Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
December 31, 2001, is entered into by and among Xxxxxxx Xxxxxxx ("Employee"),
iParty Corp., a Delaware corporation (the "Company"), and iParty Retail Stores
Corp., a Delaware corporation (the "Subsidiary").
W I T N E S S E T H :
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WHEREAS, the Company and Employee have previously entered into
an Amended and Restated Employment Agreement dated as of November 1, 2000 (the
"Prior Employment Agreement"), which will expire on December 31, 2001; and
WHEREAS, the Company and Employee each desire to continue the
employment.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and intending to be legally bound hereby, Employee, the
Company and the Subsidiary have agreed and do hereby agree to continue the
employment of Employee as follows:
1. Duties and Title. The Company does hereby agree to
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continue to employ, engage and hire Employee as President and Chief Financial
Officer of the Company and as President of the Subsidiary during the Employment
Period. Employee does hereby accept and agree to such continuance. Employee
agrees to perform any and all other duties and to assume any and all
responsibilities that may be assigned to him. Employee shall devote his full
time (at least forty (40) hours per week), energy and skill to the performance
of his duties for the Company and the Subsidiary.
2. Compensation.
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(a) The Company shall pay Employee and Employee
agrees and accepts from the Company, in full payment for his services and
promises to the Company, a base salary (the "Base Salary") at the rate of One
Hundred Sixty-Five Thousand Dollars ($165,000.00) per year, less all applicable
payroll withholding taxes and deductions for insurance contributions and the
like. The Base Salary shall be payable in accordance with the regular payroll
practices of the Company, as in effect from time to time.
(b) Employee shall also be eligible to participate in
any executive bonus plan established from time to time by the Board of Directors
(the "Bonus Plan").
3. Benefits. Employee shall be eligible to participate
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in any medical and dental plan adopted by the Company for the benefit of its
employees. Employee shall also be eligible to receive any other benefits that
the Company makes available to its employees from time to time.
4. Vacation. Employee is entitled to four (4) weeks paid
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vacation per calendar year, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies.
5. Employment Period. The Company shall employ Employee
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for a period commencing as of January 1, 2002 and ending on March 31, 2004 (the
"Employment Period"), unless sooner terminated in accordance with the provisions
of this Agreement.
6. Termination of Employment.
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(a) Notwithstanding anything herein contained, if on
or after January 1, 2002 and prior to the end of the Employment Period, the
Company or Employee, as the case may be, shall have the right to terminate
Employee's services under this Agreement. Termination of Employee's employment
shall be deemed termination for "cause" if on account of: (i) Employee's
voluntary resignation (other than as a result of Employee's death or disability,
or for the reasons set forth in subparagraphs (x), (y) and (z)); (ii)
intentionally fail to follow any commercially reasonable and lawful direction of
the Board of Directors and continue to fail to follow such direction within
fifteen (15) days of written notification of the same; (iii) Employee is
convicted of a felony crime; (iv) Employee commits any act of fraud against the
Company; and (v) Employee commits any act or omits to take any action in bad
faith and to the detriment of the Company. Cessation of the employment
relationship between Employee and the Company by reason of Employee's death or
permanent disability, or Employee's resignation because of (x) the assignment to
him of duties materially inconsistent with respect to his position as
contemplated by this Agreement, (y) a change in his title (set forth Section 1)
without his expressed written consent, or (z) any material failure by the
Company to comply with the provisions of this Agreement, shall be deemed
termination without "cause."
(b) Termination because of Disabilities. Employee
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shall be considered to be "disabled" for purposes of this Section 6 if Employee
is unable to perform his customary duties under this Agreement for a continuous
period of six (6) months because of physical or mental impairment, in which
event this Agreement shall terminate upon thirty (30) days written notice to
Employee and no further compensation shall be payable to Employee, except as may
otherwise be provided under any disability insurance policy. Notwithstanding
anything to the contrary above, if Employee is terminated pursuant to this
Section 6(b), he shall be entitled to any accrued but unused vacation time (the
"Unused Vacation Payment"). The Unused Vacation Payment shall be payable on the
first payroll disbursement date for the month following the date this Agreement
terminates.
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(c) Effect of Termination Without "Cause". If
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Employee's employment is terminated without "cause," the Company shall give
notice of termination of Employee's services hereunder as of a date to be
specified in such notice and this Agreement shall terminate on the date so
specified (the "Without Cause Termination Date"). The Company shall also pay
Employee: (i) an amount equal to six (6) months Base Salary (less all applicable
payroll withholding taxes and deductions) ("Severance Payment"), (ii) a bonus,
if any, which Employee may be entitled to under the provisions of the Bonus Plan
(the "Bonus"), and (iii) the Unused Vacation Payment. The Severance Payment
shall be payable in accordance with the regular payroll practices of the
Company. The Bonus shall be payable as and when payable under the Bonus Plan.
The Unused Vacation Payment shall be payable on the first payroll disbursement
date for the month following the Without Cause Termination Date.
Upon termination without "cause", the Company shall
also extend the benefits that Employee is granted under Section 3 of this
Agreement for a period of six (6) months from the Without Cause Termination
Date.
(d) Effect of Termination for "Cause". If Employee's
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employment is terminated by the Company for "cause," the Company shall give
notice of termination of Employee's services hereunder as of a date to be
specified in such notice and this Agreement shall terminate on the date so
specified (the "Termination Date"). Employee shall be entitled to receive only
his Base Salary at the rate provided in Section 2(a) to the Termination Date and
Employee shall not be entitled to any other compensation or benefits not already
earned and vested on the Termination Date.
(e) If Employee's employment is terminated by
Employee's voluntary resignation (other than for the reasons set forth in
paragraphs (x), (y) or (z) or paragraph (a) above) Employee agrees to provide
the Company with thirty (30) days' advance written notice of such termination
and this Agreement shall terminate on the date so specified (the "Resignation
Termination Date"). If Employee resigns, he shall be entitled to the Unused
Vacation Payment. The Unused Vacation Payment shall be payable on the first
payroll disbursement date for the month following the Resignation Termination
Date.
(f) Nothing contained in this Section 6 shall be
deemed to limit any other right the Company or the Employee may have to
terminate Employee's employment hereunder upon any ground permitted by law.
7. Effect on Prior Employment Agreement; Termination of
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Prior Agreements. The Prior Employment Agreement shall remain in effect through
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December 31, 2001, and shall continue to apply to all duties, rights,
compensation and other benefits of or due to Employee for all periods through
December 31, 2001 (except as otherwise agreed to in writing by the parties). For
all periods from and after January 1, 2002, this Agreement terminates and
supercedes any and all prior agreements and understandings between the parties
with respect to employment or with respect to the compensation of Employee by
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the Company, including the Prior Employment Agreement.
8. Nondisclosure and Nonuse of Confidential Information.
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Employee shall not use or disclose to any other person (except as required by
applicable law or for the proper performance of his duties hereunder) any
confidential information obtained by him incident to his employment or other
associations with the Company and the Subsidiary. Employee understands that this
restriction shall continue to apply after his employment terminates, regardless
of the reason for such termination.
9. Non-competition. During Employee's employment
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hereunder and for a period of one (1) year thereafter (the "Non-competition
Period"), Employee shall not, without permission of the Company: (i) engage in
any activity, whether as owner, partner, investor, consultant, agent, employee,
co-venturer or otherwise, that is competitive with the business of the Company
or the Subsidiary, or (ii) solicit or do business with, directly or indirectly,
any present or past customer or employee of the Company or the Subsidiary.
10. Enforcement. The Company and Employee agree that a
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breach of the provisions of Sections 8 or 9 hereof would cause irreparable
damage to the Company or the Subsidiary and that recovery by the Company or the
Subsidiary of money damages would not constitute an adequate remedy for such
breach. Accordingly, the Company, the Subsidiary and Employee agree that the
provisions of Sections 8 and 9 hereof may be specifically enforced in addition
to any other rights or remedies available on account of such breach.
11. Assignment. This Agreement is personal in its nature
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and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of a merger or consolidation of the Company with any
other entity, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties and obligations of the
Company hereunder. In addition, the Company or the Subsidiary shall require any
purchaser of all, or substantially all, of its assets to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no sale of its assets had taken
place.
12. Governing Law. This Agreement shall be governed in
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all respects, whether as to validity, construction, capacity, performance, or
otherwise, by the laws of The Commonwealth of Massachusetts. Except as otherwise
provided in Section 14 hereof, no action involving this Agreement may be brought
except in a court of The Commonwealth of Massachusetts (or, if appropriate, a
federal court located in Massachusetts).
13. Entire Agreement. This Agreement embodies the entire
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agreement of the parties respecting those matters within its scope and may be
modified only in writing executed by the Company, the Subsidiary and Employee.
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14. Arbitration. All claims, disputes and other matters
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in question between the parties arising out of the employment relationship shall
be decided by arbitration conducted in Boston, Massachusetts in accordance with
the rules of the American Arbitration Association, unless the parties mutually
agree otherwise. The award by the arbitrator shall be final, and judgment may be
entered upon it in accordance with applicable law in a court of The Commonwealth
of Massachusetts (or, if appropriate, a federal court located in Massachusetts).
15. Waiver. Failure to insist upon strict compliance with
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any of the terms, covenants or conditions hereof shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder at
any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times.
16. Severability. In the event that a court of competent
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jurisdiction determines that any portion of this Agreement is in violation of
any statute or public policy, then only the portions of this Agreement that
violate such statute or public policy shall be stricken. All portions of this
Agreement that do not violate such statute or public policy continue in full
force and effect. Further, any court order striking any portion of this
Agreement shall modify the stricken terms to give as much effect as possible to
the intentions of the parties under this Agreement.
17. Notices. Any notice, consent, or other communication
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required or permitted to be given hereunder shall be in writing and shall be
deemed to have been given three (3) days after the date sent if sent by United
States certified mail, return receipt requested, with proper postage thereon,
one (1) day after the date sent if sent by overnight courier of national
recognition, or on the day of delivery if by hand to an officer of the Company.
Notices shall be addressed as follows:
(a) If to Employee: Xxxxxxx Xxxxxxx
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(b) If to the Company iParty Corp.
or Subsidiary: 0000 X.X.X. Xxxxxxx
Xxxx Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx, CEO
(c) With a copy to: Posternak, Xxxxxxxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, P.C.
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or at such other address or addresses as the party addressed may from time to
time designate by written notice.
18. Headings; Counterparts. The headings in this
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Agreement are solely for the convenience of reference and shall be given no
effect in the construction or interpretation of this Agreement. 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed
this Agreement or cause this Agreement to be executed on its behalf as of the
date first written above.
iPARTY CORP.
By: /s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx
Chief Executive Officer
iPARTY RETAIL STORES CORP.
By: /s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx
Chief Executive Officer
EMPLOYEE
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
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