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CUSIP No. 702145103 Page 1 of 30
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
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
702145103
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(CUSIP Number)
Steven Mandell, 400 Commons Way, Rockaway, New Jersey 07866 (973) 983-0888
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 8, 1999
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(Date of Event which Requires Filing of this Statement)
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 Rule 13d-1(b)(3) or (4), check the following box. ?
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a person's initial
filing on this form with respect to the subject class of securities, and for any
subsequent amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 702145103 Page 2 of 30
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1. Name of Reporting Person Steven Mandell
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2. Check the Appropriate Box if a Member of a Group*
(a) [X]
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(b) [ ]
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3. SEC Use Only
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4. Source of Funds*
Not Applicable
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
Not applicable
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6. Citizenship or Place of Organization
U.S. Citizen
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Number of 7. Sole Voting Power
Shares 2,457,500**
Beneficially
by Owned by 8. Shared Voting Power
Each None
Reporting
Persons With 9. Sole Dispositive Power
2,457,500**
10. Shared Dispositive Power
None
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,457,500**
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
Not applicable
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13. Percent of Class Represented by Amount in Row (11)
19.7%
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14. Type of Reporting Person*
IN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
** This figure includes 750,000 shares owned by Mandell Family
Limited Partnership, a limited partnership organized under the
laws of New Jersey, wholly owned by Mr. Mandell. See also the
disclosure provided in response to Item 5 hereof. 1,000,000
shares owned individually by Mr. Mandell are subject to an Option
Agreement described in Item 4 and attached hereto as Exhibit I.
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CUSIP No. 702145103 Page 3 of 30
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1. Name of Reporting Person Mandell Family Limited Partnership
I.R.S Identification Nos. of above persons (entities only)
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2. Check the Appropriate Box if a Member of a Group*
(a) [X]
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(b) [ ]
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3. SEC Use Only
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4. Source of Funds*
Not Applicable
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
Not applicable
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6. Citizenship or Place of Organization
New Jersey
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Number of 7. Sole Voting Power
Shares 750,000
Beneficially
by Owned by 8. Shared Voting Power
Each None
Reporting
Persons With 9. Sole Dispositive Power
750,000
10. Shared Dispositive Power
None
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
750,000
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
Not applicable
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13. Percent of Class Represented by Amount in Row (11)
6%
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14. Type of Reporting Person*
PN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 702145103 Page 4 of 30
Item 1. Security and Issuer.
Item I of the Schedule 13D (as defined below) is hereby
deleted in its entirety and the following is inserted in lieu thereof:
"This Amendment No. 2 amends and supplements the Schedule 13D filed by Mr.
Steven Mandell ("Mr. Mandell") and the Mandell Family Limited Partnership, a New
Jersey limited partnership (the "Partnership", together with Mandell, the
"Reporting Persons") with the Securities and Exchange Commission on March 10,
1997 as amended by Amendment No. 1 thereto (as amended, the "Schedule 13D")
relating to the common stock, par value $0.01 per share ("Common Stock") of
Party City Corporation (the "Issuer"), having its principal offices at 400
Commons Way, Rockaway, New Jersey 07866."
The Reporting Persons have entered into a Joint Filing Agreement, dated
June 11, 1999, attached hereto as Schedule I."
Item 2. Identity and Background
Paragraph 1(c) of Item 2 of the Schedule 13D is hereby amended and restated
to read as follows:
"(c) Mr. Mandell is a businessman and currently serves as a consultant
to and a member of the Board of Directors of the Issuer."
Item 3. Source and Amount of Funds and Other Consideration.
Item 3 of the Schedule 13D is hereby deleted in its entirety and replaced
by the following:
"1. Mr. Mandell
Of the 2,457,500 shares of the Issuer reported as beneficially owned
by Mr. Mandell hereunder, 1,707,500 shares are owned individually by Mr. Mandell
and 750,000 are owned by the Partnership. All of these shares of Common Stock
beneficially owned by Mr. Mandell were either (i) purchased by Mr. Mandell with
personal funds or (ii) issued to Mr. Mandell by the Issuer in January of 1998 as
part of a stock dividend. As described in more detail in Item 4, Mr. Mandell has
placed 1,000,000 of the shares individually owned by himself under an Option (as
defined in Item 4) in favor of Mr. Jack Futterman in connection with Mr.
Futterman's assumption of the position of Chief Executive Officer of the Issuer.
2. The Partnership
The 750,000 shares of Common Stock of the Issuer owned by the Partnership
were received from Mr. Mandell."
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended by inserting a new paragraph 3
immediately after paragraph 2 thereof which shall read in full as follows:
"On June 8, 1999, Mr. Mandell entered into an option agreement (the "Option
Agreement") pursuant to which he granted Mr. Jack Futterman an option (the
"Option") to purchase up to 1,000,000 of his individually owned shares of Common
Stock (the "Option Shares") at an exercise price of $3.00 per share. The Option
is exercisable at any time within a five year period beginning on June 8, 1999
and ending on the fifth anniversary
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CUSIP No. 702145103 Page 5 of 30
thereof. Mr. Mandell pledged the Option Shares to Mr. Futterman as security for
the Option pursuant to an Stock Pledge Agreement dated June 8, 1999 between Mr.
Mandell and Mr. Futterman (the "Stock Pledge"). Prior to any exercise of the
Option or a related default under the Stock Pledge, Mr. Mandell shall maintain
the sole power to vote the Option Shares. Upon Mr. Futterman's exercise of the
option, Mr. Futterman will obtain sole voting and dispositive control over the
Option Shares purchased pursuant to any such exercise.
In connection with entering into the Option Agreement and the Stock Pledge,
Mr. Mandell has resigned from his previous position as Chief Executive Officer
and Chairman of the Board of Directors and Mr. Futterman has been appointed to
those positions."
Item 5. Interest In Securities of the Issuer.
Item 5 of the Schedule 13D is hereby deleted in its entirety and replaced
by the following:
"(a) The table below sets forth the aggregate number of shares and
percentage of Common Stock owned by each of the Reporting Persons. The
information herein pertaining to the Issuer's issued and outstanding Common
Stock is as of June 8, 1999, at which time there were issued and outstanding
12,455,538 shares of the Issuer's Common Stock.
Aggregate Amount of
Reporting Person Title of Class Beneficial Ownership
- ---------------- -------------- --------------------
Mr. Mandell Common Stock 2,457,500(1)
The Partnership Common Stock 750,000
(1) This figure consists of (i) 1,707,500 shares held by Mr. Mandell
individually and (ii) 750,000 shares held by the Partnership of
which Mr. Mandell is the sole General Partner. 1,000,000 of these
shares individually beneficially owned by Mr. Mandell are subject
to the Option and are also pledged, subject to the Stock Pledge,
to Mr. Futterman to secure the Option.
(b) (i) Sole Voting Power. Mr. Mandell has sole voting power with
respect to 2,457,500 shares of Common Stock.
(ii) Shared Voting Power: 0
(iii) Sole Dispositive Power. Mr. Mandell has sole dispositive
power with respect to 2,457,500 shares of Common Stock.
(iv) Shared Dispositive Power: 0
(c) Except as disclosed in Item 4, no Reporting Person owns any shares
of Common Stock or has effected any transaction in shares of Common Stock during
the preceding 60 days."
Item 7. Material to Be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"Exhibit I Option Agreement, dated June 8, 1999, between Mr. Mandell and Jack
Futterman.
Exhibit II Stock Pledge Agreement, dated as of June 8, 1999, between Mr.
Mandell and Jack Futterman.
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CUSIP No. 702145103 Page 6 of 30
Signature
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.
/s/ Steven Mandell
------------------
Name: Steven Mandell
General Partner
Dated: June 11, 1999
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CUSIP No. 702145103 Page 7 of 30
Signature
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.
MANDELL FAMILY LIMITED PARTNERSHIP
By: /s/ Steven Mandell
--------------------------
Name: Steven Mandell
General Partner
Dated: June 11, 1999
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CUSIP No. 702145103 Page 8 of 30
Schedule 1
JOINT FILING AGREEMENT
The undersigned parties hereby agree that the Schedule 13D filed
herewith (and any amendments thereto) relating to the Stock of Party City
Corporation is being filed jointly with the Securities and Exchange Commission
pursuant to Rule 13d-1(k) on behalf of each such person.
Dated: June 11, 1999
/s/ Steven Mandell
------------------
Steven Mandell
MANDELL FAMILY LIMITED PARTNERSHIP
By: /s/ Steven Mandell
----------------------
Name: Steven Mandell
Its: Sole General Partner
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CUSIP No. 702145103 Page 9 of 30
List of Exhibits:
Exhibit I Option Agreement, dated June 8, 1999, between Steven Mandell and
Jack Futterman.
Exhibit II Stock Pledge Agreement, dated as of June 8, 1999, between Steven
Mandell and Jack Futterman.
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CUSIP No. 702145103 Page 10 of 30
Exhibit 1
OPTION AGREEMENT
AGREEMENT, dated June 8, 1999, between Steven Mandell, having an
address at P.O. Box 85, New Vernon, New Jersey 07976 ("Seller") and Jack
Futterman, residing at 16315 Vintage Oaks Lane, Delray Beach, Florida 33484
("Purchaser").
WHEREAS, the Seller is presently the Chief Executive Officer of Party
City Corporation, a Delaware corporation (the "Company"), and is the beneficial
owner of 2,457,500 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), and the record owner of at least 1,000,000 of such
shares; and
WHEREAS, the Purchaser is becoming the Chief Executive Officer of the
Company on the date hereof; and
WHEREAS, the Seller wishes to grant to Purchaser an option to purchase
certain of his shares of Common Stock on the terms set forth herein, as an
inducement for Purchaser to take on the responsibility of Chief Executive
Officer of the Company; and
WHEREAS, Seller's inducement to grant this option is that by virtue of
Purchaser's new position as Chief Executive Officer, the value of Sellers's
shares that are not subject to the option may increase in value.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree as follows:
I. OPTION.
1.01. Grant of the Option; Term. Subject to the terms of this
Agreement, in reliance on the representations, warranties and agreements of the
Purchaser contained herein, the Seller hereby grants to the Purchaser an option
to purchase, in whole or in part, 1,000,000 shares of Common Stock at any time
during the period commencing on the date hereof and ending on the fifth
anniversary of the date hereof, at the exercise price per share of $3.00 (the
"Purchase Price"). The option shall be evidenced by one or more option
certificates substantially in the form attached hereto as Exhibit A (the
"Option").
1.02. Exercise of the Option and Purchase of the Shares. The Option
shall be exercised upon receipt by the Seller of a duly executed and completed
facsimile of the form for such purpose attached hereto as Exhibit A, accompanied
by a bank or certified check issued by any domestic office of a bank organized
under the laws of the United States of America or any state thereof, which has
net assets of not less than $100 million, in the amount of the Purchase Price
for the number of shares being purchased in accordance with the terms set forth
below. Notwithstanding the foregoing the Option may not be exercised at any time
for less than 100,000 Option Shares (as hereinafter defined and as the same may
be adjusted under Section 1.04 hereof), and the Option shall not be exercised
more than six times over the course of the five-year term, unless the same shall
be waived in writing by Seller.
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CUSIP No. 702145103 Page 11 of 30
1.03. Delivery by the Seller of the Option Shares. As promptly as
practicable after any exercise of the Option, the Seller shall do all things
necessary or appropriate and execute and deliver all documents and instruments
necessary or appropriate, including without limitation, duly executed stock
powers, to cause certificate(s) registered in the name of the Purchaser to be
delivered to Purchaser, or his permitted transferees, for the shares of Common
Stock so purchased.
1.04. Adjustment. The price and number of shares subject to the Option
shall be appropriately adjusted in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares or similar
change in the Company's shares. Upon the subdivision or combination of the
outstanding shares of Common Stock or the issuance of a stock dividend, payable
in shares, to holders of Common Stock, the Purchase Price shall be adjusted by
multiplying the Purchase Price by a fraction, the numerator of which is equal to
the number of issued and outstanding shares of Common Stock immediately prior to
such subdivision, combination or stock dividend, and the denominator of which is
equal to the number of issued and outstanding shares of Common Stock immediately
following such subdivision, combination or stock dividend. If the Company shall
be reorganized, consolidated, or merged with another corporation, or if all or
substantially all of the assets of the Company shall be sold or exchanged, or if
there is a recapitalization, stock split, stock dividend, combination of shares
or similar change in the Company's shares, the Purchaser shall at the time of
issuance of the stock under such corporate event be entitled to receive, upon
the exercise of his Option, the same number and kind of shares of stock or the
same amount of property, cash or securities as the Purchaser would have been
entitled to receive upon the occurrence of any such corporate event as if the
Purchaser had been, immediately prior to such event, the holder of the number of
shares covered by his Option so exercised.
1.05. Pledge of Shares. The Option evidenced hereby shall be secured by
Seller's pledge of 1,000,000 shares of Common Stock to Purchaser, upon the terms
and subject to the conditions contained in a Stock Pledge Agreement (the "Stock
Pledge Agreement") mutually agreed to by the parties. As and when the option is
exercised, the Option Shares, deliverable upon such exercise shall be released
from the pledge.
II. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Seller as follows:
2.01. Authority. The Purchaser has the power and authority to enter
into and perform his obligations under this Agreement and the Option and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by the Purchaser.
2.02. Valid and Binding Obligations. This Agreement and the Option
constitute the valid and binding obligations of the Purchaser enforceable
against the Purchaser in accordance with their respective terms, except that the
remedy of specific performance and other forms of
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CUSIP No. 702145103 Page 12 of 30
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.03. Investment Intent. The Purchaser represents, warrants and agrees
that he is acquiring the Option and upon the exercise of the Option, he will
acquire the shares of common stock issued pursuant thereto (the "Option Shares")
for his own account and not with a view to the sale or distribution thereof
other than in accordance with the Securities Act of 1933, as amended, (the
"Securities Act") or pursuant to this Agreement and that there will be placed on
the certificate or certificates representing the Option, and/or the Option
Shares or any certificates delivered in substitution for any of the foregoing, a
legend stating in substance:
"This option and the securities issuable
upon exercise of this option are
restricted securities, as defined in Rule
144 promulgated under the Securities Act
of 1933, as amended, and have not been
registered under such Act. Accordingly, in
the absence of such registration, these
securities may only be sold or transferred
pursuant to that rule or under another
exemption from registration under said
Act."
2.04. No Violation. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby will not violate or conflict with the terms, conditions or provisions of
any agreement or obligation or any order, arbitration award, judgment or decree
or (to the knowledge of Purchaser) any law, rule or regulation to which the
Purchaser is subject, or by which his assets may be bound, which would prohibit
the Purchaser from consummating the transactions contemplated hereby.
2.05. No Consents. No approval, consent, order, authorization of or
exemption by any governmental authority or any person not a party to this
Agreement is required by or with respect to the Purchaser in connection with the
execution, delivery and performance of this Agreement by the Purchaser or the
consummation by the Purchaser of the transactions contemplated hereby.
2.06. No Brokers or Finders. The Purchaser has not engaged or agreed to
pay any commission, fee or like remuneration to any finder, broker or agent in
connection with this Agreement, or the performance by the parties of any of
their obligations under this Agreement which could result in any obligation of
the Seller or the Company.
2.07. No Reliance on Seller. Purchaser represents and warrants that he
has made his own independent evaluation of the Company before entering into this
Agreement and has not and is not relying on any representations or warranties
made by the Seller relating to the Company. In no event shall Purchaser be
entitled to assert any claim against Seller, except for any breach by Seller of
any of his express representations and warranties contained in this Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents and warrants to the Purchaser as follows:
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CUSIP No. 702145103 Page 13 of 30
3.01. Authority of the Seller. The Seller has the power and authority
to enter into and perform his obligations under this Agreement and the Option
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Seller.
3.02. Option Valid and Binding Obligations. This Agreement and the
Option constitute the valid and binding obligations of the Seller enforceable
against the Seller in accordance with their respective terms, except that the
remedy of specific performance and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.03. Option Shares. The Option Shares owned by the Seller are fully
paid and non-assessable to the Seller, and are free and clear of any lien,
encumbrance or claim whatsoever, other than those created in favor of Purchaser
pursuant to the Stock Pledge Agreement. There is no outstanding agreement,
option, warrant or right to purchase or otherwise acquire by or from the Seller
any shares or securities of the Company or any calls thereon or commitments
relating thereto.
3.04. No Violation. The execution and delivery of this Agreement and
the Option by the Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby will not violate the terms, conditions or
provisions of any agreement or obligation or any order, arbitration award,
judgment or decree or (to the knowledge of the Seller) any law, rule or
regulation to which the Seller is subject, or by which any of his assets may be
bound, which would prohibit the Seller from consummating the transactions
contemplated hereby and thereby.
3.05. No Consents. No approval, consent, order, authorization of or
exemption by any governmental authority or any person not a party to this
Agreement or the Option is required by or with respect to the Seller in
connection with the execution, delivery and performance of this Agreement or the
Option by the Seller or the consummation by the Seller of the transactions
contemplated hereby or thereby except for filings required under Federal
securities laws or state securities or "blue sky" laws which have been made or
which, according to such applicable law, may be made following the date hereof
and which the Seller has committed to make within the prescribed time period.
3.06. Solvency. As of the date hereof and after giving effect to the
transactions contemplated by this Agreement and the Seller is able to pay his
debts as they become due and the value of the Seller's assets valued at fair
market value exceeds his liabilities excluding any contingent liabilities on
account of pending shareholder suits, copies of which have been supplied to
Seller.
3.07. No Brokers or Finders. The Seller has not engaged or agreed to
pay any commission, fee or like remuneration to any finder, broker or agent in
connection with this Agreement or the Option or the performance by the parties
of any of their obligations under this Agreement or the Option which could
result in any obligation of the Purchaser.
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CUSIP No. 702145103 Page 14 of 30
3.08. Seller's Consideration. The Seller acknowledges that he has made
the business decision to enter into this Option for the consideration set forth
in the recitals.
IV. COVENANTS OF THE PARTIES.
4.01. Restrictions on Transferability.(a)The Purchaser covenants and
agrees that so long as the Purchaser is the record or beneficial owner of the
Option, any Option Shares or any other securities of the Company which are
entitled to vote or which are convertible into securities of the Company which
are entitled to vote ("Voting Securities") (collectively the Option, upon
exercise, the Option Shares and Voting Securities are referred to as the
"Securities"), the Purchaser shall not, directly or indirectly (by operation of
law or otherwise) sell, assign, mortgage, hypothecate, transfer, pledge, create
a security interest in or lien upon, encumber, give or otherwise dispose of any
of such Securities (a "Transfer") except:
(i) Purchaser's Transfer of all or a portion of the Securities
following Purchaser's death by will or intestacy to Purchaser's legal
representative, heir or legatee;
(ii) Purchaser's Transfer of any or all of the Securities
owned by Purchaser as a gift or gifts during Purchaser's lifetime to Purchaser's
spouse, children (including stepchildren), grandchildren or a trust or other
legal entity for the benefit of Purchaser or any of the foregoing;
(iii) sales of Securities pursuant to a distribution to the
public, registered under the Securities Act;
(iv) sales of Securities pursuant to Rule 144 of the General
Rules and Regulations under the Securities Act;
(v) sales of any Securities to the Company or the Seller or to
any person, corporation, entity or group designated by the Seller;
(vi) sales of Securities pursuant to a private placement in
accordance with the provisions of Regulation D under the Securities Act in which
each of the proposed purchasers agrees in advance in writing to be bound by the
provisions of this Agreement as if such person were the Purchaser; or
(vii) sales of Securities pursuant to an exemption from
registration under the Securities Act.
The Purchaser shall notify the Seller, for his records, of all
Transfers of all or a portion of the Option as and when the Transfers are
effected. Promptly upon Purchaser's written request, Seller shall execute one or
more option certificates in the name of one or more of Purchaser's permitted
transferees, in such amounts as shall be requested by Purchaser (so long as in
the aggregate all of the Option Shares represented by all outstanding option
certificates plus all shares purchased upon exercise of option certificates do
not exceed 1,000,000 Option Shares, as the same may be adjusted under the terms
of this Agreement).
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CUSIP No. 702145103 Page 15 of 30
4.02. Transferee's Rights. Any transferee of any of Purchaser's rights
in the Option or this Agreement shall be deemed to have agreed to be bound by
and be subject to all of the provisions of this Agreement (including but not
limited to Section 2.07).
V. INDEMNITY.
5.01. Indemnification by Seller. Seller shall indemnify Purchaser, his
successors and assigns and permitted transferees and hold Purchaser and the
foregoing named persons harmless from any charges, claims, damages, settlements,
costs, judgments, decrees, expenses (including reasonable counsel fees and
expenses), penalties and liabilities of any kind or nature whatsoever which may
be sustained or suffered by or secured against Purchaser and/or any of the
foregoing named persons, arising out of or as a result of any breach by Seller
of any of his covenants, agreements, representations or warranties under any of
the provisions of this Agreement.
5.02. Indemnification by Purchaser. Purchaser shall indemnify Seller,
his successors and assigns, and hold Seller and the foregoing named persons
harmless from any charges, claims, damages, settlements, costs, judgments,
decrees, expenses (including reasonable counsel fees and expenses), penalties
and liabilities of any kind or nature whatsoever which may be sustained or
suffered by or secured against Seller and/or any of the foregoing named persons,
arising out of or as a result of any breach by Purchaser of any of his
covenants, agreements, representations or warranties under any of the provisions
of this Agreement.
VI. MISCELLANEOUS.
6.01. Assignment. This Agreement and the Option granted hereby is
assignable, in whole or in part, by the Purchaser to the permitted transferees
only to the extent permitted in Section 4.01(a).
6.02. Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of, and shall be
enforceable by and against the respective heirs, devisees, legal
representatives, successors, permitted assigns and other permitted transferees
of the parties hereto, including without limitation, the Stock Pledge Agreement.
6.03. Survival of Representations. All representations, warranties and
agreements made by the Seller and Purchaser in this Agreement shall survive the
exercise of the Option.
6.04. Further Assurances. The parties hereto will execute and deliver
any and all documents and will take any and all actions in addition to those
provided for herein that may be appropriate or necessary to effectuate the
provisions of this Agreement, whether at or after the Closing.
6.05. Entire Agreement; Amendments. This Agreement and the other
agreements delivered simultaneously herewith, including, without limitation, the
Stock Pledge Agreement, contain the entire understanding of the parties with
respect to its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those
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CUSIP No. 702145103 Page 16 of 30
expressly set forth herein. This Agreement may be amended only by a written
instrument duly executed by the parties or their respective successors or
assigns.
6.06. Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.07. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given on the date of delivery, if by personal
delivery, or on the next day if delivered by overnight mail by a nationally
recognized courier service, or on the third business day after mailing if sent
by mail (registered or certified mail, postage prepaid, return receipt
requested) to the respective parties as follows:
to the Seller:
Steven Mandell
P.O. Box 85
New Vernon, New Jersey 07976
With a copy to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Stuart Hirshfield, Esq.
If to the Purchaser:
Jack Futterman
16315 Vintage Oaks Lane
Delray Beach, FL 33484
With a copy to
Prior to 7/4/99 After 7/4/99
Wolf, Block, Schorr & Solis-Cohen LLP Wolf, Block, Schorr & Solis-Cohen LLP
12th Floor, Packard Building 1650 Arch Street
Philadelphia, PA 19102 Philadelphia, PA 19103
Attention: Matthew H. Kamens, Esq. Attention: Matthew H. Kamens, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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CUSIP No. 702145103 Page 17 of 30
6.08. Arbitration. Any dispute or controversy arising out of or
relating to this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, including without
limitation, the Stock Pledge Agreement, or any breach of this Agreement or any
such document or instrument shall be settled by arbitration to be held in Essex
County in New Jersey in accordance with the rules then in effect of the American
Arbitration Association or any successor thereto. The arbitrator may grant
injunction or other relief in such dispute or controversy and may, if requested
by either of the parties, determine which or both of the parties shall bear the
costs of the arbitration (other than the costs of each party's legal fees which
costs shall be borne by the party incurring same) and, if both parties shall
bear the costs, then the allocation of such costs between them. The decision of
the arbitrator shall be final, conclusive, and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction, and the parties irrevocably consent to the jurisdiction of
the United States District Court for the District of New Jersey for this
purpose. In any such arbitration, the parties waive personal service of any
process or other papers and agree that service thereof may be made in accordance
with Paragraph 6.07.
6.09. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
6.10. Governing Law. This Agreement shall be and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto through duly authorized officers on the day and
year first above written.
/s/ Steven Mandell
------------------
STEVEN MANDELL
/s/ Jack Futterman
------------------
JACK FUTTERMAN
<PAGE>
CUSIP No. 702145103 Page 18 of 30
EXHIBITS
Exhibit A: Option Certificate
<PAGE>
CUSIP No. 702145103 Page 19 of 30
SCHEDULE A
List of share certificates to be pledged:
1. Certificate No. ____ evidencing 500,000 shares
2. Certificate No. ____ evidencing 100,000 shares
3. Certificate No. ____ evidencing 100,000 shares
4. Certificate No. ____ evidencing 100,000 shares
5. Certificate No. ____ evidencing 100,000 shares
6. Certificate No. ____ evidencing 100,000 shares
<PAGE>
CUSIP No. 702145103 Page 20 of 30
EXHIBIT A
THE SECURITIES REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THESE OPTIONS ARE RESTRICTED SECURITIES, AS DEFINED IN RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933 AND HAVE NOT BEEN REGISTERED UNDER
SUCH ACT. ACCORDINGLY, IN THE ABSENCE OF SUCH REGISTRATION, THESE SECURITIES MAY
ONLY BE SOLD OR TRANSFERRED PURSUANT TO THAT RULE OR UNDER ANOTHER EXEMPTION
FROM REGISTRATION UNDER SAID ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY UPON COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THAT CERTAIN OPTION AGREEMENT DATED JUNE 8, 1999, BY AND BETWEEN
STEVEN MANDELL AND JACK FUTTERMAN, A COPY OF WHICH IS ON FILE AT THE OFFICE OF
THE SECRETARY OF PARTY CITY CORPORATION.
OPTION CERTIFICATE
1,000,000 SHARES OF COMMON STOCK
STEVEN MANDELL, having an address at P.O. Box 85, New Vernon, New Jersey 07976,
hereby certifies that, for value received, Jack Futterman, with a residence at
16315 Vintage Oaks Lane, Delray Beach, Florida 33484, and/or any of his
permitted transferees (the "Option Holder"), is entitled, subject to the terms
of this Option Certificate, to purchase from Steven Mandell, in whole or in
part, at any time during the five-year period commencing on the date hereof (the
"Commencement Date") and ending on the fifth anniversary from the Commencement
Date, 1,000,000 shares of the common stock, par value $.01 per share (the
"Common Stock") of Party City Corporation (the "Company"), at a purchase price
per share equal to $3.00 per share (the "Purchase Price"). The number of shares
of Common Stock that may be purchased upon the exercise of the Option (the
"Option Shares") and payment of the Purchase Price, as set forth in the
preceding sentence, are subject to adjustment as provided in this Option
Certificate.
1. Exercise of Option. This Option Certificate may be exercised at any
time or from time to time, in whole or in part, during the period commencing on
the Commencement Date and ending at 5:00 p.m. on the fifth anniversary of the
Commencement Date by delivery of this Option Certificate to Steven Mandell at
the address listed above (or such other address as Steven Mandell may designate
in writing to the Option Holder in accordance with Section 8), together with an
Exercise Form in the form attached hereto and payment in an amount equal to the
Purchase Price multiplied by the number of shares being acquired (the "Aggregate
Purchase Price"). Notwithstanding the foregoing, the Option Holder may not
exercise the Option evidenced hereby at any time for less than 100,000 Option
Shares (as the same may be adjusted
<PAGE>
CUSIP No. 702145103 Page 21 of 30
under the terms of Section 4 hereof) and the Option Holder, together with any
and all other Option Holders, may not exercise the Option evidenced by this
Option Certificate and by any other Option Certificate issued pursuant to the
Option Agreement dated June 8, 1999, between Steven Mandell and Jack Futterman,
in the aggregate, more than six (6) times over the course of the five-year term,
unless the same shall be waived in writing by Steven Mandell. Payment shall be
made by delivery to Steven Mandell of a certified check or bank check issued by
any domestic office of a bank organized under the laws of the United States of
America or any state thereof, which has net assets of not less than $100
million, payable to the order of Steven Mandell in an amount equal to the
Aggregate Purchase Price. As promptly as practicable after any exercise of the
Option evidenced by this Option Certificate, Steven Mandell shall do all things
necessary or appropriate and execute and deliver all documents and instruments
necessary or appropriate, including without limitation, stock powers duly
executed, to cause a certificate or certificates registered in the name of the
Option Holder for the shares of Common Stock so purchased to be delivered to the
Option Holder. If the Option Holder exercises the Option to purchase fewer than
all the Option Shares subject to this Option Certificate, Steven Mandell shall,
on the date of delivery of the certificate representing the Option Shares so
purchased, deliver to the Option Holder a new Option Certificate evidencing an
option to purchase the number of Option Shares resulting from the subtraction of
the number of Option Shares purchased from the number of Option Shares evidenced
by this Option Certificate immediately prior to the exercise.
2. Fractional Shares and Options. The Option Holder may not exercise
the option to purchase a fraction of an Option Share, but may purchase only an
integral number of Option Shares. If, at the time of exercise of the Options
evidenced by this Option Certificate, a fractional share of the Common Stock
would be deliverable to the Option Holder, Steven Mandell, at his option, may
pay the Option Holder an amount equal to the current market price of the Common
Stock on the date of exercise multiplied by the same fraction.
3. Transferability. By acceptance of this Option, (a) the Option Holder
confirms his representations and agreements set forth in the Option Agreement of
even date herewith between Steven Mandell and the Option Holder relating to the
Option Holder's investment intent and restrictions on transferability of the
Options and the Option Shares and (b) any transferee of this Option agrees to be
subject to the Option Agreement as if he or it were the Purchaser thereunder.
4. Adjustment in Number of Shares and Purchase Price. If the total
number of outstanding shares of Common Stock of the Company is hereafter changed
by reason of any stock dividend, stock split, combination, subdivision or
recapitalization, an appropriate adjustment will be made in the number of shares
that can be purchased hereunder and the exercise price. Upon the subdivision or
combination of the outstanding shares of Common Stock or the issuance of a stock
dividend, payable in shares, to holders of Common Stock, the Purchase Price
shall be adjusted by multiplying the Purchase Price by a fraction, the numerator
of which is equal to the number of issued and outstanding shares of Common Stock
immediately prior to such subdivision, combination or stock dividend, and the
denominator of which is equal to the number of issued and outstanding shares of
Common Stock immediately following such subdivision,
<PAGE>
CUSIP No. 702145103 Page 22 of 30
combination or stock dividend. If the Company shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, or if there is a
recapitalization, stock split, stock dividend, combination of shares or similar
change in the Company's shares, the Purchaser shall at the time of issuance of
the stock under such corporate event be entitled to receive, upon the exercise
of his or her Option, the same number and kind of shares of stock or the same
amount of property, cash or securities as the Purchaser would have been entitled
to receive upon the occurrence of any such corporate event as if the Optionee
had been, immediately prior to such event, the holder of the number of shares
covered by his or her Option so exercised.
5. No Rights as Stockholder. The Option Holder, by virtue of holding
the Option evidenced by this Option Certificate, shall not be entitled to vote
or receive dividends or be deemed to be or be entitled to any rights of a
stockholder of the Company and the Option Holder shall have no rights other than
those specifically set forth herein.
6. Complete Agreement; Modification and Termination. This Option
Certificate contains, or otherwise makes reference to, a complete statement of
all the arrangements with respect to the Options evidenced by this Option
Certificate and cannot be changed or terminated orally.
7. Notice. All notices and other communications relating to the Options
shall be in writing and shall be deemed to have been duly given when delivered
personally or mailed (registered or certified mail, postage prepaid, return
receipt requested) as follows:
if to the Option Holder, then to
Jack Futterman
16315 Vintage Oaks Lane
Delray Beach, FL 33484
if to Steven Mandell, to:
Steven Mandell
P.O. Box 85
New Vernon, New Jersey 07976
or to such other address as the party to whom notice is to be given shall have
previously furnished the other party in writing in the manner set forth above.
8. Governing Law. The Options evidenced by this Option
Certificate shall be governed by and construed in accordance with the laws of
the State of New York.
9. Headings. The headings in this Option Certificate are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Option Certificate.
<PAGE>
CUSIP No. 702145103 Page 23 of 30
Dated: June 8, 1999
/s/ Steven Mandell
------------------
STEVEN MANDELL
<PAGE>
EXERCISE FORM
(To be executed by the Option Holder to exercise the Option evidenced by the
attached Option Certificate)
Mr. Steven Mandell
P.O. Box 85
New Vernon, New Jersey 07976
Dear Mr. Mandell:
The undersigned, pursuant to and in accordance with the terms and
conditions of the option certificate (the "Option Certificate") issued by you,
on ____________________, hereby irrevocably exercises his option evidenced by
the Option Certificate, and requests that a certificate for ____ shares of Party
City Corporation Common Stock, par value $____ per share ("Common Stock"),
issuable upon the exercise of the option be issued in the name of the
undersigned and delivered to the undersigned at the address stated below.
Pursuant to Section 1 of the Option Certificate and in complete
satisfaction of the Aggregate Purchase Price for the shares of Common Stock
specified herein issuable upon the exercise of the option, the undersigned is
delivering to you herewith, a certified or bank cashier's check payable to your
order in the amount of $__________.
The undersigned agrees that the undersigned shall not offer, sell,
transfer or otherwise dispose of any shares of Common Stock issuable upon the
exercise of the option evidenced by the Option Certificate except in accordance
with the terms of that certain Option Agreement dated as of June 8, 1999, by and
between Jack Futterman and Steven Mandell.
Dated:
By:___________________________
Registered Holder
Address:
<PAGE>
CUSIP No. 702145103 Page 25 of 30
Exhibit II
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of June 8,
1999, is by and between STEVEN MANDELL, having an address at P.O. Box 85, New
Vernon, New Jersey 07976 ("Pledgor"), and JACK FUTTERMAN, residing at 16315
Vintage Oaks Lane, Delray Beach, Florida 33484 ("Secured Party").
WITNESSETH:
WHEREAS, Secured Party and Pledgor have entered into that certain
Option Agreement (the "Option") of even date, whereby Pledgor has granted to
Secured Party an option to purchase 1,000,000 shares (the "Shares") of Pledgor's
common stock, par value $.01 per share ("Common Stock"), of Party City
Corporation, a Delaware corporation (the "Company") at an exercise price of
$3.00 per share (as more fully described in the Option); and
WHEREAS, as security for performance of the Option and under any other
instrument, document, or agreement executed and delivered by Pledgor pursuant to
the Option (if any, the "Other Documents"), Pledgor has agreed to pledge and
grant a lien and security interest to Secured Party in the Shares and Pledgor
has agreed to execute and deliver this Agreement to Secured Party.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each party intending to be legally bound hereby, the Pledgor and
the Secured Party hereby agree as follows:
1. Definitions. Unless the context otherwise requires, all terms used
but not expressly defined herein shall have the meanings, if any, given to them
in the Option or, if they are not defined in the Option but are defined in the
Uniform Commercial Code, as enacted in New York (the "Code"), they shall have
the same meaning herein as in the Code.
2. Pledge of the Pledged Collateral and Adjustments.
(a) As security for the performance of the Pledgor's obligations under
the Option (collectively, the "Obligations"), Pledgor hereby pledges, delivers
and sets over unto Secured Party, and grants a lien and security interest to
Secured Party, in the following (collectively, the "Pledged Collateral"):
(i) the Shares;
(ii) Pledgor's rights in any stock dividend, reclassification,
readjustment or other change declared or made by the Company with
respect to or affecting the Shares;
(iii) Pledgor's rights in any subscription warrants or any
other rights or options issued by the Company in connection with the
Shares; and
<PAGE>
CUSIP No. 702145103 Page 26 of 30
(iv) all proceeds of any of the foregoing upon sale, exchange
or other disposition of any of the foregoing (but excluding cash payments or
distributions made by the Company with respect to any of the foregoing as a
result of owning, rather than disposing of, any of the foregoing-which payments
or distributions are referred to herein as "Distributions").
(b) All new, substituted and additional shares (such shares to be
included within the definition ofthe Shares hereunder), warrants, rights,
options or other securities, issued by reason of any of the foregoing, in
respect of the Pledged Collateral, shall be immediately delivered to and held by
(or otherwise retained by) the Secured Party under the terms of this Pledge
Agreement and shall constitute Pledged Collateral hereunder.
(c) Simultaneously with the execution of this Pledge Agreement, Pledgor
hereby delivers to the Secured Party the original stock certificate(s)
evidencing the Shares, as described in more detail on Schedule A hereto,
accompanied by stock powers in the form of Exhibit A attached hereto and made a
part hereof, duly executed in blank for all of the Shares.
(d) In addition, the Pledgor shall, upon request of the Secured Party,
deliver to the Secured Party such financing statements as may be necessary or
desirable, in the reasonable opinion of the Secured Party to perfect the
security interest created herein. Pledgor hereby authorizes Secured Party to
file, and appoints Secured Party his attorney-in-fact for the purpose of
executing and filing financing statements or continuation statements to the
extent permitted by applicable law.
3. Power of Attorney.
(a) The Secured Party shall have no obligation with respect to the
Pledged Collateral or any other property held or received by it hereunder except
to use reasonable care in the custody thereof to the extent required by law. The
Secured Party may hold the Pledged Collateral in the form in which it is
received by it.
(b) The Pledgor, to the full extent permitted by law, hereby
constitutes and irrevocably appoints the Secured Party (and any officer or agent
of the Secured Party, with full power of substitution and revocation) as the
Pledgor's true and lawful attorney-in-fact, in the Pledgor's stead and in the
name of the Pledgor, to transfer, upon the occurrence of an Event of Default,
the Pledged Collateral on the books of the Company, in whole or in part, to the
name of the Secured Party or such other Person or Persons as the Secured Party
may designate in accordance with the terms of the Option and, upon the
occurrence of an Event of Default, to take all such other and further actions as
the Pledgor could have taken with respect to the Pledged Collateral and as the
Secured Party in its reasonable discretion determines to be necessary or
appropriate to accomplish the purposes of this Agreement and the Option.
(c) The limited powers of attorney granted pursuant to this Agreement
and all authority hereby conferred are granted and conferred solely to protect
the Secured Party's interests in the Pledged Collateral and shall not impose any
duty upon the attorney-in-fact to exercise such powers. Such powers of attorney
shall be irrevocable prior to the performance in full of the Obligations or
expiration of the Option, and shall
<PAGE>
CUSIP No. 702145103 Page 27 of 30
not be terminated prior thereto or affected by any act of the Pledgor or other
Persons or by operation of law.
4. Voting Rights, Dividends, Etc. During the term of this Pledge
Agreement, and except as otherwise provided in this Section 4, (a) Pledgor shall
have the right to vote the Shares on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement and any other agreement,
instrument or document executed pursuant thereto or in connection therewith and
(b) all Distributions, if any, in respect of the Pledged Collateral, shall be
the property of the Pledgor. Any Distributions received by Secured Party prior
to either the exercise of the Option with respect to any Shares or prior to the
occurrence of an Event of Default shall be promptly forwarded to Pledgor. After
the Option has been duly exercised, including payment of the exercise price, (x)
the Secured Party may, at the Secured Party's option and following written
notice from the Secured Party to Pledgor, exercise all voting powers pertaining
to the Pledged Collateral, and Pledgor hereby grants Secured Party an
irrevocable proxy, coupled with an interest, therefor, and (y) all
Distributions, if any, in respect of the Pledged Collateral, shall be the
property of the Secured Party. Any Distributions received by Pledgor after
either the exercise of the Option with respect to any Shares, including payment
of the exercise price therefor, or after the occurrence of an Event of Default
shall be promptly forwarded to Secured Party.
5. Pledgor's Covenants, Representations and Warranties.
(a) Pledgor reaffirms his representations, warranties and
covenants set forth in the Option Agreement; and
(b) Pledgor agrees to defend the Pledged Collateral from all
claims, liens, suits, or asserted rights of all other parties to the Pledged
Collateral arising out of an action or omission of Pledgor.
6. Return of the Pledged Collateral Upon Termination; Termination of
Financing Statement. The Pledged Collateral shall be released, in whole or in
part, from the lien created by this Agreement to the extent that the Secured
Party exercises its Option. Upon expiration of the Option, Secured Party shall
cause to be transferred to Pledgor all of the Pledged Collateral then in its
possession, to the extent Secured Party has not exercised its option under the
terms of the Option or taken, sold or otherwise realized upon the same pursuant
to its rights hereunder. Immediately following the termination of the lien
created by this Agreement, Secured Party shall execute and deliver to Pledgor,
at Secured Party's expense, such documents as Pledgor may reasonably request to
release the Pledged Collateral from the lien of this Agreement and shall cause
any Pledged Collateral remaining in its possession to be transferred to Pledgor
or his nominee in accordance with Pledgor's instructions.
7. Event of Default. The following event shall constitute an Event of
Default hereunder: a failure by Pledgor to perform his obligations under the
Option if such failure is coupled with an exercise of the Option including
payment of the exercise price by Secured Party or his permitted transferee
pursuant to the provisions of the Option.
<PAGE>
CUSIP No. 702145103 Page 28 of 30
8. Remedies Upon Default. Upon the occurrence of an Event of Default
Secured Party shall have (a) the right to recover from Seller all actual damages
arising as a result of such Event of Default, and (b) all of the rights of a
secured party under the Code, including without limitation, seizure of,
foreclosure upon and/or sale of the Pledged Collateral. The proceeds of any such
sale shall be the property of Secured Party. Notwithstanding the foregoing,
Pledgor irrevocably agrees that Secured Party may, in lieu of foreclosure upon
and sale of the Pledged Collateral, seize and retain the Pledged Collateral upon
the occurrence of an Event of Default.
9. Transfer and Assignment. Pledgor may not transfer its rights or
liabilities under this Pledge Agreement to any other person without the express
written consent of the Secured Party. Secured Party may transfer its rights and
obligations solely to the permitted transferees as set forth in the Option, on
written notice to Pledgor.
10. Further Assurances. Pledgor agrees that it will cooperate with the
Secured Party and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents, and
will take all such other action, including, without limitation, the execution of
financing statements, as the Secured Party may reasonably request from time to
time in order to carry out the provisions and purposes of this Pledge Agreement.
11. Miscellaneous.
(a) No Waivers. No action, failure to act, or knowledge of Secured
Party shall be deemed to constitute a waiver of any power, right, or remedy
hereunder, nor shall any single or partial exercise thereof preclude any further
exercise thereof or the exercise of any other power, right, or remedy. The
failure, or delay of Secured Party at any time or times to require performance
of, or to exercise its rights with respect to, any representation, warranty,
covenant, or other term or provision of this Pledge Agreement in no manner shall
affect its right at a later time to enforce any such provision. No notice to or
demand on a party in any case shall entitle such party to any other or further
notice or demand in the same, similar, or other circumstances.
(b) Amendment. This Pledge Agreement shall not be amended nor shall any
right hereunder be deemed waived except by a written agreement expressly setting
forth the amendment or waiver and signed by the party against whom or which such
amendment or waiver is sought to be charged.
(c) Counterparts. This Pledge Agreement may be executed by the parties
on any number of separate counterparts, and by each party on separate
counterparts; each counterpart shall be deemed an original instrument; and all
of the counterparts taken together shall be deemed to constitute one and the
same instrument.
(d) Choice of Law. This Pledge Agreement and any document or instrument
executed in connection herewith shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of New York.
(e) No Strict Construction. The language used in this Pledge Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
<PAGE>
CUSIP No. 702145103 Page 29 of 30
IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Pledge
Agreement as of the day and year first above written.
SECURED PARTY: PLEDGOR:
/s/ Jack Futterman /s/ Steven Mandell
- ------------------ ------------------
JACK FUTTERMAN STEVEN MANDELL
<PAGE>
CUSIP No. 702145103 Page 30 of 30
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to
__________________________, [_________] shares of common stock, $.01 par value
per share, of Party City Corporation, a Delaware corporation, represented by
Certificate No. [___] (the "Stock"), standing in the name of the undersigned on
the books of said corporation and does hereby irrevocably constitute and appoint
_________________________ as the undersigned's true and lawful attorney, for him
and in his name and stead, to sell, assign and transfer all or any of the Stock,
and for that purpose to make and execute all necessary acts of assignment and
transfer thereof; and to substitute one or more persons with like full power,
hereby ratifying and confirming all that said attorney or substitute or
substitutes shall lawfully do by virtue hereof.
Dated: ______________________
----------------------------
Name: STEVEN MANDELL
Its: Sole General Partner
