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Exhibit 10.20

FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FOURTH AMENDMENT AGREEMENT dated as of May 1, 2003 (this Amendment) is
between and among Wells Fargo Retail Finance II LLC (hereinafter, WFRF or
Lender"), a Delaware limited liability company with its principal executive
offices at One Boston Place, 18th Floor, Boston, Massachusetts 02108, 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),
and PartySmart.com, Inc., a Minnesota corporation with its principal executive
offices at 7630 Excelsior Boulevard, Minneapolis, Minnesota, 55426-4504
(hereinafter PartySmart) (hereinafter Paper Warehouse, PWFI and PartySmart may be
collectively referred to as collectively Borrowers and any one of them
individually as Borrower").

Recitals

WHEREAS,

A.     The Borrowers and the Lender have entered into a Loan and Security
Agreement dated as of September 7, 2001, as amended by the First Amendment to
the Loan and Security Agreement dated as of December 12, 2001 (the First
Amendment), the Second Amendment to the Loan and Security Agreement dated as
of April 26, 2002 (the Second Amendment) and by the Third Amendment to the
Loan and Security Agreement (the Third Amendment) dated as of September 3,
2002 through the date hereof (with this Amendment, the Loan Agreement") and
all Liabilities of the Borrowers to the Lender are secured pursuant to the
terms of the Loan Agreement and the Loan Documents by substantially all assets
of the Borrowers; and

B.     The Loan Agreement provides, in relevant part, that the Borrower shall
perform in accordance with the following covenants:

"EBITDA:Measured on a quarterly basis on the last Banking Day of each
fiscal quarter during the term hereof, Borrowers actual EBITDA for the then
fiscal quarter shall:



| | (a) |  | Be equal to or exceed the positive amounts corresponding to
the measurement dates (i.e. last day of each of the second and third
fiscal quarters) referenced below; or
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Not be less than the negative amounts corresponding to the
measurement dates (i.e. last day of each of the first and fourth
fiscal quarters) referenced below:        

|        |  |            
|------- |  | -----------
|Q4 2002 |  | $(108,000)





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(the EBITDA Covenant); and

"MINIMUM/MAXIMUM INVENTORY:Measured monthly, on the last Banking Day of
each fiscal month during the term hereof, end of month (EOM) Inventory at
Cost shall be at least eighty-five (85%) percent of the EOM Inventory set forth
in the Business Plan, and not more than one hundred fifteen (115%) percent of
the of the EOM Inventory set forth in Business Plan

(the Min/Max Inventory Covenant).

C.     In addition, the Borrower advises that it intends to incur an
additional $4,470,000 in unsecured trade debt in contravention of Section 5-6
of the Loan Agreement.

D.     The Borrowers have represented to Lender as follows:



| | i.   |  | For the fourth fiscal quarter of 2002, Borrowers failed
to perform in accordance with the EBITDA Covenant and that such
failure constitutes an Event of Default under the Loan Agreement
(the EBITDA Default);                   
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | ii.  |  | Borrowers failed to perform in accordance with the
Min/Max Inventory Covenant for the end of the month March 2003
and that such failure constitutes an Event of Default under the
Loan Agreement (the Min Max Inventory Default);
|
| | iii. |  | Borrowers incurring of $4,470,000 in additional trade
debt constitutes an Event of Default under the Loan Agreement
(the Additional Indebtedness Default)                                                                       



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (the EBITDA Default, the Min Max Inventory Default, the 2002 Financial
Statement Default and the Additional Indebtedness Default collectively
hereinafter may be referred to as the Current Defaults); and



| | iv. |  | As of the date hereof, no other Event of Default other
than the Current Defaults, or such other defaults as have been
previously expressly waived in writing by the Lender, has
occurred under the Loan Agreement or would be occurring but for
the passage of time or the giving of any notice, or both.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

E.     As a consequence of the Current Defaults all of the Liabilities under
the Loan Agreement are presently due and owing;

F.     The Borrowers have requested that the Lender waive the Current
Defaults; and

G.     The Lender is willing to consent and agree to the Borrowers request as
set forth above, but only upon the terms and conditions set forth herein;

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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 waivers and consents contained herein shall be effective upon receipt by
the Lender of an executed original hereof, and are conditional on the following
and the Borrower hereby acknowledges, agrees and consent to amendment of the
Loan Agreement to provided for the following:



| | (a) |  | Borrowers shall timely file a fiscal year 2002 SEC form 10-K
with audited annual financial statements bearing an unqualified
opinion with explanatory footnotes acceptable to Lender of an
independent certified public accountant acceptable to Lender and
deliver a copy of same to Lender;                                                                                                                                     
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | On or before May 31, 2003, Borrowers shall deliver to Lender
a revised Business Plan, in form acceptable to Lender, which
reflects, inter alia, the Equity Infusion (as defined in
subparagraph (c) below);                                                                                                                                                                                                                       
|
| | (c) |  | On or before June 13, 2003, or such later date as Lender
shall approve, in writing, in its discretion, Borrower shall:                                                                                                                                                                                                                                                                                                            
|
| | i.  |  | obtain a written commitment for an infusion of at least
Five Million ($5,000,000) Dollars of equity, or such other amount
as Lender shall approve in its discretion (the Equity
Infusion), on terms and conditions (including a condition
respecting the compromise of Borrowers then-outstanding trade
payables) that are acceptable to Lender in its discretion; and
deliver a copy of such written commitment to Lender; and
|
| | ii. |  | Borrowers shall provide Lender with confirmation of the
closing and funding of the Equity Infusion, including, without
limitation, delivering copies of all executed documentation and
depositing the proceeds of the Equity Infusion (the Equity
Proceeds) into the Blocked Account pursuant to Section 7-7 of
the Loan Agreement;                                                                                             
|
| | (d) |  | Lender agrees that Borrower shall be entitled to utilize any
additional Availability created by the Equity Proceeds in
compromising Borrowers trade payables on terms consistent with
written commitment referenced in subparagraph (c)(i) above, and the
Loan Agreement and on such other terms acceptable to Lender in its
discretion.                                                                                         
|
| | (e) |  | The Revolving Credit shall no longer provide for Eurodollar
Loans and accordingly:                                                                                                                                                                                                                                                                                                                                                

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| | i.   |  | Any existing Eurodollar Loans are hereby converted to
Index Rate Loans;                                                                                                                                                                                                                                                                                                                                                       
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | ii.  |  | The definition of Eurodollar Margin is hereby
deleted; and                                                                                                                                                                                                                                                                                                                                                                  
|
| | iii. |  | Sections 1.8(c) and 1.8(d) are hereby deleted from the
Loan Agreement;                                                                                                                                                                                                                                                                                                                                                        
|
| | (f)  |  | Borrowers shall pay a fee in the amount of Twenty-Five
Thousand ($25,000) Dollars (the Waiver Fee), payable as follows:
$5,000 payable on the date hereof; and $5,000 payable on each Monday
thereafter until paid in full; by accepting this Agreement, the
Borrowers hereby authorize and direct the Lender to advance such
Waiver Fee and to treat the same as a loan to the Borrower pursuant
to the Loan Documents; and
|
| | (g)  |  | Upon execution of this Amendment the Borrowers shall
reimburse Lender for any and all of Lenders counsels reasonable
fees and expenses and the Borrowers hereby authorize and direct the
Lender to advance such fees and expenses and to treat the same as a
loan to the Borrowers pursuant to the Loan Documents.                                                                                                          

3.     Lender hereby waives the Events of Default caused by the Borrowers (i)
failure to perform for the fourth fiscal quarter of 2002 in accordance with the
EBITDA Covenant; (ii) failure to perform in accordance with the Min/Max
Inventory Covenant for the end of the month March 2003; and (iii) incurrence of
$4,470,000 in additional unsecured trade debt and, to the extent such trade
debt remains unsecured and subject to all other applicable provisions of the
Loan Agreement, consents to the same.

4.     Lender hereby waives testing for compliance with the EBITDA Covenant and Min
Max Inventory Covenant until the next testing date set by the revised Business
Plan to be provided in accordance with Section 2(c) above.

5.     The waivers and consent set forth herein shall not be deemed a waiver of or
consent to any default or Event of Default other than the Current Defaults or a
continuing waiver or consent to any future default of the EBITDA Covenant, the
Min Max Inventory Covenant, the Additional Indebtedness Default (provided
however the existence of the $4,470,000 in additional unsecured trade debt
referenced above, to the extent such trade debt remains unsecured and subject
to all other applicable provisions of the Loan Agreement from the date hereof
through the date of funding of the Equity Infusion, as referenced above, shall
not be deemed an Event of Default) any covenant to provide future financial
reporting, or consent to any additional or future Indebtedness, and Lender
shall not be obligated to waive or consent to any other Event of Default.

6.     Each of the Borrowers hereby, jointly and severally, further represents and
warrants to the Lender as follows:

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) It 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 such Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (b) All the representations set forth in the Recitals hereto are
true and correct;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (c) 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.                                                                                                                                                                          
|
| | (d) All of the representations and warranties set forth in Article 5
of the Loan Agreement are correct on and as of the Amendment Closing Date
as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (e) Except to the extent set forth on Exhibit A hereto, (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 original execution and delivery of the Loan
Agreement (the Certificate") are in full force and effect, (ii) the
Certificate of Incorporation 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 any Certificate to be delivered herewith, and (iii) the officers and directors of the Borrower who have been
certified to the Lender pursuant to the Certificate as being authorized
remain authorized. In addition, the definition of Executive Officer is
hereby amended to strike the name Cheryl Newell and substitute therefore
Diana G. Purcel.

7.     By execution hereof, each of the Borrowers, jointly and severally,
represents and warrants that it has no defenses, setoffs or counterclaims to
the payment of its liabilities and obligations to Lender. To the extent any
such defenses, setoffs, counterclaims ever existed, in consideration of the
Lenders agreements herein and other valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) such defenses, setoffs,
counterclaims are hereby expressly waived and Lender is released, remised and
forever discharged from any and all, defenses causes of action, counterclaims
or claims of any kind or nature, known or unknown, existing or which have
existed on or prior to the date hereof.

8.     All references in the Loan Agreement to this Agreement shall be deemed to
refer to the Loan Agreement as amended through the date hereof and hereby.

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9.     The Loan Documents set forth in full the 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
Borrowers 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.

10.     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.

11.     The Lender and the Borrowers, jointly and severally, further agree that
this Amendment and the Loan Agreement and all documents which have been or may
be hereinafter furnished by any Borrower to the Lender may be reproduced by the
Lender by any photographic, photostatic, microfilm, xerographic or similar
process, and any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business).

12.     This Amendment may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Amendment.
Any party delivering an executed counterpart of this Amendment by telefacsimile
also shall deliver an original executed counterpart of this Amendment but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.

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The foregoing
shall apply to each other Loan Document mutadis mutandis, except as otherwise
specifically provided therein or therefore.

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
to be duly executed as a document under seal as of May 1, 2003. (Signature
pages to follow)

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Signature of Borrowers to Fourth Amendment to Loan and Security Agreement

| |                                                                             
| | ----------------------------------------------------------------------------
| | PAPER WAREHOUSE, INC.
(BORROWER)                                            
|
| | By:\s\ Yale T. DolginowPrint Name: Yale T. Dolginow
Title: President and CEO
|
| | PAPER WAREHOUSE FRANCHISING, INC.
(BORROWER)                                
|
| | By:\s\ Yale T. DolginowPrint Name: Yale T. Dolginow
Title: President and CEO
|
| | PARTYSMART.COM, INC.
(BORROWER)                                             
|
| | By:\s\ Yale T. DolginowPrint Name: Yale T. Dolginow
Title: President and CEO

Lenders signature on following page

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Signature of Lender to Fourth Amendment to Loan and Security Agreement

| |                                                            
| | -----------------------------------------------------------
| | WELLS FARGO RETAIL FINANCE II LLC
(LENDER)                 
|
| | By:\s\ Lynn WhitmoreLynn Whitmore, Assistant Vice President

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EXHIBIT A

CHANGES TO BORROWERS GENERAL CERTIFICATES

Cheryl W. Newell is no longer authorized and empowered to act as an officer of
Borrowers in accordance with the resolutions attached as Exhibit A to the
Certificates of Borrowers.

10