Exhibit 10.4
**CONSULTING AGREEMENT**
     This Consulting Agreement (this “Agreement”) dated as of April 12, 2005, and effectiveas of March 21, 2005 (the “Effective Date”) is entered into by and between Party CityCorporation, a Delaware corporation (the “Company”), and Dillon Associates RetailConsultants (the “Consultant”).
RECITALS
     WHEREAS, the Company desires to engage the Consultant to provide services to the Companypursuant to this Agreement and the Consultant desires to provide such services to the Companypursuant to this Agreement;
     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, theCompany and the Consultant agree as follows:
1. Services and Duties.
     (a) The Company agrees to engage the Consultant to provide strategic business,management and financial advice to the Company as directed by and reporting to the Board ofDirectors of the Company (the “Board”).
     (b) The Consultant agrees to devote as much time as is reasonably necessary to theperformance of services hereunder; including an appropriate amount of time at the Company’soffices in Rockaway, NJ (to include by example but not limitation reasonable travel betweensuch location and the Consultant’s primary residence in Wisconsin) and the balance of which may be performed from the Consultants home in Wisconsin or at a location beneficial to theCompany and selected by the Consultant.
     2. Term. The term of this Agreement (the “Initial Term”) shall be for theperiod beginning on the Effective Date and ending on June 30, 2005 provided that the term willautomatically be extended for successive ninety (90) day periods (each, an “ExtensionTerm”) unless either party shall provide written notice to the other not later than 30 daysprior to the expiration of the Initial Term or Extension Term, if any, then in effect. The InitialTerm and any Extension Term shall be collectively referred to as the “Term” hereunder.
     3. Fees/Expenses. During the Term, the Company shall pay to the Consultant aconsulting fee of $700 per hour (the “Hourly Fee”). The Hourly Fee shall include byexample reasonable travel time incurred by Consultant pursuant to this Agreement. The Hourly Feeshall be payable on the first business day of each month (beginning April 2005) provided that theConsultant properly accounts for his hours worked as a consultant hereunder. In addition, theConsultant shall be entitled to prompt reimbursement by the Company for all reasonable travel,entertainment and other business expenses incurred by him in connection with his serviceshereunder, in accordance with the policies and procedures established by the Company.
     4. Health Coverage. From the effective date of this Agreement the Company shallprovide medical and dental benefit plan coverage to the Consultant to the same degree available tosenior executives of the Company through the date of the Consultant’s death (and to theConsultant’s spouse to whom he is married as of the Effective Date from the date of suchtermination until her
 

 

death). If and to the extent that the Company cannot provide such coverage or it is notpayable or provided under the terms of the Company’s plans because the Consultant is not an activeemployee or for any other reason, the Company itself shall, to the extent necessary, provide forpayment of such benefit to the Consultant or of an amount sufficient for him to purchase suchbenefits. In every event, and notwithstanding anything to the contrary contained above, Consultantunderstands and agrees that, upon the Consultant or spouse being eligible for Medicare, theCompany’s medical benefit plan coverage shall be secondary, with Medicare being primary coverage.The provision of this paragraph shall survive the termination of this Agreement.
     5. OtherConsulting Arrangements. Prior to the execution of this Agreement, the Companyand Consultant were parties to an oral agreement (the “Oral Agreement”) pursuant to whichConsultant was paid at the rate of $10,000 per month for consulting services rendered to theCompany. As of the Effective Date of this Agreement, the Company and Consultant agree as follows:(1) During any period in which Consultant performs services pursuant to this Agreement, the priorOral Agreement shall be suspended and Consultant will receive no fees (except for fees incurred forservices rendered prior to the Effective Date of this Agreement) pursuant to the Oral Agreement;and (2) upon termination of this Agreement, the Oral Agreement shall be reinstated, provided,however, that either party may terminate the Oral Agreement at any time upon notice to the otherparty.
     6. Company Property. Upon the later of the termination of this Agreement for anyreason or the Consultant’s termination of services as a Director, the Consultant will promptlydeliver to the Company all Company property in his possession and all documents including drawings,manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, orany other documents concerning the Company’s customers, business plans, marketing strategies,products or processes which contain proprietary information or trade secrets provided or obtainedby Consultant pursuant to this Agreement.
     7. Confidential Information. Unless specifically authorized in writing by the Companyto do so, except to the extent required by an order of a court having competent jurisdiction orunder subpoena from an appropriate government agency, the Consultant shall not disclose anyinformation disclosed or made available to the Consultant or known by the Consultant as a direct orindirect consequent of or through his services as Director or Consultant to the Company, related tothe 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 suchinformation 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 ConfidentialInformation has been previously disclosed to the public by the Company or is in the public domain(other than by reason of the Consultant’s breach of this Section 7 or breach of any duty as aDirector). Notwithstanding the foregoing, if the Consultant is required by an order of a courthaving competent jurisdiction or under subpoena from an appropriate government agency to discloseConfidential Information, the Consultant shall provide the Company with prompt written notice ofsuch requirement and shall assist the Company to seek a protective order or other appropriateremedy protecting its interests. In any event, the Consultant will furnish only the part of theConfidential Information that is required to be disclosed by the court order or subpoena and willuse reasonable efforts to obtain reliable assurances that confidential treatment will be accordedto any Confidential Information so furnished.
 

 

8. Independent Contractor Status.
     (a) Itis hereby understood and agreed by the Company and the Consultant that theConsultant’s rendering of the consulting services pursuant to this Agreement is as anindependent contractor and not as a stockholder, officer, employee, director or partner ofthe Company, and that the Consultant’s retention as a consultant pursuant to this Agreementshall not entitle the Consultant to any benefits as an employee of the Company under anybenefit plan maintained by the Company or any of its subsidiaries or affiliates for its ortheir respective employees except as expressly provided herein. It is further herebyunderstood and agreed by the Company and the Consultant that, as an independent contractor,the Consultant shall be responsible for complying with all applicable laws, rules andregulations concerning taxes, social security contributions, pension plans contributions,unemployment contributions, and the like.
     (b) It is hereby acknowledged by the Company and the Consultant that as of theEffective Date the Consultant is a member of the Board (a“Director”). Nothing in thisAgreement shall affect the Consultant’s duties, obligations or authority as a Director orthe Company’s obligations to the Consultant in respect of his services as a Director.Except as expressly provided herein, the Consultant’s continuation or termination ofservices as a Director shall have no effect on this Agreement or the obligations of eitherparty hereto. In addition, Consultant agrees that time devoted in the performance ofservices for Board duties shall not be deemed time devoted for Consultant’s services underthe Agreement or applied in anyway against the services and duties requirements of Section1.(b) herein.
     9. Authority. The Consultant hereby acknowledges and agrees that in his capacity asConsultant he shall have no right or authority to enter into any agreements or other arrangementsin the name or on behalf of the Company, or to assume or create any obligation or liability of anykind whatsoever, express or implied, in the name or on behalf of the Company, except as expresslyauthorized by the Board.
     10. Amendments. This Agreement may not be amended or changed except by the writtenagreement of the Company and the Consultant.
     11. Not an Employment Contract. This Agreement is not a contract of employmentbetween the Consultant and the Company, and the Consultant and the Company hereby agree andacknowledge that this Agreement does not impose any obligation on the Company to offer employmentto the Consultant at any time.
     12. Governing Law. This Agreement, and any dispute arising under or relating to anyprovision of this Agreement shall be governed by and construed in accordance with the laws of theState of New Jersey.
     13. Severability. Whenever possible, each provision of this Agreement shall beinterpreted in such manner as to be effective and valid under applicable law, but if any provisionof this Agreement is held to be invalid, illegal or unenforceable in any respect under anyapplicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shallnot affect any other provision, but this Agreement shall be reformed, construed and enforced as ifsuch invalid, illegal or unenforceable provision had never been contained herein.
 

 

     14. Entire Agreement. This Agreement constitutes the entire agreement between theparties hereto with respect to the Consultant’s services as a consultant to the Company. No otheragreement relating to the terms of the Consultant’s engagement to perform consulting services forthe Company, oral or otherwise, shall be binding between the parties unless it is in writing andsigned by the party against whom enforcement is sought. There are no promises, representations,inducements or statements between the parties relating to the terms of the Consultant’s engagementas a consultant to the Company other than those that are expressly contained herein. TheConsultant 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 legalconsequences.
     15. Successors and Assigns of the Company. This Agreement shall be binding upon inureto the benefit of the Company and its successors and assigns (whether by merger, consolidation,sale of all or substantially all assets or otherwise). The Consultant hereby acknowledges andagrees that the consulting services to be performed by him pursuant to this Agreement are personalin nature and that he shall not assign any of his rights or delegate any of his duties orobligations under this Agreement to any other person or entity.
     16. Counterparts. This Agreement may be executed in any number of counterparts, eachof which when so executed shall be deemed to be an original, and such counterparts together shallconstitute and be one and the same instrument.
     17. Arbitration. In the event that any dispute or controversy should arise under orin connection with this Agreement the parties hereto shall first attempt to resolved such disputethrough mediation, the costs of which shall be shared equally by the parties. In the event thatsuch dispute is not resolved in mediation, the parties agree that it shall be resolved by bindingarbitration. The arbitration shall be held in Morris County, New Jersey and except to the extentinconsistent with this Agreement, shall be conducted in accordance with the Labor Arbitration Rulesof the American Arbitration Association then in effect at the time of the arbitration, andotherwise in accordance with principles which would be applied by a court of law or equity. Thearbitrator shall be acceptable to both the Company and the Consultant. If the parties cannot agreeon an acceptable arbitrator, the dispute shall be heard by one arbitrator, appointed by theAmerican Arbitration Association. Judgments on any award may be entered in and enforced by anycourt appropriate jurisdiction. Each party shall pay his or its own costs for the arbitration orlitigation, as the case may be, with the cost of the arbitrator, if applicable, to be equallydivided between the parties.
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and yearfirst above written. **Party City Corporation**