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                                                                    EXHIBIT 10.9


                               FIRST AMENDMENT TO
                            INVESTOR RIGHTS AGREEMENT

        THIS FIRST AMENDMENT TO THE INVESTOR RIGHTS AGREEMENT (this "Amendment")
is made and entered into as of October 11, 2000, by and among Party City
Corporation, a Delaware corporation (the "Company"), Jack Futterman, and each of
the other parties whose names appear on the signature pages hereto (such other
parties, the "Investors").

                                     RECITAL

        On August 16, 1999, the Company entered into an Investor Rights
Agreement (the "IR Agreement") with Tennenbaum & Co., LLC, TCO/Party City, LLC,
Goldman, Sachs & Co., Goldman Sachs Credit Partners, L.P., Enhanced Retail
Funding, LLC, Richmond Associates, L.P. and Jack Futterman. The parties hereto
now desire to amend the IR Agreement in the manner set forth below. Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the IR Agreement.

        1.      AMENDMENT TO SECTION 5.1(a). Section 5.1(a) of the IR Agreement
is hereby amended by inserting immediately after the phrase "of any securities
of the Company" in clause (i) thereof, the following: "(provided that this
clause (i) shall not be construed as limiting the right of any Investor to
transfer any Notes (as such term is defined in the Purchase Agreement, and such
term to include any new series of Notes issued by the Company to one or more
Investors subsequent to August 16, 1999) to any other Investor, and provided
further, that from and after August 16, 1999, the Investors may purchase up to
an aggregate of 1,500,000 additional shares of Common Stock)."

        2.      COUNTERPARTS. This Amendment may be executed in one or more
counterparts, and signature pages may be delivered by facsimile, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument, and shall become effective upon its execution by the
Company, a Supermajority in Interest of the Investors and a Supermajority in
Interest of the Warrantholders.

        3.      FULL FORCE AND EFFECT. Except as expressly modified by this
Amendment, all of the terms, covenants, agreements, conditions and other
provisions of the IR Agreement shall remain in full force and effect in
accordance with their respective terms.



                  [Remainder of Page Intentionally Left Blank]





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               IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first above written.

                               PARTY CITY CORPORATION

                               By:  /s/ Thomas E. Larson
                                    ----------------------------------
                                    Name:  Thomas E. Larson
                                    Title: CFO



                                    /s/ Jack Futterman
                                    ----------------------------------
                                             Jack Futterman



                              INVESTORS:

                              SPECIAL VALUE BOND FUND, LLC

                              By:  SVIM/MSM, LLC,
                                   its Managing Member

                              By:  TENNENBAUM & CO., LLC,
                                   its Managing Member

                              By:   /s/ Michael E. Tennenbaum
                                    ----------------------------------
                                    Name:  Michael E. Tennenbaum
                                    Title: Managing Member



                              SPECIAL VALUE BOND FUND II, LLC

                              By:  SVIM/MSMII, LLC,
                                   its Managing Member

                              By:  TENNENBAUM & CO., LLC,
                                   its Managing Member

                              By:  /s/ Michael E. Tennenbaum
                                   ----------------------------------
                                   Name:  Michael E. Tennenbaum
                                   Title: Managing Member



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                              SPECIAL VALUE INVESTMENT MANAGEMENT, LLC

                              By:  TENNENBAUM & CO., LLC,
                                   its Managing Member

                              By:  /s/ Michael E. Tennenbaum
                                   ----------------------------------
                                   Name:  Michael E. Tennenbaum
                                   Title: Managing Member



                               GOLDMAN, SACHS & CO.

                               By: /s/ Kevin Ulrich
                                   ----------------------------------
                                   Name:  Kevin Ulrich
                                   Title: Authorized Signatory



                               GOLDMAN SACHS CREDIT PARTNERS, L.P.

                               By: /s/ Kevin Ulrich
                                   ----------------------------------
                                   Name:  Kevin Ulrich
                                   Title: Authorized Signatory



                               ENHANCED RETAIL FUNDING, LLC

                               By: /s/ Allen R. Goldstein
                                   ----------------------------------
                                   Name:  Allen R. Goldstein
                                   Title: CFO and Assistant Vice President



                               CLYDE STREET INVESTMENT, LLC


                               By: /s/ Ralph D. Dillon
                                   --------------------------------------
                                   Name:  Ralph D. Dillon
                                   Title: Managing Member


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                               RICHMOND ASSOCIATES, L.P.

                               By:  MHM MANAGEMENT, INC.,
                                    its General Partner

                               By:  /s/ John F. Clausen
                                    --------------------------------------
                                    Name:  John F. Clausen
                                    Title: Vice President




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