EXECUTIVE AGREEMENT
Exhibit - 10.5
WHEREAS, Xxxxxxx X. Xxxxxx (the “Executive”) is the Chief Financial Officer of Factory Card &
Party Outlet Corp., a Delaware corporation (the “Company”);
WHEREAS, the Executive is a participant in the Company’s Amended and Restated Executive
Severance Plan (the “Executive Severance Plan”);
WHEREAS, in connection with the proposed acquisition (the “Merger”) of the Company pursuant to
an Agreement and Plan of Merger (the “Merger Agreement”)
dated as of September 17, 2007, by and
among Amscan Holdings, Inc., a Delaware corporation (“Parent”), Amscan Acquisition, Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent (“Newco”) and the Company, the
Company shall become a wholly owned subsidiary of Parent; and
WHEREAS, the Executive Severance Plan shall remain in effect on and after the consummation of
the transactions contemplated by the Merger Agreement, with such changes as may be effected by this
Agreement, and, in connection therewith, the Executive shall continue to serve as Chief Financial
Officer of the Company.
NOW THEREFORE, in consideration of the mutual promises contained herein, the Executive, Parent
and the Company agree as follows:
1. The Executive shall continue employment with the Company as an at-will employee following
the closing of the Merger (the “Closing”), it being understood that the Company shall thereupon be
a direct or indirect subsidiary of Parent and/or AAH Holdings Corporation (“Holdings”). Executive
shall serve as Chief Financial Officer of the Company. The Executive shall report to the President
and Chief Executive Officer of the Company. The Executive hereby agrees that changes to his
duties, responsibilities and authorities caused solely and as a direct and proximate result of the
Company becoming a privately held subsidiary of Parent and/or Holdings will not in and of itself
constitute “Good Reason” within the meaning of Section 1.2 of the Executive Severance Plan. The
Executive will have such duties, responsibilities and authorities as are prescribed by the
President and Chief Executive Officer of the Company from time to time and normally associated with
those of chief financial officers of retail businesses of similar size in the United States. For
the avoidance of doubt, Executive’s duties, responsibilities and authority will include, but not be
limited to: (i) preparation of budgets of the Company for recommendation to the President and CEO
of the Company, and (ii) selection, retention and termination of employees of the Executive’s
department.
2. On the date of the Closing, Parent shall cause to be granted to the Executive nonqualified
stock options to purchase 24 shares of common stock of Holdings (such options, the “New Options”),
at an exercise price equal to the fair market value of a share of common stock at the date of
grant, which is expected to be $17,500 per share. One-half (50%) of the New Options shall be
subject to vesting in equal annual installments over a period of 5 years following the date of
grant, and the remaining one-half (50%) of the New Options shall be subject to
performance vesting, in each case on the terms set forth in the attached form of Option
Agreements (attached as Exhibit A-1 and Exhibit A-2). Such Option Agreements shall
be granted under and pursuant to the terms of the AAH Holdings Corporation 2004 Equity Incentive
Plan (the “AAH Option Plan”), in or substantially in the form of the attached options certificates.
Notwithstanding anything else in the Executive Severance Plan (including Section 3.5 thereof) or
in any other agreement, the New Options shall vest on such terms as provided in such Option
Agreements.
3. Contemporaneous with the execution of this Agreement, the Company shall amend the
Executive Severance Plan in the form attached hereto as Exhibit B (subject to the terms of this
Agreement, including the last sentence of Section 2).
4. The parties hereto acknowledge and agree that the transactions contemplated by the Merger
Agreement shall constitute a “Change in Control” (as defined in the Executive Severance Plan) and
that if the Executive becomes entitled to severance benefits under the Executive Severance Plan
within two years after the consummation of the transactions contemplated by the Merger Agreement,
the “Severance Period” (as defined in the Executive Severance Plan) shall be eighteen months.
5. This Agreement shall become effective on the Closing (as defined in the Merger Agreement)
and shall be of no force or effective if the Merger Agreement is terminated in accordance with its
terms.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective as of this 17th day of
September, 2007.
| Amscan Holdings, Inc. |
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| By: | /s/ Xxxxxx X. Small | |||
| Name: | Xxxxxx X. Small | |||
| Title: | Chairman of the Board | |||
| Factory Card and Party Outlet Corp. |
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| By: | /s/ Xxxx Xxxx | |||
| Name: | Xxxx Xxxx | |||
| Title: | CEO | |||
| Executive |
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| /s/ Xxxxxxx X. Xxxxxx | ||||
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