CIO Employment Agreement - Steve Skiba

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 aggregatin ...