FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT









Exhibit 10.17




FIRST AMENDMENT TO LOAN AND SECURITY

AGREEMENT




 




 




THIS FIRST AMENDMENT AGREEMENT (the “Amendment”) dated December 12,

2001, is between and among Wells Fargo Retail Finance LLC (hereinafter, “WFRF” or

“Lender”), a Delaware limited liability company with its principal

executive offices at One Boston Place, 18th Floor, Boston,

Massachusetts 02108 and Paper Warehouse, Inc. a Minnesota corporation with its

principal executive offices at 7630 Excelsior Boulevard, Minneapolis,

Minnesota, 55426-4504 (hereinafter “Paper Warehouse”), jointly and severally

with  Paper

Warehouse Franchising, Inc. a Minnesota corporation with its principal

executive offices at 7630 Excelsior Boulevard, Minneapolis, Minnesota,

55426-4504 (hereinafter “PWFI”), PartySmart.com, Inc. a Minnesota

corporation with its principal executive offices at 7630 Excelsior Boulevard,

Minneapolis, Minnesota, 55426-4504 (“PartySmart”) (hereinafter Paper Warehouse,

PWFI and PartySmart may be collectively referred to as collectively Borrowers

and any one of them individually as “Borrower”)




 




Recitals




 




The Borrower and the Lender have entered into a Loan and Security

Agreement dated as the 7th of September, 2001 (the “Loan

Agreement”) and all indebtedness of the Borrower to the Lender is

secured pursuant to the terms of the Loan Agreement and all other Loan

Documents as defined therein (collectively, the “Loan Documents”).




 




The Borrower and the Lender desire to amend the Loan Agreement to

provide for a substitute Exhibit 9-11, and that such amendment be deemed to be

effective as of the Closing Date.




 




NOW, THEREFORE, in consideration of the premises and of the mutual

covenants and agreements herein contained, it is agreed as follows:




 




1.             Terms

used in this Amendment, which are defined in the Loan Agreement, shall have the

same meanings as defined therein, unless otherwise defined herein.




 




2.             The

Loan Agreement is hereby amended to provide that the EBITDA Covenant set forth

on Exhibit 9-11 attached at closing is hereby stricken in its entirety and the

new EBITDA Covenant set forth below is substituted therefore as if attached on

the Closing Date:




 




EBITDA




 




Measured on a rolling four quarter basis, on the last

day of each of the Company’s fiscal quarters (the “Measurement Dates”), during

the term hereof, actual EBIDTA shall be at least 80% of the prior 12 month

EBITDA set forth in the Business Plan if the prior 12 month EBITDA is

forecasted to be positive, and no greater than 120% of the prior 12 month

EBITDA if the prior 12 month EBITDA is forecasted to be negative.




 




 




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To the extent there exist or have existed any Event(s) of Default based

upon the EBITDA covenant set forth on Exhibit 9-11 prior to amendment hereby,

Lender hereby waives such Event of Default.




 




3.             Except

as explicitly amended by this Amendment, all of the terms and conditions of the

Loan Agreement and Forebearance Agreement are hereby ratified and confirmed,

and shall remain in full force and effect and shall apply to any advance

thereunder.




 




4.             The

Borrower hereby represents and warrants to the Lender as follows:




 




(a)                                  The Borrower has all requisite power and

authority to execute this Amendment and to perform all of its obligations

hereunder, and this Amendment has been duly executed and delivered by the

Borrower and constitutes the legal, valid and binding obligation of the

Borrower, enforceable in accordance with its terms.




 




(b)                                 The execution, delivery and performance

by the Borrower of this Amendment has been duly authorized by all necessary corporate

action and does not (i) require any authorization, consent or approval by any

governmental department, commission, board, bureau, agency or instrumentality,

domestic or foreign, (ii) violate any provision of any law, rule or regulation

or of any order, writ, injunction or decree presently in effect, having

applicability to the Borrower, or the articles of incorporation or by-laws of

the Borrower, or (iii) result in a breach of or constitute a default under any

indenture or loan or Loan agreement or any other agreement, lease or instrument

to which the Borrower is a party or by which it or its properties may be bound

or affected.




 




(c)                                  All of the representations and warranties

contained in Article 5 of the Loan Agreement are correct on and as of the date

hereof as though made on and as of such date, except to the extent that such

representations and warranties relate solely to an earlier date.




 




(d)                                 With respect to each of Paper Warehouse,

PartySmart and PWFI: (i) The resolutions of the board of directors of the

Borrower attached to the Borrower’s General Certificate provided at closing,

and delivered to the Lender in connection with the execution and delivery of

the Loan Agreement (the “Certificate”) are in full force and

effect, (ii) the Articles of Organization and By Laws of the Borrower, which

were certified and delivered to the Lender pursuant to the Certificate,

continue in full force and effect and have not been amended or otherwise

modified except as set forth in the Certificate to be delivered, and (iii) the

officers and agents of the Borrower who have been certified to the Lender

pursuant to the Certificate as being authorized.




 




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5.              All references in the Loan Agreement to “this

Agreement” shall be deemed to refer to the Loan Agreement as amended hereby.




 




6.             The Loan Documents set forth in full are terms of

agreement between the parties and are intended as the full, complete and

exclusive contract governing the relationship between the parties, superseding

all other discussions, promises, representations, warranties, agreements and

the understandings between the parties with respect thereto. No term of the

Loan Documents may be modified or amended, nor may any rights thereunder be

waived, except in a writing signed by the party against whom enforcement of the

modification, amendment or waiver is sought. Any waiver of any condition in, or

breach of, any of the foregoing in a particular instance shall not operate as a

waiver of other or subsequent conditions or breaches of the same or a different

kind. The Lender’s exercise or failure to exercise any rights under any of the

foregoing in a particular instance shall not operate as a waiver of its right

to exercise the same or different rights in subsequent instances. Except as

expressly provided to the contrary in this Amendment, or in another written

agreement, all the terms, conditions, and provisions of the Loan Documents

shall continue in full force and effect. If in this Amendment’s description of

an agreement between the parties, rights and remedies of Lender or obligations

of the Borrower are described which also exist under the terms of the other

Loan Documents, the fact that this Amendment may omit or contain a briefer

description of any rights, remedies and obligations shall not be deemed to

limit any of such rights, remedies and obligations contained in the other Loan

Documents.




 




7.             This Amendment has been prepared through the joint

efforts of all the parties. Neither its provisions nor any alleged ambiguity

shall be interpreted or resolved against any party on the ground that such

party’s counsel was the draftsman of this Amendment.  Each of the parties declares that such party has carefully read

this Amendment and the agreements, documents and instruments being entered into

in connection herewith and that such party knows the contents thereof and sign

the same freely and voluntarily. The parties hereto acknowledge that they have

been represented in negotiations for and preparation of this Amendment and the

agreements, documents and instrument being entered into in connection herewith

by legal counsel of their own choosing, and that each of them has read the same

and had their contents fully explained by such counsel and is fully aware of

their contents and legal effect.




 




 




                IN WITNESS WHEREOF, the parties

hereto have caused this First Amendment to be duly executed as of the day and

year first above written.




 




	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  PAPER WAREHOUSE,

  INC.


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  (BORROWER)


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  By:  \s\

  Cheryl W. Newell


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Print Name: 

  Cheryl W. Newell


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Title:  Vice

  President and Chief Financial Officer


  





 




 




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  PAPER WAREHOUSE

  FRANCHISING, INC.


  
	

   


  	

   


  	

  (BORROWER)


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:  \s\

  Cheryl W. Newell


  
	

   


  	

   


  	

  Print Name: 

  Cheryl W. Newell


  
	

   


  	

   


  	

  Title:  Chief

  Financial Officer


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  PARTYSMART.COM, INC.


  
	

   


  	

   


  	

  (BORROWER)


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:  \s\

  Cheryl W. Newell


  
	

   


  	

   


  	

  Print Name: 

  Cheryl W. Newell


  
	

   


  	

   


  	

  Title:  Chief

  Financial Officer


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  WELLS FARGO RETAIL FINANCE LLC


  
	

   


  	

   


  	

  (LENDER)


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:  \s\

  Daniel F. O’Rourke


  
	

   


  	

   


  	

  Print Name:  Daniel F. O’Rourke


  
	

   


  	

   


  	

  Title: 

  Account Executive


  
	

   


  	

   


  	

   


  





 




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