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                              EMPLOYMENT AGREEMENT

                  THIS AGREEMENT (the "Agreement") is being made as of this 30th
day of March, 1999 between iPARTY CORP., a Delaware corporation having its
principal offices at 41 East 11th Street, New York, New York 10003 (the
"Company"), and DORICE DIONNE , an individual residing at 288 Huron Avenue,
Cambridge, Massachusetts 02138 ("Dionne").

                              W I T N E S S E T H :
                              - - - - - - - - - - -

         WHEREAS, the Company desires to employ Dionne and Dionne desires to be
employed by the Company as its Senior Vice President - Merchandising, upon 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:

         1. Nature of Employment; Term of Employment. The Company hereby employs
Dionne and Dionne agrees to serve the Company as its Senior Vice President -
Merchandising upon the terms and conditions contained herein, for a term
commencing retroactively as of March 30, 1999 and continuing until the close of
business on March 30, 2002 (unless terminated sooner pursuant to the terms
hereof, the "Employment Term").

         2. Duties and Powers as Employee. During the Employment Term, Dionne
shall be employed by the Company as its Senior Vice President - Merchandising.
Dionne agrees to devote substantially all her full working time, energy and
efforts to the business of the Company, provided, however, that Dionne may
continue to fulfill her duties and obligations to The Big Party Corporation. In
performance of her duties to the Company, Dionne shall be subject to the
direction of the Chief Executive Officer of the Company. She shall be based in
New York City and shall be available to travel as the needs of the Company
require.

         3. Compensation.

            (a) As compensation for her services hereunder, during the
Employment Term, the Company shall pay Dionne a base salary (the "Base Salary"),
payable in equal semi-monthly installments in arrears, at the initial annual
rate of One Hundred Thousand Dollars ($100,000); commencing January 1, 2000, the
Base Salary Payable to Dionne by the Company


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shall be increased to the annual rate of One Hundred Twenty- Five Thousand
Dollars ($125,000). Additionally, Dionne shall be entitled to participate in the
present or future employee benefit plans of the Company provided that she meets
the eligibility requirements therefor.

            (b) In addition to the Base Salary provided herein, Dionne may
be entitled to receive an annual performance bonus payment as determined in the
sole discretion of the Compensation Committee of the Board of Directors of the
Company.

            (c) On March 30, 1999, Dionne was granted stock options (the
"Initial Options") for an aggregate of 337,500 shares of common stock of the
Company pursuant to the iParty Stock Option Plan (the "Plan") which Initial
Options vest as follows: (i) provided Dionne remains continuously employed by
the Company through March 30, 2000, options for 112,500 shares shall vest on
March 30, 2000; and (ii) thereafter, provided Dionne remains continuously
employed by the Company on each vesting date, options for an additional 9,375
shares shall vest on the last calendar day of each of the 24 months subsequent
to March, 2000 (i.e. 9,375 shall vest on the last day of each month from April,
2000 through March, 2002). The strike price of the Initial Options is the
closing price on the date of grant, which price was $3.75 per share.

            (d) Through March 30, 2000, the Company shall reimburse Dionne
for all her reasonable commuting expenses relating to travel to New York as
required by the Company.

         4. Expenses; Vacations. Dionne shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of her duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular procedures of the
Company. Dionne shall be entitled to vacation time in accordance with the
regular procedures of the Company governing senior executive officers as
determined from time to time by the Company's Board of Directors. Dionne also
shall be eligible to participate in all medical, health and disability benefit
programs provided to senior executives of the Company.

         5. Representations and Warranties of Employee. Dionne represents and
warrants to the Company that (a) Dionne is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of her duties hereunder, or


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the other rights of the Company hereunder; and (b) Dionne is under no physical
or mental disability that would hinder her performance of duties under this
Agreement.

         6. Non-Competition. Dionne agrees that she will not (a) during the
period she is employed by the Company 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 or partner of, any other business or
organization that is or shall then be competing with the Company, and (b) for a
period of one year after she ceases to be employed by the Company, 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 or partner of, any business or organization 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 6 will not be
deemed breached merely because Dionne owns not more than five percent (5.0%) of
the outstanding common stock of a corporation, if, at the time of its
acquisition by Dionne, 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. Nothing in this Section 6 shall
preclude Dionne from continuing in her role as a consultant to The Big Party
Corporation, provided however, that it is agreed and understood that Dionne may
not be employed by The Big Party Corporation in the event it acquires a presence
on the World Wide Web that competes with or is engaged in the same business as
the Company.

         7. Confidential Information. All confidential information which Dionne
may now possess, may obtain during the Employment Term, or may create prior to
the end of the period she is employed 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 her to any other person, firm, or
corporation during the Employment Term or any time thereafter without the prior
written consent of the Company. Dionne shall return all tangible evidence of
such confidential information to the Company prior to or at the termination of
her employment.

         8. Termination.

            (a) Notwithstanding anything herein contained, if on or after the
date hereof and prior to the end of the Employment Term, Dionne is terminated
"For Cause" (as defined below) then the Company shall have the right to give
notice of termination of Dionne's services


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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 Dionne
shall (i) be convicted 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 Chief
Executive Officer or Board of Directors, (iv) commit an act of fraud against the
Company, or (v) breach any term of this Agreement and fail to correct such
breach within ten (10) days after written notice of commission thereof.

            (b) In the event that Dionne shall be physically or mentally
incapacitated or disabled or otherwise unable fully to discharge her duties
hereunder, with reasonable accommodation, for a period of nine months, then this
Agreement shall terminate upon 30 (thirty) days' written notice to Dionne, and
no further compensation shall be payable to Dionne, except for any accrued and
unpaid Base Salary and bonus, if any, as contemplated under Section 3, any
accrued and unpaid expenses as contemplated under Section 4 and as may otherwise
be provided under any disability insurance policy, if any.

            (c) In the event that Dionne shall die, then this Agreement shall
terminate on the date of Dionne's death, and no further compensation shall be
payable to Dionne, except for any accrued and unpaid Base Salary and bonus, if
any, as contemplated under Section 3, any accrued and unpaid expenses as
contemplated under Section 4 and as may otherwise be provided under any
insurance policy or similar instrument.

            (d) In the event that this Agreement is terminated "For Cause"
pursuant to Section 8(a), then Dionne shall be entitled to receive only the Base
Salary at the rate provided in Section 3 to the date on which termination shall
take effect.

            (e) In the event that the Company terminates Dionne for any reason
other than as provided under Section 8(a), (b), (c) or (d), then this Agreement
shall terminate upon thirty (30) days' written notice to Dionne and the Company
shall be obligated to pay to Dionne an amount equal to any unpaid expenses as
contemplated under Section 4 and a severance payment equal to nine (9) months
salary at the Base Salary then in effect, payable in nine (9) equal monthly
installments. If this Agreement is not renewed at the end of the Employment
Term, such non-renewal shall not be deemed a termination of this Agreement
without cause.


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            (f) Nothing contained in this Section 8 shall be deemed to limit any
other right the Company may have to terminate Dionne's employment hereunder upon
any ground permitted by law.

         9. 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.

         10. Survival. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive Dionne's
termination of employment, irrespective of any investigation made by or on
behalf of any party.

         11. 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.

         12. 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 12). In the case of a notice
to the Company, a copy of such notice (which copy shall not constitute notice)
shall be delivered to Camhy Karlinsky & Stein LLP, 1740 Broadway, 16th Floor,
New York, New York 10019, Attn. Daniel I. DeWolf. Notice to the estate of Dionne
shall be sufficient if addressed to Dionne as provided in this Section 12. 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.

         13. 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


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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.

         14. Binding Effect. Dionne'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 Dionne'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 Dionne and her 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 9.

         15. 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.

         16. 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.

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.

                            iPARTY CORP.


                            By: /s/ Daniel I. DeWolf
                                ----------------------
                                Name: Daniel I. DeWolf
                                Title: Secretary



                                /s/ Dorice Dionne
                                -----------------
                                Dorice Dionne


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