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Exhibit 10.12

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the
Agreement), dated as of April 26, 2004, is made
and entered into by and between Party City Corporation, a
Delaware corporation (the Company), and Lisa Laube
(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 her employment by the Company.

(b) Employment Period.The Company
shall employ the Executive for a one (1) year period
commencing on April 26, 2004 (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 Merchandising Officer
of the Company. Executive shall have such duties and
responsibilities as are consistent with and customarily assigned
to her position with the Company. Executive shall also have such
other duties and responsibilities as may from time to time be
assigned to her 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 her 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 her 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 $ 300,000.00 (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 $50,000 (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. Incentive Compensation.

(a) Bonus.In addition to Salary, the
Executive shall be entitled to earn an annual bonus for each
full Fiscal Year (as defined below) 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
Performance Bonus). The target amount of the
Performance Bonus for each Fiscal Year during the Employment
Period shall be fifty percent (50%) of the Executives
Salary, at the rate in effect as of the last day of the Fiscal
Year for which such bonus is paid. The Executive shall be
guaranteed a minimum bonus of $120,000; $60,000 of which shall
be paid in September, 2004 and the balance of $60,000 shall be
paid in September, 2005. The Executive shall also receive a
sign on bonus in the amount of $35,000 to be paid
not later than May 26, 2004.





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(b) Stock Options.The Executive
shall be granted on the Commencement Date nonqualified stock
options (the Stock Options) to acquire 120,000
shares of common stock of the Company, $.01 par value per share
(the Common Stock), at an exercise price per share
equal to $17.00.



| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | 30,000 Stock Options shall vest and become fully
    exercisable on April 26, 2005, provided the Executive is
    employed by the Company on such date;
|
| | 30,000 Stock Options shall vest and become fully
    exercisable on April 26, 2006, provided the Executive is
    employed by the Company on such date;
|
| | 30,000 Stock Options shall vest and become fully
    exercisable on April 26, 2007, provided the Executive is
    employed by the Company on such date;
|
| | 30,000 Stock Options shall vest and become fully
    exercisable on April 26, 2008, provided the Executive is
    employed by the Company on such date;

(c) Vacation.During the Employment
Period, the Executive shall be entitled to three weeks of paid
vacation per year of employment.

(d) Automobile Allowance.During the
Employment Period, the Executive shall be reimbursed $8,100 for
an automobile allowance.

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 her 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. The Company will also
reimburse the Executive for COBRA expenses.

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 her 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, if 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

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accordance with the Companys regular
payroll practices, (the Severance Payments) for the
twenty-six (26) weeks 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:



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| | (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 her
    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 her 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 her by the Company and historically performed by her
    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 her employment
shall be in full and complete satisfaction of the
Executives rights under this Agreement and any other
claims she may have in respect of her 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 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

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 Restriction 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 and blueprints, including electronic versions,
    concerning the Companys Business (and all copies thereof)
    in the Executives possession or under her 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, she 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                                                                                     

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| | Paragraph 8, the Executive represents that
    her economic means and circumstances are such that such
    provisions will not prevent her from providing for herself and
    her family on a basis satisfactory to her.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (g) Executive acknowledges that, 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.
|
| | (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(o)
(relating to governing law) shall survive the termination hereof.

(b) Validity and Enforceability.The
Executive acknowledges 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 provision 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
three 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
the business of the Company (or portion thereof) in which the
Executive performs a majority of her services. This Agreement
shall also inure to the benefit of the Executives heirs,
executors, administrators and legal representatives.

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(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 her 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 she is entering into this Agreement of her own
free will and accord, and with no duress, that she has read this
Agreement and that she 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 or 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 her 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 of Human Resources 
|
| | with a copy to:                              
| | Party City Corporation                       
| | 400 Commons Way                              
| | Rockaway, New Jersey                         
| | Attention: Vice President and General Counsel
|
| | If to the Executive:                         
| | Lisa Laube                                   
| | 7544 North Goodrich Square                   
| | New Albany, OH 43054                         



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| | (i) No Conflicting Obligations.The
    Executive represents that her performance of the terms of this
    Agreement and her 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 her 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.

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(j) Right of Offset.The Company may
offset any payment to be made to the Executive pursuant to this
Agreement by any amount the Executive owes to the Company as of
the time such payment would otherwise be made.

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

(l) 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.

(m) 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.

(n) 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.

(o) 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 her hand as of the day and year first
above written.



| |                       
| | ----------------------
| | PARTY CITY CORPORATION



| |     |               
| | --- | --------------
| | By: | /s/ LISA LAUBE

| | 
| | 
| | 



| |      |                    
| | ---- | -------------------
| | Its: | /s/ MELISSA WALLACE

| |          
| | ---------
| |          
|
| | EXECUTIVE
| |          

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