Exhibit 10.3

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 31st day of October, 2016,
by and between Party City Holdings Inc., a Delaware corporation (the “Company”),
Party City Holdco Inc., a Delaware corporation (“Holdco”), and Ryan Vero (the
“Executive”) and effective as of October 17, 2016 (or, if later, the date the
Executive commences employment with the Company) (the “Effective Date”).

WHEREAS, the Company, Holdco and the Executive desire to set forth in this
Agreement the terms and conditions under which the Executive will be employed as
the President, Retail of each of the Company and Holdco effective as of the
Effective Date;

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment Period. The Company and Holdco shall employ the Executive, and the
Executive agrees to, and shall, serve the Company and Holdco, on the terms and
conditions set forth in this Agreement, for the period beginning on the
Effective Date and ending on December 31, 2019, unless sooner terminated as set
forth hereinafter (the “Employment Period”).

2. Position and Duties.

(a) During the Employment Period, the Executive shall serve as the President,
Retail of the Company and of Holdco with such duties and responsibilities as are
assigned to him by the Board of Directors of Holdco (the “Board”) or the Chief
Executive Officer of the Company (the “CEO”) consistent with his position as
President, Retail of the Company and Holdco, including, as the Board or the CEO
may request, without additional compensation, to serve as an officer or director
of certain of the subsidiaries and other affiliates of Holdco and/or the
Company. During the Employment Period, the Executive shall report to the CEO.

(b) During the Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall devote his full
attention and time during normal business hours to the business and affairs of
the Company and Holdco and shall use his reasonable best efforts to carry out
the responsibilities assigned to the Executive faithfully and efficiently. It
shall not be considered a violation of the foregoing for the Executive to
(i) serve on civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, (iii) serve
on the board of directors of other companies, so long as the Board approves such
appointments (such approval not to be unreasonably withheld), or (iv) manage
personal investments, so long as such activities do not compete with and are not
provided to or for any entity that competes with or intends to compete with the
Company, Holdco or any of their respective subsidiaries and affiliates and do
not interfere with the performance of the Executive’s responsibilities as an
employee of the Company or Holdco in accordance with this Agreement.

 

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3. Compensation and Expense Reimbursements.

(a) Base Salary. During the Employment Period, the Executive shall receive from
the Company an annual base salary of $750,000 (as such amount may be increased
from time to time, in the sole discretion of the Board or the Compensation
Committee of the Board (the “Committee”), the “Annual Base Salary”), payable in
regular intervals in accordance with the Company’s customary payroll practices
in effect during the Employment Period.

(b) Annual Bonus. In addition to the Annual Base Salary, during the Employment
Period, the Executive shall be eligible to receive annual bonus compensation
(the “Annual Bonus”) consistent with the Company’s bonus plan for key executives
as in effect from time to time (the “Bonus Plan”). The Annual Bonus (including
any pro rata portion thereof, to the extent payable under this Agreement), if
any, shall be paid no later than two and one-half months following the end of
the calendar year to which such Annual Bonus corresponds. During the Employment
Period, the target amount of the Annual Bonus shall be 75% of the Annual Base
Salary (the “Target Bonus Amount”) and the maximum amount of the Annual Bonus
shall be 150% of the Annual Base Salary, with the actual amount of the Annual
Bonus, if any, to be determined by the Board or the Committee in accordance with
the Bonus Plan; provided that for 2016, in lieu of any other payment under the
Bonus Plan, the Executive will receive an annual bonus equal to (i) the Target
Bonus Amount, pro-rated to reflect the number of days the Executive was employed
by the Company during the Company’s 2016 fiscal year, plus (ii) $50,000 (the
“2016 Bonus”), which amount shall be payable at the time described above. Except
as otherwise provided in Section 5 of this Agreement, for any year during which
the Executive is employed by the Company and Holdco for less than the entire
calendar year (including a year in which the Executive’s employment is
terminated but excluding 2016), the Annual Bonus, if any, shall be determined
based on actual performance, pro-rated for the period during which the Executive
was employed during such calendar year (based on the number of days in such
calendar year the Executive was so employed divided by 365), as determined in
good faith by the Board or the Committee.

(c) Other Benefits; Car Allowance. During the Employment Period: (i) the
Executive shall be eligible to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company and shall be
entitled to paid vacation, to the same extent and on the same terms and
conditions as peer executives; and (ii) the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in, and shall
receive all benefits under, all other welfare benefit plans, practices, policies
and programs provided by the Company (including, to the extent provided, without
limitation, medical, prescription, dental, disability, employee life insurance,
group life insurance, accidental death and travel accident insurance plans and
programs) to the same extent and on the same terms and conditions as peer
executives. The term “peer executives” means the Executive Chairman, Chief
Executive Officer, Chief Financial Officer and Senior Vice Presidents of the
Company, if such positions exist, and if such positions do not exist, the
definition of the term “peer executives” shall be determined by the Board or the
Committee in good faith. During the Employment Period, the Company will pay the
Executive a monthly car allowance equal to $650, which will be paid not later
than thirty (30) days after the end of the month to which it relates.

 

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(d) Incentive Equity Grants.

(i) In connection with the commencement of the Executive’s employment with the
Company and Holdco, subject to Board or Compensation Committee approval prior to
the Effective Date, the Executive will receive a one-time grant of options (the
“Options”) on the Effective Date to acquire 100,000 shares of Holdco’s common
stock, with an exercise price equal to the closing price of a share of Holdco
common stock on the date the Options are granted. Twenty percent (20%) of the
Options will vest on each of the first five anniversaries of the Effective Date,
subject to the Executive’s continuous employment with Holdco and/or the Company
from the Effective Date through the applicable vesting date. The Options will be
granted under and subject to the terms of the Company’s Amended and Restated
2012 Omnibus Equity Incentive Plan and a stock option agreement that is
substantially similar to the form used to evidence grants to peer executives (as
defined above).

(ii) Beginning in 2017, the Executive will also be eligible to receive incentive
equity grants under the Company’s new equity compensation program for senior
executives, subject to the terms of such program as in effect from time to time
and with any grants under such program in the discretion of the Board or the
Committee.

(e) Relocation Expenses.

(i) The Company shall reimburse the Executive for reasonable and customary
relocation expenses actually incurred by the Executive during the Employment
Period as a direct result of the relocation of him and his spouse to a location
within reasonable commuting distance of the Company’s retail division executive
offices in Rockaway, NJ (“Relocation Expenses”), subject to Company policies and
to such reasonable substantiation and documentation as may be specified by the
Company, including house-hunting visits for the Executive and his spouse as
reasonably necessary; the cost of packing and moving the Executive’s household
goods and the moving of automobiles to the Executive’s home in or around
Rockaway, NJ; the cost of temporary housing for the Executive and his immediate
family in or around Rockaway, NJ (not to exceed six months in duration); the
cost of temporary storage of the Executive’s household goods for a reasonable
period of time; real estate commissions on the sale of the Executive’s home in
Illinois and the purchase of a new home in or around Rockaway, NJ; reasonable
closing costs on a new home that is a reasonable commuting distance from the
Company’s retail division executive offices; and airfare to the Rockaway, NJ
area for all members of the Executive’s immediate family. For the avoidance of
doubt, such reimbursable Relocation Expenses will not include payment of any
losses in connection with any capital transaction, such as the sale of a home.
In the event that any of the reimbursements for Relocation Expenses are taxable
to the Executive, the Company shall promptly make additional “gross up” payments
to the Executive sufficient to cover such additional taxes (including taxes on
the gross-up). The Company shall pay the Executive any amounts due to him in
respect of Relocation Expenses within thirty (30) days after submission of
written documentation substantiating such amounts.

 

 

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(ii) In the event that the Executive terminates his employment with the Company
other than for Good Reason (as defined below), or if the Executive’s employment
is terminated by the Company for Cause (as defined below), the Executive will be
required to repay (i) 100% of the gross amount of reimbursed Relocation Expenses
if such termination occurs within one year of the Effective Date and (ii) 50% of
the gross amount of reimbursed Relocation Expenses if such termination occurs
more than one year following the Effective Date but less than two years
following the Effective Date, which repayment shall be made within thirty
(30) days of the date of termination.

(f) Other Expenses. During the Employment Period, the Executive shall be
entitled to receive reimbursement for all reasonable travel and other expenses
incurred by the Executive in carrying out the Executive’s duties under this
Agreement; provided that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts, or
similar documentation of such expenses.

(g) Indemnification. During and after the Employment Period, the Executive shall
be entitled to all rights to indemnification available under the by-laws or
certificate of incorporation of Holdco and the Company, or to which he may
otherwise be entitled, through the Company, Holdco and/or any of their
respective subsidiaries and affiliates, in accordance with their respective
terms.

4. Termination of Employment.

(a) Death or Permanent Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. The
Company or Holdco shall be entitled to terminate the Executive’s employment
because of the Executive’s Permanent Disability during the Employment Period.
“Permanent Disability” means that the Executive (i) is unable to perform his
duties under this Agreement by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months; (ii) is, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Company; or (iii) has been determined to be totally disabled by the Social
Security Administration. A termination of the Executive’s employment by the
Company or Holdco for Permanent Disability shall be communicated to the
Executive by written notice and shall be effective on the 30th day after receipt
of such notice by the Executive (the “Disability Effective Date”), unless the
Executive returns to full-time performance of the Executive’s duties in
accordance with the provisions of Section 2 before such 30th day. In the event
of a dispute as to whether the Executive has suffered a Permanent Disability,
the final determination shall be made by a licensed physician selected by the
Board and acceptable to the Executive in the Executive’s reasonable judgment.

 

 

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(b) Other than Death or Disability. The Company or Holdco may terminate the
Executive’s employment at any time during the Employment Period with or without
Cause upon notice to the Executive.

(c) Good Reason. The Executive may terminate his employment at any time during
the Employment Period for Good Reason, upon prior written notice to the Company
setting forth in reasonable detail the nature of such Good Reason, as set forth
below. For purposes of this Agreement, “Good Reason” is defined as any one or
more of the following: any attempt to relocate the Executive to a work location
that is more than 100 miles from the Company’s offices in Rockaway, New Jersey;
any material diminution in the nature or scope of the Executive’s
responsibilities or duties as defined under this Agreement; any material breach
by the Company or any affiliate of the Company of any provision of this
Agreement or any other written agreement with the Executive, which breach is not
cured within twenty (20) days following written notice by the Executive to the
Company; or any material failure of the Company to provide the Executive with at
least the Annual Base Salary and/or any other compensation or benefits in
accordance with the terms of Section 3 hereof, other than an inadvertent failure
which is cured within ten (10) business days following written notice from the
Executive specifying in reasonable detail the nature of such failure.
Notwithstanding the foregoing, the appointment of an interim President, Retail
during and for any period of the Executive’s disability (which may potentially
result in a Permanent Disability) will not be considered “Good Reason” (so long
as the Executive continues to be compensated pursuant to the terms of this
Agreement), until the occurrence of a Permanent Disability as defined in Section
4(a). The Executive’s employment will only be deemed to have been terminated for
Good Reason if he gives written notice to the Company setting forth in
reasonable detail the nature of such Good Reason, gives the Company an
opportunity to cure such Good Reason event (which cure period shall not be less
than fifteen (15) days) and terminates employment within sixty (60) days of the
date of the later of the first occurrence and the Executive’s knowledge of the
circumstances giving rise to Good Reason (to the extent the Company has not
previously cured the circumstances giving rise to Good Reason).

(d) Change in Control. If there occurs a “Change in Control” (as hereinafter
defined) during the Employment Period, and the Executive is not offered
employment on substantially similar terms by Holdco or one of its continuing
affiliates immediately thereafter, then, for all purposes of this Agreement, the
Executive’s employment shall be deemed to have been terminated by the Company
other than for Cause effective as of the date of such Change in Control;
provided, however, that neither the Company nor Holdco shall have any obligation
to the Executive under this Section 4 if the Executive is hired or offered
employment on substantially similar terms by the purchaser of the stock or
assets of Holdco or the Company, if the Executive’s employment hereunder is
continued by Holdco or one of its continuing affiliates or if the Executive does
not actually terminate employment. As used herein, a “Change in Control” shall
be deemed to have occurred solely upon the occurrence of any of the following
events:

 

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(i) a change in the ownership of Holdco within the meaning of Treasury
Regulation Section 1.409A-3(i)(5)(v) as in effect on the date hereof; or

(ii) a change in the ownership of all or substantially all of Holdco’s assets
within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vii) as in
effect on the date hereof.

Notwithstanding anything to the contrary set forth in d(i) or (ii) hereinabove,
no Change in Control shall be deemed to have occurred so long as affiliates of
Thomas H. Lee Partners and Advent International Corporation continue to own at
least 50% of the stock of Holdco in the aggregate.

(e) Date of Termination. The “Date of Termination” means the date of the
Executive’s death, the Disability Effective Date or the date on which the
termination of the Executive’s employment by the Company and Holdco, or by the
Executive, is effective, as the case may be, including by reason of the
expiration of the Employment Period.

5. Obligations of the Company Upon Termination.

(a) By the Company Upon the Executive’s Death or Permanent Disability. If the
Executive dies during the Employment Period or the Company or Holdco terminates
the Executive’s employment due to the Executive’s Permanent Disability, the
Company shall pay the Executive or his legal representative:

(i) One or more payments (the “Accrued Obligations”) equal (in the aggregate) to
the sum of (1) any portion of the Executive’s Annual Base Salary through the
Date of Termination that has not yet been paid; (2) if such termination occurs
after December 31, 2017, any Annual Bonus that the Executive has earned for a
prior full calendar year that has ended prior to the Date of Termination but
which has not yet been calculated and paid; (3) if such termination occurs after
December 31, 2016 but prior to the payment of the 2016 Bonus, the 2016 Bonus,
(4) any accrued but unpaid vacation pay and (5) any unreimbursed expenses
incurred prior to the Date of Termination, including any then unreimbursed car
allowance for each month or partial month of employment; and

(ii) a pro rata Annual Bonus for the year of death or termination, calculated
and paid in accordance with Section 3(b).

The Accrued Obligations shall be paid in cash within thirty (30) days of the
Date of Termination (other than the amount described in clause (2) of the
definition of Accrued Obligations, which shall be paid in accordance with
Section 3(b)). Notwithstanding anything to the contrary set forth herein, the
Executive shall not be entitled to any payment pursuant to clause (ii) of this
Section 5(a) unless the Executive (or the Executive’s beneficiary previously
designated in writing to the Company or, if no such beneficiary has been so
designated, the Executive’s estate or representative, as applicable) shall have,
at the written request of the Company or Holdco, executed a release of any and
all legal claims substantially in the form

 

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attached hereto as Exhibit A (which form may be modified by the Company to the
extent necessary to reflect execution by a person other than the Executive) (the
“Release”) no later than twenty-one (21) days (or, if so instructed by the
Company, forty-five (45) days) following the Date of Termination and shall not
have revoked the Release in accordance with its terms. The Company shall provide
the final Release promptly in connection with any termination of the Executive’s
employment hereunder.

(b) By the Company for Cause. If the Executive’s employment is terminated by the
Company or Holdco for “Cause” (as hereinafter defined), then the Executive shall
be entitled to only the payment of the Accrued Obligations, which shall be paid
to the Executive in cash in a lump sum within thirty (30) days of the Date of
Termination (other than the amount described in clause (2) of the definition of
Accrued Obligations, which shall be paid in accordance with Section 3(b)) and
neither the Company nor Holdco shall have any further obligation under this
Agreement, except as expressly provided herein. For purposes of this Agreement,
“Cause” shall mean (1) conviction of the Executive by a court of competent
jurisdiction of a felony (excluding felonies under any state or local vehicle
and traffic code); (2) any act of intentional fraud in connection with his
duties under this Agreement; (3) any act of gross negligence or willful
misconduct with respect to the Executive’s duties under this Agreement and
(4) any act of willful disobedience in violation of specific reasonable
directions of the Board or the CEO consistent with the Executive’s duties;
provided, in the case of clause (3) or (4), that the Executive has not cured the
circumstances giving rise to “Cause” within fifteen (15) days of the date the
Company gives notice to the Executive of its intent to terminate his employment
on such basis.

(c) By the Company for any reason other than Cause or by the Executive for Good
Reason. If the Executive’s employment is terminated during the Employment Period
(i) by the Company or Holdco other than for Cause (including by reason of a
Change in Control), death or Permanent Disability or (ii) by the Executive for
Good Reason, the Company shall pay to the Executive (A) the Accrued Obligations,
paid in cash within thirty (30) days of the Date of Termination (other than the
amount described in clause (2) of the definition of Accrued Obligations, which
shall be paid in accordance with Section 3(b)); (B) a pro rata Annual Bonus for
the year of termination, calculated and paid in accordance with Section 3(b);
and (C) a severance payment (the “Severance Payment”), in an amount equal to the
Executive’s then current Annual Base Salary. The Severance Payment shall be
payable in cash in the form of salary continuation over the twelve (12) months
following the Date of Termination, with the first payment(s) being payable in
arrears on the date that is sixty (60) days following the Date of Termination.
Notwithstanding anything to the contrary set forth herein, the Executive shall
not be entitled to any payment pursuant to clauses (B) or (C) of this Section
5(c) unless the Executive shall have executed the Release not later than
twenty-one (21) days (or, if so instructed by the Company, forty-five (45) days)
following the Date of Termination and shall not have revoked the Release in
accordance with its terms. The Company shall provide the final Release promptly
in connection with any termination of the Executive’s employment hereunder.

 

 

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(d) By the Executive other than for Good Reason. If during the Employment Period
the Executive terminates his employment with the Company and Holdco other than
for Good Reason, the Company shall pay the Accrued Obligations to the Executive
in a lump sum in cash within thirty (30) days of the Date of Termination (other
than the amount described in clause (2) of the definition of Accrued
Obligations, which shall be paid in accordance with Section 3(b)) and neither
the Company nor Holdco shall have any further obligation under this Agreement
except as expressly provided herein.

(e) Expiration of the Term. Unless otherwise terminated pursuant to any of the
foregoing clauses of this Section 5, the Executive’s employment hereunder will
automatically terminate at the expiration of the Employment Period. The Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination (other than the amount described in clause
(2) of the definition of Accrued Obligations, which, for the avoidance of doubt,
shall be the Annual Bonus for the calendar year in which the Employment Period
expires and which shall be paid in accordance with Section 3(b)). Upon
expiration of the Employment Period, no Severance Payment will be due and no
further Restriction Period shall apply.

6. Section 409A. The parties intend for the compensation provided under this
Agreement to comply with, or be exempt from, the provisions of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) (together with the
regulations thereunder, “Section 409A”). Notwithstanding the foregoing, in no
event shall the Company, Holdco or any of their respective affiliates have any
liability to the Executive or to any other person claiming rights under this
Agreement relating to the failure or alleged failure of any payment or benefit
under this Agreement to comply with, or be exempt from, the provisions of
Section 409A.

(a) Definitions. For purposes of this Agreement, all references to “termination
of employment” and similar or correlative phrases shall be construed to require
a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury
regulations after giving effect to the presumptions contained therein), and the
term “specified employee” means an individual determined by Holdco to be a
specified employee under Treasury regulation Section 1.409A-1(i).

(b) Certain Delayed Payments. If any payment or benefit hereunder constituting
“nonqualified deferred compensation” subject to Section 409A would be subject to
subsection (a)(2)(B)(i) of Section 409A (relating to payments made to “specified
employees” of publicly-traded companies upon separation from service), any such
payment or benefit to which the Executive would otherwise be entitled during the
six (6) month period following the Executive’s separation from service will
instead be provided or paid without interest on the first business day following
the expiration of such six (6) month period, or if earlier, the date of the
Executive’s death.

(c) Separate Payments. Each payment made under this Agreement shall be treated
as a separate payment.

(d) Reimbursements. Notwithstanding anything to the contrary in this Agreement,
any reimbursement that constitutes or could constitute nonqualified deferred
compensation subject to Section 409A will be subject to the following additional
requirements: (i) the expenses eligible for reimbursement will have been
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Agreement, (ii) the amount of expenses eligible for reimbursement during any
calendar year will not affect the expenses eligible for reimbursement in any
other taxable year; (iii) reimbursement will be made not later than December 31
of the calendar year following the calendar year in which the expense was
incurred; and (iv) the right to reimbursement will not be subject to liquidation
or exchange for any other benefit. Any tax gross-up payments payable by the
Company under Section 3(d)(i) shall be paid not later than the time period
provided in Section 1.409A-3(v).

7. Full Settlement. The Company’s obligations to make the payments provided for
in, and otherwise to perform its obligations under, this Agreement shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action that the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.

8. Confidential Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company and Holdco all secret or confidential
information, knowledge or data relating to the Company, Holdco or any of their
affiliates and their respective businesses that the Executive obtains during the
Executive’s employment by the Company and Holdco (whether before, during or
after the Employment Period) and that is not public knowledge (other than as a
result of the Executive’s violation of this Section 8) (“Confidential
Information”). The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive’s employment
with the Company and Holdco, except with the prior written consent of the
Company or as otherwise required by law. For the avoidance of doubt, (a) nothing
contained in this Agreement or any other agreement containing confidentiality
provisions or other restrictive covenants in favor of any of Holdco, the Company
or any affiliate of either of them, shall be construed to limit, restrict or in
any other way affect the Executive’s communicating with any governmental agency
or entity, or communicating with any official or staff person of a governmental
agency or entity, concerning matters relevant to the governmental agency or
entity and (b) the Executive will not be held criminally or civilly liable under
any federal or state trade secret law for disclosing a trade secret (i) in
confidence to a federal, state, or local government official, either directly or
indirectly, or to an attorney, solely for the purpose of reporting or
investigating a suspected violation of law, or (ii) in a complaint or other
document filed under seal in a lawsuit or other proceeding; provided that
notwithstanding this immunity from liability, the Executive may be held liable
if the Executive unlawfully accesses trade secrets by unauthorized means.

9. Noncompetition; Nonsolicitation.

(a) Noncompetition. During the Employment Period, and following termination of
the Executive’s employment with the Company, Holdco and any of their affiliates,
during the “Restriction Period” (as hereinafter defined), the Executive shall
not directly or indirectly participate in or permit his name directly or
indirectly to be used by or become associated with (including as an advisor,
representative, agent, promoter, independent contractor, provider of personal
services or otherwise) any person, corporation, partnership, firm,

 

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association or other enterprise or entity (a “person”) that is, or intends to
be, engaged in any business which is in competition with any business of the
Company, Holdco or any of their respective subsidiaries or affiliates in any
geographic area in which the Company, Holdco or any of their respective
subsidiaries or affiliates operate, compete or are engaged in such business or
at such time intend so to operate, compete or become engaged in such business (a
“Competitor”); provided, however, that the foregoing will not prohibit the
Executive from participating in or becoming associated with a person if (i) less
than 10% of the consolidated gross revenues of such person, together with its
affiliates, derive from activities or businesses that are in competition with
any business of the Company or any of its subsidiaries or affiliates (a
“Competitive Business”) and (ii) the Executive does not, directly or indirectly,
participate in, become associated with, or otherwise have responsibilities that
relate to the conduct or operations of, any Competitive Business that is
conducted by such person or a division, group, or subsidiary or affiliate of
such person. For purposes of this Agreement, the term “participate” includes any
direct or indirect interest, whether as an officer, director, employee, partner,
sole proprietor, trustee, beneficiary, agent, representative, independent
contractor, consultant, advisor, provider of personal services, creditor, or
owner (other than by ownership of less than five percent of the stock of a
publicly-held corporation whose stock is traded on a national securities
exchange or in an over-the-counter market).

(b) Nonsolicitation. During the Employment Period, and during the Restriction
Period following termination of employment, the Executive shall not, directly or
indirectly, encourage or solicit, or assist any other person or firm in
encouraging or soliciting, any person or firm that during the three-year period
preceding such termination of the Executive’s employment with the Company and
Holdco (or, if such action occurs during the Employment Period, on the date such
action was taken) is or was engaged in a business relationship with the Company
or Holdco, any of their respective subsidiaries or affiliates to terminate its
relationship with the Company or Holdco or any of their respective subsidiaries
or affiliates or, in the case of any such person, to engage in a business
relationship with a Competitor.

(c) No Hire. During the Employment Period, and during the Restriction Period
following termination of employment, the Executive will not, except with the
prior written consent of the Company, directly or indirectly, induce any
employee of the Company, Holdco or any of their respective subsidiaries or
affiliates to terminate employment with such entity, and will not, directly or
indirectly, either individually or as owner, agent, employee, consultant or
otherwise, employ, offer employment or cause employment to be offered to any
person (including employment as an independent contractor) who is or was
employed by the Company, Holdco or any of their respective subsidiaries or
affiliates unless such person shall have ceased to be employed by such entity
for a period of at least twelve months; provided that the foregoing shall not
apply to employing or inducing any employee pursuant to a blanket solicitation
not specifically targeted at that employee. For purposes of this Section 9(c),
“employment” shall be deemed to include rendering services as an independent
contractor and “employees” shall be deemed to include independent contractors.

 

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(d) Restriction Period. The term “Restriction Period” as used herein, shall mean
the one-year period immediately following the Date of Termination (other than a
termination at the expiration of the Employment Period).

(e) Return of Confidential Information. Promptly following the Executive’s
termination of employment, including due to expiration of the Employment Period,
the Executive shall return to the Company all property of the Company, Holdco
and their respective subsidiaries and affiliates, and all copies thereof, in the
Executive’s possession or under his control, including, without limitation, all
Confidential Information in whatever media such Confidential Information is
maintained.

(f) Injunctive Relief. The Executive acknowledges and agrees that the
Restriction Period and the covenants and obligations of the Executive in
Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and
confidentiality and with respect to the property of the Company and its
subsidiaries and affiliates, and the territories covered thereby, are fair and
reasonable and the result of negotiation. The Executive further acknowledges and
agrees that the covenants and obligations of the Executive in Section 8 and this
Section 9 with respect to noncompetition, nonsolicitation and confidentiality
and with respect to the property of the Company, Holdco and their respective
subsidiaries and affiliates, and the territories covered thereby, relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company, Holdco and their
respective subsidiaries and affiliates irreparable injury for which adequate
remedies are not available at law. Therefore, the Executive agrees that the
Company and Holdco shall be entitled to an injunction, restraining order or such
other equitable relief as a court of competent jurisdiction may deem necessary
or appropriate to restrain the Executive from committing any violation of such
covenants and obligations. These injunctive remedies are cumulative and are in
addition to any other rights and remedies the Company and Holdco may have at law
or in equity. If, at the time of enforcement of Section 8 and/or this Section 9,
a court holds that any of the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope, and/or geographical area legally permissible under such circumstances
will be substituted for the period, scope and/or area stated herein.

10. Successors.

(a) This Agreement is personal to the Executive and shall not be assignable by
the Executive. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives and heirs and successors.

(b) This Agreement shall inure to the benefit of and be binding upon Holdco, the
Company and their respective successors and assigns.

11. Section 280G. In the event that the Company undergoes a change in control at
a time when it (or any affiliate of the Company, including Holdco, that would be
treated, together with the Company, as a single corporation under Section 280G
of the Code and the regulations thereunder) has stock that is readily tradeable
on an established securities market (within the meaning of Section 280G of the
Code and the regulations thereunder), if all, or any portion, of

 

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the payments provided under this Agreement, either alone or together with other
payments or benefits which the Executive receives or is entitled to receive from
the Company or an affiliate, could constitute an “excess parachute payment”
within the meaning of Section 280G of the Code, then the Executive shall be
entitled to receive (i) an amount limited so that no portion thereof shall fail
to be tax deductible under Section 280G of the Code (the “Limited Amount”), or
(ii) if the amount otherwise payable hereunder, together with the other payments
or benefits the Executive is so entitled to receive, (without regard to clause
(i)) reduced by the excise tax imposed by Section 4999 of the Code and all other
applicable federal, state and local taxes (with income taxes all computed at the
highest applicable marginal rate) is greater than the Limited Amount reduced by
all taxes applicable thereto (with income taxes all computed at the highest
marginal rate), the amount otherwise payable hereunder. If it is determined that
the Limited Amount will maximize the Executive’s after-tax proceeds, payments
and benefits shall be reduced to equal the Limited Amount in the following
order: (i) first, by reducing cash severance payments, (ii) second, by reducing
other payments and benefits to which Q&A 24(c) of Section 1.280G-1 of the
Treasury Regulations does not apply, and (iii) finally, by reducing all
remaining payments and benefits, with all such reductions done on a pro rata
basis. All determinations made pursuant this Section 11 will be made at the
Company’s expense by the independent public accounting firm most recently
serving as the Company’s outside auditors or such other accounting or benefits
consulting group or firm as the Company may designate.

12. Miscellaneous.

(a) This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New Jersey, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their respective
heirs, successors and legal representatives.

(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by overnight
courier or by registered or certified mail, return receipt requested, postage
prepaid, or by facsimile (with receipt confirmation), addressed as follows:

 

If to the Executive:    Ryan Vero   

At his most recent address

shown in the Company’s records

If to the Company:    Party City Holdings Inc.    80 Grasslands Road   
Elmsford, NY 10523    Attention: Corporate Secretary    Fax no.: (914) 345-2056

 

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or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.

(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations. In addition, the obligations of the Company under this Agreement
shall be conditional on compliance with this Section 12(d), and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Executive.

(e) Any party’s failure to insist upon strict compliance with any provision of,
or to assert any right under, this Agreement shall not be deemed to be a waiver
of such provision or right or of any other provision of or right under this
Agreement.

(f) The Executive acknowledges that this Agreement, together with the Exhibit
hereto and the other agreements referred to herein except as modified herein or
therein, supersedes all other agreements and understandings, both written and
oral, between the Executive, on one hand, and the Company and Holdco, on the
other, with respect to the subject matter hereof.

(g) This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which shall together constitute one and the
same instrument.

(h) Provisions of this Agreement shall survive any termination of employment if
so provided herein or if necessary or desirable to accomplish the purposes of
other surviving provisions, including, without limitation, the obligations of
the Executive under Sections 8 and 9 hereof.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization of their respective boards of directors, the
Company and Holdco have each caused this Agreement to be executed in its name on
its behalf, all as of the day and year first above written.

 

PARTY CITY HOLDINGS INC. By:  

/s/ James M. Harrison

  Name: James M. Harrison   Title: Chief Executive Officer PARTY CITY HOLDCO
INC. By:  

/s/ James M. Harrison

  Name: James M. Harrison   Title: Chief Executive Officer

/s/ Ryan Vero

RYAN VERO

[Signature Page to Employment Agreement]

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Exhibit A

FORM OF RELEASE OF CLAIMS

This Release of Claims is provided by me, Ryan Vero (or by my designated
beneficiary or estate, in the event of my death during my employment), pursuant
to the Employment Agreement between me, Party City Holdings, Inc. (the
“Company”) and Party City Holdco Inc. (“Holdco”) dated as of October __, 2016
(the “Employment Agreement”).

This Release of Claims is given in consideration of the severance benefits to be
provided to me (or, in the event of my death during my employment, to my
designated beneficiary) in connection with the termination of my employment
under Section 5 of the Employment Agreement (the “Separation Payments”), which
are conditioned on my signing this Release of Claims and to which I am not
otherwise entitled, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged. On my own behalf and that of my
heirs, executors, administrators, beneficiaries, representatives and assigns,
and all others connected with or claiming through me, I hereby release and
forever discharge the Company from any and all causes of action, rights or
claims of any type or description, known or unknown, which I have had in the
past, now have or might have, through the date of my signing of this Release of
Claims. This includes, without limitation, any and all causes of action, rights
or claims in any way resulting from, arising out of or connected with my
employment by the Company or the termination of that employment or pursuant to
any federal, state or local law, regulation or other requirement, including
without limitation Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the fair employment
practices statutes of the state or states in which I have provided services to
the Company or any other federal, state, local or foreign law, all as amended,
any contracts of employment, any tort claims, or any agreements, plans or
policies.

For purposes of this Release of Claims, the word “Company” always includes the
Company, Holdco the subsidiaries and affiliates of the Company or Holdco and all
of their respective past, present and future officers, directors, trustees,
shareholders, employees, employee benefit plans and any of the trustees or
administrators thereof, agents, general and limited partners, members, managers,
investors, joint venturers, representatives, predecessors, successors and
assigns, and all others connected with any of them, both individually and in
their official capacities.

Nothing in this Release of Claims shall be construed to prohibit me from filing
a charge with or participating in any investigation or proceeding conducted by
the federal Equal Employment Opportunity Commission or a comparable state or
local agency, except that I hereby agree to waive my right to recover monetary
damages or other individual relief in any charge, complaint or lawsuit filed by
me or by anyone else on my behalf.

 

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Nothing in this Release of Claims is intended to or does waive or release any
rights I may have with respect to (i) coverage under liability insurance or
indemnification rights provided or maintained by the Company during, or
applicable to, my employment with the Company, or under any other obligation or
policy of insurance maintained by the Company in accordance with their
respective terms; (ii) any other defense or indemnity right under applicable
law; (iii) the enforcement of the right to any payment or benefits due upon the
termination of my employment in accordance with the express terms of the
Employment Agreement or (iv) any right or claim that cannot, by law, be waived
or released through this Release of Claims.

Also excluded from the scope of this Release of Claims is any right to benefits
that were vested or eligible for continuation under the Company’s employee
benefit plans on the date on which my employment with the Company terminated, in
accordance with the terms of such plans.

In signing this Release of Claims, I give the Company assurance that I have
returned to the Company any and all documents, materials and information related
to the business, whether present or otherwise, of the Company and all keys and
other property of the Company that were in my possession or control, all as
required by and consistent with Section 9(e) of the Employment Agreement. I
agree that I will not, for any purpose, attempt to access or use any computer or
computer network or system of the Company, including without limitation their
electronic mail systems. I further acknowledge that I have disclosed to the
Company all passwords necessary or desirable to enable the Company to access all
information which I have password-protected on its computer network or system.

In signing this Release of Claims, I agree that I have been paid in full all
compensation due to me, whether for services rendered by me to the Company or
otherwise, through the date on which my employment with the Company terminated
and that, exclusive only of the Separation Payments [and the Accrued
Obligations, as defined in the Employment Agreement], no further compensation of
any kind shall be due to me by the Company, whether arising under the Employment
Agreement or otherwise, in connection with my employment or the termination
thereof. I also agree that except for any right I and my eligible dependents may
have to continue participation in the Company’s health and dental plans under
the federal law commonly known as COBRA, my right to participate in any employee
benefit plan of the Company will be determined in accordance with the terms of
such plan.

I acknowledge that my eligibility for the Separation Payments is not only
contingent on my signing and returning this Release of Claims to the Company in
a timely manner and not revoking it thereafter, but also is subject to my
compliance with the covenants contained in the Employment Agreement.

In signing this Release of Claims, acknowledge that I have not relied on any
promises or representations, express or implied, that are not set forth
expressly in this Release of Claims. I further acknowledge that I am waiving and
releasing any rights I may have under the Age Discrimination in Employment Act
of 1967, as amended (“ADEA”), and that this waiver and release is knowing and
voluntary and is being done with a full understanding of its terms. I agree that
the consideration given for this wavier and release is in addition to anything
of value to which I was already entitled. I further acknowledge that I have been
advised by this writing as required by the ADEA that:

 

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1. I have the right to and am advised by the Company to consult with an attorney
prior to executing this Release of Claims; and I acknowledge that I have had
sufficient time to consider this Release of Claims and to consult with an
attorney, if I wished to do so, or to consult with any other person of my
choosing before signing;

2. I may not sign this Release of Claims prior to the termination of my
employment, but that I may consider the terms of this Release of Claims for up
to twenty-one (21) days (or, if the Company so instructs, forty-five (45) days)
from the later of the date my employment with the Company terminates or the date
I receive this Release of Claims;

3. I have seven (7) days following my execution of this Release of Claims to
revoke this Release of Claims; and

4. This Release of Claims shall not be effective until the revocation period has
expired.

Intending to be legally bound, I have signed this Release of Claims under seal
as of the date written below.

 

Signature:

 

 

   

Date signed:

 

 

 

Party City Holdings Inc.

 

Name:

Title:

 

Party City Holdco Inc.

 

Name:

Title: