EMPLOYMENT AGREEMENT



 


EXHIBIT 10.9




EMPLOYMENT AGREEMENT


     
THIS EMPLOYMENT AGREEMENT (the
“Agreement”), dated as of November 29, 2002, is
made and entered into by and between Party City Corporation, a
Delaware corporation (the “Company”), and Steve Skiba
(the “Executive”).



     
WHEREAS, the Company wishes to employ the
Executive, and the Executive wishes to serve the Company, in the
capacities and on the terms and conditions set forth in this
Agreement;



     
NOW, THEREFORE, it is hereby agreed as follows:



     
1.     Employment.



     
(a)     Agreement to
Employ. Upon the terms and subject to the conditions of this
Agreement, the Company hereby agrees to employ the Executive and
the Executive hereby agrees to accept his employment by the
Company.



     
(b)     Employment
Period. The Company shall employ the Executive for a one (1)
year period commencing on November 29, 2002 (the
“Commencement Date”), unless earlier terminated in
accordance with the provisions hereof. The employment period
shall automatically be extended for an indefinite number of
one-year periods, subject to earlier termination in accordance
with the provisions hereof, unless notice is given by either
party of an intent not to extend the period for additional years
at least two (2) months prior to the expiration of the then
current employment period. The period during which the Executive
is employed pursuant to this Agreement, including any extension
thereof in accordance with this Paragraph 1(b), shall be
referred to as the “Employment Period.”



     
2. Duties. During the Employment
Period, the Executive shall serve as Chief Information Officer
(CIO). Executive shall have such duties and responsibilities as
are consistent with and customarily assigned to his position
with the Company. Executive shall also have such other duties
and responsibilities as may from time to time be assigned to him
by the Chief Executive Officer of the Company (the
“CEO”) or any other officer of the Company having a
senior position. During the Employment Period, the Executive
shall devote his full attention and time to the business and
affairs of the Company and shall carry out such duties and
responsibilities faithfully and to the best of his ability.



     
3. Salary. For the services rendered
by the Executive under and during the Employment Period, the
Company shall pay to Executive as compensation, subject to any
required withholding, an annual base salary of $240,000 (the
“Base Salary”). In addition, in consideration for
Executive’s agreement to abide by the provisions of
Paragraph 8 herein, the Company shall pay to Executive,
subject to any required withholding, an annual noncompete
stipend of $10,000 (the “Noncompete Stipend”)(the Base
Salary and the Noncompete Stipend hereafter referred to as the
“Salary”). The Salary shall be payable in accordance
with the Company’s regular payroll practice for its senior
executives, as in effect from time to time.








 



     
4.     Bonus. In
addition to Salary, the Executive shall be entitled to earn an
annual bonus for each full fiscal year of the Company during the
Employment Period pursuant to the Company’s annual
incentive bonus plan as in effect from time to time and based on
attaining certain performance objectives thereunder (the
“Bonus”). The determination of what level the
Executive may participate in any Company bonus plan and the
maximum and target Bonus that may be earned shall be made by the
CEO in his sole discretion.



     
5.     Benefit
Plans. The Executive shall also be eligible to participate
in any health insurance plan, dental insurance plan, retirement
plan, fringe benefit plan, vacation plan or other employee
benefit plan generally made available by the Company to all
employees or to other executive officers of the Company in the
same class as the Executive. Participation in any such plan or
program shall be subject to the terms and conditions of such
plan, including any waiting periods and/or eligibility
requirements thereunder.



     
6.     Reimbursement
of Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him in performing services
hereunder, in accordance with the Company’s policies and
procedures established for reimbursement of expenses of
executive officers in the same class as the Executive.
Reimbursement shall be subject to prompt presentation by
Executive of expense statements, receipts or such other
supporting information as the Company may require or as may be
required for tax purposes.



     
7.     Termination of
Employment.




		
	 	     
    (a) Termination of the Employment
    Period. Notwithstanding Paragraph 1(b), the Company
    reserves the right at any time during the Employment Period to
    terminate Executive’s employment with or without Cause. The
    Employment Period shall end upon the earliest to occur of
    (i) Executive’s death or Disability (as defined
    below), (ii) a termination of Executive’s employment
    by the Company for Cause (as defined below), (iii) a
    termination of Executive’s employment by the Company
    without Cause, (iv) a resignation by the Executive, or
    (v) the end of the final Employment Period after notice of
    nonrenewal pursuant to Paragraph 1(b) herein.
    
	 
	 	     
    (b) Benefits Payable Upon
    Termination. (i) In the event of the termination of
    Executive’s employment on account of Executive’s death
    or Disability, Executive’s voluntary resignation or the
    Company’s termination of Executive’s employment for
    Cause, the Company shall pay to Executive, or Executive’s
    estate on account of his death, in a lump sum within 10 business
    days following Executive’s termination, all earned but
    unpaid then-existing Salary and Bonus; provided however, that,
    whether any Bonus is earned at the time of Executive’s
    termination will be determined by reference to the terms of the
    Company’s respective bonus or performance-based
    compensation plans or programs, in any, or, if not set forth
    therein, as determined by the Company in its sole discretion
    (such earned but unpaid Salary and Bonus hereafter referred to
    as “Earned Compensation”). (ii) In the event of
    the termination of Executive’s employment by the Company
    without Cause, the Company shall (A) pay to Executive, in a
    lump sum within 10 business days following such termination, all
    Earned Compensation and (B) continue to pay
    Executive’s then-existing Salary, in accordance with the
    Company’s regular payroll practices, (the “Severance
    Payments”) for the twenty-six (26) weeks
    




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immediately following such termination (the
“Severance Period”).



     
(c) Notwithstanding anything herein to the
contrary, to the degree that a Bonus has been earned but cannot
be calculated because the performance objectives identified to
such Bonus cannot yet be calculated then payment of the earned
Bonus shall occur in a lump sum within 10 business days
following the date on which such performance goals are
calculated.



     
(d) Definitions. For the purposes of
this Agreement the following capitalized terms shall have the
following meanings:




		
	 	     
    (i) “Cause” shall mean any of the
    following: (A) fraud, personal dishonesty,
    embezzlement, defalcation or acts of gross negligence or gross
    misconduct on the part of Executive in the course of his
    employment; (B) a material breach of Executive’s
    fiduciary duty of loyalty to the Company; (C) a material
    breach of this Agreement by Executive that is injurious to the
    Company; (D) Executive’s conviction by a court of
    competent jurisdiction of, or pleading “guilty” or
    “no contest” to, (x) a felony, or (y) any
    other criminal charge (other than minor traffic violations)
    which could reasonably be expected to have, or which actually
    has, a material adverse financial impact on the Company or a
    material adverse impact on the Company’s reputation and
    standing in the community; (E) consistent drunkenness by
    Executive or his illegal use of narcotics which is, or could
    reasonably be expected to become, materially injurious to the
    reputation or business of the Company or which impairs, or could
    reasonably be expected to impair, the performance of
    Executive’s duties hereunder; (F) any breach of
    Paragraph 8 hereunder; or (G) willful failure by
    Executive to follow the lawful directions of the CEO.
    
	 
	 	     
    (ii) “Disability” shall mean
    Executive’s inability to perform the material duties
    required of him by the Company and historically performed by him
    due to a mental or physical illness or incapacity for a period
    of three consecutive months or for shorter periods aggregating
    four months during any twelve-month period.
    




     
(e) Full Discharge of Company
Obligations. The amounts payable to the Executive pursuant
to this Paragraph 7 following termination of his employment
shall be in full and complete satisfaction of the
Executive’s rights under this Agreement and any other
claims he may have in respect of his employment by the Company
or any of its subsidiaries. Such amounts shall constitute
liquidated damages with respect to any and all such rights and
claims and, upon the commencement of Executive’s receipt of
such amounts, and contingent on the full payment of such
amounts, the Company shall be released and discharged from any
and all liability to the Executive in connection with this
Agreement or otherwise in connection with the Executive’s
employment with the Company and its subsidiaries. Executive
agrees to enter into a release and waiver of claims agreement
satisfactory to the Company at the time of Executive’s
termination of employment in order to implement the purpose of
this Paragraph 7(e).



     
(f) Offset for Subsequent Employment.
In the event during the Severance Period the Executive becomes
employed with another entity (“Post Termination
Employment”), the Company’s obligation to make
Severance Payments shall be reduced on a dollar-for-dollar basis
by the amount that Executive earns on account of such Post
Termination Employment. The Executive agrees to notify the
Company of such Post Termination Employment and to disclose



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to the Company the compensation to be earned by
Executive therein. In the event that the Executive fails to
notify the Company of such Post Termination Employment, within
ten (10) business days of the date Executive first undertakes
such Post Termination Employment, the Company’s obligation
to make Severance Payments shall expire.



     
8.     Noncompetition
and Confidentiality. By and in consideration of the
Noncompete Stipend and Salary and other benefits to be provided
by the Company hereunder, the Executive agrees that:



          
(a) Noncompetition. During the
Employment Period and during the six (6) month period following
termination of the Executive’s employment for any reason
(the “Restriction Period”), the Executive shall not,
directly or indirectly, whether as a principal, partner,
employee, agent, consultant, shareholder (other than shares
purchased prior to the effective date of this Agreement or as a
holder, or a member of a group which is a holder, of not in
excess of five percent (5%) of the outstanding voting shares of
any publicly traded company) or in any other relationship or
capacity be affiliated with any business corporation,
partnership, enterprise or entity in any geographic area, which
competes with the Company’s Business (as defined below).
For purposes of this Agreement, the “Company’s
Business” at any time means the sale of party goods,
including costumes, and any other line of business which the
Company is engaged in or has substantial plans to become engaged
in at the time.



          
(b) Confidentiality. Unless
specifically authorized in writing by the Company to do so,
except to the extent required by an order of a court having
competent jurisdiction or under subpoena from an appropriate
government agency, the Executive shall not disclose (i) any
information disclosed or made available to the Executive or
known by the Executive as a direct or indirect consequence of or
through employment by the Company, or (ii) any other
information related to the Company’s referral sources,
business practices, trade secrets, operating methods,
techniques, products, processes, services or other operations
(individually or collectively Operations”), including, but
not limited to, information relating to research, development,
inventions, accounting, engineering or marketing of such
Operations and including any such information of any third party
which the Company is under an obligation to keep confidential
(individually or collectively, “Confidential
Information”) to any third person unless such Confidential
Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of the
Executive’s breach of this Paragraph 8(b)).



          
(c) Nonsolicitation of Employees.
During the Employment Period and the Restricted Period, the
Executive shall not directly or indirectly solicit, encourage or
induce any employee of the Company or any of its subsidiaries to
terminate employment with such entity, and shall not directly or
indirectly, either individually or as owner, agent, employee,
consultant or otherwise, employ or offer employment to any
person who is or was employed by the Company or a subsidiary
thereof unless such person shall have ceased to be employed by
such entity for a period of at least six months.



          
(d) Company Property. Except as
expressly provided herein, at the time of the Executive’s
termination of employment or at any other time as the CEO or the
Board may request, the Executive shall return to the Company all
property of the Company, including any automobile and other
machinery and all memoranda, notes, records, reports, manuals,
drawings



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and blueprints, including electronic versions,
concerning the Company’s Business (and all copies thereof)
in the Executive’s possession or under his control.




     
(e)     Protection of
Legitimate Business Interests. Executive acknowledges that
(i) Executive’s position with the Company requires the
performance of services which are special, unique and
extraordinary in character and places him in a position of
confidence and trust with the customers and employees of the
Company, through which, among other things, he will obtain
knowledge of the Company’s technical information and
know-how and become acquainted with its customers, in which
matters the Company has substantial proprietary interests,
(ii) the restrictive covenants in this Paragraph 8 are
necessary in order to protect and maintain such proprietary
interests and other legitimate business interests of the
Company, and (iii) the Company would not have entered into
this Agreement unless such covenants were included herein.



     
(f)     Injunctive
Relief and Other Remedies with Respect to Covenants. The
Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to noncompetition,
nonsolicitation, confidentiality and Company property, 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 irreparable injury for which adequate remedies are
not available at law. Therefore, the Executive agrees that the
Company shall (i) be entitled to an injunction, restraining
order or such other equitable relief (without the requirement to
post bond) restraining the Executive from committing any
violation of the covenants and obligations contained in this
Paragraph 8 and (ii) have no further obligation to
make any payments to the Executive hereunder following any
material violation of the covenants and obligations contained in
this Paragraph 8. These remedies are cumulative and are in
addition to any other rights and remedies the Company may have
at law or in equity. In connection with the foregoing provisions
of this Paragraph 8, the Executive represents that his
economic means and circumstances are such that such provisions
will not prevent him from providing for himself and his family
on a basis satisfactory to him.



     
(g)     Executive
acknowledges that, in addition to the Noncompete Stipend, any
and all options to acquire Company stock granted to Executive
during the course of Executive’s employment with the
Company (“Options”) are and were granted in
consideration for Executive’s covenants pursuant to
subparagraphs 8(a), (b), (c) and (d) herein. In the event
the Executive breaches any of the provisions of
subparagraphs 8(a),(b),(c) or (d) herein, all Options
(whether vested or not) then held by Executive shall expire and
terminate immediately. For purposes of this Paragraph 8,
the determination of any breach by the Executive of any
provision of this Paragraph 8 shall be made by the Board of
Directors of the Company in its sole discretion, and such
determination shall be final and binding on the Company and
Executive.



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(h) Non-Disparagement. Executive
shall not at any time after the date hereof disparage the
Company or any of its officers, directors, shareholders or any
of their respective affiliates. The obligations of Executive
under this Section 8(h) shall not apply to disclosures required
by applicable law, regulation or order of a court or
governmental agency.



 


		
	9.	
    Miscellaneous.



     
(a) Survival. Paragraphs 7
(relating to early termination of employment), 8 (relating
to noncompetition, nonsolicitation and confidentiality and
non-disparagement), 9(c) (relating to arbitration), and
9(n) (relating to governing law) shall survive the
termination hereof.



     
(b) Validity and Enforceability. The
Executive acknowledge and agrees that the covenants set forth in
Paragraph 8 are reasonable and valid in geographical and
temporal scope and in all other respects. The invalidity or
unenforceability of any provisions or provisions of this
Agreement shall not affect the validity or enforceability of any
other provision or provisions of this Agreement, which shall
remain in full force and effect. If any provision of this
Agreement is held to be invalid, void or unenforceable in any
jurisdiction, any court or arbitrator so holding shall
substitute a valid, enforceable provision that preserves, to the
maximum lawful extent, the terms and intent of such provisions
of this Agreement. If any of the provisions of, or covenants
contained in, this Agreement are hereafter construed to be
invalid or unenforceable in any jurisdiction, the same shall not
affect the remainder of the provisions or the enforceability
thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalidity or unenforceability in
such other jurisdiction. Any such holding shall affect such
provision of this Agreement, solely as to that jurisdiction,
without rendering that or any other provision of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If
any covenant should be deemed invalid, illegal or unenforceable
because its scope, either geographical or temporal, is
considered excessive, such covenant will be modified so that the
scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and
enforceable.



     
(c) Arbitration. Subject to
Paragraph 8(f), any dispute or controversy arising under or
in connection with this Agreement shall be resolved by binding
arbitration. The arbitration shall be held in Morris County, New
Jersey and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Voluntary
Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of
law or equity. The arbitrator shall be acceptable to both the
Company and the Executive. If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of
the arbitrators, one appointed by each of the parties and the
third appointed by the other two arbitrators.



     
(d) Binding Effect. This Agreement
shall be binding on, and shall inure to the benefit of, the
Company and any person or entity that succeeds to the interest
of the Company (regardless of whether such succession does or
does not occur by operation of law) by reason of the sale of all
or a portion of the Company’s stock, a merger,
consolidation or reorganization involving the Company, or unless
the Company otherwise elects in writing, a sale of the assets of



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the business of the Company (or portion thereof)
in which the Executive performs a majority of his services. This
Agreement shall also inure to the benefit of the
Executive’s heirs, executors, administrators and legal
representatives.




     
(e) Assignment. This Agreement, and
the Executive’s rights and obligations hereunder, may not
be assigned by the Executive. The Company may assign its rights,
together with its obligations, hereunder in connection with any
sale, transfer or other disposition of all or substantially all
of the business assets with respect to which Executive is
performing a majority of his services at any such time.



     
(f) Entire Agreement. This Agreement
constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein. No other agreement
relating to the terms of the Executive’s employment by the
Company, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom
enforcement is sought. There are no promises, representations,
inducements or statements between the parties relating to the
terms of Executive’s employment with the Company other than
those that are expressly contained herein. The Executive
acknowledges that he is entering into this Agreement of his own
free will and accord, and with no duress, that he has read this
Agreement and that he understands it and its legal consequences.



     
(g) Waiver. Waiver by any party
hereto of any breach or default by the other party of any of the
terms of this Agreement shall not operate as a waiver of any
other breach or default, whether similar to or different from
the breach of default waived. No waiver of any provision of this
Agreement shall be implied from any course of dealing between
the parties hereto or from any failure by either party hereto to
assert its or his rights hereunder on any occasion or series of
occasions.



     
(h) Notices. Any notice required or
desired to be delivered under this Agreement shall be in writing
and shall be delivered personally, by courier service, by
registered mail, return receipt requested, or by telecopy and
shall be effective upon actual receipt by the party to which
such notice shall be directed, and shall be addressed as follows
(or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):




			
	 	If to the Company:	Party City Corporation
	 	 	400 Commons Way
	 	 	Rockaway, New Jersey
	 	 	Attention:     Vice
President, General Counsel

	 	If to the Executive:	The most recent home address of the Executive
    noted on the records of the Company.




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(i) No Conflicting Obligations. The
Executive represents that his performance of the terms of this
Agreement and his employment by the Company does not and will
not breach any agreement to which the Executive is a party
including (without limitation) any agreement to keep in
confidence proprietary information or trade secrets acquired by
the Executive in confidence or in trust prior to the date of
this Agreement. The Executive has not entered into, and hereby
agrees not to enter into, any agreement whether written or oral
in conflict with this Agreement. The Executive further agrees
not to use in the performance of his duties for the Company any
confidential materials or documents of a present or former
employer of the Executive, or any materials or documents
obtained by the Executive under a binder of confidentiality
imposed by reason of any of the Executive’s consulting
relationships, if any, unless such materials or documents are
generally available to the public or the Executive has
authorization from such present or former employer or client for
the possession and unrestricted use of such materials. The
provisions of this Paragraph 9(i) shall survive any
termination of this Agreement.



     
(j) Amendments. This Agreement may
not be altered, modified or amended except by a written
instrument signed by each of the parties hereto.



     
(k) Headings. Headings to paragraphs
in this Agreement are for the convenience of the parties only
and are not intended to be part of or to affect the meaning or
interpretation hereof.



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



     
(m) Withholding. Any payments
provided for herein shall be reduced by any amounts required to
be withheld by the Company from time to time under applicable
Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.



     
(n) Governing Law. This Agreement
shall be governed by the laws of the State of New Jersey,
without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction would apply.



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IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer and the
Executive has hereunto set his hand as of the day and year first
above written.




		
	 	
    PARTY CITY CORPORATION
    
	 	 
	 	By: /s/ Melissa Wallace
	 	






			
	 	Its: 	
    11/29/02
    



		
	 	
    

	 
	 	
    EXECUTIVE
    
	 
	 	/s/ STEVE SKIBA
    
	 	
    

	 	Steve Skiba




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