merged into any other
corporation.
18. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 17 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 17
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to which any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the length of Offering
Periods, limit the frequency and/or number of charges permitted in the amount
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each participant properly correspond with
amounts withheld from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee) determines in its sole
discretion advisable which are consistent with the Plan.
19. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
20. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
21. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 18 hereof.
Consent of KPMG Peat Marwick LLP
--------------------------------
The Board of Directors
Factory Card Outlet Corp.:
We consent to the incorporation by reference in this registration statement on
Form S-8 of Factory Card Outlet Corp. of our report dated September 30, 1996,
except as to Note 12, "Subsequent Events-Stock Split," which is as of November
19, 1996, relating to the consolidated balance sheets of Factory Card Outlet
Corp. and subsidiary as of June 29, 1996 and July 1, 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the years in the three-year period ended June 29, 1996, which report appears
in the prospectus dated December 12, 1996, filed by Factory Card Outlet Corp.
pursuant to Rule 424(b) under the Securities Act of 1933.
KPMG PEAT MARWICK LLP
Chicago, Illinois
February 6, 1997
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person who signature appears
below hereby constitutes and appoints Lori J. Braender, Esq. his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for her and her name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-8 for the 1996 Employee Stock Purchase Plan of
Factory Card Outlet Corp., and any and all amendments thereto (including
post-effective amendments), and to file the same with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming that said
attorney-in-fact and agent or her substitutes may lawfully do or cause to be
done by virtue hereof.
This Power of Attorney has been signed by the following persons in the
capacities and on the dates indicated:
Title Date
/S/ WILLIAM E. FREEMAN Chairman of the Board of Directors January 17, 1997
- ----------------------
William E. Freeman
/S/ CHARLES R. CUMELLO President and Director January 17, 1997
- ----------------------
Charles R. Cumello
/S/ GLEN J. FRANCHI January 17, 1997
- ---------------------- Executive Vice President
Glen J. Franchi and Chief Administrative Officer
(principal financial and accounting
officer)
/S/ MICHAEL I. BARACH Director January 17, 1997
- ---------------------
Michael I. Barach
/S/ ROBERT C. BLATTBERG Director January 17, 1997
- -----------------------
Dr. Robert C. Blattberg
/S/ BART A. BROWN, JR. Director January 17, 1997
- ----------------------
Bart A. Brown, Jr.
/S/ RICHARD A. DOPPELT Director January 17, 1997
- ----------------------
Richard A. Doppelt
/S/ JAMES L. NOUSS, JR. Director January 17, 1997
- -----------------------
James L. Nouss, Jr.
/S/ STEWART M. KASEN Director January 17, 1997
- --------------------
Stewart M. Kasen
/S/ J. BAYARD KELLY Director January 17, 1997
- --------------------
J. Bayard Kelly
