Exhibit 10.21
**FIRST AMENDMENT AGREEMENT**
     THIS FIRST AMENDMENT AGREEMENT (this “Amendment”) is entered into as of February 10,2005 by and among, on the one hand, the financial institutions from time to time party to the LoanAgreement referred to below as Lenders (the “Lenders”), Wells Fargo Retail Finance, LLC, asthe arranger, collateral and administrative agent for the Lender Group and any other holder ofObligations (in such capacity, “Agent”), and, on the other hand, Party City Corporation, aDelaware corporation (the “Borrower”).
**RECITALS**
     Borrower, the Lenders and the Agent have entered into a Loan and Security Agreement dated asof January 9, 2003 (as amended to the date hereof, as amended hereby and as further amended,restated, supplemented or otherwise modified from time to time, the “Loan Agreement”)pursuant to which the Lenders and the Agent have agreed to make revolving credit loans and toprovide other financial accommodations to Borrower. The parties signatory hereto wish to amend theLoan Agreement as set forth herein.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained,and for other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties signatory hereto agree as follows.
     1. Definitions. Capitalized terms not otherwise defined herein shall have therespective meanings given such terms in the Loan Agreement.
     2. Amendment. Section 7.1 of the Loan Agreement is hereby amended by deletingsubsection (h) of such Section 7.1 in its entirety and inserting in lieu thereof thefollowing new subsection (h):
     “(h) Unsecured Indebtedness not otherwise permitted under this Section not toexceed $1,000,000 in the aggregate at any one time outstanding.”
     3. Conditions Precedent to Amendment. The satisfaction of each of the following,unless waived or deferred by the Agent in its Permitted Discretion, shall constitute conditionsprecedent to the effectiveness of this Amendment.
     (a)After giving effect to this Amendment, the representations and warranties in theLoan Agreement and the other Loan Documentsshall be true and correct in all material respects on and as of the date hereof, as though made onsuch date (except to the extent that such representations and warranties relate solely to anearlier date);
     (b)After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing on the date hereof,nor shall any Default or Event of Default result from the consummation of the transactionscontemplated herein;
     (c) This Amendment shall have been executed by Borrower, the Agent and the Required Lendersand shall be in full force and effect; and
 

 

     (d) No injunction, writ, restraining order, or other order of any nature prohibiting,directly or indirectly, the consummation of the transactions contemplated herein or by the LoanDocuments shall have been issued and remain in force by any Governmental Authority againstBorrower, the Agent or any Lender.
     4. Representations and Warranties. Borrower hereby represents and warrants to theAgent that:
     (a) the execution, delivery, and performance of this Amendment and of the Loan Agreement arewithin Borrower’s corporate, limited liability company and/or partnership powers, as applicable,have been duly authorized by all necessary corporate, limited liability company and/or partnershipaction, as applicable, and are not in contravention of any law, rule, or regulation, or any order,judgment, decree, writ or injunction, or award of any arbitrator, court, or governmentalauthority, or of the terms of its charter, bylaws or other operative or formative documents, or ofany contract or undertaking to which it is a party or by which any of its properties may be boundor affected;
     (b) this Amendment has been duly executed and delivered by Borrower;
     (c) this Amendment and the Loan Agreement constitute Borrower’s legal, valid, and bindingobligation, enforceable against Borrower in accordance with its terms;
     (d)after giving effect to this Amendment, Borrower is in compliance with all of theterms and provisions set forth in the LoanAgreement and each of the other Loan Documents, each as previously amended and as amended hereby,on their part to be observed or performed on or prior to the date hereof;
     (e)after giving effect to this Amendment, no Default or Event of Defaulthas occurred and is continuing; and
     (f) since December 31, 2004, no Material Adverse Change has occurred.
     5. Choice of Law. The validity of this Amendment, its construction, interpretationand enforcement, and the rights of the parties hereunder, shall be determined under, governed by,and construed in accordance with the laws of the State of New York.
     6. Counterparts; Telefacsimile Execution. This Amendment may be executed in anynumber of counterparts and by different parties in separate counterparts, each of which when soexecuted and delivered, shall be deemed an original, and all of which, when taken together, shallconstitute one and the same instrument. Delivery of an executed counterpart of a signature page tothis Amendment by telefacsimile shall be as effective as delivery of a manually executedcounterpart of this Amendment. Any party delivering an executed counterpart of this Amendment bytelefacsimile also shall deliver a manually executed counterpart of this Amendment but the failureto deliver a manually executed counterpart shall not affect the validity, enforceability, andbinding effect of this Amendment.
     7. Reaffirmation. Borrower further reaffirms all of its obligations under the LoanAgreement and the other Loan Documents.
2

 

     8. Effect on Loan Agreement. The execution, delivery, and performance of thisAmendment, except as expressly set forth herein, shall not operate as a waiver of or as anamendment of, any right, power, or remedy of the Agent or any Lender under the Loan Agreement.
     9. Further Assurances. Borrower shall execute and deliver all agreements, documents,and instruments, in form and substance satisfactory to Agent, and take all actions as Agent mayreasonably request from time to time, to perfect and maintain the perfection and priority of thesecurity interest in the Collateral held by Agent and to fully consummate the transactionscontemplated under this Amendment and the Loan Agreement.
     10. Miscellaneous.
     (a) Upon and after the effectiveness of this Amendment, each reference in the Loan Agreementto “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the LoanAgreement, and each reference in the other Loan Documents to “the Loan Agreement”, “thereunder”,“therein”, “thereof”, or words of like import referring to the Loan Agreement, shall mean and be areference to the Loan Agreement as amended hereby.
     (b) Except to the extent expressly amended hereby, the Loan Agreement and all other LoanDocuments shall be unaffected hereby, shall continue in full force and effect, are hereby in allrespects ratified and confirmed, and shall constitute the legal, valid, binding and enforceableobligations of Borrower to the Lenders and the Agent.
[The remainder of this page is intentionally left blank.]
3

 

     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first abovewritten.         PARTY CITY CORPORATION        By: /s/ Gregg Melnick          Name:    Gregg Melnick     Title:      Chief Financial Officer           WELLS FARGO RETAIL FINANCE, LLC,