Exhibit 10.6
CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") is being made as of this 14th
day of April, 1999 between iPARTY CORP., a Delaware corporation having its
principal offices at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Company") and XXXXX HERO, an individual residing at 000 Xxxx 00xx Xxxxxx,
Xxx. 00-X, Xxx Xxxx, Xxx Xxxx 00000 ("Hero").
W I T N E S S E T H:
WHEREAS, the Company and Hero have previously entered in an
Employment Agreement dated as of July 7, 1998 (the "Prior Employment Agreement")
whereby Hero was employed by the Company as its Chief Executive Officer; and
WHEREAS, the Company and Hero mutually desire terminate the
Prior Employment Agreement; and
WHEREAS, the Company desires to retain Hero as a consultant
and Hero desires to be retained by the Company as a consultant, subject to the
terms and conditions contained herein.
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:
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1. Resignation; Termination of Prior Employment Agreement.
Effective April 14, 1999, Hero resigns as Chief Executive Officer and as a
Director of the Company.
2. Nature of Engagement; Term. The Company hereby retains Hero
and Hero agrees to serve the Company as (i) a consultant and (ii) as the
non-executive Chairman of the Company's subsidiary, Star Greetings, Inc., on an
independent contract basis, subject to the terms and conditions contained
herein. This engagement shall commence effective April 14, 1999 (the
"Commencement Date") and shall terminate on October 14, 1999 (the "Guaranteed
Term"). This Agreement shall be automatically extended for an additional six
months, until April 14, 2000 (the "Extended Term"), provided that Hero is not
terminated pursuant to Section 10(a) hereof for actions committed subsequent to
the Commencement Date.
3. Duties and Powers as Consultant. During the Guaranteed Term
(and the Extended Term, if applicable), Hero shall be engaged by the Company as
a consultant and as the non-executive Chairman of Star Greetings, Inc., a
subsidiary of the Company. In such capacity, Hero shall lead and direct the
Company in the further development and implementation of the "Star Greetings
Concept" (the deliverance of personalized greetings from sports and
entertainment celebrities, corporate personalities and animated characters via
the Internet, videotape and other electronic means). Hero shall be responsible
for developing all aspects of the business concepts of Star Greetings. In
addition, Hero shall be available to coordinate other tasks relating to the
Company as directed by the then current Chief Executive Officer of the Company.
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In the performance of his duties hereunder, Hero shall be
subject to the direction of the then current Chief Executive Officer of the
Company.
4. Compensation.
(a) As compensation for his services hereunder, the
Company shall pay Hero, during the Guaranteed Term, and during the Extended
Term, if applicable, a monthly fee (the "Fee") of $20,833.33.
(b) So long as Hero is engaged pursuant to this Agreement,
the Company shall continue to provide Hero with the health and medical benefits
provided to him under the Prior Employment Agreement, and Hero shall be eligible
to participate in all other benefits enjoyed by senior employees of the Company.
5. Stock Option. Pursuant to the terms of the Prior Employment
Agreement, Hero was granted stock options for an aggregate of 300,000 shares of
common stock of the Company pursuant to the iParty Stock Option Plan at an
exercise price of $2.50 per share. Options to purchase 50,000 of such shares
vested on January 15, 1999. The remainder of such options shall vest in
accordance with the terms of the Prior Employment Agreement as follows: provided
Hero remains engaged by the Company on July 15, 1999, options for 50,000 shares
shall vest on July 15, 1999; provided Hero remains engaged by the Company on
January 15, 2000, options for 50,000 shares shall vest on January 15, 2000;
provided Hero remains engaged by the Company on July 15, 2000, options for
50,000 shares shall vest on July 15, 2000; provided Hero remains engaged by the
Company on January 15, 2001, options for 50,000 shares shall vest on January 15,
2001; and provided Hero remains
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engaged by the Company on July 15, 2001, options for 50,000 shares shall vest on
July 15, 2001. In the event that the Company or its assets are sold
substantially as an entirety or ownership of more than 50% of the Common Stock
is transferred to a non-affiliated party, than any unvested options shall
immediately vest. The options will be evidenced by the standard option grant
certificates issued to the Company to employees, which shall include standard
adjustments for recapitalizations, etc.
6. Expenses; Travel.
(a) Hero shall be entitled to reimbursement for reasonable
travel and other out-of-pocket expenses necessarily incurred in the performance
of his duties hereunder, upon prior written approval of and submission and
approval of written statements and bills to the Chief Financial Officer of the
Company in accordance with the then regular procedures of the Company governing
consultants. Hero shall be available to travel as the needs of the Company
require.
(b) Hero shall not cause the Company to be obligated for
any costs or obligations without the prior written approval of the Chief
Executive Officer or Chief Financial Officer of the Company.
(c) Hero shall have office space at the main offices of
the Company.
7. Representations and Warranties of Hero. Hero represents and
warrants to the Company that (a) Hero is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder,
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or the other rights of the Company hereunder; and (b) Hero is under no physical
or mental disability that would hinder his performance of duties under this
Agreement.
8. Non-Competition. Hero agrees that he will not (a) during
the period he is engaged by the Company or receiving the Fee in Section 4 hereof
(whichever is longer), 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, member, agent or partner of, any other business, organization
or entity that is or shall then be competing with the Company, and (b) for a
period of six months after the termination of this Agreement or six months after
he receives his last Fee payment from the Company (whichever is longer),
directly or indirectly compete with or be engaged in the same business as the
Company, or be employed by, or act as consultant or lender to, or be a director,
officer, employee, owner, member, agent or partner of, any business,
organization or entity which, at the time of such cessation, competes with or is
engaged in the same business as the Company, except that in each case the
provisions of this Section 8 will not be deemed breached merely because Hero
owns not more than five percent (5.0%) of the outstanding common stock of a
corporation, if, at the time of its acquisition by Hero, 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.
9. Confidential Information. All confidential information
which Hero may now possess, may obtain during the Guaranteed Term or the
Extended Term, if applicable, or
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may create prior to the end of the period he is engaged by the Company, relating
to the business of the Company or of any customer or supplier of the Company,
shall not be published, disclosed, or made accessible by him to any other
person, firm, corporation or entity during the Guaranteed Term or Extended Term,
if applicable, or any time thereafter without the prior written consent of the
Company. Hero shall return all tangible evidence of such confidential
information to the Company prior to or at the termination of his engagement by
the Company.
10. Termination.
(a) Notwithstanding anything herein contained, if on or
after the date hereof and prior to the end of the Guaranteed Term, or the
Extended Term, if applicable, Hero is terminated "For Cause" (as defined below)
then the Company shall have the right to give notice of termination of Hero's
services hereunder as of a date to be specified in such notice, and this
Agreement shall terminate on the date so specified. Termination "For Cause"
shall mean that, for the period subsequent to the Commencement Date, Hero shall
(i) be charged with 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 direction of the then current Chief
Executive Officer of the Company, (iv) commit an act of fraud against the
Company, or (v) breach any term of this Agreement and fail to correct such
breach within three days after written notice of commission thereof.
(b) In the event that Hero shall be physically or mentally
incapacitated or disabled or otherwise unable fully to discharge his duties
hereunder for a period of six months,
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then this Agreement shall terminate upon 30 (thirty) days' written notice to
Hero, and no further compensation shall be payable to Hero, except for any
accrued and unpaid Fee and expenses as contemplated under Sections 4 and 6(a)
respectively, and as may otherwise be provided under any disability insurance
policy, if any.
(c) In the event that Hero shall die, all unvested
options shall vest and the Company shall continue to pay the Fee through the
balance of the term of the Agreement and any accrued but unpaid expenses
pursuant to Section 6(a).
(d) In the event that this Agreement is terminated during
the Guaranteed Term, for any reason, including "For Cause" pursuant to Section
10(a) (but excluding a breach of the covenants contained in Section 8 hereof),
then Hero shall be entitled to receive the Fee at the rate provided in Section 4
hereof for the remainder of the Guaranteed Term and any accrued but unpaid
expenses as contemplated by Section 6(a) hereof.
(e) In the event that this Agreement is terminated during
the ExtendedTerm, "For Cause" pursuant to Section 10(a), then Hero shall be
entitled to receive only the Fee at the rate provided in Section 4 to the date
on which termination shall take effect and any unpaid expenses as contemplated
by Section 6(a).
(f) In the event that the Company terminates Hero during
the Extended Term, for any reason other than as provided under Section 8(a),
(b), (c) or (e), then this Agreement shall terminate upon five (5) days' written
notice to Hero and the Company shall be obligated to pay to Hero an amount equal
to any unpaid expenses as contemplated under Section 6(a) and a severance
payment equal to six (6) months Fee, payable in six (6) equal
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monthly installments. If this Agreement is not renewed at the end of the
Extended Term, if applicable, such non-renewal shall not be deemed a termination
of this Agreement without cause.
11. Merger, Etc. In the event of a future disposition of the
properties and business of the Company, substantially as an entirety, by merger,
consolidation, sale of assets, sale of stock, or otherwise, then the Company may
elect to assign this Agreement and all of its rights and obligations hereunder
to the acquiring or surviving entity.
12. Survival. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive Hero's
termination, irrespective of any investigation made by or on behalf of any
party.
13. Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them, including the Prior Employment
Agreement, concerning such subject matter, and may be modified only by a written
instrument duly executed by each party.
14. Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 14). In
the case of a notice to the Company, a copy of such notice (which copy shall not
constitute
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notice) shall be delivered to Camhy Xxxxxxxxx & Xxxxx LLP, 0000 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn. Xxxxxx X. XxXxxx. Notice to the estate of
Hero shall be sufficient if addressed to Hero as provided in this Section 14.
Any notice or other communication given by certified mail shall be deemed given
at the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
15. Waiver. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
16. Binding Effect. Hero'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 Hero'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 Hero 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
11. The Prior Employment Agreement has been mutually terminated in its entirety,
and shall not be deemed a termination "with cause" or a termination "without
cause".
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17. 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.
18. 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 State of New York, without giving effect to the rules governing the
conflicts of laws.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
iPARTY CORP.
By:
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Name:
Title:
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Xxxxx Hero
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