FIRST AMENDMENT TO VENDOR FORBEARANCE
AND STANDSTILL AGREEMENT
------------------------
This FIRST AMENDMENT TO VENDOR FORBEARANCE AND STANDSTILL AGREEMENT (this
"Amendment") is entered into as of this 24th day of November, 1999, by and among
Party City Corporation (the "Company") and each vendor that has executed a
signature page hereto that has been accepted by the Company in accordance with
the terms set forth in Section 11(a) below (each, a "Vendor," and collectively,
the "Vendors").
RECITALS
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A. The Company and the Vendors are parties to a Vendor Forbearance and
Standstill Agreement dated August 16, 1999 (the "Agreement").
B. The Company has failed to make certain payments that were required to be
made on November 15, 1999 pursuant to the Agreement and certain Trade Notes that
were delivered to the Vendors pursuant to the Agreement.
C. The Company and the Vendors have agreed to amend the Agreement and the
Trade Notes, on the terms and conditions set forth herein.
AGREEMENT
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NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each of the Vendors,
intending to be bound, agree as follows:
1. Definitions.
a. Capitalized terms used in this Amendment and not otherwise
defined shall have the same meaning as in the Agreement.
b. The following terms used in this Amendment shall have the
following meanings:
"Amendment Effective Date" shall have the meaning given to
it in Section 7 below.
"Extended Payment Date" shall mean the earliest to occur of
(a) the Termination Date and (b) the Refinancing Date.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement between and among the Bank Group, certain
of the Vendors, the Vendor Agent and the other parties named
therein dated as of July 1, 1999.
"Interest Claim" shall mean, for any Vendor, the Vendor's
claim for any interest accrued and unpaid on each Vendor's Trade
Note.
"Investors" shall have the same meaning as in the
Intercreditor Agreement.
"Net Vendor Claim" shall mean, for each Vendor, that portion
of such Vendor's Vendor Claim that exceeds the principal amount
of such Vendor's Trade Note as of the Amendment Effective Date,
minus any rebates or offsets to which the Company is entitled.
The Net Vendor Claim shall not include the Vendor's Interest
Claim.
"Refinancing" shall mean any transaction pursuant to which
the Company refinances the Bank Debt.
"Refinancing Date" shall mean the effective date of any
Refinancing.
"Remaining Principal" shall mean, for any Vendor, the
Vendor's claim for that portion of each Vendor's Trade Note that
is payable pursuant to Section 2(a)(ii) hereof.
"Seasonal Purchases" shall have the same meaning as in the
Seasonal Vendor Security Agreement.
"Seasonal Trade Credit" shall have the same meaning as in
the Seasonal Vendor Security Agreement.
"Vendor Agent" shall mean Xxxx Associates, Inc., in its
capacity as agent under the Intercreditor Agreement.
c. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Amendment unless
otherwise specifically provided. Any of the terms defined in Section
1(b) may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference.
2. Amendments to Repayment Terms of Trade Notes; Deferral of Additional
Amount.
a. Effective as of the Amendment Effective Date, each of the
Vendors agrees that its Trade Note shall be deemed to have been
amended to incorporate the following repayment terms:
(i) Fifty percent (50%) of the principal amount of the Trade
Note shall be due and payable on November 24, 1999;
(ii) The remaining principal balance of the Trade Note shall
be due and payable on the Extended Payment Date; and
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(iii) The remaining balance of the Trade Note, consisting of
all accrued interest (including interest accrued through November
24, 1999 at the rate of 10% per annum on the amount paid pursuant
to subsection 2(a)(i)) shall be due and payable on the
Termination Date.
b. The principal balance of the Trade Note remaining outstanding
as reduced by the payments made in accordance with Section 2(a)(i)
shall bear interest commencing on November 15, 1999, at the rate of
14% per annum until paid in full; provided, however, that in the event
the Company pays the outstanding balance of the Trade Note on or
before the Extended Payment Date, the Vendors agree to waive their
right to receive interest in excess of 10% per annum on the
outstanding balance of the Trade Note.
c. The Additional Amount shall be payable on the Extended Payment
Date.
3. Conditional Waiver of Events of Default; Reservations of Rights.
a. Provided that the Amendment Effective Date shall have occurred
within the time period provided in Section 7, each Vendor hereby
waives any Event of Default that occurred as a result of (i) the
Company having failed to make the payments on the Trade Note and the
payments of the Additional Amount that were previously required to
have been made by November 15, 1999, or (ii) the Company having
breached Section 12(l) of the Agreement prior to October 31, 1999.
b. Except as expressly provided herein, the Agreement and the
Trade Notes shall remain in full force and effect and nothing
contained herein shall affect any Vendor's rights arising (i) under
the Seasonal Vendor Security Agreement, (ii) with respect to any
extension of credit made after the Effective Date, (iii) with respect
to any payments received by the Vendor from the Company prior to the
Amendment Effective Date, or (iv) with respect to its Net Vendor
Claim.
c. Except as provided in Section 4 or as otherwise agreed between
the Company and any Vendor, no Vendor shall have any obligation to
sell the Company Merchandise after the Amendment Effective Date. To
the extent that any Vendor agrees to sell the Company Merchandise
after the Amendment Effective Date, such Vendor agrees that (i) it
will apply any payment received from the Company after the Amendment
Effective Date and prior to the Termination Date (other than payments
made (x) on the Trade Note pursuant to Section 2(a), or (y) on account
of Seasonal Purchases) first to the oldest portion of its Net Vendor
Claim and (ii) for Merchandise purchased in connection with the
Seasonal Vendor Security Agreement, it will use commercially
reasonable efforts to complete shipping of such Merchandise within (5)
business days after such Vendor's receipt of appropriate notice and a
payment equal to seventy percent (70%) of the purchase price for such
Merchandise. Any credit extended by any Vendor after the Amendment
Effective Date pursuant to clause (i) of the preceding sentence shall
be referred to herein as "Discretionary Credit." For all Merchandise
purchased on credit,
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each Vendor agrees to use its reasonable best efforts to ship
Merchandise in accordance with customary business practices.
d. Subsection 2(f) of the Agreement is deleted in its entirety.
4. Vendor's Agreement to Extend Additional Trade Credit.
a. Each Vendor agrees to extend additional trade credit ("Future
Trade Credit") to the Company in an amount equal to the amount of its
Net Vendor Claim as of the Amendment Effective Date for purchases of
new Merchandise through December 31, 2000 with terms of 105 days for
purchase orders placed for immediate delivery prior to July 1, 2000,
and terms of 90 days thereafter, subject to the following conditions:
(i) All payments due on such Vendor's Trade Note shall have
been timely made;
(ii) The Company shall not have breached any of its
obligations to such Vendor with respect to any Seasonal Trade
Credit, Discretionary Credit, or Future Trade Credit owed to such
Vendor.
(iii) No event shall have occurred that would constitute an
Event of Default under Section 10(h) of the Agreement if such
event were to have occurred prior to the Termination Date; and
(iv) The aggregate amount of the Company's indebtedness to
the Vendor (exclusive of Seasonal Trade Credit, but including any
Future Trade Credit, Discretionary Credit, and any Existing Trade
Debt owed to the Vendor) shall not exceed (x) prior to the
Extended Payment Date, the aggregate amount of the Vendor's Net
Vendor Claim and Remaining Principal, and (y) after the Extended
Payment Date, the amount of the Vendor's Net Vendor Claim.
(v) Nothing in the Agreement or this Amendment, and no
course of dealing established for so long as the Agreement or
this Amendment are in effect, shall obligate any Vendor to extend
credit to the Company after December 31, 2000.
5. Conditions Precedent to Each Vendor's Obligations. The Amendment
Effective Date shall not occur and this Agreement shall not become effective
until satisfaction or express waiver of the following conditions:
a. The Company shall have timely made the payment in good funds
to each Vendor as provided in Section 2(a)(i).
b. The Company, the Bank Group, the Vendors, and the Investors
shall have entered into a consent with respect to the Intercreditor
Agreement and the Seasonal Vendor Security Agreement to (i)
acknowledge and approve the terms of this
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Amendment, (ii) address any deferred or disputed portions of
outstanding Seasonal Trade Credit, and (iii) provide for the
continuation of the protections for Seasonal Trade Credit that are
provided for in the Seasonal Vendor Security Agreement and the
Intercreditor Agreement.
c. The Company shall have provided a retainer of at least $25,000
to the counsel for the Vendor Agent.
d. After giving effect to the transactions contemplated by this
Agreement, no Event of Default shall exist under the Agreement.
e. The Company shall have accepted the signature page of each
Vendor that is a member of the Vendor Group as set forth in Section
11(a).
6. Conditions Precedent to the Company's Obligations. The Amendment
Effective Date shall not occur and this Agreement shall not become effective
until satisfaction or express waiver of the following conditions:
a. Each of the Vendors that signed the Agreement shall have
executed and delivered an original counterpart of this Agreement to
the Company.
7. The Amendment Effective Date. This Amendment shall become effective on
the date (the "Amendment Effective Date") on which all of the conditions set
forth in Sections 5 and 6 have been satisfied or waived by the party(ies) for
whose benefit they are intended; provided that, if the Amendment Effective Date
does not occur on or prior to November 24, 1999 (as such date may be extended in
writing by the mutual agreement of the parties hereto), this Amendment shall be
deemed null and void and neither the Company nor any of the Vendors shall be
deemed to be obligated hereunder.
8. Representations and Warranties of the Company. As a material inducement
to the Vendors to enter into the transactions contemplated hereby, the Company
represents and warrants to each of the Vendors as follows:
a. This Amendment has been duly authorized, executed and
delivered by the Company, is a legally valid and binding agreement and
is enforceable against the Company in accordance with its terms,
except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
b. The execution, delivery and performance by the Company of this
Amendment do not and will not (i) violate any provisions of any law or
any governmental rule or regulation applicable to the Company, the
Company's governing documents or any order, judgment or decree of any
court or other agency of government binding on the Company, (ii)
conflict with, result in a material breach of or constitute (with due
notice or lapse of time or both) a default under any material
agreement or contract of the Company, or (iii) result in or require
the creation or imposition of any lien upon any of the properties or
assets of the Company except as expressly contemplated hereby.
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9. Representations and Warranties of the Vendors. As a material inducement
to the Company to enter into the transactions contemplated hereby, each of the
Vendors severally represents and warrants to the Company as follows:
a. This Amendment has been duly authorized, executed and
delivered by such Vendor, is a legally valid and binding agreement and
is enforceable against such Vendor in accordance with its terms,
except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
b. The execution, delivery and performance by such Vendor of this
Amendment do not and will not (i) violate any provisions of any law or
any governmental rule or regulation applicable to such Vendor, such
Vendor's governing documents or any order, judgment or decree of any
court or other agency of government binding on such Vendor, or (ii)
conflict with, result in a material breach of or constitute (with due
notice or lapse of time or both) a default under any material
agreement or contract of such Vendor.
10. Covenants of the Company. The Company covenants and agrees as follows:
a. The Company shall simultaneously provide Xxxxxx & Xxxxxxx and
E&Y Restructuring LLC ("EYR"), the Vendor Group's advisors, with
periodic reports on efforts to effectuate a Refinancing.
b. The Company shall provide EYR with access on a reasonable,
confidential basis to information that the Company makes available to
any prospective sources of a Refinancing.
c. The Company shall provide notice to each Vendor of the
occurrence of an Event of Default as to any Vendor or Vendors promptly
after becoming aware thereof.
11. Miscellaneous Provisions.
a. This Amendment shall not become binding as to any Vendor
unless and until (i) such Vendor has completed, executed and delivered
to the Company a signature page to this Agreement and (ii) the Company
has manifested its acceptance of such signature page by executing in
the space provided thereon and returning an original executed
counterpart thereof to such Vendor. Simultaneously with returning an
accepted signature page to any Vendor, the Company shall forward a
copy of such signature page to EYR and Xxxxxx & Xxxxxxx at the
addresses set forth in the Agreement, provided that the name and
address for EYR is hereby amended as follows:
E & Y Restructuring LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Upon request from any Vendor, the Company shall provide such Vendor
with a list of all Vendors who are party hereto; provided, however,
that the Company will keep confidential the amount of each individual
Vendor Claim.
b. The Company hereby acknowledges that it has been represented
by counsel of its choice in negotiating, executing and delivering this
Amendment and the Trade Notes. The Vendors acknowledge that Xxxxxx &
Xxxxxxx has acted as counsel and EYR has acted as financial advisor to
the Vendor Group but neither Xxxxxx & Xxxxxxx nor EYR has represented
any individual Vendor in connection with the negotiation, execution
and delivery of this Amendment. Each Vendor acknowledges that it has
had the opportunity to obtain independent legal advice from counsel of
its choice.
c. All references in the Agreement to Ernst & Young shall
hereafter be deemed to be references to EYR.
d. The second sentence of Section 12.b of the Agreement is
deleted in its entirety and the following sentence is inserted in lieu
thereof: "The Company further agrees to pay on demand all reasonable
fees and expenses of Xxxxxx & Xxxxxxx, counsel to the Vendor Group,
and EYR, financial advisor to the Vendor Group, from the Effective
Date through the Termination Date."
e. This Amendment may be executed in any number of counterparts
with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be
necessary to produce one such counterpart. Delivery of an executed
signature page of this Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart thereof.
f. Time is of the essence of this Amendment and all of the terms,
provisions, covenants and conditions hereof.
g. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November ___, 1999 AMSCAN INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 22, 1999 BUNZL DISTRIBUTION USA, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: EVP
Notice Address:
000 Xxxxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 19, 1999 CREATIVE EXPRESSIONS GROUP, INC.
By: /s/ Xxx X. XxXxxx
------------------------------
Name: Xxx X. XxXxxx
Title: VP and GM
Notice Address:
Creative Expressions Group, Inc.
0000 Xxxxxxxxx Xxxxxxx #000
Xxxxxxxxxxxx, XX 00000
Attn: Xxx X. XxXxxx
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 19, 1999 EASTER UNLIMITED, INC. AND
FUNWORLD DIVISION OF EASTER
UNLIMITED, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
Notice Address:
00 Xxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 19, 1999 MARYLAND PLASTICS, INC.
By: /s/ Xxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxx X. Xxxxx, Xx.
Title: Controller
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 22, 1999 PLASTICS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: President and General Manager
Notice Address:
000 Xxxxxx Xxxx
Xxxxx, XX 00000
Attn: Controller
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 19, 1999 RUBIE'S COSTUME CO., INC.
By: /s/ Xxxx X. Beige
------------------------------
Name: Xxxx X. Beige
Title: President
Notice Address:
Xxx Xxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxx X. Beige
Facsimile: (000) 000-0000 or
(000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 22, 1999 THE BEISTLE COMPANY
By: /s/ Xxxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President
Notice Address:
0 Xxxxxxx Xxxxx, XX Xxx 00
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxx
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 22, 1999 TURN UP THE MUSIC, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Exec. VP-COO
Notice Address:
000 Xxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November 22, 1999 U.S. BALLOON MFG. CO., INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Pres.
Notice Address:
000 00 Xx.
Xxxxx, XX 00000
Attn: X. Xxxxxx
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Vendor Forbearance and Standstill Agreement to be duly executed and delivered by
their proper and duly authorized officers.
Date: November ___, 1999 UNIQUE INDUSTRIES, INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: X. Xxxxx
Title: Chief Executive Officer
Notice Address:
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn:
Facsimile: (000) 000-0000
Agreed to and Accepted.
Date: November 29, 1999
PARTY CITY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
