EX-10.12 EMPLOYMENT AGREEMENT FOR LISA LAUBE

Exhibit 10.12

EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of April 26, 2004, is made and entered into by and between Party City Corporation, a Delaware corporation (the “Company”), and Lisa Laube (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 her employment by the Company.

      (b) Employment Period. The Company shall employ the Executive for a one (1) year period commencing on April 26, 2004 (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 Merchandising Officer of the Company. Executive shall have such duties and responsibilities as are consistent with and customarily assigned to her position with the Company. Executive shall also have such other duties and responsibilities as may from time to time be assigned to her 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 her 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 her 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 $ 300,000.00 (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 $50,000 (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. Incentive Compensation.

      (a) Bonus. In addition to Salary, the Executive shall be entitled to earn an annual bonus for each full Fiscal Year (as defined below) 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 “Performance Bonus”). The target amount of the Performance Bonus for each Fiscal Year during the Employment Period shall be fifty percent (50%) of the Executive’s Salary, at the rate in effect as of the last day of the Fiscal Year for which such bonus is paid. The Executive shall be guaranteed a minimum bonus of $120,000; $60,000 of which shall be paid in September, 2004 and the balance of $60,000 shall be paid in September, 2005. The Executive shall also receive a “sign on” bonus in the amount of $35,000 to be paid not later than May 26, 2004.

      (b) Stock Options. The Executive shall be granted on the Commencement Date nonqualified stock options (the “Stock Options”) to acquire 120,000 shares of common stock of the Company, $.01 par value per share (the “Common Stock”), at an exercise price per share equal to $17.00.

      (c) Vacation. During the Employment Period, the Executive shall be entitled to three weeks of paid vacation per year of employment.

      (d) Automobile Allowance. During the Employment Period, the Executive shall be reimbursed $8,100 for an automobile allowance.

      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 her 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. The Company will also reimburse the Executive for COBRA expenses.

      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 her 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, if 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

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      (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:

      (e) Full Discharge of Company Obligations. The amounts payable to the Executive pursuant to this Paragraph 7 following termination of her employment shall be in full and complete satisfaction of the Executive’s rights under this Agreement and any other claims she may have in respect of her employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the commencement of Executive’s receipt of such amounts, and contingent on the full payment of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive’s employment with the Company and its subsidiaries. Executive agrees to enter into a release and waiver of claims agreement satisfactory to the Company at the time of Executive’s termination of employment in order to implement the purpose of this Paragraph 7(e).

      (f) Offset for Subsequent Employment. In the event during the Severance Period the Executive becomes employed with another entity (“Post Termination Employment”), the Company’s obligation to make Severance Payments shall be reduced on a dollar-for-dollar basis by the amount that Executive earns on account of such Post Termination Employment. The Executive agrees to notify the Company of such Post Termination Employment and to disclose to the Company the compensation to be earned by Executive therein. In the event that the Executive fails to notify the Company of such Post Termination Employment, within ten (10) business days of the date Executive first undertakes such Post Termination Employment, the Company’s obligation to make Severance Payments shall expire.

      8. Noncompetition and Confidentiality. By and in consideration of the Noncompete Stipend and Salary and other benefits to be provided by the Company hereunder, the Executive agrees that:

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      9. Miscellaneous.

      (a) Survival. Paragraphs 7 (relating to early termination of employment), 8 (relating to noncompetition, nonsolicitation and confidentiality and non-disparagement), 9(c) (relating to arbitration), and 9(o) (relating to governing law) shall survive the termination hereof.

      (b) Validity and Enforceability. The Executive acknowledges and agrees that the covenants set forth in Paragraph 8 are reasonable and valid in geographical and temporal scope and in all other respects. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision or provisions of this Agreement, which shall remain in full force and effect. If any provision of this Agreement is held to be invalid, void or unenforceable in any jurisdiction, any court or arbitrator so holding shall substitute a valid, enforceable provision that preserves, to the maximum lawful extent, the terms and intent of such provisions of this Agreement. If any of the provisions of, or covenants contained in, this Agreement are hereafter construed to be invalid or unenforceable in any jurisdiction, the same shall not affect the remainder of the provisions or the enforceability thereof in any other jurisdiction, which shall be given full effect, without regard to the invalidity or unenforceability in such other jurisdiction. Any such holding shall affect such provision of this Agreement, solely as to that jurisdiction, without rendering that or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope, either geographical or temporal, is considered excessive, such covenant will be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

      (c) Arbitration. Subject to Paragraph 8(f), any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held in Morris County, New Jersey and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Voluntary Labor Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.

      (d) Binding Effect. This Agreement shall be binding on, and shall inure to the benefit of, the Company and any person or entity that succeeds to the interest of the Company (regardless of whether such succession does or does not occur by operation of law) by reason of the sale of all or a portion of the Company’s stock, a merger, consolidation or reorganization involving the Company, or unless the Company otherwise elects in writing, a sale of the assets of the business of the Company (or portion thereof) in which the Executive performs a majority of her services. This Agreement shall also inure to the benefit of the Executive’s heirs, executors, administrators and legal representatives.

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      (e) Assignment. This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. 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 the business assets with respect to which Executive is performing a majority of her services at any such time.

      (f) Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein. No other agreement relating to the terms of the Executive’s employment by the Company, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no promises, representations, inducements or statements between the parties relating to the terms of Executive’s employment with the Company other than those that are expressly contained herein. The Executive acknowledges that she is entering into this Agreement of her own free will and accord, and with no duress, that she has read this Agreement and that she understands it and its legal consequences.

      (g) Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or her rights hereunder on any occasion or series of occasions.

      (h) Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally, by courier service, by registered mail, return receipt requested, or by telecopy and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):

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      (j) Right of Offset. The Company may offset any payment to be made to the Executive pursuant to this Agreement by any amount the Executive owes to the Company as of the time such payment would otherwise be made.

      (k) Amendments. This Agreement may not be altered, modified or amended except by a written instrument signed by each of the parties hereto.

      (l) Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof.

      (m) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

      (n) Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect.

      (o) Governing Law. This Agreement shall be governed by the laws of the State of New Jersey, without reference to principles of conflicts or choice of law under which the law of any other jurisdiction would apply.

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      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has hereunto set her hand as of the day and year first above written.

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