Exhibit 10.11
**EMPLOYMENT AGREEMENT**
     THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of November 7, 2003,is made and entered into by and between Party City Corporation, a Delawarecorporation (the “Company”), and Warren Jeffery (the “Executive”).
     WHEREAS, the Company wishes to employ the Executive, and the Executivewishes to serve the Company, in the capacities and on the terms and conditionsset 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 ofthis Agreement, the Company hereby agrees to employ the Executive and theExecutive 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 3, 2003 (the “Commencement Date”),unless earlier terminated in accordance with the provisions hereof. Theemployment period shall automatically be extended for an indefinite number ofone-year periods, subject to earlier termination in accordance with theprovisions hereof, unless notice is given by either party of an intent not toextend the period for additional years at least two (2) months prior to theexpiration of the then current employment period. The period during which theExecutive is employed pursuant to this Agreement, including any extensionthereof 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 asSenior Vice President. Executive shall have such duties and responsibilitiesas are consistent with and customarily assigned to his position with theCompany. Executive shall also have such other duties and responsibilities asmay from time to time be assigned to him by the Chief Executive Officer of theCompany (the “CEO”) or any other officer of the Company having a seniorposition. During the Employment Period, the Executive shall devote his fullattention and time to the business and affairs of the Company and shall carryout such duties and responsibilities faithfully and to the best of his ability.
     3. Salary. For the services rendered by the Executive under and duringthe Employment Period, the Company shall pay to Executive as compensation,subject to any required withholding, an annual base salary of $225,806 (the“Base Salary”). In addition, in consideration for Executive’s agreement toabide by the provisions of Paragraph 8 herein, the Company shall pay toExecutive, subject to any required withholding, an annual noncompete stipend of$10,000 (the “Noncompete Stipend”) (the Base Salary and the Noncompete Stipendhereafter referred to as the “Salary”). The Salary shall be payable inaccordance with the Company’s regular payroll practice for its seniorexecutives, as in effect from time to time.
     4. Bonus. In addition to Salary, the Executive shall be entitled to earnan annual bonus for each full fiscal year of the Company during the EmploymentPeriod pursuant to the Company’s annual incentive bonus plan as in effect fromtime to time and based on attaining
 

 

 certain performance objectives thereunder (the “Bonus”). Thedetermination of what level the Executive may participate in any Company bonusplan and the maximum and target Bonus that may be earned shall be made by theCEO in his sole discretion.
     5. Benefit Plans. The Executive shall also be eligible to participate inany health insurance plan, dental insurance plan, retirement plan, fringebenefit plan, vacation plan or other employee benefit plan generally madeavailable by the Company to all employees or to other executive officers of theCompany in the same class as the Executive. Participation in any such plan orprogram shall be subject to the terms and conditions of such plan, includingany waiting periods and/or eligibility requirements thereunder.
     6. Reimbursement of Expenses. During the Employment Period, the Executiveshall be entitled to receive prompt reimbursement for all reasonable expensesincurred by him in performing services hereunder, in accordance with theCompany’s policies and procedures established for reimbursement of expenses ofexecutive officers in the same class as the Executive. Reimbursement shall besubject to prompt presentation by Executive of expense statements, receipts orsuch other supporting information as the Company may require or as may berequired 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 toterminate Executive’s employment with or without Cause. The Employment Periodshall end upon the earliest to occur of (i) Executive’s death or Disability (asdefined below), (ii) a termination of Executive’s employment by the Company forCause (as defined below), (iii) a termination of Executive’s employment by theCompany without Cause, (iv) a resignation by the Executive, or (v) the end ofthe final Employment Period after notice of nonrenewal pursuant to Paragraph1(b) herein.
          (b) Benefits Payable Upon Termination. (i) In the event of thetermination of Executive’s employment on account of Executive’s death orDisability, Executive’s voluntary resignation or the Company’s termination ofExecutive’s employment for Cause, the Company shall pay to Executive, orExecutive’s estate on account of his death, in a lump sum within 10 businessdays following Executive’s termination, all earned but unpaid then-existingSalary and Bonus; provided however, that, whether any Bonus is earned at thetime of Executive’s termination will be determined by reference to the terms ofthe Company’s respective bonus or performance-based compensation plans orprograms, if any, or, if not set forth therein, as determined by the Company inits sole discretion (such earned but unpaid Salary and Bonus hereafter referredto as “Earned Compensation”). (ii) In the event of the termination ofExecutive’s employment by the Company without Cause, the Company shall (A) payto Executive, in a lump sum within 10 business days following such termination,all Earned Compensation and (B) continue to pay Executive’s then-existingSalary, in accordance with the Company’s regular payroll practices, (the“Severance Payments”) for the twenty-six (26) weeks immediately following suchtermination (the “Severance Period”).
          (c) Notwithstanding anything herein to the contrary, to the degree that a
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Bonus has been earned but cannot be calculated because the performanceobjectives identified to such Bonus cannot yet be calculated then payment ofthe earned Bonus shall occur in a lump sum within 10 business days followingthe date on which such performance goals are calculated.
     (d) Definitions. For the purposes of this Agreement the followingcapitalized terms shall have the following meanings:
     (i) “Cause” shall mean any of the following: (A) fraud, personaldishonesty, embezzlement, defalcation or acts of gross negligence orgross misconduct on the part of Executive in the course of hisemployment; (B) a material breach of Executive’s fiduciary duty ofloyalty to the Company; (C) a material breach of this Agreement byExecutive that is injurious to the Company; (D) Executive’s conviction bya court of competent jurisdiction of, or pleading “guilty” or “nocontest” to, (x) a felony, or (y) any other criminal charge (other thanminor traffic violations) which could reasonably be expected to have, orwhich actually has, a material adverse financial impact on the Company ora material adverse impact on the Company’s reputation and standing in thecommunity; (E) consistent drunkenness by Executive or his illegal use ofnarcotics which is, or could reasonably be expected to become, materiallyinjurious to the reputation or business of the Company or which impairs,or could reasonably be expected to impair, the performance of Executive’sduties hereunder; (F) any breach of Paragraph 8 hereunder; or (G) willfulfailure by Executive to follow the lawful directions of the CEO.
     (ii) “Disability” shall mean Executive’s inability to perform thematerial duties required of him by the Company and historically performedby him due to a mental or physical illness or incapacity for a period ofthree consecutive months or for shorter periods aggregating four monthsduring any twelve-month period.
          (e) Full Discharge of Company Obligations. The amounts payable to theExecutive pursuant to this Paragraph 7 following termination of his employmentshall be in full and complete satisfaction of the Executive’s rights under thisAgreement and any other claims he may have in respect of his employment by theCompany or any of its subsidiaries. Such amounts shall constitute liquidateddamages with respect to any and all such rights and claims and, upon thecommencement of Executive’s receipt of such amounts, and contingent on the fullpayment of such amounts, the Company shall be released and discharged from anyand all liability to the Executive in connection with this Agreement orotherwise in connection with the Executive’s employment with the Company andits subsidiaries. Executive agrees to enter into a release and waiver ofclaims agreement satisfactory to the Company at the time of Executive’stermination of employment in order to implement the purpose of this Paragraph7(e).
          (f) Offset for Subsequent Employment. In the event during the SeverancePeriod the Executive becomes employed with another entity (“Post TerminationEmployment”), the Company’s obligation to make Severance Payments shall bereduced on a dollar-for-dollar basis by the amount that Executive earns onaccount of such Post Termination Employment. The Executive agrees to notifythe Company of such Post Termination Employment and to disclose to the Companythe compensation to be earned by Executive therein. In the event that theExecutive fails to notify the Company of such Post Termination Employment,within ten (10) business days of the date Executive first undertakes such PostTermination Employment, the
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Company’s obligation to make Severance Payments shall expire.
     8. Noncompetition and Confidentiality. By and in consideration of theNoncompete Stipend and Salary and other benefits to be provided by the Companyhereunder, 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 oras a holder, or a member of a group which is a holder, of not in excess of fivepercent (5%) of the outstanding voting shares of any publicly traded company)or in any other relationship or capacity be affiliated with any businesscorporation, partnership, enterprise or entity in any geographic area, whichcompetes with the Company’s Business (as defined below). For purposes of thisAgreement, 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 engagedin or has substantial plans to become engaged in at the time.
          (b) Confidentiality. Unless specifically authorized in writing by theCompany to do so, except to the extent required by an order of a court havingcompetent jurisdiction or under subpoena from an appropriate government agency,the Executive shall not disclose (i) any information disclosed or madeavailable to the Executive or known by the Executive as a direct or indirectconsequence of or through employment by the Company, or (ii) any otherinformation related to the Company’s referral sources, business practices,trade secrets, operating methods, techniques, products, processes, services orother operations (individually or collectively Operations”), including, but notlimited 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 keepconfidential (individually or collectively, “Confidential Information”) to anythird person unless such Confidential Information has been previously disclosedto the public by the Company or is in the public domain (other than by reasonof the Executive’s breach of this Paragraph 8(b)).
          (c) Nonsolicitation of Employees. During the Employment Period and theRestriction Period, the Executive shall not directly or indirectly solicit,encourage or induce any employee of the Company or any of its subsidiaries toterminate 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 Companyor a subsidiary thereof unless such person shall have ceased to be employed bysuch entity for a period of at least six months.
          (d) Company Property. Except as expressly provided herein, at the time ofthe Executive’s termination of employment or at any other time as the CEO orthe Board may request, the Executive shall return to the Company all propertyof the Company, including any automobile and other machinery and all memoranda,notes, records, reports, manuals, drawings and blueprints, including electronicversions, concerning the Company’s Business (and all copies thereof) in theExecutive’s possession or under his control.
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          (e) Protection of Legitimate Business Interests. Executive acknowledgesthat (i) Executive’s position with the Company requires the performance ofservices which are special, unique and extraordinary in character and placeshim in a position of confidence and trust with the customers and employees ofthe Company, through which, among other things, he will obtain knowledge of theCompany’s technical information and know-how and become acquainted with itscustomers, in which matters the Company has substantial proprietary interests,(ii) the restrictive covenants in this Paragraph 8 are necessary in order toprotect and maintain such proprietary interests and other legitimate businessinterests of the Company, and (iii) the Company would not have entered intothis Agreement unless such covenants were included herein.
          (f) Injunctive Relief and Other Remedies with Respect to Covenants. TheExecutive acknowledges and agrees that the covenants and obligations of theExecutive with respect to noncompetition, nonsolicitation, confidentiality andCompany property, relate to special, unique and extraordinary matters and thata violation of any of the terms of such covenants and obligations will causethe Company irreparable injury for which adequate remedies are not available atlaw. Therefore, the Executive agrees that the Company shall (i) be entitled toan injunction, restraining order or such other equitable relief (without therequirement to post bond) restraining the Executive from committing anyviolation of the covenants and obligations contained in this Paragraph 8 and(ii) have no further obligation to make any payments to the Executive hereunderfollowing any material violation of the covenants and obligations contained inthis Paragraph 8. These remedies are cumulative and are in addition to anyother rights and remedies the Company may have at law or in equity. Inconnection with the foregoing provisions of this Paragraph 8, the Executiverepresents that his economic means and circumstances are such that suchprovisions will not prevent him from providing for himself and his family on abasis 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 thecourse of Executive’s employment with the Company (“Options”) are and weregranted in consideration for Executive’s covenants pursuant to subparagraphs8(a), (b), (c) and (d) herein. In the event the Executive breaches any of theprovisions of subparagraphs 8(a), (b), (c) or (d) herein, all Options (whethervested or not) then held by Executive shall expire and terminate immediately.For purposes of this Paragraph 8, the determination of any breach by theExecutive of any provision of this Paragraph 8 shall be made by the Board ofDirectors of the Company in its sole discretion, and such determination shallbe final and binding on the Company and Executive.
          (h) Non-Disparagement. Executive shall not at any time after the datehereof disparage the Company or any of its officers, directors, shareholders orany of their respective affiliates. The obligations of Executive under thisSection 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 andnon-disparagement), 9(c) (relating to arbitration), and 9(n) (relating togoverning law) shall survive the termination hereof.
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          (b) Validity and Enforceability. The Executive acknowledges and agreesthat the covenants set forth in Paragraph 8 are reasonable and valid ingeographical and temporal scope and in all other respects. The invalidity orunenforceability of any provision or provisions of this Agreement shall notaffect the validity or enforceability of any other provision or provisions ofthis Agreement, which shall remain in full force and effect. If any provisionof this Agreement is held to be invalid, void or unenforceable in anyjurisdiction, any court or arbitrator so holding shall substitute a valid,enforceable provision that preserves, to the maximum lawful extent, the termsand intent of such provisions of this Agreement. If any of the provisions of,or covenants contained in, this Agreement are hereafter construed to be invalidor unenforceable in any jurisdiction, the same shall not affect the remainderof the provisions or the enforceability thereof in any other jurisdiction,which shall be given full effect, without regard to the invalidity orunenforceability in such other jurisdiction. Any such holding shall affectsuch provision of this Agreement, solely as to that jurisdiction, withoutrendering that or any other provision of this Agreement invalid, illegal, orunenforceable in any other jurisdiction. If any covenant should be deemedinvalid, illegal or unenforceable because its scope, either geographical ortemporal, is considered excessive, such covenant will be modified so that thescope of the covenant is reduced only to the minimum extent necessary to renderthe modified covenant valid, legal and enforceable.
          (c) Arbitration. Subject to Paragraph 8(f), any dispute or controversyarising under or in connection with this Agreement shall be resolved by bindingarbitration. The arbitration shall be held in Morris County, New Jersey andexcept to the extent inconsistent with this Agreement, shall be conducted inaccordance with the Voluntary Labor Arbitration Rules of the AmericanArbitration Association then in effect at the time of the arbitration, andotherwise in accordance with principles which would be applied by a court oflaw or equity. The arbitrator shall be acceptable to both the Company and theExecutive. If the parties cannot agree on an acceptable arbitrator, thedispute shall be heard by a panel of three arbitrators, one appointed by eachof the parties and the third appointed by the other two arbitrators.
          (d) Binding Effect. This Agreement shall be binding on, and shall inureto the benefit of, the Company and any person or entity that succeeds to theinterest of the Company (regardless of whether such succession does or does notoccur by operation of law) by reason of the sale of all or a portion of theCompany’s stock, a merger, consolidation or reorganization involving theCompany, or unless the Company otherwise elects in writing, a sale of theassets of the business of the Company (or portion thereof) in which theExecutive performs a majority of his services. This Agreement shall also inureto the benefit of the Executive’s heirs, executors, administrators and legalrepresentatives.
          (e) Assignment. This Agreement, and the Executive’s rights andobligations hereunder, may not be assigned by the Executive. The Company mayassign its rights, together with its obligations, hereunder in connection withany sale, transfer or other disposition of all or substantially all of thebusiness assets with respect to which Executive is performing a majority of hisservices at any such time.
          (f) Entire Agreement. This Agreement constitutes the entire agreementbetween the parties hereto with respect to the matters referred to herein. Noother agreement relating to the terms of the Executive’s employment by theCompany, oral or otherwise, shall be
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binding between the parties unless it is in writing and signed by theparty against whom enforcement is sought. There are no promises,representations, inducements or statements between the parties relating to theterms of Executive’s employment with the Company other than those that areexpressly contained herein. The Executive acknowledges that he is enteringinto this Agreement of his own free will and accord, and with no duress, thathe has read this Agreement and that he understands it and its legalconsequences.
          (g) Waiver. Waiver by any party hereto of any breach or default by theother party of any of the terms of this Agreement shall not operate as a waiverof any other breach or default, whether similar to or different from the breachor default waived. No waiver of any provision of this Agreement shall beimplied from any course of dealing between the parties hereto or from anyfailure by either party hereto to assert its or his rights hereunder on anyoccasion or series of occasions.
          (h) Notices. Any notice required or desired to be delivered under thisAgreement shall be in writing and shall be delivered personally, by courierservice, by registered mail, return receipt requested, or by telecopy and shallbe effective upon actual receipt by the party to which such notice shall bedirected, and shall be addressed as follows (or to such other address as theparty entitled to notice shall hereafter designate in accordance with the termshereof):       If to the Company: Party City Corporation400 Commons WayRockaway, New JerseyAttention: Vice President ofHuman Resources       with a copy to: N/A           If to the Executive: Warren Jeffery11 Beardburn WayConvent Station, New Jersey 07960
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          (i) No Conflicting Obligations. The Executive represents that hisperformance of the terms of this Agreement and his employment by the Companydoes not and will not breach any agreement to which the Executive is a partyincluding (without limitation) any agreement to keep in confidence proprietaryinformation or trade secrets acquired by the Executive in confidence or intrust 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 inconflict with this Agreement. The Executive further agrees not to use in theperformance of his duties for the Company any confidential materials ordocuments of a present or former employer of the Executive, or any materials ordocuments obtained by the Executive under a binder of confidentiality imposedby reason of any of the Executive’s consulting relationships, if any, unlesssuch materials or documents are generally available to the public or theExecutive has authorization from such present or former employer or client forthe possession and unrestricted use of such materials. The provisions of thisParagraph 9(i) shall survive any termination of this Agreement.
          (j) Amendments. This Agreement may not be altered, modified or amendedexcept by a written instrument signed by each of the parties hereto.
          (k) Headings. Headings to paragraphs in this Agreement are for theconvenience of the parties only and are not intended to be part of or to affectthe meaning or interpretation hereof.
          (l) Counterparts. This Agreement may be executed in counterparts, each ofwhich shall be deemed an original but all of which together shall constituteone and the same instrument.
          (m) Withholding. Any payments provided for herein shall be reduced by anyamounts required to be withheld by the Company from time to time underapplicable Federal, State or local income or employment tax laws or similarstatutes or other provisions of law then in effect.
          (n) Governing Law. This Agreement shall be governed by the laws of theState of New Jersey, without reference to principles of conflicts or choice oflaw under which the law of any other jurisdiction would apply.
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          (o) IN WITNESS WHEREOF, the Company has caused this Agreement to beexecuted by its duly authorized officer and the Executive has hereunto set hishand as of the day and year first above written.     **PARTY CITY CORPORATION**       By: /s/ Melissa Wallace      Its: Vice President of Human Resources       
**EXECUTIVE**
/s/ Warren JefferyWarren Jeffery
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