**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 Delawarecorporation (“iParty”), and [Grantee’s name] (the “Grantee”).

 

WHEREAS, iParty has adopted the iParty Corp. Amendedand 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”) ofiParty has determined to grant a Nonqualified Stock Option to the Grantee asprovided herein;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

# 1.             Grant of Option.

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

 

1.2           ThisAgreement shall be construed in accordance and consistent with, andsubject to, the provisions of the Plan (the provisions of which areincorporated herein by reference) and, except as otherwise expressly set forthherein, the capitalized terms used in this Agreement shall have the samedefinitions as set forth in the Plan.

 

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

 

# 2              Option Price.

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The price at which the Grantee shall be entitled topurchase shares upon the exercise of the Option shall be $[insert price] pershare.

 

# 3.             Duration of Option.

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

 

# 4.             Exercisability of Option.

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

 

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# 5.             Manner of Exercise and Payment.

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

 

5.2           Theoption price may be paid (i) with cash, certified check or bank check, and(ii) if established by iParty, through a “same day sale” commitment fromGrantee and a broker-dealer selected by iParty that is a member of the NationalAssociation of Securities Dealers (an “NASD Dealer”) whereby the Granteeirrevocably elects to exercise the Option and to sell a portion of the sharesso purchased having a “fair market value” equal to the total Option exerciseprice and whereby the NASD Dealer irrevocably commits upon receipt of suchshares to forward the total option exercise price directly to iParty. In thediscretion of the Board, the exercise price of the option may also be paid byone or more of the following methods: (i) surrender of shares of Common Stock (having a Fair Market Valueequal 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 requiredto avoid a charge to earnings for financial accounting purposes) or theattestation of ownership of such shares, in either case, if so permitted byiParty, (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 itsdiscretion, or (iii) by any combination of any of the foregoing methods, and,in all instances, to the extent permitted by applicable law. The Grantee’ssubsequent transfer or disposition of any shares of Common Stock acquired uponexercise of the Option shall be subject to any Federal and state laws thenapplicable, specifically securities law, and the terms and conditions of thisPlan.

 

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

 

5.4           Effectiveupon the exercise of the Option in whole or in part and the receipt by iPartyof the option price for the shares being purchased, the Grantee shall be theholder of record of such shares and shall have all of the rights of ashareholder with respect thereto (including the right to vote such shares atany meeting at which the holders of the Common Stock may vote, the right toreceive all dividends declared and paid upon such shares and the right toexercise any rights or warrants issued in respect of any such shares). iPartyshall, upon receipt of the option price, issue in the name of the Grantee acertificate representing the shares purchased from time to time.

 

# 6.             Nontransferability.

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

 

# 7.             No Right to Continued Employmentor Service.

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

 

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#  8.            Adjustments upon Changes inCapitalization.

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If the Common Stock ishereafter changed by reason of reorganization, merger, consolidation,recapitalization, reclassification, stock split-up, combination, or exchange ofshares or the like, or dividends payable in shares of the Common Stock, anappropriate adjustment shall be made by the Board in the number of shares andprice per share subject to the Option. The Board’s adjustment shall be made inaccordance with the provisions of Section 13 of the Plan and shall beeffective and final, binding and conclusive for all purposes of the Plan andthis Agreement.

 

#  9.            Effect of a Merger, Consolidation orLiquidation.

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

 

# 10.           Withholding Taxes.

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Upon the occurrence of a Taxable Event (as definedherein), the Grantee shall pay an amount equal to the applicable WithholdingTaxes prior to Grantee’s receipt of any Shares or the payment of any cash duethe Grantee as the result of the exercise of any portion of the Option. TheCorporation shall have the right to deduct from any payment of cash to theGrantee an amount equal to the Withholding Taxes (as defined in the Plan) insatisfaction of the obligation to pay Withholding Taxes. In satisfaction of theobligation to pay Withholding Taxes to the Corporation, Grantee may make awritten election, which may be accepted or rejected in the sole discretion ofthe Board, to have withheld a portion of the shares then issuable to Granteefor payment of Withholding Taxes, but not in excess of Grantee’s requiredstatutory withholding obligation.

 

# 11.           Grantee Bound by the Plan.

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

 

# 12.           Modification of Agreement.

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This Agreement may be modified, amended, or terminatedby iParty, and any terms or conditions may be waived; provided, however, thatno amendment, modification or termination of this Agreement may, without theconsent of the Grantee, adversely affect the rights conferred by thisAgreement.

 

# 13.           Severability.

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

 

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# 14.           Governing Law.

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

 

# 15.           Successors in Interest.

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

 

# 16.           Resolution of Disputes.

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

 

**SIGNATURE PAGE FOLLOWS**

 

 
|                           |   | iPARTY CORP. |                 |
|--------------------------------|--------|--------------|----------------------|
|                           |   |         |                 |
|                           |   |         |                 |
|                           |   | By:          |                 |   |
|                           |   |         | Patrick Farrell      |   |
|                           |   |         | President &  CFO |   |
|                           |   |         |                 |
| Acknowledged and  Accepted by: |   |         |                 |
|                           |   |         |                 |
|                           |   |         |                 |
| [Grantee’s Name]          |   |         |                 |
|                                |        |              |                      |  |  |

 

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