FACTORY CARD OUTLET OF AMERICA LTD.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
August 1. 1996
Xxxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xxxxxxx:
This will confirm the agreement by and between Factory Card Outlet of
America Ltd. ("FCOA") and you concerning amounts to be paid, advanced or loaned,
or already paid, advanced or loaned, to you by FCOA.
In connection therewith, you and FCOA leave agreed as follows:
1. In consideration of any loss incurred by you as a result of
reducing the sale price of your home located at 00 Xxxxx Xxxx Xxxx, Xxxxxx,
Xxxxxxxxxxx (the "Connecticut Home") in connection with your relocation to the
Bensenville, Illinois area for the purpose of assuming your position as Chief
Executive Officer and President of FCOA (the "Relocation"), FCOA shall pay to
you an amount equal to such loss, based upon the original purchase price paid by
you for the Connecticut Home, plus permanent improvements, less the final sale
price in connection with such sale.
2. In addition to the payment referred to in paragraph 1 above, FCOA
shall pay to you an amount equal to any and all reasonable realty transfer taxes
and fees, costs and expenses (including attorneys' fees and commissions)
incurred by you related to the closing of the sale of the Connecticut Home.
3. In addition, FCOA shall loan, or has loaned, to you the amount of
$175,000 (the "Loan Amount") in order to finance the purchase of your primary
residence located at 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx (the "Illinois Home")
in connection with the Relocation. Your repayment to FCOA of the Loan Amount
shall be secured by a Promissory Note, in form and substance acceptable to FCOA,
providing for the accrual of interest on the Loan Amount at the prime rate and
further providing for the repayment of all principal and interest upon the
earlier to occur of:
Xx. Xxxxxxx Xxxxxxx
August 1, 1996
Page 2
(a) July 31, 2001; or
(b) The sale of either the Connecticut Home or the
Illinois Home; or
(c) A public offering of securities of FCOA, provided you
participate in such offering, but the amount of principal and interest
outstanding under the Promissory Note as of the date of such offering which you
will be required to pay under this subparagraph (c) shall be limited to the
market value, on the date of such offering, of the securities held by you and
registered pursuant to such offering; or
(d) Your exercise of any stock options granted to you by FCOA,
but the amount of principal and interest outstanding under the Promissory Note
as of the date of such exercise which you will be required to pay under this
subparagraph (d) shall be limited to the fair value, on the date of such
exercise, of the common stock of FCOA ("Common Stock") into which such options
convert, which fair value shall equal the greater of (i) the purchase price of
shares of Common Stock in the immediately preceding sale of shares of Common
Stock by FCOA or (ii) if no such sale has occurred within twelve (12) months
after the date of such exercise, the fair value of shares of Common Stock as
reasonably determined by the board directors of FCOA in its sole discretion.
4. As collateral security for the full and prompt payment of the Loan
Amount, together with interest thereon, pursuant to paragraph 3 hereof, you
shall grant FCOA a mortgage, in form and substance deductible to FCOA, on each
of the Connecticut Home and the Illinois Home, and you shall execute such
Mortgages, Promissory Notes, UCC-1 Financing Statements and other instruments,
agreements and documents as FCOA shall deem necessary or advisable to give
effect to the provisions of this letter agreement and to perfect and protect
FCOA's security interests in the Connecticut Home and the Illinois Home.
Xx. Xxxxxxx Xxxxxxx
August 1, 1996
Page 3
Kindly indicate your acceptance of the terms and conditions set forth
herein by signing and dating the enclosed copy of this letter in the space
indicated below.
Thank you.
Sincerely,
FACTORY CARD OUTLET OF AMERICA LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman of the Board
ACCEPTED AND AGREED TO
as of this 1st day of August, 1996:
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
