Document:

Exhibit
10.1

FORM OF PERFORMANCE SHARE UNIT AWARD AGREEMENT

PERFORMANCE SHARE
UNIT AWARD AGREEMENT UNDER THE

ASBURY AUTOMOTIVE GROUP, INC. 2002 EQUITY INCENTIVE PLAN

dated as of October 23, 2006 between Asbury Automotive Group, Inc. (the “Company”),

a Delaware corporation, and {NAME}.

This Performance Share Unit Award Agreement (the “Award
Agreement”) sets forth the terms and conditions of a target award of {X}
performance compensation shares (the “Award”) that are subject to the
terms and conditions specified herein (“Performance Awards”) and that
are granted to you under the Asbury Automotive Group, Inc. 2002 Equity
Incentive Plan (the “Plan”).  This
Award provides you with the opportunity to earn, subject to the terms of this
Award Agreement, shares of the Company’s common stock, $0.01 par value (“Shares”).

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF
THE PLAN AND THIS AWARD AGREEMENT.  BY
SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS
AND CONDITIONS OF THIS AWARD AGREEMENT.

SECTION
1.  Definitions.  Capitalized terms used in this Award
Agreement that are not defined in this Award Agreement have the meanings as
used or defined in the Plan.  As used in
this Award Agreement, the following terms shall have the meanings set forth
below:

“Cause” shall have the meaning set forth in any
employment agreement then in effect between you, on the one hand, and the
Company or any of its Affiliates, on the other hand, or, if not defined in any
such agreement, “Cause” shall mean a finding by the Committee of any of the
following: (a) your being convicted of, or entering a plea of nolo
contendere to, any crime that constitutes a felony or involves moral turpitude,
(b) your gross negligence or serious misconduct (including, without limitation,
any criminal, fraudulent or dishonest conduct) that is injurious to the Company
or any of its Affiliates, (c) your material breach of your employment or
service contract with the Company or any of its Affiliates, (d) your willful
and continued failure to substantially perform your duties with the Company and
it’s Affiliates or (e) your material breach of a material written policy
of the Company, in each case (with respect to clauses (b), (c), (d) and (e))
which is not corrected within 30 days after written notice from the
Company.  The determination of the
existence of Cause shall be made by the Committee in good faith.

 

 

“Committee” shall mean the compensation
committee of the Board, or such other committee of the Board as may be
designated by the Board to administer the Plan.

“Determination Date” means the date, as
determined by the Committee, on which the Committee determines whether and to
what extent the Performance Goals with respect to the Award have been achieved;
provided that such date shall be no later than March 15, 2009.

“Performance Commencement Date” means
January 1, 2006.

“Performance Cycle” means calendar years 2006
through 2008.

SECTION 2.  (a) 
Performance-Based Right to Payment.  The number of Shares that shall be issued
pursuant to the Award shall be determined based on the Company’s achievement of
Performance Goals as set forth on Exhibit A.  On the Determination Date, the Committee in
its sole discretion shall determine whether and to what extent the Performance
Goals as set forth on Exhibit A have been attained.  Except as otherwise provided in
Section 4 of this Award Agreement, the payment of Shares with respect to
your Performance Awards is contingent on the attainment of the Performance
Goals as set forth on Exhibit A. 
Accordingly, except as otherwise provided in Section 4 of this
Award Agreement, you will not become entitled to payment with respect to the
Performance Awards subject to this Award Agreement unless and until the
Committee determines that the Performance Goals set forth on Exhibit A
have been attained.  Upon such
determination by the Committee and subject to the provisions of the Plan and
this Award Agreement, you shall be entitled to payment of that portion of this
Award as corresponds to the Performance Goals attained (as determined by the
Committee in its sole discretion) as set forth on Exhibit A.  Furthermore, pursuant to Section 3 (except as
otherwise provided therein) and except as otherwise provided in Section 4 of
this Award Agreement, in order to be entitled to payment with respect to any
Performance Awards, you must be employed by the Company or an Affiliate on the
Payment Date.

(b)  Payment of Award.  The Committee shall determine the date on
which payments pursuant to this Award Agreement shall be made (the “Payment
Date”); provided that (i) the Payment Date shall not be any earlier
than the Determination Date and (ii) except as otherwise provided in
Section 4(a)(ii) of this Award Agreement, the Payment Date shall not be
earlier than January 1, 2009, and not later than March 20, 2009.  Except as otherwise provided in
Section 4 of this Award Agreement, payments made pursuant to this Award
Agreement shall be payable in Shares.

SECTION 3.  Forfeiture of Performance Awards.  Except as otherwise provided in Section 4 of
this Award Agreement, if your employment with the Company and its Affiliates
terminates prior to the Payment Date, your rights with respect to any
Performance Awards awarded to you pursuant to this Award Agreement shall

 2
 

 

 

immediately
terminate, and you will be entitled to no payments or benefits with respect
thereto, unless the Committee, as permitted pursuant to the terms of the Plan,
determines in its sole discretion otherwise (in which case any payment to be
made to you pursuant to this Award Agreement will be made to you on the Payment
Date).

SECTION 4.  Change of Control.  In the event of a Change of Control after the
date of this Award Agreement, the provisions of this Section 4 shall
apply.

(a)  Timing of Payment.  In the event of a Change of Control after the
date of this Award Agreement and prior to the Payment Date, to the extent your
rights with respect to Performance Awards have not previously been terminated
in connection with the termination of your employment with the Company and its Affiliates
prior to such Change of Control, payments made pursuant to this Award
Agreement:

(i)  shall be paid on the
Payment Date, provided you remain continuously employed with the Company
and its Affiliates through the Payment Date;

(ii)  shall be paid promptly
following the date of your termination of employment with the Company and its
Affiliates if your employment is involuntarily terminated (other than for
Cause) by the Company and its Affiliates following such Change of Control; or

(iii)  shall be forfeited
if your employment with the Company and its Affiliates is terminated prior to
the Payment Date for any reason other than an involuntary termination described
in the preceding clause (ii).

(b)  Form of Payment.  If
the Change of Control occurs prior to the Payment Date, any amount to be paid
under this Award Agreement shall be paid (at such time as determined in
accordance with paragraph (a) above) in equity securities of the successor
corporation (the “Acquiror Securities”) with the number of such Acquiror
Securities determined by calculating the number of Shares earned under this
Award Agreement (as determined in accordance with paragraph (c) below) and
converting such Shares on the same basis as the conversion applicable to
holders of Shares generally in connection with the Change of Control; provided,
however, that if the consideration received by holders of Shares
generally in connection with the Change of Control is not solely Acquiror
Securities, the Committee may, with the consent of the successor corporation,
provide that the amount to be paid under this Award Agreement will be solely in
the form of Acquiror Securities equal in fair market value to the per Share
consideration received by holders of Shares generally in connection with the
Change of Control.  Notwithstanding the
foregoing, the successor corporation may elect, no later than  90 days following a Change of Control (but in
no event later than the scheduled payment date determined in accordance with
paragraph (a) above), to settle (at such time as determined in accordance with
paragraph (a) above) the Performance Awards in a lump-sum cash payment (in lieu
of settling such Performance Awards with Acquiror Securities) in an amount
equal to the product of (i) the number of Shares earned under this Award
Agreement (as determined in accordance with paragraph (c) below) and (ii) 

 3
 

 

 

the fair market value per Share at the time of the Change of Control,
as determined by the Committee in its sole discretion; provided, however,
that, in the event the consideration received by holders of Shares in
connection with the Change of Control is paid solely in cash, the successor
corporation shall be deemed to have made such election as of the time of such
Change of Control.

(c)  Determination of Performance
Results.  (i)  If the Change of Control occurs prior to the
first anniversary of the Performance Commencement Date, the Performance Goals
set forth on Exhibit A shall be deemed to have been satisfied at
the target level.

(ii)  If the Change of
Control occurs on or following the first anniversary of the Performance
Commencement Date and prior to the third anniversary of the Performance
Commencement Date, immediately prior to the Change of Control, the Committee in
its sole discretion shall determine whether and to what extent the Performance
Goals as set forth on Exhibit A have been attained as of such Change of
Control.  For purposes of this clause
(ii), the Committee shall determine the performance results for (A) any
completed year in the Performance Cycle and (B) any year in the Performance
Cycle which is not fully completed as of the Change of Control but in which at
least six full months have elapsed prior to the Change of Control
(collectively, the “Completed Years”). 
For any Completed Year that does not consist of a full twelve months,
the Committee in its sole discretion shall determine whether and to what extent
the Performance Goals as set forth on Exhibit A have been attained for
such year on an annualized basis.

(A)  If there is only one
Completed Year prior to the Change of Control, the points achieved during the
Completed Years shall be multiplied by three for purposes of determining the
level of achievement on the cumulative three-year point scale set forth on Exhibit
A.

(B)  If there are only two Completed Years
prior to the Change of Control, the points achieved during the Completed Years
shall be multiplied by 1.5 for purposes of determining the level of achievement
on the cumulative three-year point scale set forth on Exhibit A.

(C)  If there are three Completed Years
prior to the Change of Control, the points achieved during the Completed Years
shall be multiplied by 1.0 for purposes of determining the level of achievement
on the cumulative three-year point scale set forth on Exhibit A.

SECTION 5.  Grant Subject to Plan Provisions.  This Award is made pursuant to the Plan, the
terms of which are incorporated herein by reference, and in all respects shall
be interpreted in accordance with the Plan. 
The grant and terms of this Award are subject to the provisions of the
Plan and to interpretations, regulations and determinations concerning the Plan
established from time to time by the Committee in accordance with the
provisions of the Plan, including, but not limited to, provisions 

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pertaining to
(a) rights and obligations with respect to withholding taxes, (b) the
registration, qualification or listing of the Company’s shares,
(c) capital or other changes of the Company and (d) other
requirements of applicable law.  The
Committee shall have the authority to interpret and construe this Award
pursuant to the terms of the Plan, and its decisions shall be conclusive as to
any questions arising hereunder.  This
Award is granted pursuant to Section 6(e) of the Plan and shall not be deemed a
“Performance Compensation Award” for purposes of Section 6(g) of the Plan.  This Award, nevertheless, shall be subject to
the terms of Section 6(g); provided, however, that actions
otherwise required to be taken during the first 90 days of the Performance
Period may be taken following such 90-day period for purposes of this
Award.  Notwithstanding the provisions of
Section 6(g)(vi)(D) of the Plan, the Committee shall not exercise the use of
negative discretion authorized under Section 6(g)(vi)(D) of the Plan to
reduce or eliminate the amount of the Performance Award earned under the terms
of this Award Agreement (it being understood that the determination of the
attainment of the Performance Goals as set forth on Exhibit A shall be
in the sole discretion of the Committee and shall not be deemed to be a
reduction or elimination of the Performance Award for this purpose).

SECTION 6.  No Rights as a Shareholder.  You shall not have any rights or privileges
of a shareholder with respect to the Performance Awards subject to this Award
Agreement unless and until certificates representing Shares are actually issued
and delivered to you or your legal representative in settlement of this Award.

SECTION 7.  No Employment or Other Rights.  The grant of this Award shall not confer upon
you any right to be retained as a director, officer or employee of or to the
Company or any of its Affiliates and shall not interfere in any way with the
right of the Company and its Affiliates to terminate your employment or service
at any time.  The right of the Company
and its Affiliates to terminate at will your employment or service at any time
for any reason, free from any liability or any claim under the Plan or this
Award Agreement, is specifically reserved unless otherwise expressly provided
in the Plan or in this Award Agreement.

SECTION 8.  Non-Transferability of Performance
Awards.  Your rights and interests
under this Award Agreement may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by you except, in the event of your
death, by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary shall not constitute
an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

 5
 

 

 

SECTION 9.  Successors and Assigns of the
Company.  The terms and conditions of
this Award Agreement shall be binding upon and shall inure to the benefit of
the Company and its successors and assigns.

SECTION 10.  Taxes, Consents, Stop Transfer
Orders and Legends.  (a)  Taxes. 
The delivery of Shares pursuant to Section 2(b) (or any cash
payment made pursuant to Section 4) is conditioned on satisfaction of any
applicable withholding taxes in accordance with Section 9(d) of the Plan.  You are solely responsible and liable for the
satisfaction of all taxes and penalties that may arise in connection with this
Award (including any taxes arising under Section 409A of the Code), and the
Company shall not have any obligation to indemnify or otherwise hold you
harmless from any or all of such taxes. 
The Committee shall have the discretion to unilaterally modify this
Award in a manner (i) that it in good faith believes conforms with the
requirements of Section 409A of the Code and (ii) for any distribution
event that could be expected to violate Section 409A of the Code, in order
to make the distribution only upon a “permissible distribution event” within
the meaning of Section 409A of the Code (as determined by the Committee in good
faith).  The Committee shall have the
sole discretion to interpret the requirements of the Code, including
Section 409A, for purposes of the Plan and this Award.

(b)  Consents.  Your rights in respect of Performance Awards
are conditioned on the receipt to the full satisfaction of the Committee of (i)
any required consents that the Committee may determine to be necessary or
advisable (including, without limitation, your consenting to the Company’s
supplying to any third party recordkeeper of the Plan such personal information
as the Committee deems advisable to administer the Plan) and (ii) your
making or entering into such written representations, warranties and agreements
in connection with the acquisition of any Shares pursuant to this Award as the
Committee may request in order to comply with applicable securities laws or
this Award.

(c)  Stop Transfer Orders and Legends.  All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to
this Award shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

SECTION 11.  Committee Discretion.  The Committee shall have full and plenary
discretion with respect to any actions to be taken or determinations to be made
in connection with this Award Agreement, and its determinations shall be final,
binding and conclusive.

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SECTION 12.  Confidentiality.  You hereby agree to keep confidential, and to
not disclose to anyone, the existence and terms of this Award Agreement
(including the Performance Goals set forth on Exhibit A), except to your
immediate family and your financial and legal advisors, or as may be required
by law or ordered by a court with valid jurisdiction over such matter.  You further agree that any disclosure to your
immediate family and your financial and legal advisors will only be made after
such individuals or entities acknowledge and agree to maintain the
confidentiality of this Award Agreement and its terms.

SECTION
13.  Applicable Law.  The validity,
construction, interpretation and effect of this Award Agreement shall be governed
by and determined in accordance with the laws of the State of Delaware without
giving effect to the conflict of laws provisions thereof.

SECTION
14.  Notice.  All notices, requests, demands and other
communications required or permitted to be given under the terms of this Award
Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand or overnight courier or three Business Days after they have
been mailed by U.S. registered mail, return receipt requested, postage prepaid,
addressed to the other party as set forth below:

	
  If to the
  Company:

  	
  Asbury Automotive Group, Inc.

  622 Third Avenue

  New York, NY 10017

  Attention: General Counsel

  
	
  If to you:

  	
  At the then-current address shown on the

  payroll of the Company

  

 

The Company and you may change the address to which
notices under this Award Agreement shall be sent by providing written notice to
the other in the manner specified above. 
Notwithstanding the above, the Company and its Affiliates may provide
notice to you by email or other electronic means to which you have regular
access.

SECTION
15.  Headings.  Headings are given to the Sections and
subsections of this Award Agreement solely as a convenience to facilitate
reference.  Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
this Award Agreement, the Plan or any provision thereof.

 7
 

 

 

SECTION
16.  Amendment of this Award
Agreement.  The Committee may waive
any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate this Award Agreement prospectively or
retroactively; provided, however, that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would materially and adversely impair your rights under this Award
Agreement shall not to that extent be effective without your consent (it being
understood, notwithstanding the foregoing proviso, that this Award Agreement
and Performance Awards shall be subject to the provisions of Sections 6(g)(v)
(including, without limitation, in connection with adjustments to the number or
identity of peer companies), 7(a) and 7(c) (including, without limitation, in
connection with adjustments to the number or kinds of shares, security or other
property subject to this Award Agreement) of the Plan).

SECTION
17.  Counterparts.  This Award Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

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

 

	
  

  	
  ASBURY AUTOMOTIVE GROUP, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  {NAME},

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 8
 

 

 

EXHIBIT A

Performance Goals with Respect to the Performance Awards for the
Performance Period from January 1, 2006 through December 31, 2008

	
  Points Achieved

  	
   

  	
  0-4.9

  	
   

  	
  5-6.9

  	
   

  	
  7-8.9

  	
   

  	
  9-10.9

  	
   

  	
  11-13.9

  	
   

  	
  14-15.4

  	
   

  	
  15.5-16.9

  	
   

  	
  17-18

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  % of
  Standard Award

  	
   

  	
  0%

  	
   

  	
  40%

  	
   

  	
  60%

  	
   

  	
  80%

  	
   

  	
  100%

  	
   

  	
  125%

  	
   

  	
  150%

  	
   

  	
  180%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Target

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Point
Scoring

	
  Metric

  	
   

  	
  Description

  	
   

  	
  Point Allocation

  	
   

  	
  Measurement

  
	
  New Vehicle
  Retail Revenue Same Store

  	
   

  	
  Percent increase in same —store new vehicle retail
  revenue vs. other public consolidators

  	
   

  	
  Annually

  Top 3 out of 6 = 1 point

  	
   

  	
  Sum of the points awarded

  in each of the 3 years

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Used Vehicle
  Retail Revenue Same Store

  	
   

  	
  Percent increase in same — store used vehicle retail
  revenue vs. other public consolidators

  	
   

  	
  Annually

  Top 3 out of 6 = 1 point

  	
   

  	
  Sum of the points awarded in each of the 3 years

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Platform Same
  Store F&I PVR

  	
   

  	
  Percent growth in platform PVR

  	
   

  	
  Annually

  Below 2% = 0 points

  >2%, <3.5% = 0.5 points

  >3.5% = 1 point

  	
   

  	
  The greater of the sum of the points awarded in each
  of the 3 years OR points that would have been awarded each year based on
  compounded annual growth over the 3 years

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Operations
  Gross Profit Same Store

  	
   

  	
  Percent growth in same — store fixed operations
  gross profit

  	
   

  	
  Annually

  Below 3% = 0 points

  >3%, <4% = 0.5 points

  >4%, <5% = 1 point

  >5% = 1.5 points

  	
   

  	
  The greater of the sum of the points awarded in each
  of the 3 years OR points that would have been awarded each year based on
  compounded annual growth over the 3 years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPS Growth

  	
   

  	
  Year-over-year percentage growth in EPS from
  continuing operations

  	
   

  	
  Average annual growth rate Below 0% = -2 points

  >0%, <4% = 0 points

  >4%, <7% = 1.5 points

  >7%, <9.5% = 3 points

  >9.5% = 4.5 points

  	
   

  	
  Average annual growth of income from continuing
  operations over the three year period.

  

 

 9Exhibit 10.1

THIS NOTE IS SUBJECT TO THAT
CERTAIN SUBORDINATION AGREEMENT DATED AS OF OCTOBER 24, 2006 BY AND AMONG
AMSCAN INC., WELLS FARGO RETAIL FINANCE II, LLC, iPARTY CORP., iPARTY RETAIL
STORES CORP., AS SUCH SUBORDINATION AGREEMENT IS AMENDED FROM TIME TO TIME.

THIS NOTE IS SUBJECT TO THAT
CERTAIN SUBORDINATION AGREEMENT DATED AS OF OCTOBER 24, 2006 BY AND AMONG
AMSCAN INC., HIGHBRIDGE INTERNATIONAL LLC, AND iPARTY CORP., AS SUCH
SUBORDINATED AGREEMENT IS AMENDED FROM TIME TO TIME.

SUBORDINATED PROMISSORY NOTE

	
  $1,819,373.11

  	
   

  	
  Elmsford, New York

  
	
   

  	
   

  	
  October 24, 2006

  

 

iPARTY CORP., a Delaware corporation (the “Company”), the principal office of which is located at 270
Bridge Street, Dedham, Massachusetts 
02026, for value received hereby promises to pay to AMSCAN INC., or its
assigns (the “Holder”), the sum of ONE MILLION
EIGHT HUNDRED NINETEEN THOUSAND THREE HUNDRED SEVENTY-THREE AND 11/100 DOLLARS
($1,819,373.11), plus interest calculated at the rate of 11.0% per annum.

This Note shall be payable in thirty-six (36) equal
monthly installments of principal and interest of $59,562.48 commencing on
November 1, 2006, and thereafter, on the first date of each month until October
1, 2009, when the entire remaining principal balance and all accrued interest
shall be due and payable.  All interest
shall be computed on the basis of a 365 day year and shall be paid for the
actual number of days elapsed.

1.                                       SUBORDINATION.

This Note is subordinate to the Senior Indebtedness
(as hereinafter defined) of the Company. 
“Senior Indebtedness” shall mean any and all obligations and
liabilities of the Company to (i) Wells Fargo Retail Finance II, LLC, (“Wells Fargo”) as referenced by the certain Subordination
Agreement dated as of the date hereof by and between the Company, Wells Fargo
and Holder (the “Senior Subordination Agreement”)
and (ii) to any Senior Subordinated Lender, and including, without limitation,
principal and interest thereon, whether accrued before or after the filing of a
petition in bankruptcy or similar insolvency proceeding, and whether direct or
indirect, absolute or contingent, joint or several, secured or unsecured, due
or to become due, now existing or later arising and however evidenced, together
with all other sums due thereon and all costs of collecting the same
(including, without limitation, reasonable attorney fees) for which the Company
is liable, and any such indebtedness or any debentures, notes or other evidence
of 

 

indebtedness issued in exchange for or to refinance such
Senior Indebtedness (in whole or in part), or any indebtedness arising from the
satisfaction of such Senior Indebtedness by a guarantor.  Wells Fargo, any such Senior Subordinated
Lender and any successor holders of Senior Indebtedness are collectively
referred to as the “Senior Lenders.”

“Senior Subordinated Lender” means any current or
future lender or lenders to the Company and/or its subsidiaries, which loan up
to $3,200,000 in the aggregate to the Company and/or its subsidiaries, and
which indebtedness is by its express terms senior hereto and junior to the
Senior Indebtedness to Wells Fargo or any successor to Wells Fargo.

The Holder agrees that the indebtedness evidenced by this Note is, and
until the Senior Indebtedness is indefeasibly paid in full shall be, subject
and subordinate and junior in right of repayment to the Senior Indebtedness,
subject to the terms of the respective Subordination Agreements between the
Holder and the respective Senior Lenders.

2.                                       EVENTS OF
DEFAULT.

If any of the events specified in this section shall
occur (herein individually referred to as an “Event of
Default”), the Holder of this Note may, so long as such condition
exists, and, subject to the provision of the Subordination Agreements, declare
the entire principal and unpaid accrued interest hereon immediately due and
payable, by notice in writing to the Company:

(i)            Default in the payment of the
principal, and unpaid accrued interest of this Note when due and payable if
such default is not cured by the Company within ten (10) days after the Holder
has given the Company written notice of such default; or

(ii)           The institution by the Company of any
Insolvency Case (as hereinafter defined) or the taking of corporate action by
the Company in furtherance of any such Insolvency Case; or

(iii)          If, within sixty (60) days after the
commencement of an action against the Company (and service of process in
connection therewith on the Company) of an Insolvency Case, such Insolvency
Case shall not have been resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within sixty (60) days after the appointment without the consent
or acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial 

 

part of the properties of the Company, such
appointment shall not have been vacated; or

(iv)          Any declared default of the Company
under any Senior Indebtedness that gives the holder thereof the right to
accelerate such Senior Indebtedness, and such Senior Indebtedness is in fact
accelerated by the holder.

(v)           The
term “Insolvency Case” means (i) any insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, readjustment,
composition or other similar proceeding relative to the Company or any of its
properties, whether under any bankruptcy, reorganization or insolvency law or
laws, federal or state, or any law, federal or state, relating to relief of
debtors, readjustment of indebtedness, reorganization, composition or
extension, (ii) proceeding for any liquidation, liquidating distribution,
dissolution or other winding up of the Company, voluntary or involuntary, whether
or not involving insolvency or bankruptcy proceedings, (iii) assignment for the
benefit of creditors of the Company or (iv) other marshalling of assets of the
Company.

3.                                   MISCELLANEOUS.

(a)           The rights
and obligations of the Company and the Holder shall be binding upon and benefit
the permitted successors, assigns, and transferees of the parties.

(b)          No provision
of this Note may be amended, waived or modified except upon the written consent
of the Company, the Holder and the holder of the Senior Indebtedness.

(c)           This
Note is governed by, and shall be construed and enforced in accordance with,
the laws of the State of New York.  Each
of the parties hereto expressly submits to the non-exclusive jurisdiction of
the Supreme Court, County of Westchester and the United States District Court
for the Southern District of New York in any action or proceeding relating to
any claim, dispute or other matter pertaining directly or indirectly to this
Note.

(d)           THE
PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR IN CONNECTION WITH THIS NOTE AND FURTHER HEREBY WAIVE ANY RIGHT OF
OFFSET OR RIGHT TO INTERPOSE ANY COUNTERCLAIM IN ANY SUCH ACTION.

(e)           The
provisions of this Note shall be applicable both before and after the
commencement of any Insolvency Case by or against the Company and all converted
and succeeding cases in respect thereof. 
The relative rights, as provided for in this Note, shall 

 

continue after the commencement of any such Insolvency
Case on the same basis as prior to the date of the commencement of any such
Insolvency Case, as provided in this Note.

(f)            The
Company shall pay to the Holder, upon written demand, all costs of collection
and reasonable attorney’s fees and other costs and expenses paid or incurred by
the Holder in enforcing the obligations of the Company hereunder and/or in
exercising the Holder’s rights and remedies hereunder (whether such costs and
expenses are incurred in any work-out, bankruptcy case or proceeding, or
otherwise).

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left blank]

 

 

IN WITNESS WHEREOF, the Company has caused this Note
to be issued this 24th day of October, 
2006, and the Holder, by signing this Note, agrees to be bound by this
Note.

	
  

  	
  iPARTY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SAL PERISANO

  
	
   

  	
  Name:

  	
  Sal Perisano

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Holder:

  	
  AMSCAN INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  80 Grasslands Road, Elmsford, New York 10523

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AMSCAN INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ JAMES M. HARRISON

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]