Exhibit 10.1


 


THIRD AMENDMENT TO FINANCING
AGREEMENT


 


 


THIRD AMENDMENT
dated as of April 27, 2005 (the “Third Amendment”) to the Loan and
Security Agreement, dated as of August 23, 2000, by and between iParty Retail
Stores Corp. and iParty Corp.(individually, each a Borrower and,
collectively, the “Borrowers”), and Wells Fargo Retail Finance II, LLC,
a Delaware limited liability company (formerly known as Wells Fargo Retail
Finance, LLC)(in such capacity, the “Lender”), as amended by that First
Amendment to Loan and Security Agreement dated as of May 23, 2002 by and
between the Borrowers and the Lender, and as amended by that Second Amendment
to Loan and Security Agreement dated as of January 2, 2004 by and between the
Borrowers and the Lender  (as amended from
time to time, the “Loan Agreement”). 
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.


 


The Borrowers have
requested that the Lender agree to certain modifications of the financial covenants
contained in the Loan Agreement as set forth herein.  The Lender is prepared to agree to the
Borrowers’ request on the terms and conditions contained herein.


 


In consideration
of the foregoing and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
agree as follows:


 


1.             Amendments to Loan Agreement.    The Loan Agreement is hereby amended as
follows


 


(a)      The
definition of “Borrowing Base” is hereby deleted and the following is
substituted therefor:


 


“‘Borrowing Base’: 
Means the sum of


 


(A)          the lesser of (i) or (ii) where


 


(x)            During
the period commencing on October 1 and ending on June 30 of any calendar year
during the term hereof (i) is the result (expressed in Dollars) of seventy
(70%) percent times the aggregate value of
Acceptable Inventory at Cost, and (ii) is the result (expressed in Dollars) of
eighty-five (85%) percent times the then applicable Net Retail Liquidation
Value; or


 


(y)           During
the period commencing on July 1 and ending on September 30 of any calendar year
during the term hereof (i) is the result (expressed in Dollars) of seventy-five
(75%) percent times the aggregate value of
Acceptable Inventory at Cost, and (ii) is the result (expressed in Dollars) of
ninety (90%) percent times the then applicable Net Retail Liquidation Value; plus


 


(B)           the lesser of (i) or (ii) where (i) is the result (expressed
in Dollars) of eighty-five (85%) percent times the
aggregate value of Eligible Credit Card Receivables and (ii) is Two Million
($2,000,000) Dollars; plus


 


(C)           the
Special Subline.”


 


(b)      The
definition of “Minimum Availability Block” shall be deleted in its entirety and
the following substituted therefor:


 


“Minimum Availability Block”:  Means, during the period between April 27,
2005 and November 1, 2005, an amount expressed in Dollars equal to $375,000,
and thereafter, an amount expressed in Dollars equal to at least five (5%) of
the Credit Limit or the Adjusted Credit Limit, whichever is then in effect.”


 


 





















 


(c)      The
definition of “Special Subline” shall be added to Exhibit 3 of the Loan Agreement,
which definition shall read as follows:


 


“‘Special Subline’: 
Initially, zero ($0) Dollars. 
From and after the Special Subline Activation Date through the Special
Subline Termination Date, Five Hundred Thousand ($500,000) Dollars, and
thereafter zero ($0) Dollars.”


 


(d)      The
definition of “Special Subline Activation Date” shall be added to Exhibit 3
of the Loan Agreement, which definition shall read as follows:


 


“‘Special Subline Activation Date’:  That date which is five (5) days from the
date that the Borrower furnishes the Lender with written notice of its
intention to activate the Special Subline, which notice shall be effective
provided that there does not exist an Event of Default as of Special Subline
Activation Date.


 


(e)      The
definition of “Special Subline Termination Date” shall be added to Exhibit 3 of
the Loan Agreement, which definition shall read as follows:


 


(f)       “Special
Subline Termination Date”: Means the date that is the earlier of (i) November
1, 2005 or (ii) written notice by the Borrowers to the Lender of their
termination of the Special Subline, which notice shall be irrevocable.  The Special Subline shall not be renewable or
subject to reinstatement following the occurrence of the Special Subline
Termination Date.


 


(g)      Section
1-8(a) is deleted in its entirety and the following new Section 1.8(a) shall be
substituted therefor:


 


“(a)         Prior
to the Special Subline Activation Date, the unpaid principal balance of the
Loan Account, shall bear interest, until repaid (calculated based upon a
360-day year and actual days elapsed), at the aggregate of Base plus one-half
of one (0.50 %) percent but in no event in excess of the maximum rate permitted
by applicable law.  From and after the
Special Subline Activation Date, the unpaid principal balance of the Loan
Account shall bear interest, until repaid (calculated based upon a 360-day year
and actual days elapsed), at the aggregate of Base plus three-quarters of one
(0.75%) percent but in no event in excess of the maximum rate permitted by
applicable law, provided, that upon the occurrence of the Special Subline
Termination Date and reduction by the Borrowers of the outstanding balance of
the Special Subline to zero ($0) Dollars, the unpaid principal balance of the
Loan Account shall bear interest, until repaid (calculated based upon a 360-day
year and actual days elapsed), at the aggregate of Base plus one half of one
(0.5%) percent but in no event in excess of the maximum rate permitted by
applicable law.”


 


(h)      Section
12-1 is amended to reflect a change in the notice address of counsel to the
Lender by deleting the reference to Ruberto, Israel & Weiner and
substituting therefor the following:


 


“Brown Rudnick Berlack Israels LLP


One Financial Place, 18th Floor


Boston, MA 02111


Attention: Peter J. Antoszyk, Esq.


Phone:  (617)
856-8513


Fax: (617) 856-8201”


 


(i)       The following Exhibits to the Loan
Agreement are hereby stricken and replaced by the correspondingly identified
Exhibits attached hereto: Exhibits 5-4 [Locations], 5-5 [Encumbrances and
Liens], 5-6 [Indebtedness], 5-7 [Insurance], 5-9 [Leases] and 9-10 [Business
Plan].


 


2.             Acknowledgement of Liabilities
by Borrowers. Borrowers confirm and agree that (a) all representations and
warranties contained in the Loan Agreement and in the other Loan Documents,
after giving effect to the updated Exhibits attached to the Third Amendment,
are on the date hereof true and


 


 





















 


correct in all material
respects, and (b) they are unconditionally liable for the punctual and full
payment of all Liabilities now due and owing under the Loan Agreement and other
Loan Documents, including, without limitation, all reasonable charges, fees,
expenses and costs (including attorneys’ fees and expenses) under the Loan
Documents, and that Borrowers have no defenses, counterclaims or setoffs with
respect to full, complete and timely payment of all such Liabilities.


 


3.             Ratification of Financing.  The Borrowers confirm that the Loan Agreement
and the Loan Documents remain in full force and effect without amendment or
modification of any kind, except for the amendments explicitly set forth
herein.  This Third Amendment shall be
deemed to be one of the Loan Documents and, together with the other Loan
Documents, constitute the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior dealings, correspondence,
conversations or communications between the parties with respect to the subject
matter hereof.  This Third Amendment
shall be considered a Loan Document and, without in any way limiting the
application of other provisions of the Loan Agreement, this Third Amendment
shall governed by the provisions of Sections 14-2,14-3,14-4, 14-7,14-8, 14-9,
14-10, 14-14 of the Loan Agreement.  No
further amendment to the Loan Agreement shall be made except by a writing
signed by all parties to the Loan Agreement.


 


4.             Representations, Warranties and
Covenants.  Each Borrower, jointly and
severally, represents, warrants and covenants with and to the Lender as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, the truth and accuracy of, or
compliance with each, together with the representations, warranties and
covenants in the other Loan Agreements, begin continuing condition of the
making or providing any loans or letters of credit by the Lender to Borrowers:


 


(a)      This Third Amendment has been duly
authorized, executed and delivered by all necessary action of each Borrower and
each Guarantor, and is in full force and effect, and the agreements and
obligations of each Borrower and Guarantor contained herein constitute legal,
valid and binding obligations of Borrower enforceable against each Borrower and
Guarantor in accordance with its terms.


 


(b)      After giving effect to this Third
Amendment, there is no Event of Default under the Loan Agreement or any of the
Loan Documents.


 


5.             Conditions Precedent.    This Third Amendment shall become effective
(the “Effective Date of the Third Amendment”) upon satisfaction of each of the
following conditions precedent or waiver of such conditions by the Lender:


 


(a)      Receipt by Lender of this Third Amendment
duly executed by the Borrowers, Lender and Lenders.


 


(b)      All representations and warranties
contained herein shall be true and correct in all material respects.


 


(c)      After giving effect to this Third
Amendment, no Default or Event of Default shall have occurred and be
continuing.


 


6.             Counterparts.    This Third Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original hereof
and submissible into evidence and all of which together shall be deemed to be a
single instrument.  In making proof of
this Third Amendment, it shall not be necessary to produce or account for more
than one counterpart thereof signed by each of the parties hereto.  Delivery of an executed counterpart of this
Third Amendment by telefacsimile or other electronic method of transmission
shall have the same force and effect as delivery of an original executed
counterpart of this Third Amendment.


 


 





















 


 IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their authorized officers as of the day and year
first above written.


 


	
   

  	
  WELLS
  FARGO RETAIL FINANCE II, LLC

  
	
   

  	
  (Lender)

  
	
   

  	
  By: 

  	
  /s/ LYNN WHITMORE

  	
   

  
	
   

  	
   

  	
  Name: Lynn
  Whitmore

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
  BORROWERS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  IPARTY RETAIL STORES CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/
  PATRICK FARRELL

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Patrick Farrell

  	
   

  	
   

  
	
   

  	
  Title:
  President and Chief
  Financial Officer

  	
   

  	
   

  
	
  IPARTY CORP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/
  PATRICK FARRELL

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Patrick Farrell

  	
   

  	
   

  
	
   

  	
  Title:
  President and Chief
  Financial Officer

  	
   

  	
   

  



 


 





















 


ACKNOWLEDGMENT
AND CONSENT


 


 


The undersigned, as a party to one
or more Loan Documents (as defined in the Loan and Security Agreement, dated as of August 23,
2000, by and between iParty Retail Stores Corp. and iParty Corp. (individually,
each a Borrower and, collectively, the “Borrowers”), and Wells
Fargo Retail Finance II, LLC, a Delaware limited liability company (formerly
known as Wells Fargo Retail Finance, LLC)(in such capacity, the “Lender”),
as amended by that First Amendment to Loan and Security Agreement dated as of
May 23, 2002 by and between the Borrowers and the Lender, and as amended by
that Second Amendment to Loan and Security Agreement dated as of January 2,
2004 by and between the Borrowers and the Lender  (as amended from time to time, the “Loan
Agreement”), hereby (i) acknowledge and
consent to the Third Amendment dated as of April 27, 2005, to Loan Agreement
(the “Amendment”, all terms defined therein being used herein as defined
therein), to which this Acknowledgement and Consent is attached; (ii) confirm
and agree that each Loan Document to which the undersigned is a party is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects; and (iii) confirm and agree that to the extent that
any such Loan Document purports to assign or pledge to the Lender, or to grant
to the Lender a security interest in or lien on, any collateral as security for
the obligations of such Borrower or Guarantor from time to time existing in
respect of the Loan Documents, such pledge, assignment and/or grant of a
security interest or lien is hereby ratified and confirmed in all respects as
security for all such obligations of such Borrower or Guarantor, whether now
existing or hereafter arising.


 


Dated:  April 27, 2005


 


	
  IPARTY RETAIL STORES CORP

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ PATRICK FARRELL

  	
   

  	
   

  
	
   

  	
  Name:
  Patrick Farrell

  	
   

  
	
   

  	
  Title:
  President and Chief
  Financial Officer

  	
   

  
	
  IPARTY CORP.

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  PATRICK FARRELL

  	
   

  	
   

  
	
   

  	
  Name: Patrick Farrell

  	
   

  
	
   

  	
  Title:
  President and Chief
  Financial Officer

  	
   

  



 


Signature Page to Third Amendment