Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is being made as of this 1st
day of April, 2010 between iPARTY CORP., a Delaware corporation (the "Company")
and XXX XXXXXXXX, an individual residing at 000 Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive previously entered into an
employment agreement dated as of March 22, 2007, which agreement was amended on
December 30, 2008 (the "Prior Employment Agreement") and which expires on March
31, 2010; and
WHEREAS, the Company and the Executive desire to enter into a new
Employment Agreement with the Executive effective as of April 1, 2010.
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Term of Employment. Except for earlier termination as provided in
Section 11 hereof, the Executive's employment under this Agreement shall be for
a period commencing on April 1, 2010 and expiring on March 31, 2013 (the
"Initial Term") and shall automatically renew for successive additional terms of
one (1) year each (each a "Renewal Term"), unless earlier terminated as provided
in this Agreement. The Initial Term and any Renewal Terms are hereinafter
collectively referred to as the "Employment Term."
2. Duties, Responsibilities and Positions.
(a) During the Employment Term, the Executive shall serve as the Chief
Executive Officer of the Company. In addition, during the Employment Term, the
Company shall use its best efforts to (i) cause the Executive to be nominated
for election to the Board of Directors of the Company (the "Board") and (ii)
subject to a Permitted Change (as defined below) to be appointed as Chairman of
the Board. During the Employment Term, the Executive shall perform all duties
and accept all responsibilities incidental to such positions or as may be
assigned to him by the Board, or any committee thereof, from time to time and
which are normally associated with the positions of Chief Executive Officer and
(subject to a Permitted Change) Chairman of the Board. All employees of the
Company shall report to the Executive; provided, however, that the Board or any
committee thereof may direct employees of the Company to report directly to the
Board or any committee thereof in connection with any internal investigations or
reviews commenced by the Board or any committee thereof. The Executive shall be
subject at all times to the general supervision, orders, advice and direction of
the Board. The Executive shall also cooperate fully with the Board and other
executive officers of the Company.
As used herein, a "Permitted Change" shall mean the appointment of a person
reasonably acceptable to the Executive (which such acceptance shall not be
unreasonably withheld or delayed) as Chairman of the Board (i) in connection
with any material acquisition, financing or similar transaction which increases
the size and scope of the Company's business or (ii) in order to comply with
general corporate governance practices then being followed by companies of
similar size and scope.
(b) Upon termination of the Executive's employment for any reason, the
Executive shall be deemed to have resigned as a member of the Board and from any
other office or offices within the Company and any subsidiary of the Company
that the Executive may then hold.
(c) During the Employment Term, the Executive shall devote substantially
all his full working time, energy and efforts to the business of the Company;
provided, however, that the Executive shall be allowed, to the extent that such
activities do not materially interfere with the performance of his duties and
responsibilities hereunder, to manage his personal and family financial and
legal affairs and to serve on civic, not-for-profit and charitable industry
boards and advisory committees. The Executive shall only serve on for-profit
corporate boards of directors and advisory committees if approved in advance, in
writing, by the Board.
(d) The Executive represents to the Company that (i) the Executive has the
legal capacity to execute and perform this Agreement and (ii) that he is not
currently subject to or bound by any employment agreement, non-competition
covenant, non-disclosure agreement or other agreement, covenant, understanding
or restriction of any nature whatsoever which would prohibit the Executive from
executing this Agreement and performing fully his duties and responsibilities
hereunder, or which would in any manner, directly or indirectly, materially
limit the duties and responsibilities which it is now reasonably foreseeable may
now or in the future be assigned to the Executive by the Board.
(e) The Executive shall at all times comply in all material respects with
policies and procedures adopted by the Company applicable to executives of the
Company, including without limitation, procedures and policies regarding
conflicts of interest.
3. Compensation. For all services rendered by the Executive in any
capacity during the Employment Term, including without limitation, services as
an officer, director, or member of any committee of the Company, or any
subsidiary, affiliate or division thereof, the Executive shall be compensated as
follows (subject, in each case, to the provisions of Section11 below):
(a) Base Salary. During the Employment Term, the Company shall pay to
the Executive a base salary on an annualized basis (the "Base Salary") as
follows: (i) for the period from April 1, 2010 through March 31, 2011, $334,750;
(ii) for the period from April 1, 2011 through March 31, 2012, $351,488 (iii)
for the period from April 1, 2012 through March 31, 2013, $369,062 and (iv) for
any Renewal Term within thirty (30) days of the end of the Initial Term or any
Renewal Term, the Compensation Committee of the Board shall determine in its
sole discretion whether or not to increase the Base Salary for such Renewal
Term. The term "Base Salary" as used in this Agreement shall refer to Base
Salary in effect for the applicable period set forth in the immediately
preceding sentence. The Base Salary shall be payable in accordance with the
customary payroll practices of the Company. The Base Salary paid to the
Executive shall at all times be the highest salary paid or payable by the
Company to any of its employees, and shall not be decreased during the
Employment Term without the consent of the Executive. If, during the Employment
Term, the Company consummates any material acquisitions or similar transactions
which increase the size and scope of the Company's business, the Compensation
Committee of the Board shall convene as promptly as reasonably practicable for
the purpose of discussing whether or not it is appropriate to increase the
Executive's Base Salary; provided, however, that no such increase shall be
required.
2
(b) Bonus. In addition to the Base Salary provided herein, the
Executive shall be entitled to participate in, and may receive performance bonus
payments under, such annual bonus plan or plans as the Compensation Committee of
the Board may establish from time to time for senior executive officers of the
Company. Any such performance bonus or bonuses shall be determined in the sole
discretion of the Compensation Committee of the Board. Without limiting the
generality of the foregoing, such performance bonus or bonuses, if paid, may be
paid in stock, stock options, restricted stock, restricted stock units, cash, or
any combination thereof.
(c) Benefits. During the Employment Term, the Executive shall be entitled
to participate in all employee benefit and equity plans and fringe benefits and
prerequisites generally provided to senior executives of the Company, in each
case subject to the eligibility requirements and other terms and provisions of
such plans and programs. The Company may amend, modify or rescind any employee
benefit plan or program and change employee contribution amounts or benefit
costs without notice in its discretion.
4. Stock Options Matters. Effective April 1, 2010, provided the
Executive is then employed by the Company, the options to purchase up to 460,000
shares of common stock of the Company granted to Executive on May 27, 2009, to
the extent not then vested, will become fully vested. On July 1, 2010 (the
"Grant Date"), provided the Executive is then employed by the Company, the
Company will grant the Executive stock options (the "Options") for an aggregate
of 410,000 shares of common stock of the Company, at an exercise price equal to
the closing price of the common stock on such date, pursuant to the Company's
2009 Stock Incentive Plan (the "Plan"). The Options shall comprise incentive
stock options (to the extent permitted under applicable laws) and the balance
shall be non-qualified stock options and shall vest as follows: options for
136,653 shares shall be vested as of the Grant Date; options for an additional
136,653 shares shall vest on June 30, 2011, provided the Executive remains
continuously employed by the Company through June 30, 2011; and options for all
remaining shares shall vest on June 30, 2012, provided the Executive remains
continuously employed by the Company through June 30, 2012. The Options shall
be subject to the terms of the Plan and the terms and conditions of the
Company's standard form of option grant agreements to be entered into between
the Company and the Executive as a condition of grant of the Options. In
determining other equity grants to Executive under the Plan or any other equity
plan, the Board of Directors will take into account any options or other equity
award grants that are expiring and the Executives beneficial ownership interest
in the Company's common stock, including any options.
5. Expenses; Vacations. The Executive shall be entitled to
reimbursement for reasonable travel and other out-of-pocket expenses necessarily
incurred in the performance of his duties hereunder, upon submission and
approval of written statements and bills in accordance with the then regular
procedures of the Company. The Executive shall be entitled to four weeks paid
vacation per calendar year, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. Up to two (2) weeks
accrued but unused vacation time may be carried forward from year to year;
provided, however, in no event shall more than an aggregate of six (6) weeks of
unused vacation time be accrued during the Employment Term.
3
6. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Executive that (i) pursuant to
the Delaware General Corporation Law, the Company's Certificate of
Incorporation, as amended to date (the "Charter"), provides for indemnification
of officers and directors of the Company and that so long as the Executive
serves as an executive officer of the Company, unless required by applicable law
the Charter will not be amended to limit such indemnification without the
written consent of the Executive and (ii) the Company maintains an officers and
directors liability insurance policy which insures the Executive (subject to the
limitations contained therein) and will maintain such a policy for so long as
the Executive serves as an executive officer of the Company.
7. Developments. All developments, including inventions, whether patentable
or otherwise, trade secrets, discoveries, improvements, ideas and writings which
relate to or may be useful in the business of the Company, and which the
Executive, either by himself or in conjunction with any other person or persons,
has conceived, made, developed, acquired or acquired knowledge of while engaged
in any activity on behalf of or while acting for the Company during the course
of his employment by the Company (the "Developments"), shall, on and after the
start of the Employment Term, become the sole and exclusive property of the
Company. The Executive hereby assigns, transfers and conveys, and agrees to so
assign, transfer and convey to the Company, all of his right, title and interest
in and to any and all such Developments and to disclose in writing to the Board,
as soon as practicable, all Developments that he believes in his good faith
judgment may be of material significance to the Company, and to reduce any such
Developments to writing at the request of Board if he has not already done so.
At any time, and from time to time, upon the request and at the expense of the
Company, the Executive will execute and deliver any and all instruments,
documents and papers, give evidence and do any and all other acts which, in the
reasonable opinion of counsel for the Company, are or may reasonably be
necessary or desirable to document such transfer or to enable the Company to
file and prosecute applications for and to acquire, maintain and enforce any and
all patents, trademark registrations or copyrights under United States or
foreign law with respect to any such Developments or to obtain any extension,
validation, reissue, continuance or renewal of any such patent, trademark or
copyrights; provided only that any such actions requested following termination
of employment shall not unreasonably interfere with Executive's then employment,
business or other activities. The Company will be responsible for the
preparation of any such instruments, documents and papers and for the
prosecution of any such proceedings and will reimburse the Executive for all
reasonable expenses incurred by him in compliance with the provisions of this
Section 7. The Developments shall not include any knowledge or information of
any kind acquired by or disclosed to the Executive while serving in his capacity
as a member of the board of directors of any non-Company entity, in his capacity
as a private investor, or in any other circumstance during which the Executive
is not or was not engaged in any activity on behalf of or acting for the
Company. Furthermore, nothing herein shall preclude Executive from utilizing
Developments applicable to retailing generally (whether from stores, via
catalog, via e-commerce or otherwise) following termination of employment,
subject always to the provisions of Section 8 below.
4
8. Non-Competition and Non-Solicitation.
(a) Non-Competition. The Executive agrees that the Executive will not,
during the "Restrictive Period", as defined below, engage in, or otherwise
directly or indirectly be employed by, or act as a consultant or lender to, or
be a director, officer, employee, owner, co-venturer, member or partner of, or
use or expressly permit the Executive's name to be used by (collectively an
"Engagement With"), any business, entity or organization which has a primary
line of business (i.e. representing more than 4.9% of its revenue) involving the
sale at retail, whether from store locations, and/or by or from direct mail,
catalogues and/or websites, of party goods and/or supplies anywhere in the
United States (a "Competing Entity"); provided, however, that in each case the
provisions of this Section 8(a) will not be deemed breached merely because the
Executive owns not more than five percent (5.0%) of the outstanding common stock
of a Competing Entity, if, at the time of its acquisition by the Executive, such
stock is listed on a national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange; and provided, further, however, that, subject to the
provisions of Section 8(b), nothing herein shall prevent the Executive from
working for a business segment or department of a Competing Entity, or a
subsidiary, division or other entity that controls or is controlled by a
Competing Entity if (and only if), the business segment or department of the
Competing Entity for which the Executive provides services, or the subsidiary,
division or other entity by which the Executive has an Engagement With (as the
case may be), (1) does not itself compete with the Company, and (2) the
Executive does not provide any services, advice, assistance and/or guidance to
any business segment or department, subsidiary, division, or other entity of the
Competing Entity which competes with the Company. As used in this Section the
"Restrictive Period" shall be (i) the period the Executive is employed by the
Company and (ii) the period of one (1) year after the Executive ceases to be
employed by the Company for any reason, or, in the case of the Executive's
Engagement With any Competing Entity that operates retail stores which are
located in any states where the Company has retail stores on the date of the
Executive's cessation of employment, the period of eighteen (18) months period
after the Executive ceases to be employed by the Company for any reason.
(b) Non-Solicitation. During the Restrictive Period, the Executive will
not, either directly or indirectly, (i) call on or solicit (for the purpose of
diverting business from the Company) any person, firm, corporation or other
entity who or which at the time of such termination was, or within one (1) year
prior thereto had been, a customer of the Company or (ii) solicit the employment
of any person (other than any family member) who was employed the Company on a
full or part-time basis at any time during the six (6) months prior to the
termination of Executive's employment, unless such person prior to such
solicitation of employment was involuntarily discharged by the Company.
9. Confidential Information. The Executive recognizes and acknowledges
that by reason of his employment by and service to the Company, he has had and
will have access to confidential information of the Company and its affiliates,
including without limitation, information and knowledge pertaining to products
and services offered, ideas, plans, trade secrets, proprietary information,
advertising, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its customers, clients, suppliers and others who have business dealings with the
Company (collectively, "Confidential Information"). The Executive acknowledges
that such Confidential Information is a valuable and unique asset and covenants
that he will not, either during or at any time after the end of the Employment
Term, use or disclose any such Confidential Information to any person or entity
for any reason whatsoever (except as his duties described herein may require)
without the prior authorization of the Board, unless such information is in or
enters the public domain through no fault of the Executive or is otherwise
lawfully known by third parties. In the event the Executive becomes or may
become legally compelled to disclose any Confidential Information (whether by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or other process or otherwise), the Executive shall provide to the Board
prompt prior written notice of such requirement so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Section9. In the event that such protective order or other remedy
is not obtained, or that the Company waives compliance with the provisions of
this Section9, the Executive shall furnish only that portion of the Confidential
Information which it is advised by counsel is legally required to be disclosed,
and shall use his best efforts to insure that confidential treatment shall be
afforded such disclosed portion of the Confidential Information.
5
10. Equitable Relief.
(a) The Executive acknowledges that the restrictions contained in Sections
7, 8, and 9 hereof are reasonable and necessary to protect the legitimate
interests of the Company, that the Company would not have entered into this
Agreement in the absence of such restrictions, and that any violation of any
provision of those Sections will result in irreparable injury to the Company.
The Executive represents that his experience and capabilities are such that the
restrictions contained in Section8 hereof will not prevent the Executive from
obtaining employment or otherwise earning a living at the same general level of
economic benefit as is anticipated by this Agreement. THE EXECUTIVE FURTHER
REPRESENTS AND ACKNOWLEDGES THAT (i) HE HAS BEEN ADVISED BY THE COMPANY TO
CONSULT HIS OWN LEGAL COUNSEL IN RESPECT OF THIS AGREEMENT, (ii) THAT HE HAS HAD
FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS AGREEMENT, TO REVIEW THOROUGHLY
THIS AGREEMENT WITH HIS COUNSEL, AND (iii) HE HAS READ AND FULLY UNDERSTANDS THE
TERMS AND PROVISIONS OF THIS AGREEMENT.
(b) The Executive agrees that the Company shall be entitled to preliminary
and permanent injunctive relief, without the necessity of proving actual
damages, as well as an equitable accounting of all earnings, profits and other
benefits arising from any violation of Sections 7, 8, or 9 hereof, which rights
shall be cumulative and in addition to any other rights or remedies to which the
Company may be entitled. In the event that any of the provisions of Sections 7,
8, or 9 hereof should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, product or service, or other limitations
permitted by applicable law.
(c) The Company and the Executive each irrevocably and unconditionally
(i) agree that any suit, action or other legal proceeding arising out of this
Agreement, including without limitation, any action for preliminary or permanent
injunctive relief or other equitable relief, may be brought in the United States
District Court for the Eastern District of Massachusetts, or if such court does
not have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in the Commonwealth of Massachusetts, (ii) consent to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, and (iii) waive any objection which such party may have to the
laying of venue of any such suit, action or proceeding in any such court. The
Company and the Executive each also irrevocably and unconditionally consent to
the service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 15 hereof.
6
(d) The Executive agrees that he will provide a copy of Sections 7, 8, and
9 of this Agreement to any for-profit business or enterprise (i) which he may
directly or indirectly own, manage, operate, finance, join, participate in the
ownership, management, operation, financing, control or control of, or (ii) with
which he may be connected with as an officer, director, employee, partner,
principal, agent, representative, or consultant, or in connection with which he
may use or expressly permit his name to be used; provided, however, that this
provision shall not apply in respect of Section 8 of this Agreement after
expiration of the time periods set forth therein.
11. Termination.
(a) Cause. Notwithstanding anything herein contained, if on or after the
date hereof and prior to the end of the Employment Term, the Executive is
terminated "For Cause" (as defined below) then the Company shall have the right
to give notice of termination of the Executive's services hereunder as of a date
to be specified in such notice, and the Employment Term shall terminate on the
date so specified. Termination "For Cause" shall mean the Executive shall: (i)
be charged with the commission of a felony crime; (ii) commit any act or omit to
take any action in bad faith and to the detriment of the Company; (iii)
intentionally fail to follow any commercially reasonable and lawful direction of
the Board and continue to fail to follow such direction within ten (10) days of
written notification of same; (iv) commit an act of fraud against the Company;
(v) knowingly provide materially false information concerning the Company to the
Board, any governmental body, any regulatory agency, any lender or other
financing source of the Company, or any shareholder of the Company; or (vi)
breach any term of this Agreement and fail to correct such breach within ten
(10) days after written notice of commission thereof. In the event that this
Agreement is terminated "For Cause" pursuant to this Section 11(a), then the
Executive shall be entitled to receive only the Base Salary at the rate provided
in Section 3(a) to the date on which termination shall take effect, any accrued
vacation and unpaid expenses as contemplated under Section 5, and (iii) any
performance bonus earned and unpaid for any prior plan periods and, if
applicable under any performance bonus plan for the year of termination, the
amount, if any, earned thereunder to the date of termination (collectively,
"Accrued Bonus Payments").
(b) Disability. In the event of the Disability of the Executive, as defined
below, then Executive or the Company may terminate the Executive's employment
hereunder upon thirty (30) days' written notice to the other. In the event of
termination as a result of Executive's Disability, no further compensation shall
be payable to the Executive, except that the Company shall pay or provide: (i)
any accrued and unpaid Base Salary as contemplated under Section 3(a) up to the
effective date of termination of employment, (ii) any accrued vacation and
unpaid expenses as contemplated under Section 5, (iii) any Accrued Bonus
Payments, (iv) the Executive's benefits set forth in Section 3(c), or comparable
benefits, for a period of one (1) year from such date of termination and (v)
make severance payments to the Executive for a period of one (1) year following
his date of termination in an amount equal to the rate of Base Salary in effect
at the date of termination less the total amount of disability benefits, if any,
payable to Executive under any disability plan or policy maintained by the
Company.
7
As used hereunder, "Disability" shall mean (A) the inability of the
Executive to engage in any substantial gainful employment activity on behalf of
the Company, with or without reasonable accommodation, as that term is defined
under applicable state or federal law, by reason of any medically determinable
physical or mental impairment (1) that can be expected to result in death or to
last for a continuous period of not less than 12 months; or (2) that can be
expected to result in death or to last for a continuous period of not less than
12 months and the Executive is receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering the Company's employees; or (B) the Executive shall be determined to be
totally disabled by the U.S. Social Security Administration ("SSA"). A
determination of Disability (other than a determination by the SSA) shall be
made by a physician satisfactory to both the Executive and the Company;
provided, that, if the Executive and the Company do not agree on a physician,
the Executive and the Company shall each select a physician and these two
together shall select a third physician, whose determination as to disability
shall be binding on all the parties to this Agreement.
(c) Death. In the event that the Executive shall die, then his employment
shall terminate on the date of his death, and no further compensation shall be
payable to the Executive, except for any accrued and unpaid Base Salary as
contemplated under Section 3(a), any accrued vacation and unpaid expenses as
contemplated under Section 5, any Accrued Bonus Payments and as may otherwise be
provided under any insurance policy or similar instrument.
(d) Termination Without Cause. In the event that the Company terminates
this Agreement or the Executive's employment with the Company for any reason,
other than as provided under Section 11(a), 11(b), and 11(c), then the
Executive's employment shall terminate upon thirty (30) days' written notice to
the Executive and, the Company shall be obligated to pay to the Executive Base
Salary earned, but not yet paid to the Executive, prior to the date of such
termination in accordance with Section 3(a), and reimburse the Executive for any
accrued vacation and unpaid expenses incurred by the Executive through the date
of termination in accordance with Section 5, and any Accrued Bonus Payments. In
addition, subject to the provisions of Section 11(h) hereof and the Executive's
compliance (and continued compliance) with the provisions of Sections 7, 8 and 9
hereof, (i) the Company shall pay to the Executive a severance payment equal to
twelve (12) months salary at the Base Salary then in effect, payable in twelve
(12) equal monthly installments and (ii) for such twelve (12) month period, the
Executive shall be entitled to continue to receive his then current health, life
and disability insurance benefits or, in the case of health insurance benefits,
payment by the Company of applicable "COBRA" payments (collectively (i) and (ii)
are called the "Severance Payments"). Except as set forth in Section 11(j), the
Severance Payments shall commence no earlier than seven (7) working days after
the Company receives the executed release and resignations required under
Section 11(h) and no later than 60 days after the date of the Executive's
termination, the exact payment date to be determined by the Company in its sole
discretion, provided that the Executive timely executes and returns the release
and does not subsequently revoke such execution. In no event shall any Severance
Payments hereunder be made to the Executive later than December 31 of the second
calendar year following his termination.
8
(e) Change of Control. Subject to the provisions of Sections 11(i) and
11(j), in the event that the Company shall terminate this Agreement or the
Executive's employment hereunder pursuant to the provisions of Section 11(d)
within thirteen (13) months following a Change in Control (as defined below) or
the Executive shall terminate this Agreement and the Executive's employment
hereunder for Good Reason (as defined in Section 11(g)) within thirteen (13)
months following a Change in Control, then, in lieu of (and not in addition to)
the amounts to be paid (and benefits to be provided) by the Company pursuant to
Section 11(d) or Section 11(g), the Company shall have no further obligations
under this Agreement to the Executive other than the obligation to: (i) pay to
the Executive Base Salary earned, but not yet paid to the Executive, prior to
the date of such termination in accordance with Section 3(a), (ii) reimburse the
Executive for any accrued vacation and unpaid expenses incurred by the Executive
through the date of termination in accordance with Section 5, and pay any
Accrued Bonus Payments and (iii) subject to the provisions of Sections 11(h),
11(i) and 11(j), pay to the Executive a lump sum amount equal to the product of
(1) the Executive's Base Salary then in effect and (2) a fraction, the numerator
of which is the number of days remaining from the date the termination occurred
through the end of the Employment Term, but, subject to the provisions of
Section 11(i), in no event less than 912, and the denominator of which is 365.
In addition, for the twelve (12) month period following the date of such
termination, the Executive shall be entitled to continue to receive his then
current health, life and disability insurance benefits or, in the case of health
insurance benefits, payment by the Company of applicable "COBRA" payments.
Except as set forth in Section 11(j), such lump sum payment set forth above
shall be made within ten (10) working days after the Company receives the
executed release and resignations required under Section 11(h), but in no event
later than 60 days after the date of Executive's termination, provided that the
Executive has not subsequently revoked such release thereunder.
As used in this Agreement, "Change in Control" shall mean the occurrence of
any one of the following events:
(i) any Person other than an employee benefit plan of the Company or
of any wholly-owned subsidiary of the Company becomes the owner of 50%
or more of the combined voting power of the Company's then outstanding
voting securities and thereafter individuals who were not directors of
the Company prior to the date such Person became a 50% owner are
elected as directors pursuant to an arrangement or understanding with,
or upon the request of or nomination by, such Person and constitute at
least one-half of the Board; provided, however, such acquisition of
ownership shall not constitute a Change of Control if the Executive or
an Executive Related Party is the Person or a member of a group
constituting the Person acquiring such ownership; or
(ii) there occurs any solicitation or series of solicitations of
proxies by or on behalf of any Person other than the Board and
thereafter individuals who were not directors of the Company prior to
the commencement of such solicitation or series of solicitations are
elected as directors pursuant to an arrangement or understanding with,
or upon the request of or nomination by, such Person and constitute at
least one-half of the Board of Directors; or
9
(iii) the Company executes an agreement of sale, merger or
consolidation which contemplates that (x) after the effective date
provided for in such agreement, all or substantially all of the
business and/or assets of the Company shall be owned, leased or
otherwise controlled by another Person and (y) individuals who are
directors of the Company when such agreement is executed shall not
constitute at least one-half of the board of directors of the survivor
or successor entity immediately after the effective date provided for
in such agreement; provided, however, that for purposes of this
paragraph (iii), if such agreement requires as a condition precedent
approval by the Company's shareholders of the agreement or
transaction, a Change of Control shall not be deemed to have taken
place unless and until such approval is secured (but upon any such
approval, a Change of Control shall be deemed to have occurred on the
effective date of such agreement)."
"Executive Related Party" shall mean any Affiliate or Associate of the
Executive other than the Company or a Subsidiary of the Company. The terms
"Affiliate" and "Associate" shall have the meanings ascribed thereto in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(the term "registrant" in the definition of "Associate" meaning, in this case,
the Company).
"Person" shall have the meaning used in Section 13(d) of the Exchange Act,
as in effect on the date hereof.
(f) Termination by Executive. In the event that the Executive desires to
resign voluntarily as Chief Executive Officer, the Executive covenants to
provide the Company with not less than ninety (90) days written notice of any
such voluntary resignation; and further the Executive covenants to cooperate in
good faith in order to facilitate a smooth transfer of authority during the
period from notice of resignation to the date of termination. In the event that
the Executive's employment is terminated by the Executive pursuant to this
Section 11(f), then the Executive shall be entitled to receive an amount payable
in a lump sum within ten (10) business days following the date of termination,
equal to the sum of any accrued and unpaid Base Salary as contemplated by
Section 3(a), any accrued vacation and unpaid expenses as contemplated by
Section 5 and any Accrued Bonus Payments.
(g) Good Reason. The Executive may, upon thirty (30) days written notice,
terminate his employment with the Company for "Good Reason". "Good Reason" shall
mean any material breach by the Company of its obligations hereunder which are
not cured within thirty (30) days following receipt of written notice from the
Executive detailing such breach and such notice is sent by the Executive within
ninety (90) days after the occurrence of such an event. The parties agree that a
material breach shall mean (x) any material diminution in the Executive's
duties, authority, reporting relationships or responsibilities (whether or not
accompanied by a title change) not consented to by the Executive, other than a
Permitted Change, and (y) the relocation of the principal executive offices of
the Company a distance of more than 35 miles from its current location not
consented to by the Executive. In the event that the Executive terminates his
employment with the Company for Good Reason, the Company shall be obligated to
pay to the Executive Base Salary earned, but not yet paid to the Executive,
prior to the date of such termination in accordance with Section 3(a), reimburse
the Executive for any accrued vacation and unpaid expenses incurred by the
Executive through the date of termination in accordance with Section 5 and pay
any Accrued Bonus Payments. In addition, subject to the provisions of Section
11(h) hereof, and the Executive's compliance (and continued compliance) with the
provisions of Sections 7, 8 and 9 hereof, and so long as the Executive's
termination of employment shall occur within thirteen (13) months following the
initial existence of one or more of the foregoing conditions constituting Good
Reason hereunder, the Company shall pay and provide to the Executive the
Severance Payments.
10
(h) Release. Notwithstanding anything to the contrary contained in this
Agreement, the Executive (or his estate) shall not be entitled to receive the
payments and benefits set forth in this Section 11 (other than Base Salary
through the effective date of termination in accordance with Section 3(a) hereof
and reimbursement of expenses in accordance with Section 5) prior to (i) the
execution, delivery and non revocation by the Executive to the Company of a
valid and fully effective general release and nondisparagement agreement (in
form and substance reasonably satisfactory to the Company) of all claims,
including but not limited to the Age Discrimination in Employment Act, Title VII
of the Civil Rights Act of 1964, which the Executive might have at such time
against the Company and (ii) the resignation of the Executive from all positions
of any nature which the Executive may then have held with the Company and any
subsidiary of the Company.
(i) Limitation as to Amounts Payable. Notwithstanding any provision of this
Agreement to the contrary (including without limitation the provisions of
Section 11(e)) if all or any portion of the amounts to be paid to the Executive
under this Agreement otherwise would be a "parachute payment," as defined in
section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")
and the Treasury Regulations thereunder, the aggregate present value of the
total amounts to be paid to the Executive under this Agreement shall be limited
to an amount that is less than three times the Executive's "annualized
includible compensation for the base period," as defined in section 280G(d) of
the Code and any Treasury Regulations thereunder; provided, however, that in no
event shall the amount payable under this Agreement be reduced pursuant to this
Section 11(i) to less than the maximum amount that may be paid to the Executive
without causing any portion of such amount to become nondeductible under section
280G of the Code and subject to the excise tax imposed by section 4999 of the
Code. The determination of the Executive's "annualized includible compensation
for the base period" and the deductibility of payments made pursuant to this
Agreement shall be made by the independent outside accounting firm regularly
retained by the Company. For purposes of this Section 11(i), "present value"
shall be determined in accordance with section 280G of the Code and the Treasury
Regulations thereunder.
(j) Coordination with Section 409A of the Code. Notwithstanding anything to
the contrary set forth in this Section 11, in the event that the Executive is
determined to be a "key employee" as defined by Section 416(i) of the Code
(without regard to paragraph 5), to the extent necessary to comply with Section
409A of the Code and the Treasury Regulations thereunder, any payments or
distributions due the Executive under this Agreement as a result of or following
any separation from service shall not be made before the date which is 6 months
after the date of separation from service (or if earlier, the date of death of
the Executive). All payments that would have been made to the Executive during
such six (6) month period shall be made in a lump sum on the date six (6) months
and two days after the Executive's date of separation from service and all
remaining payments (if any) shall commence on the next regular payroll date in
the seventh (7th) month following the Executive's date of separation from
service. Notwithstanding anything to the contrary contained in this Agreement,
Executive's termination of employment shall occur only upon his "separation from
service" within the meaning of Treasury Regulations Section 1.409A-1(h). For all
purposes of Section 409A of the Code and the related Treasury Regulations, the
Executive's entitlement to severance pay pursuant to this Agreement shall be
treated as an entitlement to a series of separate payments. All payments and
benefits provided under this Agreement are intended to either comply with or be
exempt from Section 409A of the Code and the terms hereof shall be administered
and construed accordingly, provided that nothing in this Agreement shall
constitute an agreement not to withhold any sums required under Section 409A or
to assume any liability for withholdings necessary under Section 409A.
11
12. Survival. Except as otherwise provided in this Agreement,
notwithstanding the termination of this Agreement or the Executive's employment
for any reason, the Executive's obligations under Sections 2(b), 7, 8, and 9
hereof shall survive and remain in full force and effect for the periods therein
provided, and the provisions for equitable relief against the Executive in
Section 10 hereof shall continue in force, along with the provisions of Sections
11(j) through 20 hereof. In addition, the obligations of the Company set forth
in Section 11 shall survive any termination (as applicable) and shall remain in
full force and effect until such obligations are satisfied in full (subject, as
applicable, to the Executive's compliance with the provisions of Section11(h)).
13. Assignment. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of the
Executive hereunder are of a personal nature and shall not be assignable or
delegatable in whole or in part by the Executive.
14. Modification. This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
15. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or three (3) days
after being mailed by registered or certified mail, as follows (provided that
notice of change of address shall be deemed given only when received):
12
If to the Company:
iParty Corp.
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Corporate Secretary
With a required copy to:
Chairman of the Compensation Committee
of the Board of Directors
c/o iParty Corp.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
If to the Executive:
Xxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
16. Remedies Cumulative; No Waiver. No remedy conferred upon the Company by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by the Company in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Company
from time to time and as often as may be deemed expedient or necessary by the
Company in its sole discretion.
17. Binding Effect. The Executive's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to encumbrance or the claims of the Executive's creditors,
and any attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Executive and
his heirs and personal representatives, and shall be binding upon and inure to
the benefit of the Company and its successors and those who are its assigns
under Section 13.
18. Entire Agreement; Contents of Agreement.
(a) Effective as of April 1, 2010, this Agreement sets forth the entire
understanding among the parties hereto with respect to the subject matter
hereof. This Agreement cannot be changed, modified, extended or terminated
except upon written amendment executed by the Executive and approved by the
Board and executed on behalf of the Company by a duly authorized officer. The
Executive acknowledges that the effect of this provision is that no oral
modifications of any nature whatsoever to this Agreement shall be permitted.
13
(b) The Executive acknowledges that from time to time, the Company may
establish, maintain and distribute manuals or handbooks or personnel policy
manuals, and officers or other representatives of the Company may make written
or oral statements relating to personnel policies and procedures. Such manuals,
handbooks and statements are intended only for general guidance. No policies,
procedures or statements of any nature by or on behalf of the Company (whether
written or oral, and whether or not contained in any manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement or to create express or implied obligations
of any nature to the Executive.
19. Headings. The headings in this Agreement are solely for the convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
20. Counterparts; Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It shall be
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts, without giving effect to the rules governing the conflicts of
laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
iPARTY CORP.
By: /s/ XXXXX XXXXXXXXX
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
/s/ XXX XXXXXXXX
----------------
Xxx Xxxxxxxx
14
