Exhibit 10.7

Party City Holdco Inc.

Amended and Restated 2012 Omnibus Equity Incentive Plan

RESTRICTED STOCK UNIT AWARD AGREEMENT

(TIME AND PERFORMANCE-BASED VESTING)

THIS AGREEMENT (this “Award Agreement”), is made effective as of [●], 2019 (the
“Date of Grant”), by and between Party City Holdco Inc., a Delaware corporation
(the “Company”), and ____________ (the “Participant”). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Party City
Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (as amended
from time to time, the “Plan”).

R E C I T A L S:

WHEREAS, the Committee has determined that it would be in the best interests of
the Company and its stockholders to grant the Award provided for herein to the
Participant pursuant to the Plan and the terms set forth herein.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:

1.    Grant of the Award. The Company hereby grants to the Participant an Award
of ____________ restricted stock units (the “RSUs”), on the terms and conditions
set forth in the Plan and this Award Agreement, subject to adjustment as set
forth in the Plan. Certain RSUs are subject to performance-based vesting
conditions and are referred to herein as “PSUs”. Each PSU represents the
conditional right to receive up to two Shares and each other RSU represents the
conditional right to receive one Share, in each case, without payment but
subject to the term and conditions set forth in the Plan and this Award
Agreement, including Exhibit A to this Award Agreement, and subject to
adjustment as set forth in the Plan.

2.    Vesting of the RSUs. The RSUs shall become vested in accordance with, and
subject to the conditions described in, Exhibit A to this Award Agreement. At
any time, the portion of the RSUs that have become vested is hereinafter
referred to as the “Vested Portion” and any portion of the RSUs that are not a
Vested Portion is hereinafter referred to as the “Unvested Portion”.

3.    Forfeiture; Expiration.

a.    Termination of Employment. Upon the termination of the Participant’s
Service by the Company for any reason at any time, any Unvested Portion of the
RSUs will be forfeited automatically without consideration.

b.    Breach of Restrictive Covenants. The Unvested Portion shall be forfeited
without consideration if the Participant breaches any restrictive covenant
relating to confidentiality, non-competition, non-solicitation and/or
non-disparagement and/or other similar restrictive covenants in favor of the
Company or any of its Subsidiaries.

4.    Delivery of Shares; Company Policies. Not later than thirty (30) days
following the date on which any portion of the RSUs vest (as determined pursuant
to the terms of Exhibit A), the Company shall effect delivery of the Shares with
respect to such vested RSUs to the Participant. The Participant’s sales or other
dispositions of Shares acquired upon settlement of the RSUs shall be subject to
applicable restrictions under Company policies applicable to the Participant,
including those covering insider trading by employees and recoupment of
compensation, as in effect from time to time.

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5.    No Right to Continued Service. The granting of the RSUs shall impose no
obligation on the Company or any Subsidiary to continue the employment or other
Service of the Participant and shall not lessen or affect any right that the
Company or any Subsidiary may have to terminate the employment or other Service
of the Participant.

6.    Tax Matters.

a.    Withholding. As a condition to the granting of the RSUs and the vesting
thereof, the Participant acknowledges and agrees that he or she is responsible
for the payment of all income and employment taxes (and any other taxes required
to be withheld) payable in connection with the grant or vesting of, or otherwise
in connection with, the RSUs. The Company shall have the power and the right to
deduct or withhold automatically from any payment or Shares deliverable under
this Award Agreement, or require the Participant to remit to the Company
(including through the delivery of irrevocable instructions to a broker to sell
Shares deliverable under this Award Agreement and to deliver promptly to the
Company an amount out of the proceeds of such sale equal to an amount as
determined by the Company, consistent with the terms of the Plan), such amount
as is determined by the Company, consistent with the terms of the Plan, to
satisfy federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Award Agreement. The Participant authorizes the Company and its
Subsidiaries to withhold such amounts due hereunder from any payments otherwise
owed to the Participant, but nothing in this sentence shall be construed as
relieving the Participant of any liability for satisfying his or her obligation
under the preceding provisions of this Section 6(a).

b.    Section 280G. In the event that the Company undergoes a change in control
after it (or any of its Affiliates that would be treated, together with the
Company, as a single corporation under Section 280G of the Code and the
regulations thereunder) has stock that is readily tradeable on an established
securities market (within the meaning of Section 280G of the Code and the
regulations thereunder), if all, or any portion, of the payments provided under
this Award Agreement, either alone or together with other payments or benefits
which the Participant receives or is entitled to receive from the Company or an
Affiliate, could constitute an “excess parachute payment” within the meaning of
Section 280G of the Code, then the Executive shall be entitled to receive (i) an
amount limited so that no portion thereof shall fail to be tax deductible under
Section 280G of the Code (the “Limited Amount”), or (ii) if the amount otherwise
payable hereunder (without regard to clause (i)) reduced by the excise tax
imposed by Section 4999 of the Code and all other applicable federal, state and
local taxes (with income taxes all computed at the highest applicable marginal
rate) is greater than the Limited Amount reduced by all taxes applicable thereto
(with income taxes all computed at the highest marginal rate), the amount
otherwise payable hereunder. If it is determined that the Limited Amount will
maximize the Participant’s after-tax proceeds, payments and benefits shall be
reduced to equal the Limited Amount in the following order: (i) first, by
reducing cash severance payments, (ii) second, by reducing other payments and
benefits to which Q&A 24(c) of Section 1.280G-1 of the Treasury Regulations does
not apply, and (iii) finally, by reducing all remaining payments and benefits,
with all such reductions done on a pro rata basis. All determinations made
pursuant this Section 6(b) will be made at the Company’s expense by the
independent public accounting firm most recently serving as the Company’s
outside auditors or such other accounting or benefits consulting group or firm
as the Company may designate.

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7.    Dividends. The RSUs shall have no rights with respect to dividends
declared by the Company with respect to its capital stock, provided that the
foregoing shall not prohibit or otherwise limit the adjustment of the terms of
this Award Agreement in accordance with the terms of the Plan.

8.    Transferability. Unless otherwise determined by the Committee, the
Participant shall not be permitted to transfer or assign the RSUs except in the
event of death and in accordance with Section 14.6 of the Plan.

9.    Adjustment of RSUs. Adjustments to the RSUs (or any Shares underlying the
RSUs), and the Performance Criteria specified in Exhibit A, may be made in
accordance with the terms of the Plan. Without limiting the generality of the
foregoing, upon a Change of Control, the Committee may deem the PSUs to be
earned at any level as it deems appropriate in its sole discretion, which
determination shall be binding on all parties.

10.    RSUs Subject to Plan. By entering into this Award Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The RSUs are subject to the terms and conditions of the Plan.
In the event of a conflict between any term hereof and a term of the Plan, the
applicable term of the Plan shall govern and prevail.

11.    Choice of Law. This Award Agreement, and all claims or causes of action
or other matters that may be based upon, arise out of or relate to this Award
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, excluding any conflict or choice of law rule or principle
that might otherwise refer construction or interpretation thereof to the
substantive laws of another jurisdiction.

12.    Consent to Jurisdiction. The Company and the Participant, by his or her
execution hereof, (a) hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts in the State of Delaware for the purposes of any
claim or action arising out of or based upon this Award Agreement or relating to
the subject matter hereof, (b) hereby waive, to the extent not prohibited by
applicable law, and agree not to assert by way of motion, as a defense or
otherwise, in any such claim or action, any claim that it, he or she is not
subject personally to the jurisdiction of the above-named courts, that its, his
or her property is exempt or immune from attachment or execution, that any such
proceeding brought in the above-named court is improper or that this Award
Agreement or the subject matter hereof may not be enforced in or by such court
and (c) hereby agree not to commence any claim or action arising out of or based
upon this Award Agreement or relating to the subject matter hereof other than
before the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such claim or
action to any court other than the above-named courts whether on the grounds of
inconvenient forum or otherwise; provided, however, that the Company and the
Participant may seek to enforce a judgment issued by the above-named courts in
any proper jurisdiction. The Company and the Participant hereby consent to
service of process in any such proceeding, and agree that service of process by
registered or certified mail, return receipt requested, at its, his or her
address specified pursuant to Section 15 is reasonably calculated to give actual
notice.

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13.    WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT
CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT HE, SHE OR
IT SHALL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AWARD AGREEMENT OR THE SUBJECT
MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER
PARTY HERETO THAT THIS SECTION 13 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH
THEY ARE RELYING AND SHALL RELY IN ENTERING INTO THIS AWARD AGREEMENT. ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.

14.    Compliance with Securities Laws. Shares shall not be issued pursuant to
this Award Agreement unless the issuance and delivery of such Shares comply with
(or are exempt from) all applicable requirements of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, state securities laws and regulations, and the
regulations of any stock exchange or other securities market on which the
Company’s securities may then be traded. The Company shall not be obligated to
file any registration statement under any applicable securities laws to permit
the purchase or issuance of any Shares, and accordingly any certificates for
Shares may have an appropriate legend or statement of applicable restrictions
endorsed thereon. If the Company deems it necessary to ensure that the issuance
of Shares under this Award Agreement is not required to be registered under any
applicable securities laws, the Participant shall deliver to the Company an
agreement containing such representations, warranties and covenants as the
Company may reasonably require.

15.    Notices. Any notice or other communication provided for herein or given
hereunder to a party hereto must be in writing, and shall be deemed to have been
given (a) when personally delivered or delivered by facsimile transmission with
confirmation of delivery, (b) one (1) business day after deposit with Federal
Express or similar overnight courier service, or (c) three (3) business days
after being mailed by first class mail, return receipt requested. A notice shall
be addressed to the Company at its principal executive office, attention Chief
Executive Officer and to the Participant at the address that he or she most
recently provided to the Company.

16.    Entire Agreement. This Award Agreement, including Exhibit A attached
hereto, and the Plan constitute the entire agreement and understanding among the
parties hereto in respect of the subject matter hereof and supersede all prior
and contemporaneous arrangements, agreements and understandings, whether oral or
written and whether express or implied, and whether in term sheets, appendices,
exhibits, presentations or otherwise, among the parties hereto, or between any
of them, with respect to the subject matter hereof; provided, that, the
Participant shall continue to be bound by any other confidentiality,
non-competition, non-solicitation and other similar restrictive covenants
contained in any other agreements between the Participant and the Company, its
Affiliates and their respective predecessors to which the Participant is bound.

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17.    Amendment; Waiver. Except as otherwise provided in Exhibit A to this
Award Agreement, no amendment or modification of any term of this Award
Agreement shall be effective unless signed in writing by or on behalf of the
Company and the Participant, and made in accordance with the terms of the Plan.
No waiver of any breach or condition of this Award Agreement shall be deemed to
be a waiver of any other or subsequent breach or condition whether of like or
different nature.

18.    Successors and Assigns; No Third Party Beneficiaries. The provisions of
this Award Agreement shall inure to the benefit of, and be binding upon, the
Company and its successors and assigns and upon the Participant and the
Participant’s heirs, successors, legal representatives and permitted assigns.
Nothing in this Award Agreement, express or implied, is intended to confer on
any person other than the Company and the Participant, and their respective
heirs, successors, legal representatives and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Award Agreement.

19.    Signature in Counterparts. This Award Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

20.    No Guarantees Regarding Tax Treatment. This Award Agreement is intended
to comply with or be exempt from the requirements of Section 409A of the Code
and shall be construed consistently therewith. In any event, the Participant (or
his beneficiaries) shall be responsible for all taxes with respect to the RSUs.
The Committee and the Company make no guarantees regarding the tax treatment of
the RSUs. Neither the Committee nor the Company has any obligation to take any
action to prevent the assessment of any tax under Section 409A of the Code,
Section 4999 of the Code or otherwise and none of the Company, any Subsidiary or
Affiliate, or any of their employees or representatives shall have any liability
to a Participant with respect thereto.

*        *        *

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IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement.

 

PARTY CITY HOLDCO INC. By:       Name:   Title:

Agreed and acknowledged as

of the date first above written:

 

 

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EXHIBIT A

VESTING CONDITIONS

1.    Time-Based RSUs and Performance-Based RSUs. ____________ of the RSUs are
designated as “Time-Based RSUs”. ____________ of the RSUs are designated as “EPS
PSUs” and ____________ of the RSUs are designated as “FCF PSUs”.

2.    Definitions.

a.    “Adjusted EPS” shall mean, with respect to each fiscal year during the
Performance Period, Net Income as adjusted consistent with the adjustments made
to Net Income as reflected in the Company’s Annual Report on Form 10-K for the
applicable fiscal year, divided by the weighted-average Shares outstanding
during the relevant fiscal year, calculated on a diluted basis and reported in
the Company’s financial statements in accordance with generally accepted
accounting principles in the United States (GAAP). The performance goal for
Cumulative Adjusted EPS shall be subject to adjustment upon the occurrence of
certain corporate events in accordance with Section 11.1 of the Plan.

b.    “Credit Agreement” shall mean the Term Loan Credit Agreement dated as of
August 19, 2015, among PC Intermediate Holdings, Inc., Party City Holdings Inc.,
Party City Corporation, the subsidiaries of the borrowers from time to time
party thereto, the financial institutions party thereto, as the Lenders, and
Deutsche Bank AG New York Branch, as Administrative Agent.

c.    “Cumulative EPS” shall mean the sum of Adjusted EPS for each of the fiscal
years during the Performance Period.

d.    “Cumulative FCF” shall mean the sum of Free Cash Flow for each of the
fiscal years during the Performance Period.

e.    “Determination Date” shall mean the date on which the Committee determines
the number of Shares that have been earned with respect to the EPS PSUs and the
FCF PSUs, which date shall not be later than March 15 of the year following the
year in which the Performance Period ends.

f.    “Free Cash Flow” shall mean, with respect to each fiscal year during the
Performance Period, Consolidated Adjusted EBITDA, as such term is defined in the
Credit Agreement, less capital expenditures, as reported in the Company’s
financial statements in accordance with GAAP.

g.    “Net Income” shall mean, with respect to each fiscal year during the
Performance Period, the Company’s net income, as reported in accordance with
GAAP.

h.    “Performance Period” shall mean the period beginning on January 1, 2019
and ending on December 31, 2021.

i.    “Vesting Start Date” shall mean January 1, 2019.

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3.    Vesting of Time-Based RSUs. One third (1/3) of the Time-Based RSUs shall
vest on each of the first three anniversaries of the Vesting Start Date (each a
“Time-Vesting Date”), subject to the Participant’s continued Service on the
applicable Time-Vesting Date, such that 100% of the Time-Based RSUs shall be
vested on the third (3rd) anniversary of the Vesting Start Date. Any fractional
Time-Based RSUs vested pursuant to this Section 3 of this Exhibit A shall be
rounded down to the nearest whole number.

4.    Earning of EPS PSUs. No EPS PSUs shall vest unless they have become earned
in accordance with this Section 4 of Exhibit A. No portion of the EPS PSUs shall
become earned unless Cumulative EPS is equal to or greater than threshold
Cumulative EPS level. If the Cumulative EPS is equal to or greater than the
threshold level described in the previous sentence, the number of Shares that
may be earned with respect to the EPS PSUs shall be equal to the number of EPS
PSUs multiplied by the “Applicable Percentage” set forth in the table below. In
the event that the Cumulative EPS falls between the amounts listed in the table
below, the Applicable Percentage shall be interpolated on a straight line basis
and the percentage of the number of EPS PSUs earned shall be based on such
interpolated percentage. If Cumulative EPS is greater than maximum Cumulative
EPS level, the Applicable Percentage shall be 200%. Any fractional EPS PSUs
earned pursuant to this Section 4 of this Exhibit A shall be rounded down to the
nearest whole number.

 

Cumulative EPS Levels

  

Applicable Percentage

$5.16    37.5% $5.36    100% $5.57    200%

5.    Earning of FCF PSUs. No FCF PSUs shall vest unless they have become earned
in accordance with this Section 5 of Exhibit A. No portion of the FCF PSUs shall
become earned unless Cumulative FCF is equal to or greater than threshold
Cumulative FCF level. If the Cumulative FCF is equal to or greater than the
threshold level described in the previous sentence, the number of Shares that
may be earned with respect to the FCF PSUs shall be equal to the target number
of FCF PSUs multiplied by the “Applicable Percentage” set forth in the table
below. In the event that the Cumulative FCF falls between the amounts listed in
the table below, the Applicable Percentage shall be interpolated on a straight
line basis and the percentage of the number of FCF PSUs earned shall be based on
such interpolated percentage. If Cumulative FCF is greater than maximum
Cumulative FCF level, the Applicable Percentage shall be 200%. Any fractional
FCF PSUs earned pursuant to this Section 5 of this Exhibit A shall be rounded
down to the nearest whole number.

 

Cumulative FCF Levels

  

Applicable Percentage

$1,038,000    37.5% $1,080,000    100% $1,144,000    200%

6.    Vesting of EPS PSUs and FCF PSUs. The Participant shall become vested in
the number of EPS PSUs and/or FCF PSUs that are earned under Section 4 or
Section 5, as applicable, of this Exhibit A on the Determination Date, subject
to the Participant’s continued Service through the Determination Date.
Notwithstanding anything herein to the contrary, the Committee in its discretion
may adjust the “Cumulative EPS Levels” and/or the “Cumulative FCF Levels” in
Section 4 and Section 5 of this Exhibit A, respectively, or the number of EPS
PSUs and/or FCF PSUs that are treated as earned, as it deems appropriate to
account for fluctuations in commodity prices or other external factors adversely
affecting the Company’s performance against such metrics during the Performance
Period; provided that the foregoing adjustments may not decrease the number of
EPS PSUs and/or FCF PSUs that would otherwise be earned but for such adjustment.
All determinations under this Exhibit A shall be made by the Committee and will
be final and binding on the Participant.