First Amendment to Investor Rights Agreement by and among Party City Corporation, Jack Futterman, and Investors

Summary

This amendment updates the Investor Rights Agreement originally signed on August 16, 1999, between Party City Corporation, Jack Futterman, and several investors including Goldman Sachs and Tennenbaum & Co. The amendment clarifies that investors may transfer certain notes among themselves and allows them to purchase up to 1,500,000 additional shares of common stock. All other terms of the original agreement remain unchanged. The amendment is effective once signed by the company and a supermajority of investors and warrantholders.

EX-10.9 3 y49309ex10-9.txt FIRST AMENDMENT TO INVESTOR RIGHTS AGREEMENT 1 EXHIBIT 10.9 FIRST AMENDMENT TO INVESTOR RIGHTS AGREEMENT THIS FIRST AMENDMENT TO THE INVESTOR RIGHTS AGREEMENT (this "Amendment") is made and entered into as of October 11, 2000, by and among Party City Corporation, a Delaware corporation (the "Company"), Jack Futterman, and each of the other parties whose names appear on the signature pages hereto (such other parties, the "Investors"). RECITAL On August 16, 1999, the Company entered into an Investor Rights Agreement (the "IR Agreement") with Tennenbaum & Co., LLC, TCO/Party City, LLC, Goldman, Sachs & Co., Goldman Sachs Credit Partners, L.P., Enhanced Retail Funding, LLC, Richmond Associates, L.P. and Jack Futterman. The parties hereto now desire to amend the IR Agreement in the manner set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the IR Agreement. 1. AMENDMENT TO SECTION 5.1(a). Section 5.1(a) of the IR Agreement is hereby amended by inserting immediately after the phrase "of any securities of the Company" in clause (i) thereof, the following: "(provided that this clause (i) shall not be construed as limiting the right of any Investor to transfer any Notes (as such term is defined in the Purchase Agreement, and such term to include any new series of Notes issued by the Company to one or more Investors subsequent to August 16, 1999) to any other Investor, and provided further, that from and after August 16, 1999, the Investors may purchase up to an aggregate of 1,500,000 additional shares of Common Stock)." 2. COUNTERPARTS. This Amendment may be executed in one or more counterparts, and signature pages may be delivered by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective upon its execution by the Company, a Supermajority in Interest of the Investors and a Supermajority in Interest of the Warrantholders. 3. FULL FORCE AND EFFECT. Except as expressly modified by this Amendment, all of the terms, covenants, agreements, conditions and other provisions of the IR Agreement shall remain in full force and effect in accordance with their respective terms. [Remainder of Page Intentionally Left Blank] 2 IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. PARTY CITY CORPORATION By: /s/ Thomas E. Larson ---------------------------------- Name: Thomas E. Larson Title: CFO /s/ Jack Futterman ---------------------------------- Jack Futterman INVESTORS: SPECIAL VALUE BOND FUND, LLC By: SVIM/MSM, LLC, its Managing Member By: TENNENBAUM & CO., LLC, its Managing Member By: /s/ Michael E. Tennenbaum ---------------------------------- Name: Michael E. Tennenbaum Title: Managing Member SPECIAL VALUE BOND FUND II, LLC By: SVIM/MSMII, LLC, its Managing Member By: TENNENBAUM & CO., LLC, its Managing Member By: /s/ Michael E. Tennenbaum ---------------------------------- Name: Michael E. Tennenbaum Title: Managing Member 3 SPECIAL VALUE INVESTMENT MANAGEMENT, LLC By: TENNENBAUM & CO., LLC, its Managing Member By: /s/ Michael E. Tennenbaum ---------------------------------- Name: Michael E. Tennenbaum Title: Managing Member GOLDMAN, SACHS & CO. By: /s/ Kevin Ulrich ---------------------------------- Name: Kevin Ulrich Title: Authorized Signatory GOLDMAN SACHS CREDIT PARTNERS, L.P. By: /s/ Kevin Ulrich ---------------------------------- Name: Kevin Ulrich Title: Authorized Signatory ENHANCED RETAIL FUNDING, LLC By: /s/ Allen R. Goldstein ---------------------------------- Name: Allen R. Goldstein Title: CFO and Assistant Vice President CLYDE STREET INVESTMENT, LLC By: /s/ Ralph D. Dillon -------------------------------------- Name: Ralph D. Dillon Title: Managing Member -3- 4 RICHMOND ASSOCIATES, L.P. By: MHM MANAGEMENT, INC., its General Partner By: /s/ John F. Clausen -------------------------------------- Name: John F. Clausen Title: Vice President -4-