SUPPLEMENT NO. 1 dated as of June 7, 2013 (this “Supplement”), to the Pledge and Security Agreement dated as of July 27, 2012 (the “Security Agreement”), among Party City Holdings Inc., a Delaware corporation (the “Company”), Party City Corporation, a...

Exhibit 10.16

SUPPLEMENT NO. 1 dated as of June 7, 2013 (this “Supplement”), to the Pledge and Security Agreement dated as of July 27, 2012 (the “Security Agreement”), among Party City Holdings Inc., a Delaware corporation (the “Company”), Party City Corporation, a Delaware corporation (“Party City”, and together with the Company, each a “Borrower” and collectively the “Borrowers”), PC Intermediate Holdings, Inc., a Delaware corporation (“Holdings”), each Subsidiary of the Borrowers party from time to time thereto (each such Subsidiary individually a “Subsidiary Party” and collectively, the “Subsidiary Parties”; the Subsidiary Parties, Holdings and the Borrowers are referred to collectively herein as the “Grantors”), and Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent (in such capacity, the “Agent”).

A. Reference is made to the Term Loan Credit Agreement dated as of July 27, 2012, (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Holdings, the Borrowers, the Subsidiary Parties, the lenders from time to time party thereto, and the Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement or the Security Agreement, as applicable.

C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans. Section 7.12 of the Security Agreement and Section 5.12 of the Credit Agreement provide that additional Domestic Subsidiaries of the Borrower (other than Excluded Subsidiaries) may become Subsidiary Parties under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiaries (each, the “New Subsidiary”) are executing this Supplement in accordance with the requirements of the Credit Agreement to become Subsidiary Parties under the Security Agreement in order to induce the Lenders to make additional Loans and as consideration for Loans previously made.

Accordingly, the Agent and each New Subsidiary agree as follows:

SECTION 1. In accordance with Section 7.12 of the Security Agreement, each New Subsidiary by its signature below becomes a Subsidiary Party and a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Subsidiary Party and each New Subsidiary hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Subsidiary Party and Grantor thereunder and (b) represents and warrants as of the date hereof that the representations and warranties made by it as a Grantor thereunder that are qualified as to materiality are true and correct in all respects on and as of the date hereof and those that are not so qualified are true and correct in all material respects on and as of the date hereof. In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and permitted assigns, a security interest in and Lien on all of the New Subsidiary’s right, title and interest in and to the Collateral of the New Subsidiary. Each reference to a “Grantor” and “Subsidiary Party” in the Security Agreement shall be deemed to include each New Subsidiary. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. Each New Subsidiary represents and warrants to the Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and except insofar as enforcement thereof is subject to general principles of equity and good faith and fair dealing.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Agent shall have received a counterpart of this Supplement that bears the signature of each New Subsidiary and the Agent has executed a counterpart hereof. Delivery of an executed signature page to this Supplement by facsimile transmission or by email as a “.pdf” or “.tif” attachment shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. Each New Subsidiary hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the location of any and all material Collateral consisting of inventory or equipment of the New Subsidiary (other than in-transit Collateral), (b) set forth on Schedule II attached hereto is a true and correct schedule of all the Pledged Stock of the New Subsidiary and all promissory notes, instruments (other than checks to be deposited in the ordinary course of business) and tangible chattel paper, in each case exceeding $1,500,000, held by the New Subsidiary, (c) set forth on Schedule III attached hereto is a true and correct schedule of all material registered Patents, Trademarks and Copyrights of the New Subsidiary and (d) set forth under its signature hereto, is the true and correct legal name of the New Subsidiary, its jurisdiction of formation and the location of its chief executive office.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 8.01 of the Security Agreement.

SECTION 9. Each New Subsidiary agrees to reimburse the Agent for its expenses in connection with this Supplement, including the fees, other charges and disbursements of counsel in accordance with Section 9.03(c) of the Credit Agreement.

IN WITNESS WHEREOF, the New Subsidiary and the Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

iPARTY RETAIL STORES CORP.
iPARTY CORP.
By:		/s/ Xxxxxxx X. Xxxxxxxx
		Name: Xxxxxxx X. Xxxxxxxx
		Title:   Vice President
		Legal Name: iParty
		Jurisdiction of Formation: Delaware
		Location of Chief Executive office:
		000 Xxxxxx Xxxxxx
		Xxxxxx, XX 00000
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Agent
By:		/s/ Xxxxxxx Xxxx
		Name: Xxxxxxx Xxxx
		Title: Vice President
By:		/s/ Xxxxxx X. Xxxxxxxxxx
		Name: Xxxxxx X. Xxxxxxxxxx
		Title: Director

Schedule I

to Supplement No. 1 to the

Pledge and Security Agreement

LOCATION OF COLLATERAL

Real Property Leased by the Company

		Address of Leased Space		Landlord
1.		000 Xxxxxx Xxxxxx, Xxxxxx, XX		Bridge Realty Trust
2.		00 Xxxxxxx Xxx Xxxxxxxx, XX Norfolk, Massachusetts		Xxxxxxx Distribution Centers

Real Property Leased by the Company Subsidiary

		Address of Leased Space		Landlord
1.		0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxx, XX		Xxxx Realty Trust
2.		The Shoppes at Blackstone, Valley, Millbury, MA		Route 146 Millbury LLC
3.		Waterford Commons, Waterford, CT		Waterford Commons of CT, LLC
4.		The Marketplace at Augusta, Augusta, ME		SK Drive Properties LLC
5.		The Shops at Long Pond, Plymouth, MA		Plymouth Exit 5 LLC
6.		Xxxxx Xxxx Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX		Xxxxxxx Realty Co, L.P.
7.		Xxxx 00, 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, XX		Two & Twelve Trust
8.		Maple Tree Place, Williston, Vermont		Starwood Xxxxxxx Williston LLC
9.		Xxxxx Xxxxxx Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx, XX		W/S Lebanon LLC
10.		The Center at Hoobs Brook, Sturbridge, MA		Charlton Road Associates LLC
00.		Xxxxx xx Xxxxxx Xxxx, Xxxxx, XX		KIR Tampa 003, LLC
12.		Monadnock Marketplace, Keene, NH		Monadnock Condominium limited partnership
13.		Chicopee Marketplace on Memorial Drive, Chicopee, MA		Chicopee Marketplace, LLC
14.		Xxxxxx Bridge Plaza, 00-00 Xxxx Xx., Xxxx Xxxxxxxx, XX		LMA/U.S.A., LLC
15.		Xxxxxx-Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx, XX		Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx, Trustees of 000 Xxxxxxx Xxxxxx Trust
16.		0000 XX Xxx 00X., Xxxx Xxxxxx, XX		Somerset Eagle Corp.
17.		Xxxxxxxxx Xxxx, Xxxxxxxxx, XX		Urstadt Xxxxxx Properties, Inc., fka
18.		Highland Ave, Seekonk, MA		Berkshire-Seekonk, LLC
19.		000 Xxxxxxxx, Xxxxx 0, Xxxxxx, XX		Enterprise Hilltop Realty Trust, assignee of 880-910 Broadway Limited Partnership

I-1

		Address of Leased Space		Landlord
20.		Walpole Mall, 90 Providence Highway, Walpole, MA		Mountaingate Wolpole, LLC, Spring Street Walpole, LLC, and Union Street Walpole, LLC
21.		Southington Plaza Shopping Plaza, Queen Street, Southington, CT		Southington/Route 10 Associates Limited Partnership
22.		000 Xxxxxxxxx Xxxx, Xxxxxx, XX		Xxxx and Xxxxxx Xxxxx Realty Trust
23.		Xxxxxx’x Xxxxxx Xxxx, Xxxx Xxxxxxxx, XX		Xxxxxx’x Corner (E&A), LLC
24.		Heritage Park Plaza Shopping Center, East Longmeadow, MA		Heritage Park II (E&A), LLC
25.		000-000 Xxxxxxxx Xxxxxx, Xxxxxx, XX		ABOY, LLC, fka Arlington Boylston Realty Trust
26.		Xxxx 00, Xxxxx Xxx Center, 0 Xxxxxxxx Xxxx, Xxxxxx, XX		E&A Northeast Limited Partnership
27.		Crossroads Shopping Center, Burlington, MA		Burlington Crossroad (E&A), LLC
28.		Sarasota Village, Sarasota, FL		CA New Plan Sarasota, L.P.
29.		Plaza at Buckland Hills, Manchester, CT		Plaza at Buckland Hills, LLC
30.		Garden City Center, Cranston RI		Gateway Woodside, Inc.
31.		Xxxx Xxxxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxxx, XX		GMG Family Limited Partnership
32.		Crossroads Plaza, Bellingham, MA		Xxxxxxxxxx Xxxxx Xxxx Xxxxxx II LLC
33.		Meadow Xxxx Mall, Medford, MA		Medford Associates Limited Partnership
34.		State Line Plaza, Plaistow, NH		Plaistow Project, LLC
35.		Main Street Marketplace, Waltham, MA		Waltham Ventures, LLC
36.		000 Xxx Xxx Xxxxxx, Xxxxxxxx, XX		CTS Fiduciary, LLC, Trustee D&C Real Estate Trust
37.		Stillwater Avenue, Bangor, ME		Inland Western Bangor Parkade, L.L.C
38.		Brookside Plaza, Enfield, CT		Gateway Connecticut
39.		Countryside Square Shopping Center, Clearwater, FL		Xxxxxxxxxx Realty Investors
40.		0000 X. Xxxxx Xxxxxx, Xxxxxxxxxxx, XX		National Realty & Development Corp.

I-2

		Address of Leased Space		Landlord
41.		0000 Xxxxxx Xxxx, Xx. Xxxxxxxxxx, XX		Northwood Limited Partnership
42.		Bristol Place, Newport Ave, Attleboro, MA		Bristol Place Limited Partnership
43.		Xxx Xxxxxxxx Xxxxxxxxx, Xxxx, XX		Avon Properties, Inc.
44.		Town Center Shopping Center, Chelmsford, MA (95 Drumhill Road)		Stonegate Development Corporation
45.		0000 XXX Xxxxxxx, Xxxx Xxxxxxx, XX		Xxxxxx VGW LLC
46.		Bldg Xx. 00000 Xxxx Xx. 00, 000 Xxxxxx Xxxxxxxxxx Xxxxxxx, Xxxxxxx, XX		Inland American Retail Management LLC
47.		000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX		Commerce Limited Partnership #8911
48.		The North Dartmouth Mall, N. Dartmouth, MA		PR North Dartmouth LLC
49.		Xxxxxxxxx Xxxxx, Xxxxxx, XX		000 Realty Associates
50.		Peabody Place Shopping Center, Peabody, MA		Peabody Center limited partnership
51.		Xxxx’x Plaza, Raynham, MA		CSC Raynham LLP
52.		Pleasant Shops, Weymouth, MA		FLV Pleasant Shops Limited Partnership
53.		Lincoln Mall Shopping Center, Lincoln, RI		XX Xxxxxxx Mall Holdings LLC
54.		South Gate Plaza, Nashua, NH		Delta & Delta Realty Trust
55.		Shopping Center in Warwick, RI		Shanri Holdings Corp.

I-3

Schedule II to Supplement No. 1 to the Pledge and Security Agreement

LIST OF PLEDGED STOCK AND OTHER INVESTMENT PROPERTY

STOCKS

Holder

Issuer

Certificate Number(s)

Number of Shares

Class of Stock

Percentage of Outstanding Shares

Party City

iParty Corp.

1

100

Common

100

%

BONDS

Holder
Issuer
Number Face
Amount
Coupon Rate
Maturity

GOVERNMENT SECURITIES

Holder
Issuer
Number
Type Face
Amount Coupon Rate
Maturity

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY (CERTIFICATED AND UNCERTIFICATED)

Holder
Issuer Description of Collateral Percentage
Ownership Interest

Schedule III to Supplement No. 1 to the Pledge and Security Agreement

INTELLECTUAL PROPERTY RIGHTS

PATENT REGISTRATIONS

Patent Description		Patent Number		Issue Date
N/A

PATENT APPLICATIONS

Patent Description		Application Filing Date		Application Serial Number
N/A

TRADEMARK REGISTRATIONS

Trademark		Registration Date		Registration Number
IParty		8/26/03		2756735
IParty		2/19/02		2541025

TRADEMARK APPLICATIONS

Trademark Application		Application Filing Date		Application Serial Number
N/A

COPYRIGHT REGISTRATIONS

Copyright		Registration Date		Registration Number
N/A

COPYRIGHT APPLICATIONS

Copyright Application		Application Filing Date		Application Serial Number
N/A