Exhibit 10.4


 


iPARTY CORP.

NONQUALIFIED STOCK OPTION AGREEMENT


 


THIS AGREEMENT, made as of the [  ] day of [ 
], 200X (the “Grant Date”), between iParty Corp., a Delaware
corporation (“iParty”), and [Grantee’s name] (the “Grantee”).


 


WHEREAS, iParty has adopted the iParty Corp. Amended
and Restated 1998 Stock Incentive and Nonqualified Stock Option Plan (the “Plan”)
in order to provide additional incentives to certain employees, officers,
directors, consultants and advisors of iParty and its subsidiaries (collectively,
the “Corporation,”) and


 


WHEREAS, the Board of Directors (the “Board”) of
iParty has determined to grant a Nonqualified Stock Option to the Grantee as
provided herein;


 


NOW, THEREFORE, the parties hereto agree as follows:


 


1.             Grant of Option.


 


1.1           iParty
hereby grants to the Grantee the right and option (the “Option”) to
purchase all or any part of an aggregate of [insert #] whole shares of Common
Stock (as defined in the Plan) subject to, and in accordance with, the terms
and conditions set forth in this Agreement.


 


1.2           This
Agreement shall be construed in accordance and consistent with, and
subject to, the provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise expressly set forth
herein, the capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.


 


1.3           The
Option is not intended to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code


 


2              Option Price.


 


The price at which the Grantee shall be entitled to
purchase shares upon the exercise of the Option shall be $[insert price] per
share.


 


3.             Duration of Option.


 


The Option shall be exercisable to the extent and in
the manner provided herein until the tenth anniversary of the Grant Date (the “Expiration
Date”); provided, however, that the Option may be earlier
terminated as provided in Section 6 hereof.


 


4.             Exercisability of Option.


 


Unless otherwise provided in this Agreement or the
Plan, the Option shall entitle the Grantee to purchase, in whole at any time or
in part from time to time [insert vesting formula]. Such right of purchase
shall continue, unless sooner exercised or terminated as herein provided,
during the remaining period of the Exercise Term. Subject to the limitations
contained herein and Section 7 hereof, the Option shall immediately vest as set
forth herein, provided that vesting shall cease upon the termination of Grantee’s
employment by or service for the Corporation.


 

















 


5.             Manner of Exercise and Payment.


 


5.1           Subject
to the terms and conditions of this Agreement and the Plan, the Option may be
exercised by delivery of notice of exercise to iParty (in the form required by
iParty), specifying the number of shares of Common Stock to be purchased and
delivering the option price pursuant to Section 5.2 hereof.


 


5.2           The
option price may be paid (i) with cash, certified check or bank check, and
(ii) if established by iParty, through a “same day sale” commitment from
Grantee and a broker-dealer selected by iParty that is a member of the National
Association of Securities Dealers (an “NASD Dealer”) whereby the Grantee
irrevocably elects to exercise the Option and to sell a portion of the shares
so purchased having a “fair market value” equal to the total Option exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
shares to forward the total option exercise price directly to iParty. In the
discretion of the Board, the exercise price of the option may also be paid by
one or more of the following methods: 
(i) surrender of shares of Common Stock (having a Fair Market Value
equal to the Option exercise price) held by the Grantee for at least six (6)
months prior to exercise (or such longer or shorter period as may be required
to avoid a charge to earnings for financial accounting purposes) or the
attestation of ownership of such shares, in either case, if so permitted by
iParty, (ii) through additional methods prescribed by the Board,
including, without limitation, loans, installment payments and/or guarantees,
all under such terms and conditions as deemed appropriate by the Board in its
discretion, or (iii) by any combination of any of the foregoing methods, and,
in all instances, to the extent permitted by applicable law. The Grantee’s
subsequent transfer or disposition of any shares of Common Stock acquired upon
exercise of the Option shall be subject to any Federal and state laws then
applicable, specifically securities law, and the terms and conditions of this
Plan.


 


5.3           Upon
receipt of notice of exercise and full payment for the shares in respect of
which the Option is being exercised, iParty shall, subject to any applicable
law, take such action as may be necessary to effect the transfer to the Grantee
of the number of shares as to which such exercise was effective.


 


5.4           Effective
upon the exercise of the Option in whole or in part and the receipt by iParty
of the option price for the shares being purchased, the Grantee shall be the
holder of record of such shares and shall have all of the rights of a
shareholder with respect thereto (including the right to vote such shares at
any meeting at which the holders of the Common Stock may vote, the right to
receive all dividends declared and paid upon such shares and the right to
exercise any rights or warrants issued in respect of any such shares). iParty
shall, upon receipt of the option price, issue in the name of the Grantee a
certificate representing the shares purchased from time to time.


 


6.             Nontransferability.


 


The Option shall not be transferable other than by
will or by the laws of descent and distribution or pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the ‘34
Act). The Option shall be exercisable only by the Grantee or the Grantee’s
guardian or legal representative during the lifetime of the Grantee.


 


7.             No Right to Continued Employment
or Service.


 


Nothing in this Agreement or the Plan shall be
interpreted or construed to confer upon the Grantee any right with respect to
continuance of employment by or service for the Corporation, nor shall this
Agreement or the Plan interfere in any way with the right of the Corporation to
terminate the Grantee’s employment or service at any time.


 

















 


 8.            Adjustments upon Changes in
Capitalization.


 


If the Common Stock is
hereafter changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination, or exchange of
shares or the like, or dividends payable in shares of the Common Stock, an
appropriate adjustment shall be made by the Board in the number of shares and
price per share subject to the Option. The Board’s adjustment shall be made in
accordance with the provisions of Section 13 of the Plan and shall be
effective and final, binding and conclusive for all purposes of the Plan and
this Agreement.


 


 9.            Effect of a Merger, Consolidation or
Liquidation.


 


Subject to Section 7
hereof, upon the effective date of (i) a merger, consolidation or
reorganization of iParty with another corporation, or (ii) a sale or exchange
of all or substantially all the assets of iParty, the Grantee, shall, after the
occurrence of such a corporate event, be entitled to receive upon the exercise
of the Option the same number and kind of shares of stock or the same amount of
property, cash, or securities as the Grantee would have been entitled to
receive upon the happening of any such corporate event as if the Grantee had
exercised the option and had been, immediately prior to the event, the holder
of the number of shares covered by the Option.


 


10.           Withholding Taxes.


 


Upon the occurrence of a Taxable Event (as defined
herein), the Grantee shall pay an amount equal to the applicable Withholding
Taxes prior to Grantee’s receipt of any Shares or the payment of any cash due
the Grantee as the result of the exercise of any portion of the Option. The
Corporation shall have the right to deduct from any payment of cash to the
Grantee an amount equal to the Withholding Taxes (as defined in the Plan) in
satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the
obligation to pay Withholding Taxes to the Corporation, Grantee may make a
written election, which may be accepted or rejected in the sole discretion of
the Board, to have withheld a portion of the shares then issuable to Grantee
for payment of Withholding Taxes, but not in excess of Grantee’s required
statutory withholding obligation.


 


11.           Grantee Bound by the Plan.


 


The Grantee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions thereof.


 


12.           Modification of Agreement.


 


This Agreement may be modified, amended, or terminated
by iParty, and any terms or conditions may be waived; provided, however, that
no amendment, modification or termination of this Agreement may, without the
consent of the Grantee, adversely affect the rights conferred by this
Agreement.


 


13.           Severability.


 


Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid for any reason,
the remaining provisions of this Agreement shall not be affected by such
holding and shall continue in full force in accordance with their terms.


 

















 


14.           Governing Law.


 


The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware without giving effect to the conflicts of laws principles thereof.


 


15.           Successors in Interest.


 


This Agreement shall inure to the benefit of and be
binding upon any successor to iParty. This Agreement shall inure to the benefit
of the Grantee’s legal representatives. All obligations imposed upon the
Grantee and all rights granted to iParty under this Agreement shall be final,
binding and conclusive upon the Grantee’s heirs, executors, administrators and
successors.


 


16.           Resolution of Disputes.


 


Any dispute or disagreement which may arise under, or
as a result of, or in any way relate to, the interpretation, construction or
application of this Agreement shall be determined by the Board. Any
determination made hereunder shall be final, binding and conclusive on the
Grantee and Corporation for all purposes.


 


SIGNATURE PAGE FOLLOWS


 


 


	
   

  	
   

  	
  iPARTY CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Patrick Farrell

  	
   

  
	
   

  	
   

  	
   

  	
  President &
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged and
  Accepted by:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Grantee’s Name]