<PAGE>
Exhibit 99.1
VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement"), dated as of September
26,
2005, is made by and among Michael E.
Tennenbaum, Tennenbaum Capital Partners,
LLC, Tennenbaum & Co., LLC, Special
Value Bond Fund, LLC, Special Value Absolute
Return Fund, LLC and Special Value Bond
Fund II, LLC (individually, a
"Stockholder" and, collectively, the
"Stockholders"), and Amscan Holdings, Inc.,
a Delaware corporation ("Parent").
Capitalized terms used herein but not
otherwise defined herein shall have the
meanings ascribed to such terms in the
Merger Agreement (as defined below).
WHEREAS, concurrently herewith, Parent, Amscan Holdings, Inc.,
a
Delaware corporation and wholly owned
subsidiary of Parent ("Merger Sub"), and
Party City Corporation, a Delaware
corporation (the "Company"), are entering
into an Agreement and Plan of Merger (the
"Merger Agreement"), providing for the
merger of Merger Sub with and into the
Company with the Company as the surviving
corporation (the "Merger"), upon the terms
and subject to the conditions set
forth in the Merger Agreement;
WHEREAS, as of the date hereof, each of the Stockholders
beneficially
owns, or has complete investment authority
over, and has (or upon exercise or
exchange of a convertible security will
have) the power to vote and dispose of
the number of shares of common stock, par
value $0.01 per share, of the Company
(the "Common Stock") set forth opposite
such Stockholder's name on Schedule A
attached hereto (the "Owned Shares" and,
together with any securities issued or
exchanged with respect to such shares of
Common Stock upon any recapitalization,
reclassification, merger, consolidation,
spin-off, partial or complete
liquidation, stock dividend, split-up or
combination of the securities of the
Company or any other change in the
Company's capital structure or securities of
which such Stockholder acquires beneficial
ownership after the date hereof and
prior to the termination hereof, whether by
purchase, acquisition or upon
exercise of options, warrants, conversion
of other convertible securities or
otherwise, collectively referred to herein
as, the "Covered Shares"); and
WHEREAS, as a condition to the willingness of Parent and Merger Sub
to
enter into the Merger Agreement, each of
Parent and Merger Sub has required that
the Stockholders agree, and in order to
induce Parent and Merger Sub to enter
into the Merger Agreement, the Stockholders
have agreed, to enter into this
Agreement with respect to (a) the Covered
Shares and (b) certain other matters
as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual
covenants and agreements contained herein,
and intending co be legally bound
hereby, the parties hereto hereby agree as
follows:
ARTICLE I.
VOTING AGREEMENT
Section 1.1 Voting Agreement. The Stockholders hereby agree
that
during the Voting Period, at any meeting of
the stockholders of the Company,
however called, or at any adjournment
thereof or in any other circumstances upon
which a vote, consent or other approval
(including by written consent) is
sought, the Stockholders shall (i) when a
meeting is held,
<PAGE>
appear at such meeting or otherwise cause
the Covered Shares to be counted as
present thereat for the purpose of
establishing a quorum and (ii) vote (or cause
to be voted) in person or by proxy the
Covered Shares in favor of the Merger,
the Merger Agreement and the transactions
contemplated by the Merger Agreement
and (iii) vote (or cause to be voted) the
Covered Shares against any
extraordinary corporate transaction (other
than the Merger), such as a merger,
consolidation, business combination, tender
or exchange offer, reorganization,
recapitalization, liquidation, sale or
transfer of a material amount of the
assets or securities of the Company or any
of its subsidiaries (other than
pursuant to the Merger) or any other
Takeover Proposal. For the purposes of this
Agreement, "Voting Period" shall mean the
period commencing on the date hereof
and ending immediately prior to any
termination of this Agreement pursuant to
Section 5.1 hereof.
Section 1.2 Proxy.
(a) EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, PARENT,
THE
PRESIDENT OF PARENT AND THE SECRETARY OF
PARENT, IN THEIR RESPECTIVE CAPACITIES
AS OFFICERS OF PARENT, AND ANY OTHER
DESIGNEE OF PARENT, EACH OF THEM
INDIVIDUALLY, SUCH STOCKHOLDER'S
IRREVOCABLE (UNTIL THE TERMINATION DATE (AS
DEFINED BELOW)) PROXY AND ATTORNEY-IN-FACT
(WITH FULL POWER OF SUBSTITUTION) TO
VOTE THE COVERED SHARES IN ACCORDANCE WITH
SECTION 1.1. EACH STOCKHOLDER INTENDS
THIS PROXY TO BE IRREVOCABLE (UNTIL THE
TERMINATION DATE) AND COUPLED WITH AN
INTEREST AND WILL TAKE SUCH FURTHER ACTION
OR EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT
OF THIS PROXY AND HEREBY REVOKES ANY
PROXY PREVIOUSLY GRANTED BY SUCH
STOCKHOLDER WITH RESPECT TO THE COVERED SHARES.
(b) The parties acknowledge and agree that neither Parent, nor
Parent's successors, assigns, subsidiaries,
divisions, employees, officers,
directors, shareholders, agents and
affiliates, shall owe any duty to, whether
in law or otherwise, or incur any liability
of any kind whatsoever, including
without limitation, with respect to any and
all claims, losses, demands, causes
of action, costs, expenses (including
reasonable attorney's fees) and
compensation of any kind or nature
whatsoever to the Stockholder in connection
with, as a result of or otherwise relating
to any vote (or refrain from voting)
by Parent of the Covered Shares subject to
the irrevocable proxy hereby granted
to Parent at any annual, special or other
meeting or action or the execution of
any consent of the Stockholders of the
Company. The parties acknowledge that,
pursuant to the authority hereby granted
under the irrevocable proxy, Parent may
vote the Covered Shares pursuant to Section
1.1 in furtherance of its own
interests, and Parent is not acting as a
fiduciary for the Stockholder.
(c) Except pursuant to Section 5.1 of this Agreement, this
irrevocable
proxy shall not be terminated by any act of
the Stockholder or by operation of
law, whether by the death or incapacity of
the Stockholder or by the occurrence
of any other event or events (including,
without limiting the foregoing, the
termination of any trust or estate for
which the Stockholder is acting as a
fiduciary or fiduciaries or the dissolution
or liquidation of any corporation or
partnership). If after the execution hereof
the Stockholder should die or become
incapacitated, or if any trust or estate
should be terminated, or if any
corporation or partnership
2
<PAGE>
should be dissolved or liquidated, or if
any other such event or events shall
occur before the Termination Date,
certificates representing the Covered Shares
shall be delivered by or on behalf of the
Stockholder in accordance with the
terms and conditions of the Merger
Agreement and this Agreement, and actions
taken by the Parent hereunder shall be as
valid as if such death, incapacity,
termination, dissolution, liquidation or
other event or events had not occurred,
regardless of whether or not the Parent has
received notice of such death,
incapacity, termination, dissolution,
liquidation or other event.
Section 1.3 Warrant. At the request of Parent made at any time
after
the date hereof and prior to the record
date set by the Board of Directors of
the Company in connection with the meeting
of stockholders of the Company to
vote on and approve the Merger (the "Record
Date"), Special Value Bond Fund, LLC
("SVBF") shall, pursuant to its Warrant to
Purchase Common Stock of the Company
dated August 16, 1999 representing the
right to purchase 2,496,000 shares of
Common Stock (the "Warrant"), exercise the
Warrant in full immediately prior to
the Record Date either pursuant to Section
1.1(a) or 1.2 of the Warrant. In the
event that (a) SVBF shall exercise the
Warrant in a cashless exercise in
accordance with Section 1.2 of the Warrant,
and (b) the Merger is consummated
pursuant to the Merger Agreement, promptly
after the Effective Time, Parent
shall pay to SVBF in immediately available
funds, as directed by SVBF in
writing, an amount equal to the product of
(I) the Cash Merger Consideration per
share of Common Stock, times (II) the
difference of (x) the number of shares of
Common Stock that would have been issued
upon exercise of the Warrant if the
Current Market Price (as defined in the
Warrant) was equal to the per share Cash
Merger Consideration for purposes of
consummating the cashless exercise in
accordance with Section 1.2 of the Warrant,
and (y) the number of shares of
Common Stock actually issued upon exercise
of the Warrant in accordance with
Section 1.2 of the Warrant. An example of
such payment mechanic is set forth on
Schedule B hereto. In no event shall any
such payment be made if either the
Merger is not consummated pursuant to the
Merger Agreement, or the Warrant is
not exercised pursuant to Section 1.2 of
the Warrant.
Section 1.4 Other Matters. Except as set forth in Section 1.1,
each
Stockholder shall not be restricted from
voting in favor of, against or
abstaining with respect to any matter
presented to the stockholders of the
Company. In addition, nothing in this
Agreement shall give Parent or any of its
officers or designees the right to vote any
Covered Shares in connection with
the election of directors.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to each Stockholder as
follows:
Section 2.1 Valid Existence. Parent is a corporation duly
organized,
validly existing and in good standing under
the laws of the State of Delaware
and has the requisite corporate power and
authority to carry on its business as
it is now being conducted.
Section 2.2 Authority Relative to This Agreement. Parent has
all
necessary corporate power and authority to
execute and deliver this Agreement,
to perform its obligations hereunder and to
consummate the transactions
contemplated hereby. This Agreement has
been
3
<PAGE>
duly and validly authorized, executed and
delivered by Parent and, assuming the
due authorization, execution and delivery
by the other parties hereto,
constitutes a legal, valid and binding
obligations of Parent, enforceable
against Parent in accordance with its
terms, except as enforcement may be
limited by bankruptcy, insolvency,
moratorium or other similar laws relating to
creditors rights generally and by general
equitable principles (regardless of
whether such enforceability is considered
in a proceeding in equity or at law).
Section 2.3 No Conflicts. Except for the applicable requirements
of
the Securities Exchange Act of 1934, as
amended, no filing with, and no permit,
authorization, consent or approval of, any
Governmental Entity is necessary on
the part of Parent for the execution and
delivery of this Agreement by Parent
and the consummation by Parent of the
transaction contemplated hereby.
ARTICLE III.
REPRESENTATIONS
AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Parent as
follows:
Section 3.1 Valid Existence. Such Stockholder is duly
organized,
formed or created, validly existing and in
good standing under the laws of the
jurisdiction of its organization.
Section 3.2 Authority Relative To This Agreement. Such Stockholder
has
all necessary power and authority to
execute and deliver this Agreement, to
perform its obligations hereunder and to
consummate the transactions
contemplated hereby. This Agreement has
been duly and validly authorized,
executed and delivered by such Stockholder
and, assuming the due authorization,
execution and delivery by the other parties
hereto, constitutes a legal, valid
and binding obligation of such Stockholder,
enforceable against such Stockholder
in accordance with its terms, except as
enforcement may be limited by
bankruptcy, insolvency, moratorium or other
similar laws relating to creditors
rights generally and by general equitable
principles (regardless of whether such
enforceability is considered in a
proceeding in equity or at law).
Section 3.3 No Conflict.
(a) The execution and delivery of this Agreement by such
Stockholder
do not, and the performance of its
obligations under this Agreement by such
Stockholder and the consummation by such
Stockholder of the transactions
contemplated hereby will not, (i) conflict
with or violate any law, rule,
regulation, order, judgment or decree
applicable to such Stockholder or (ii)
result in any breach of or constitute a
default (or an event that with notice or
lapse of time or both would become a
default) under contract to which such
Stockholder is a party; except for
violations, breaches or defaults that would
not materially impair the ability of such
Stockholder to perform its obligations
hereunder.
(b) The execution and delivery of this Agreement by such
Stockholder
do not, and the performance of its
obligations under this Agreement will not,
require any consent, approval,
authorization or permit of, or filing with or
notification to, any court or arbitrator or
any governmental entity, agency or
official except for applicable
requirements, if any, of the
4
<PAGE>
Securities and Exchange Act of 1934, as
amended, and except where the failure to
obtain such consents, approvals,
authorizations or permits, or to make such
filings or notifications, would not
materially impair the ability of such
Stockholder to perform its obligations
hereunder.
Section 3.4 Ownership Of Shares. As of the date hereof, (i)
such
Stockholder (other than Tennenbaum Capital
Partners, LLC) has good and
marketable title to and is the record and
beneficial owner of the Owned Shares
set forth opposite such Stockhol
