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EXHIBIT 10.14
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of the 18th day of
June, 1999 between Party City Corporation, a Delaware corporation (together with
its successors and assigns referred to as herein the "Company"), with principal
executive offices located at 000 Xxxxxxx Xxx, Xxxxxxxx, Xxx Xxxxxx 00000 and
Xxxxxx X. Xxxxxx with an address at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxx 00000
(the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee to engage in such
activities and to render such services under the terms and conditions hereof and
has authorized and approved the execution of this Agreement; and
WHEREAS, Employee desires to be employed by the Company under the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and
premises herein contained, the parties hereto hereby agree as follows:
1. Employment, Duties and Acceptance.
1.1. Services. The Company hereby employs Employee, for the Term
(as hereinafter defined in Section 2 hereof), to render exclusive and full-time
services to the business and affairs of the Company as Chief Financial Officer
and, in connection therewith, shall perform such duties as directed by the Board
of Directors of the Company from time to time, in its reasonable discretion, and
shall perform such other duties as shall be consistent with the responsibilities
of such office. Employee shall
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perform activities related to such office as he shall reasonably be directed or
requested to so perform by the Company's Chief Executive Officer to whom he
shall report or the Company's Board of Directors. Employee shall use his best
efforts, skill and abilities to promote the interests of the Company and its
subsidiaries.
1.2. Acceptance. Employee hereby accepts such employment and
agrees to render the services described in Section 1.1 hereof.
2. Term of Employment.
The term of Employee's employment under this Agreement (the
"Term") shall commence on June 18, 1999 (the "Effective Date") and shall
terminate on June 18, 2002, unless sooner terminated pursuant to Section 8 of
this Agreement; provided, however this Agreement may be extended for additional
periods of one (1) year if, on or before the thirtieth (30) day prior to the
then applicable termination date, both parties hereto enter into a written
agreement to extend the Term of this Agreement for a period of one (1) year. Any
reference in this Agreement to time periods or matters to occur after June 18,
2002 (other than as described in Section 9 hereof) are provisional and are only
applicable to the extent the Agreement is renewed in accordance with the
provisions of this Section 2. Notwithstanding anything to the contrary contained
herein, the provisions of this Agreement governing Protection of Confidential
Information shall continue in effect as specified in Section 9 hereof.
3. Base Salary/Bonus.
3.1. During the Term, as compensation for all services to be
rendered by Employee pursuant to this Agreement, the Company agrees to pay
Employee a minimum base salary ("Base Salary") at the annual rate of $250,000.
All payments of
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Base Salary shall be prorated during any partial calendar year during the Term.
Such Base Salary may be adjusted upward on a merit basis by the Board of
Directors in its sole discretion. The Employee will be reviewed annually on or
about the anniversary of the Effective Date by the Chief Executive Officer to
determine if Employee's compensation (including Base Salary) should be adjusted.
The Chief Executive Officer's review of the Employee's compensation shall
consider both cash and non-cash (i.e., stock options) remuneration. Employee's
Base Salary shall be payable during the term of this Agreement in accordance
with the Company's customary payment practices.
3.2. Bonuses. In addition to Base Salary, the Employee shall:
(a) receive $125,000, payable in June 2000 as a
guaranteed bonus; and
(b) be eligible for an annual bonus each year thereafter
in an amount equal to up to 50% of Employee's Base Salary; provided, however,
Employee achieves certain performance goals including: (i) the performance of
the Company based upon performance criteria established by the Board of
Directors; and (ii) the performance of the Employee in his function as Chief
Financial Officer of the Company as determined by the Board of Directors and the
Chief Executive Officer of the Company, in their sole and absolute discretion.
3.3. Stock Options. The Employee shall also receive an option to
purchase an aggregate amount of the Company's common stock equal to 60,000
shares with the following features: (i) exercise price of $3.84375 per share and
(ii) vesting schedule as follows: (x) 20,000 of the 60,000 shares shall vest as
of the date hereof (June 18, 1999); (y) an additional 20,000 shares shall vest
on June 18, 2000; and (z) the final
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20,000 shares shall vest on June 18, 2001; provided, however, that if Xxxx
Xxxxxxxxx ceases, for any reason, to be employed as the Chief Executive Officer
of the Company prior to May 1, 2001, the balance of the underlying shares
referenced in Sub-section (y) and (z) shall vest on such date.
4. Severance. In the event that Employee's employment hereunder shall
be terminated by the Company without Cause (as such term is defined in Section
8.2 hereof) at any time prior to June 18, 2002, or if Employee elects to
terminate his employment because Xxxx Xxxxxxxxx has resigned as Chief Executive
Officer prior to May 1, 2001, Employee shall be entitled to receive from the
Company, in addition to any Base Salary earned to the date of termination, a
severance payment in an amount equal to six (6) months of Employee's Base Salary
applicable at the date of such termination; which amount shall be paid in
biweekly increments during the six (6) months following such termination.
In the event the Employee's employment hereunder shall be
terminated by the Company without Cause subsequent to December 18, 2001, then in
that event Employee shall be entitled to receive from the Company a severance
payment in an amount equal to Employee's Base Salary for the then remaining
period of the Term (i.e., in the event there are four (4) months remaining in
the Term, the severance payment will be a payment in an amount equal to four (4)
months of Employee's then current Base Salary) which payment shall be made in
bi-weekly increments during the applicable period.
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5. Expenses.
(a) Upon submission to, and approval by an officer of
the Company designated by the Board of Directors of the Company, of a statement
of expenses, which approval shall be granted or withheld based on the Company's
policies in effect at such time, the Company shall pay or reimburse Employee for
all reasonable expenses actually incurred or paid by him during the Term in the
performance of his services under this Agreement, including, but not limited to,
expenses for entertainment and travel. Subject to such approval, the Company
will reimburse Employee for such expenses only upon presentation of expense
statements or vouchers or such other supporting information as the Company may
require and as may be required for tax purposes.
(b) Relocation Expenses. The Company shall reimburse
Employee for airfare in an amount up to $1,200 in connection with a maximum of
three (3) house hunting trips. The Company shall also reimburse Employee for
additional relocation costs in accordance with existing Company practices and
policy. The Company shall also reimburse Employee for travel costs of up to $420
per week and the cost of local housing for the months of June 1999, July 1999,
August 1999 and September 1999, unless Employee obtains permanent housing during
such months.
6. Additional Benefits.
(a) Automobile Allowance. The Company shall provide to
Employee an automobile allowance of $600 per month, or reimburse Employee for
such amount on a monthly basis, in accordance with Company policy.
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(b) In addition to the compensation, expenses and other
benefits to be paid under Section 3, Section 5 and Section 6(a) hereof, Employee
will be entitled to all rights and benefits for which he shall be eligible under
any health insurance, dental, 401(k), incentive, bonus, pension or other extra
compensation or "fringe" benefit plan of the Company now existing or hereafter
adopted for the benefit of the executives or employees generally of the Company.
The provisions of this Section 6(b) are subject to the provisions of Section 7.
(c) Professional Dues; Continuing Education. The Company
agrees to reimburse Employee for fees for professional associations and
organizations and CPA continuing education expenses up to a maximum amount of
$1,500 annually.
7. Company's Benefits.
The provisions of this Agreement which incorporate the employee
benefit package shall change as and when such employee benefit package changes.
8. Termination.
8.1. Death. If Employee dies during the Term of this Agreement,
Employee's employment hereunder shall terminate upon his death and all
obligations of the Company hereunder shall terminate on such date, except that
Employee's estate or his designated beneficiary shall be entitled to payment of
any unpaid accrued Base Salary through the date of his death.
8.2. Termination for Cause. The Company may at any time during
the Term, without any prior notice, terminate this Agreement and discharge
Employee for Cause, whereupon the Company's obligation to pay compensation or
other amounts payable hereunder to or for the benefit of Employee shall
terminate on the date of such
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discharge. As used herein the term "Cause" shall be deemed to mean and include:
(i) a material breach by Employee of this Agreement including without limitation
a breach by Employee of his obligation set forth in Section 9 hereof; (ii)
excessive absenteeism, alcoholism or drug abuse; (iii) substantial neglect or
inattention by Employee of or to his duties hereunder; (iv) willful violation of
specific and lawful written or oral direction from the Chief Executive Officer
or the Board of Directors of the Company; provided such direction is not
inconsistent with the Executive's duties and responsibilities as the Chief
Financial Officer of the Company and provided further that said direction does
not require substantial and burdensome travel out of the New York metropolitan
area or relocation out of the New York metropolitan area; or (v) fraud, criminal
conduct or embezzlement. The obligations of the Employee under Section 9 shall
continue notwithstanding termination of the Employee's employment pursuant to
this Section.
8.3. Disability. Should Employee become disabled, as hereinafter
defined, during the Term hereunder, this Agreement and the Employee's employment
with the Company shall terminate upon written notice from the Company to the
Employee, and such termination shall be deemed to be for Cause.
As used herein, the term "disabled" is hereby defined as the
inability of Employee, by reason of injury, physical or mental illness or other
similar cause to perform a major part of his duties and responsibilities in
connection with the conduct of the business and affairs of the Company for a
continuous period of three months or more, or for an aggregate period of four
months or more in any twelve month period, whether or not continuous. In the
event of a dispute as to the existence of any such disability, Employee agrees
to submit to a medical and psychiatric examination conducted by a
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physician mutually acceptable to the Employee and the Company and to be bound by
any determination made by such physician.
8.4. Termination Without Cause. The Company may at any time
during the Term, without prior notice, terminate the Agreement and discharge
Employee without Cause provided, however, that the severance provisions of
Section 4 shall apply.
9. Protection of Confidential Information.
In view of the fact that Employee's work for the Company will
bring him into close contact with confidential information and plans for future
developments, Employee agrees to the following:
9.1. Secrecy. To keep secret and retain in the strictest
confidence all confidential matters of the Company, including, without
limitation, trade "know how" and trade secrets, customer lists, pricing
policies, marketing plans, technical processes, formulae, inventions and
research projects, and other business affairs of the Company, learned by him
heretofore or hereafter, and not to disclose them to anyone inside or outside of
the Company, except (i) in the course of performing his duties hereunder, (ii)
with the express written consent of the Chief Executive Officer or Board of
Directors of the Company, (iii) except to the extent such information is already
known to the general public, or (iv) to the extent required by lawful order of a
court of competent jurisdiction.
9.2. Return Memoranda, etc. To deliver promptly to the Company
on termination of his employment, or at any other time as the Chief Executive
Officer or the Board of Directors of the Company may so request, all memoranda,
notes, records, reports, manuals, drawings, blueprints and other documents (and
all copies thereof)
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relating to the Company's business and all property associated therewith, which
he may then possess or have under his control.
9.3. Non-competition. A. Employee agrees that at all times while
he is employed by the Company and, regardless of the reason for termination of
his employment or this Agreement, for a period of one (1) year thereafter, he
will not, as a principal, agent, employee, employer, consultant, stockholder,
investor, director or co-partner of any person, firm, corporation or business
entity other than the Company, or in any individual representative capacity
whatsoever, directly or indirectly, without the express prior written consent of
the Company:
(a) engage or participate in any business whose products
or services are competitive with that of the Company, which business is
exclusively the sale of party goods, and which conducts or solicits business, or
transacts with supplier or customers located within the United States, Canada or
Puerto Rico;
(b) aid or counsel any other person, firm, corporation
or business entity to do any of the above;
(c) become employed by a firm, corporation, partnership
or joint venture which competes with the business of the Company within the
United States, Canada or Puerto Rico;
(d) approach, solicit business from, or otherwise do
business or deal with any customer of the Company in connection with any product
or service competitive to any provided by the Company.
B. Employee agrees that during the term of his
employment hereunder, and, thereafter for a period of one (1) year, he will not,
as a principal, agent,
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employee, employer, consultant, director or partner of any person, firm,
corporation or business entity other than the Company, or in any individual
representative capacity whatsoever, directly or indirectly, without the prior
express written consent of the Company approach, counsel or attempt to induce
any person who is then in the employ of the Company to leave the employ of the
Company or employ or attempt to employ any such person or persons who at any
time during the preceding six months was in the employ of the Company.
Employee acknowledges (i) that his 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, he shall 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) that the restrictive
covenants set forth above are necessary in order to protect and maintain such
proprietary interests and the other legitimate business interests of the
Company, and (iii) that the Company would not have entered into this Agreement
unless such covenants were included herein.
Employee also acknowledges that the business of the Company
presently extends throughout the United States, Puerto Rico, Canada and certain
European countries, and that he will personally supervise and engage in such
business on behalf of Company and, accordingly, it is reasonable that the
restrictive covenants set forth above are not more limited as to geographic area
then is set forth therein. Employee also
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represents to the Company that the enforcement of such covenants will not
prevent Employee from earning a livelihood or impose an undue hardship on the
Employee.
If any of the provisions of this Section, or any part thereof, is
hereinafter construed to be invalid or unenforceable, the same shall not affect
the remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions. If any of the provisions of this
Section, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or the type of conduct
restricted therein, the parties agree that the court making such determination
shall have the power to modify the duration, geographic area and/or other terms
of such provision and, as so modified, said provisions shall then be
enforceable. In the event that the courts of any one or more jurisdictions shall
hold such provisions wholly or partially unenforceable by reason of the scope
thereof or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the Company's right to the relief
provided for herein in the courts of any other jurisdictions as to breaches or
threatened breaches of such provisions in other such jurisdictions, the above
provisions as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
The provisions of this Section 9 shall be construed as an
agreement on the part of the Employee independent of any other part of this
Agreement or any other agreement, and the existence of any claim or cause of
action of the Employee against the Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company
of the provisions of this Section 9.
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9.4. Injunctive Relief. Employee acknowledges and agrees that,
because of the unique and extraordinary nature of his services, any breach or
threatened breach of the provisions of Sections 9.1, 9.2, or 9.3 hereof will
cause irreparable injury and incalculable harm to the Company, and the Company
shall, accordingly, be entitled to injunctive and other equitable relief for
such breach or threatened breach and that resort by the Company to such
injunctive or other equitable relief shall not be deemed to waive or to limit in
any respect any right or remedy which the Company may have with respect to such
breach or threatened breach. The Company and Employee agree that any such action
for injunctive or equitable relief shall be heard in a state or federal court
situated in New Jersey and each of the parties hereto, hereby agrees to accept
service of process by registered mail and to otherwise consent to the
jurisdiction of such courts.
9.5. Expenses of Enforcement of Covenants. In the event that any
action, suit or proceeding at law or in equity is brought to enforce the
covenants contained in Section 9.1, 9.2, or 9.3 hereof or to obtain money
damages for the breach thereof, the party prevailing in any such action, suit or
other proceeding shall be entitled upon demand to reimbursement from the other
party for all expenses (including, without limitation, reasonable attorneys'
fees and disbursements) incurred in connection therewith.
10. Indemnification.
The Company will indemnify Employee, to the maximum extent
permitted by Delaware law and the by-laws of the Company, against all costs,
charges and expenses incurred or sustained by him in connection with any action,
suit or other proceeding to which he may be made a party by reason of his being
an officer, director or employee of
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the Company or of any subsidiary or affiliate thereof except such actions as are
brought by the Company or in which the Company is an adverse party regarding
Employee's obligations hereunder.
11. Arbitration.
Except with respect to any injunction or other equitable relief
proceeding brought under Section 9.4 hereof, any controversy, claim, or dispute
between the parties, directly or indirectly, concerning this Agreement or the
breach hereof, or the subject matter hereof, including questions concerning the
scope and applicability of this arbitration clause, shall be finally settled by
arbitration in Xxxxxx County, New Jersey pursuant to the rules then applying of
the American Arbitration Association. The parties agree to expedite the
arbitration proceeding in every way, so that the arbitration proceeding shall be
commenced within thirty (30) days after request therefore is made, and shall
continue thereafter, without interruption, and that the decision of the
arbitrators shall be handed down within thirty (30) days after the hearings in
the arbitration proceedings are closed. The arbitrators shall have the right and
authority to assess the cost of the arbitration proceedings and to determine how
their decision or determination as to each issue or matter in dispute may be
implemented or enforced. The decision in writing of any two of the arbitrators
shall be binding and conclusive on all of the parties to this Agreement. Any
decision or award of the arbitrators shall be final and conclusive on the
parties to this Agreement; judgment upon such decision or award may be entered
in any competent Federal or state court located in the United States of America;
and the application may be made to such court for confirmation of such decision
or award for any order of enforcement and for any other legal remedies that may
be necessary to effectuate
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such decision or award. The prevailing party in any such arbitration proceeding
shall be entitled to reimbursement from the non-prevailing party for all
expenses incurred in relation to such arbitration proceedings, including but not
limited to, reasonable attorney's fees.
12. Notices.
All notices, requests, consents and other communications required
or permitted to be given hereunder, shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by prepaid telegram,
telecopy (with confirmation of receipt) or mailed first-class, postage prepaid,
by registered or certified mail (notices sent by telegram or mailed shall be
deemed to have been given on the date sent), to the parties at their respective
addresses hereinabove set forth or to such other address as either party shall
designate by notice in writing to the other in accordance herewith.
13. General.
13.1. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the local laws of the State of New
Jersey applicable to agreements made and to be performed entirely in New Jersey.
13.2. Section Headings. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.3. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject
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matter hereof. No representation, promise or inducement has been made by either
party that is not embodied in this Agreement, and neither party shall be bound
by or liable for any alleged representation, promise or inducement not so set
forth.
13.4. Assignability. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. 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 its business
or assets; in any event the rights and obligations of the Company hereunder
shall be binding on its successors or assigns, whether by merger, consolidation
or acquisition of all or substantially all of its business or assets.
13.5. Amendment. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. No superseding
instrument, amendment, modification, cancellation, renewal or extension hereof
shall require the consent or approval of any person other than the parties
hereto. The failure of either party at any time or times to require performance
of any provision hereof shall in no matter affect the right at a later time to
enforce the same. No waiver by either party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ATTEST: PARTY CITY CORPORATION
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxx Xxxxxxxxx
------------------------- ------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
WITNESS: EMPLOYEE
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
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