Exhibit 99.8
June 12, 2002
Special Value Absolute Return Fund, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Dear Sirs:
This letter will confirm the terms pursuant to which Special Value Absolute
Return Fund, LLC (the "Purchaser") will purchase from Xxxxxxx, Xxxxx & Co.
("Xxxxxxx Xxxxx"), and Xxxxxxx Xxxxx will sell to the Purchaser, the shares of
common stock, par value $.01 per share (the "Shares"), of Party City
Corporation, a Delaware corporation (the "Company"), to be issued upon the net
exercise by Xxxxxxx Xxxxx of a warrant (No. W-3, the "Warrant") issued by the
Company to purchase 2,867,000 shares of the Company's common stock.
The closing of the purchase and sale of the Shares shall occur on the
business day after the funding of the Purchaser (which funding Purchaser
currently expects to occur on or about June 12, 2002) or as soon thereafter as
practicable. Purchaser shall give written notice to Xxxxxxx Xxxxx on the
business day of the funding of the Purchaser, which shall serve as an
irrevocable instruction to Xxxxxxx Xxxxx to take the action specified in
paragraph 2 below on the closing date. In order to effect the purchase and sale
of the Shares, Purchaser and Xxxxxxx Xxxxx agree to take the following actions
on the closing date:
1. Purchaser and Xxxxxxx Xxxxx shall confirm with the Company the exact
number of Shares to be issued upon exercise of the Warrant in full on a net
exercise basis pursuant to Section 1.2 of the Warrant.
2. Xxxxxxx Xxxxx shall exercise the Warrant in full on a net exercise basis
by surrender of the Warrant to the Company, together with a completed Notice of
Exercise in the form attached as Exhibit A hereto, pursuant to which the Shares
issuable upon net exercise of the Warrant will be issued in the name of, and
delivered by the Company to, the Purchaser.
3. Purchaser shall effect a wire transfer of immediately available funds to
an account designated by Xxxxxxx Xxxxx concurrent with the delivery by Xxxxxxx
Xxxxx of the Warrant to the Company as specified in paragraph 2 above in the
amount of the aggregate purchase price of the Shares at a purchase price per
Share of $13.25.
4. Xxxxxxx Xxxxx shall execute (and cause Xxxxxxx Xxxxx Credit Partners,
L.P. to execute) and deliver to Purchaser the Waiver and Consent in the form
attached as Exhibit B hereto.
The sale of the Shares shall also represent and effect the assignment by
Xxxxxxx Xxxxx to Purchaser of the registration rights and all other rights with
respect to the Shares set forth in that certain Investor Rights Agreement dated
August 16, 1999, as amended, by and among the Company and the investors named
therein.
Purchaser and Xxxxxxx Xxxxx shall also take all other appropriate action
and execute all documents, instruments or conveyances of any kind, which may be
reasonably necessary or advisable to effectuate the purchase and sale of the
Shares, provided that after the closing the Purchaser and Xxxxxxx Xxxxx shall
not be required to incur any out of pocket expenses in connection therewith.
By agreeing to purchase the Shares and by purchasing the Shares, Purchaser
represents and warrants to, and agrees with, Xxxxxxx Xxxxx and its affiliates
that:
1. The Purchaser is an "accredited investor" within the meaning of Rule 501
of Regulation D under the Securities Act of 1933, as amended, (the "Securities
Act") and has full power and authority to make the representations, warranties
and agreements in this letter.
2. The Purchaser is acquiring the Shares for investment purposes and not
with a view to any distribution of the Shares in violation of the Securities
Act.
3. The Purchaser is aware, and has been advised, that (a) the sale of the
Shares to the Purchaser is being made in a transaction not involving a public
offering of securities in the United States and (b) the Shares will be
"restricted securities" within the meaning of Rule 144 ("Rule 144") under the
Securities Act; and (c) that the Shares contain the following legend: THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE ENCUMBERED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE
STATE SECURITIES LAWS UNLESS, IN EACH CASE, VALIDLY EXEMPT THEREFROM, OR
PURSUANT TO AN OPINION OF COUNSEL OR A NO-ACTION LETTER FROM THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION, IN EACH CASE, SATISFACTORY TO THE ISSUER OF
SUCH SECURITIES THAT SUCH REGISTRATION IS NOT REQUIRED.
4. The Purchaser understands that no offering circular or prospectus will
be prepared in connection with the offer and sale of the Shares and that Xxxxxxx
Xxxxx has not provided, and will not provide, the Purchaser with any other
information regarding the Shares or the Company; the Purchaser has not requested
Xxxxxxx Xxxxx to provide it with any such information.
5. In making its decision to purchase the Shares, the Purchaser:
(a) has made its own independent, investment decision regarding the
Shares based on its own knowledge (and information it may have or which is
publicly available) with respect to the Shares and the Company;
(b) has had access to such information as it deems necessary or
appropriate in connection with its purchase of the Shares; and
(c) has sufficient knowledge and experience in financial and business
matters, and expertise in assessing credit, market and all other relevant risk,
that it is capable of evaluating, and has evaluated, independently the merits,
risks and suitability of purchasing the Shares.
6. The Purchaser understands that the Shares have not been registered under
the Securities Act or any state securities laws and may not be offered, sold,
pledged or otherwise transferred unless registered pursuant to, or in a
transaction that is exempt from, the Securities Act and any applicable
securities laws of any state of the United States.
7. The Purchaser understands that Xxxxxxx Xxxxx does not make any
representation as to the availability of Rule 144 or any other exemption under
the Securities Act for the reoffer, resale, pledge or other transfer of the
Shares.
8. The Purchaser understands that, for so long as the Shares remain
"restricted securities" within the meaning of Rule 144 under the Securities Act,
the Shares may not be deposited in any unrestricted depositary facility for the
Shares.
9. The Purchaser understands that by its purchase or holding of the Shares
the Purchaser is assuming and is capable of bearing the risk of loss that may
occur with respect to the Shares, including the possibility that the Purchaser
may lose all or a substantial portion of its investment in the Shares, and the
Purchaser will not look to Xxxxxxx Xxxxx for all or part of any such loss or
losses it may suffer.
10. The Purchaser represents that two of its affiliates are members of the
Board of Directors of the Company and that, in such capacity, such affiliates
from time to time may or may not possess or receive non-public information that
is material or price-sensitive in relation to the Company or its securities. The
Purchaser further represents that it is not in possession of material non-public
information with respect to the Company except insofar as such information has
otherwise been made available to the Board of Directors of the Company.
11. Purchaser agrees to indemnify and hold Xxxxxxx Xxxxx harmless from any
loss, claim, damage or liability arising out of or relating to its breach of or
inaccuracy in any of the foregoing representations, warranties, or agreements of
Purchaser.
By agreeing to sell the Shares and by selling the Shares, Xxxxxxx Xxxxx
represents and warrants to, and agrees with, the Purchaser and its affiliates
that:
1. The Warrant is owned by Xxxxxxx Xxxxx of record and beneficially, free
and clear of all claims, liens or encumbrances of any nature whatsoever, and
upon issuance upon exercise of the Warrant, the Shares will be free and clear of
all claims, liens or encumbrances of any nature whatsoever arising out of the
actions of Xxxxxxx Xxxxx.
2. Xxxxxxx Xxxxx agrees to indemnify and hold Purchaser harmless from any
loss, claim, damage or liability arising out of or relating to its breach or
inaccuracy in any of the foregoing representations, warranties or agreements of
Xxxxxxx Xxxxx.
Yours truly
Xxxxxxx, Xxxxx & Co.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Authorized Signatory
Accepted and agreed
Special Value Absolute Return Fund, LLC
By: SVAR/MM, LLC
its Managing Member
By: Special Value Investment Management, LLC, its
Managing Member
By:/s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, its Managing Member
Date: June 12, 2002
