Document:

<PAGE>
                                                                    EXHIBIT 10.1

                              SEPARATION AGREEMENT

         The parties to this Separation Agreement ("Agreement") are:

         George E. Willett
         401 DUFF LANE
         LOUISVILLE, KY  40207                      ("WILLETT")

         and

         High Speed Access Corp.
         9900 CORPORATE CAMPUS DRIVE
         SUITE 3000
         LOUISVILLE, KY  40223                      ("HSA")
                                    RECITALS

         A. Willett and HSA are parties to a certain Employment Agreement dated
June 4, 2001 (the "Willett Employment Agreement"). Willett's employment with HSA
was terminated on April 30, 2003, pursuant to a Constructive Termination (as
defined in the Willett Employment Agreement).

         B. The parties hereto wish to mutually and amicably settle all issues
existing between them, whether or not arising under the Willett Employment
Agreement, as more specifically set forth below on the terms and conditions of
this Agreement. HSA, by entering into this Agreement, admits no wrongdoing or
liability whatsoever.

         In consideration of the mutual covenants set forth herein and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:

1.   Willett, for himself and his heirs and assigns, acknowledges his separation
     from HSA on April 30, 2003, and does hereby forever release and discharge
     HSA, its subsidiaries, affiliates, successors, predecessors, assigns,
     agents, employees, directors, attorneys and representatives (collectively,
     referred to as "Released Parties") from any and all causes of action,
     actions, judgments, liens, indebtedness, damages, losses, claims,
     liabilities and demands of whatsoever kind and character in any manner
     whatsoever arising from or relating to the Willett Employment Agreement and
     his employment and termination of employment with HSA; and, without
     limiting the generality of the foregoing, specifically from all claims
     relating to bonus, accrued vacation, continued base salary, benefits
     (including COBRA), or any and all other allegations asserted or which could
     have been asserted by Willett or on his behalf against HSA, including
     claims for attorneys' fees. Willett specifically releases HSA and the
     above-released parties from any and all claims of age discrimination under
     the federal Age Discrimination in Employment Act, 29 U.S.C. Section 621, et
     seq.

2.   Willett represents that he has not commenced, and that he will not at any
     time after execution of this Agreement commence, any other action, lawsuit,
     or legal proceeding or

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     file any charge or complaint with any federal, state or local agency
     against any of the Released Parties relating in any way to the Willett
     Employment Agreement or his employment with or separation from HSA.

3.   Notwithstanding anything to the contrary contained herein, HSA acknowledges
     and agrees to the existence and continuing validity, as they may apply to
     Willett, or Article VII of HSA's Second Amended and Restated Certificate of
     Incorporation and HSA's Amended and Restated Bylaw, and that certain
     Indemnity Agreement dated as of May 23, 2001 by and between HSA and
     Willett. The foregoing sections and agreement which relate to
     indemnification, advancement of expenses and related protections for
     Willett as an officer of HSA are expressly incorporated into this Agreement
     and continue in full force and effect notwithstanding any release or other
     provision of this Agreement.

4.   Willett acknowledges and agrees to the existence and continued validity of
     Sections 8 and 9 (and their subparts) of the Willett Employment Agreement.
     These provisions relating to covenants not to compete, non-solicitation,
     non-inducement and non-disclosure, are expressly incorporated into this
     Agreement, and continue in full force and effect notwithstanding the
     termination of Willett's employment with the HSA.

5.   Willett understands and expressly agrees that this Agreement extends to all
     claims of every nature and kind, known or unknown, suspected or
     unsuspected, past, present, or future, arising from or relating to the
     Willett Employment Agreement, including any claim of any kind of nature
     whatsoever or any alleged unlawful act of any of the Released Parties
     occurring prior to the execution of this Agreement, referred to herein or
     not.

6.   The parties understand and expressly agree that this Agreement shall bind
     and benefit Willett and HSA, and their respective heirs, administrators,
     successors and assigns. Willett further represents that he has full and
     exclusive authority to release, discharge and covenant not to sue the
     Released Parties pursuant to the terms of this Agreement, and that he has
     not assigned or transferred in any way any claims against any of the
     Released Parties.

7.   In consideration of the releases, covenants and covenant not to sue set
     forth in this Agreement, HSA and Willett agree to the following:

           a) On May 2, 2003, HSA shall pay Base Salary to Willett through
              April 30, 2003.

           b) HSA shall pay Willett $168,000 (the "Severance Payment") as
              follows: HSA shall continue to pay Base Salary to Willett in the
              amount of $14,000 per month commencing May 1, 2003 through the
              date of HSA's initial liquidating distribution to shareholders
              (which is presently expected to occur on or before June 1, 2003),
              and a lump sum payment to Willett of the remaining amount balance
              of such Severance Payent within 10 days after such initial
              liquidating distribution.

           c) HSA shall provide for Willett continued health benefits programs
              (i.e., "family" medical coverage with Humana and Kentucky Access,
              but not disability or group life insurance) by reimbursing Willett
              for the cost ($876.25 per month) of obtaining

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              such family medical coverage (the "New Coverage") for a period of
              not less than 12 months from the Termination Date. If Willett
              obtains family medical coverage through a subsequent employer's
              group plan (the "Replacement Coverage") prior to the end of such
              12 month period, HSA shall pay to Willett (grossed-up for any
              tax/W-2 effect to Willett) the "employee-paid" portion of such
              employer-provided group coverage (not to exceed $876.25/mo.) from
              the effective start date of such Replacement Coverage through
              April 30, 2004.

           d) HSA shall permit Willett to cash-out his "in-the-money" options
              pursuant to the terms of a certain Options Termination and
              Cash-Out Agreement.

           e) HSA shall release from it custody and deliver to Willett one (1)
              HSA stock certificate (No. C1278) representing 75,000 shares of
              HSA common stock pursuant a certain Restricted Stock Agreement
              dated February 2, 2001; provided, that such shares shall not be
              registered and are subject trading restrictions absent compliance
              with SEC Rule 144 (including, without limitation, a 1-year holding
              period commencing May 1, 2003).

           f) HSA shall enter into a Consulting Agreement with Willett in the
              form of Exhibit A hereto and pursuant.

           g) HSA shall maintain its D&O coverage in full force and effect and
              treat Willett as an Insured officer thereunder for all purposes.

8.   It is understood and agreed by Willett that, with respect to the payment to
     be made pursuant to paragraph 7(d) above, all applicable income and other
     taxes are required to be withheld. If and to the extent HSA is required to
     withhold on the value of the restricted stock delivered to Willett under
     Section 7(d) above, Willett shall pay the appropriate amount of withholding
     taxes to HSA for remittance to the IRS.

9.   Willett expressly warrants and agrees that he will keep the terms of this
     Agreement strictly confidential and will not communicate the terms of this
     Agreement orally or in writing to any third party except to his immediate
     family, his tax advisor, or as may be required by law. This confidentiality
     agreement shall not apply to any terms hereof disclosed publicly by HSA.

10.  The parties agree that this Agreement does not constitute an admission of
     liability; that it does not constitute any factual or legal precedent or
     finding whatsoever; and that it may not be used as evidence in any
     subsequent proceeding of any kind, except in an action alleging a breach of
     this Agreement.

11.  The parties will bear their own attorneys' fees and costs respectively in
     connection with this Agreement.

12.  Each party to this Agreement shall have the right to bring an action to
     enforce any of its terms or provisions. The parties agree that the Court
     shall enter an award of attorneys' fees and costs to the prevailing party
     in any action to enforce the terms of this Agreement.

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13.  Kentucky law shall govern the validity, effect and interpretation of this
     Agreement.

14.  This Agreement constitutes the entire understanding and agreement between
     the parties. Any modification of this Agreement must be in writing and
     signed by both Willett and HSA.

15.  Willett represents that he has read this Agreement, has consulted his
     attorney of record concerning the terms of this Agreement, and understands
     each of the terms of this Agreement. Willett further represents that he has
     entered into this settlement and executed this Agreement voluntarily and
     willingly. Willett understands that he may revoke this Agreement by giving
     written notice to HSA within seven (7) days after it has been signed and
     notarized. This Agreement will not become effective or enforceable until
     the seven day revocation period is passed.

16.  Willett further agrees to cooperate with HSA in any investigations,
     hearings, lawsuits or other matters involving HSA or its affiliates,
     subsidiaries and divisions, and its and their predecessors, successors, and
     assigns, concerning items or issues where Willett had specific involvement,
     knowledge or responsibility, or where subsequent assistance and cooperation
     is reasonably necessary or appropriate. Willett will be available, at the
     expense of HSA, upon reasonable notice and at reasonable times and for
     reasonable periods, for such things as interviews, depositions, hearings
     and trials.

17.  This Agreement may be executed in counterparts, each of which shall be
     deemed an original, but all of which together shall constitute one and this
     same agreement.

         I HAVE CAREFULLY READ THE FOREGOING CONFIDENTIAL SEPARATION AGREEMENT,
GENERAL RELEASE AND COVENANT NOT TO SUE AND ACKNOWLEDGE THAT I KNOW AND
UNDERSTAND THE CONTENTS THEREOF, THAT IT CONTAINS THE TERMS AND CONDITIONS I
HAVE AGREED UPON WITH THE COMPANY, AND THAT I EXECUTE IT OF MY OWN FREE WILL. I
HAVE BEEN NOTIFIED TO SEEK THE COUNSEL OF AN ATTORNEY.

         Executed effective on May 1, 2003, but actually on April 30, 2003.

                                           /s/ GEORGE E. WILLETT
                                           -------------------------------------
                                           GEORGE E. WILLETT

                                           HIGH SPEED ACCESS CORP.

                                           By: /s/ DAVID A. JONES, JR.
                                              ----------------------------------
                                              David A. Jones, Jr.
                                              Chairman of the Board of Directors

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                              CONSULTING AGREEMENT

         This is a Consulting Agreement (the "Agreement") dated as of May 1,
2003, between HIGH SPEED ACCESS CORP., a Delaware corporation ("HSA") and GEORGE
E. WILLETT ("Consultant"), a resident of Louisville, Kentucky.

                                    RECITALS

         HSAC wishes to retain the services of Consultant with respect to the
windup of the HSA and other financial and management services as Consultant and
HSA may agree. Consultant has negotiated the terms of this Agreement with HSA
and has agreed to the terms as set forth hereafter.

         NOW, THEREFORE, the parties hereto agree as follows:

         1. CONSULTING SERVICES. For a period commencing on May 1, 2003, and
continuing through October 31, 2003, Consultant agrees to advise, assist, and
serve as HSA's President and CFO on a non-employee basis, and otherwise continue
to render such services and fulfill such responsibilities to HSA in connection
with the wind-up of its affairs as Consultant previously rendered as an
employee/officer of the Company (the "Consulting Services"). The Consultant
shall render his or her Consulting Services by telephone, letter or in person,
as the Consultant and the HSA may mutually determine. Consultant shall
faithfully and industriously perform the Consulting Services, and shall devote
such time to the performance of such duties incident to the Consulting Services
as may be necessary therefor, provided that Consultant shall not be required to
devote any specific number of hours a month to such consulting services or a
minimum number of hours as a condition to receiving the compensation described
herein. HSA shall have no authority to direct or control Consultant with respect
to the amount, time, place, or manner of his or her Consulting Services.

         2. REMEDIES FOR BREACH. Consultant acknowledges that the Consulting
Services to be rendered by him or her hereunder are of a special, unique, and
extraordinary character which gives this Agreement a peculiar value to HSA, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law, and that a breach by Consultant of this Agreement shall cause HSA
irreparable injury. Therefore, HSA shall be entitled to (i) cancel any remaining
consulting payments due Consultant under Section 3 of this Agreement, and (ii)
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, and to pursue any available remedies, including
injunctive relief, actions for specific performance and damages, for breaches by
Consultant of any covenants contained herein.

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<PAGE>

         3. COMPENSATION. As compensation for the Consulting Services provided
to HSA by Consultant under this Agreement, HSAC shall pay to Consultant the sum
of SEVEN THOUSAND DOLLARS PER MONTH ($7,000/month) for the period May 1, 2003
through October 31, 2003, plus reasonable, documented business expenses (but not
mileage to and from Consultant's residence and HSA's offices in Louisville,
Kentucky). As Consultant will be an independent contractor and consultant to
HSA, he will be precluded from having, receiving or being entitled to receive
any of the rights, privileges or benefits of employees of HSA. Consultant shall
be solely responsible for meeting any legal requirements imposed on him or any
person acting on his behalf as a result of this Agreement, including but not
limited to the payment of taxes on income or the filing of tax returns, and
Consultant agrees to indemnify HSA for his failure to do so.

         6.  TERMINATION. This Agreement shall terminate immediately upon the
occurrence of any one of the following events:

                  (a)      The expiration of the term hereof;

                  (b)      Consultant's breach of his duties hereunder, unless
                           waived by HSA or cured by Consultant within 10 days
                           after HSA's having given notice thereof to
                           Consultant;

                  (c)      HSA's breach of its duties hereunder, unless waived
                           by Consultant or cured by HSA within 10 days after
                           Consultant's having given written notice thereof to
                           HSA.

         7. ASSIGNABILITY. This Agreement may not be assigned or transferred by
Consultant without the prior written consent of HSA.

         8. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Kentucky. Consultant and HSA agree that that the Circuit Courts of Jefferson
County, Kentucky shall have exclusive jurisdiction with respect to the
adjudication and enforcement of any and all disputes arising under this
Agreement, including actions arising under Section 1 hereof.

         9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties, and supersedes all prior understandings with the respect to the
subject matter hereof. No change in or modification of this Agreement shall be
enforceable unless in writing and signed by the party against whom enforcement
is sought.

         10. SEVERABILITY. If any provision of this Agreement or application
thereof shall be adjudged by any court of competent jurisdiction to be invalid,
illegal or unenforceable in any

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<PAGE>

respect, the validity, legality and enforceability of all other applications of
that provision, and of all other provisions and applications thereof, shall not
in any way be affected or impaired.

         11. NO WAIVERS. No failure or delay on the part of any party exercising
any power or right under this Agreement shall operate as a waiver thereof, and
no single or partial exercise of any such right or power shall preclude any
other or further exercise thereof, or the exercise of any other right or power
under this Agreement.

         12. HEADINGS. The headings used in this Agreement have been included
solely for ease of reference and shall not be considered in the interpretation
or construction of this Agreement.

         13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.

         IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date set forth in the preamble above, but actually on the dates indicated below.

                                        HIGH SPEED ACCESS CORP.

                                        By /s/ DAVID A. JONES, JR.
                                           -------------------------------------
                                           Name:  David A. Jones, Jr.
                                           Title: Chairman of the Board
                                           Date:  May 1, 2003

CONSULTANT:                             /s/ GEORGE E. WILLETT
                                        ----------------------------------------
                                        GEORGE E. WILLETT
                                        Date:  April 30, 2003

                                       3exv10w20

 

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)”

 

 

(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;

2

 

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:

3

 

	 	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:

4

 

		
	 	     (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.

5

 

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.

6

 

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)

7

 

Signature of Borrowers to Fourth Amendment to Loan and Security Agreement

	 	 
	 	PAPER WAREHOUSE, INC.

(BORROWER)
	 
	 	By:\s\ Yale T. Dolginow

Print Name: Yale T. Dolginow

Title: President and CEO
	 
	 	PAPER WAREHOUSE FRANCHISING, INC.

(BORROWER)
	 
	 	By:\s\ Yale T. Dolginow

Print Name: Yale T. Dolginow

Title: President and CEO
	 
	 	PARTYSMART.COM, INC.

(BORROWER)
	 
	 	By:\s\ Yale T. Dolginow

Print Name: Yale T. Dolginow

Title: President and CEO

Lender’s signature on following page

8

 

Signature of Lender to Fourth Amendment to Loan and Security Agreement

	 	 
	 	WELLS FARGO RETAIL FINANCE II LLC

(LENDER)
	 
	 	By:\s\ Lynn Whitmore

Lynn Whitmore, Assistant Vice President

9

 

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

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