Document:

Exhibit 10.2

PROMISSORY
NOTE

(Date)

FOR VALUE RECEIVED, Acusphere, Inc.
a corporation located at the address stated below (“Maker”) promises, jointly and severally if more than one, to
pay to the order of General Electric Capital
Corporation or any subsequent holder hereof (each, a “Payee”) at its office located at 83 Wooster Heights Road, Danbury, CT  06810 or at such other place as
Payee or the holder hereof may designate, the principal sum of Two Hundred Sixty Six Thousand Four Hundred Eighty
Five and 38/100 Dollars ($266,485.38), with interest on the unpaid
principal balance, from the date hereof through and including the dates of
payment, at a fixed interest rate of Ten and Sixty Hundredths percent (10.60%)
per annum, to be paid in lawful money of the United States, in Forty-Two (42)
consecutive monthly installments of principal and interest as follows:

	
  Periodic

  	
   

  	
   

  
	
  Installment

  	
   

  	
  Amount

  
	
  Thirty Six (36)

  	
   

  	
  $8,211.60

  
	
  Five (5)

  	
   

  	
  $3,350.87

  

 

(each “Periodic Installment”), and a final installment which shall be in
the amount of Three Thousand Three Hundred Fifty and 87/100 Dollars
($3,350.87), plus any outstanding principal and interest.  The first Periodic Installment shall be due
and payable on March 1, 2007 and the following Periodic Installments and the
final installment shall be due and payable on the same day of each succeeding
month (each, a “Payment Date”).  Such
installments have been calculated on the basis of a 360 day year of twelve
30-day months.  Each payment may, at the
option of the Payee, be calculated and applied on an assumption that such
payment would be made on its due date.

The acceptance by Payee of any payment which is less than payment in
full of all amounts due and owing at such time shall not constitute a waiver of
Payee’s right to receive payment in full at such time or at any prior or
subsequent time.

The
Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement,
chattel mortgage, pledge agreement or like instrument (each of which is
hereinafter called a “Security Agreement”).

Time
is of the essence hereof.  If any
installment or any other sum due under this Note or any Security Agreement is
not received within ten (10) days after its due date, the Maker agrees to pay,
in addition to the amount of each such installment or other sum, a late payment
charge of five percent (5%) of the amount of said installment or other sum, but
not exceeding any lawful maximum.  If (i)
Maker fails to make payment of any amount due hereunder within ten (10) days
after the same becomes due and payable; or 
(ii) Maker is in default under, or fails to perform under any term or
condition contained in any Security Agreement, then the entire principal sum
remaining unpaid, together with all accrued interest thereon and any other sum
payable under this Note or any Security Agreement, at the election of Payee,
shall, upon Payee’s election, immediately become due and payable, with interest
thereon at the lesser of eighteen percent (18%) per annum or the highest rate
not prohibited by applicable law from the date of such accelerated maturity
until paid (both before and after any judgment).

The Maker may prepay in full,
but not in part, its entire indebtedness hereunder upon payment of the entire
indebtedness plus an additional sum as a premium equal to the following
percentages of the remaining principal balance for the indicated period:

Prior to the first annual
anniversary date of this Note: Not Allowed

Thereafter and prior to the
second annual anniversary date of this Note: five percent (5%)

Thereafter and prior to the
third annual anniversary date of this Note: three percent (3%)

Plus all other sums due
hereunder or under any Security Agreement.

 

 

It
is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law.  If any such excess interest is contracted
for, charged or received under this Note or any Security Agreement, or if all
of the principal balance shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or received under
this Note or any Security Agreement on the principal balance shall exceed the
maximum amount of interest permitted by applicable law, then in such event  (a) the provisions of this paragraph shall
govern and control,  (b) neither Maker nor
any other person or entity now or hereafter liable for the payment hereof shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount of interest permitted by applicable law,  (c) any such excess which may have been
collected shall be either applied as a credit against the then unpaid principal
balance or refunded to Maker, at the option of the Payee, and  (d) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof.  It is further agreed that
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under this Note or any Security Agreement
which are made for the purpose of determining whether such rate exceeds the
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness evidenced
hereby, all interest at any time contracted for, charged or received from Maker
or otherwise by Payee in connection with such indebtedness; provided, however,
that if any applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful for the
Payee to receive a greater interest per annum rate than is presently allowed,
the Maker agrees that, on the effective date of such amendment or preemption,
as the case may be, the lawful maximum hereunder shall be increased to the
maximum interest per annum rate allowed by the amended state law or the law of
the United States of America.

The
Maker and all sureties, endorsers, guarantors or any others (each such person,
other than the Maker, an “Obligor”)
who may at any time become liable for the payment hereof jointly and severally
consent hereby to any and all extensions of time, renewals, waivers or
modifications of, and all substitutions or releases of, security or of any
party primarily or secondarily liable on this Note or any Security Agreement or
any term and provision of either, which may be made, granted or consented to by
Payee, and agree that suit may be brought and maintained against any one or
more of them, at the election of Payee without joinder of any other as a party
thereto, and that Payee shall not be required first to foreclose, proceed
against, or exhaust any security hereof in order to enforce payment of this
Note.  The Maker and each Obligor hereby
waives presentment, demand for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, and all other notices in connection herewith,
as well as filing of suit (if permitted by law) and diligence in collecting
this Note or enforcing any of the security hereof, and agrees to pay (if
permitted by law) all expenses incurred in collection, including Payee’s actual
attorneys’ fees.  Maker and each Obligor
agrees that fees not in excess of twenty percent (20%) of the amount then due
shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER
AND PAYEE RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER
AND PAYEE.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.)  THIS WAIVER IS IRREVOCABLE MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE,
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. 
IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

This Note and any Security
Agreement constitute the entire agreement of the Maker and Payee with respect
to the subject matter hereof and supercedes all prior understandings,
agreements and representations, express or implied.

No
variation or modification of this Note, or any waiver of any of its provisions
or conditions, shall be valid unless in writing and signed by an authorized
representative of Maker and Payee.  Any
such waiver, consent, modification or change shall be effective only in the
specific instance and for the specific purpose given.

 

 

Any
provision in this Note or any Security Agreement which is in conflict with any
statute, law or applicable rule shall be deemed omitted, modified or altered to
conform thereto.

	
  

  	
  Acusphere, Inc.

  
	
   

  	
   

  
	
  /s/ Frederick Ahlholm

  	
   

  	
  By:

  	
  /s/ John Thero

  
	
  (Witness)

  	
   

  	
   

  
	
  Frederick Ahlholm

  	
   

  	
  Name:

  	
  John Thero

  
	
  (Print name)

  	
   

  	
   

  
	
  500 Arsenal St., Watertown, MA 02472

  	
   

  	
  Title:

  	
  Sr. VP and CFO

  
	
  (Address)

  	
   

  
	
   

  	
  Federal Tax ID #

  	
  04-3208947

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  500 Arsenal Street, Watertown, MA 02472Exhibit 10.1

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”)
is being made as of this 8th day of January, 2007 between iPARTY CORP., a
Delaware corporation (the “Company”) and PATRICK FARRELL, an individual
residing at 70 Perkins Street, No. 4, Jamaica Plains, MA 02130 (the  “Executive”).

WITNESSETH:

WHEREAS, the Company and the Executive previously
entered into an employment agreement dated as of March 12, 1999, which such
agreement was amended and restated as of November 1, 2000, December 31, 2001
and May 14, 2004 (the “Prior Employment Agreements”); and

WHEREAS,
the
Executive has advised the Company that he desires to relocate and to provide
the Company with the time and ability to transition his responsibilities; and

WHEREAS, the Company and the Executive desire to amend
and restate the Prior Employment Agreements in their entirety as set forth
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.                                       Term of Employment.  Except for earlier termination as provided in
Section 11 hereof, the Executive’s employment under this Agreement shall
be for a period commencing on the date hereof and terminating on November 15,
2007.  The period commencing on the date
hereof and ending on May 15, 2007 is referred to herein as the “Continuation
Period” and the period form May 16, 2007 through November 15, 2007 is
referred to herein as the “Transition Period”.  The Continuation Period and the Transition
Period are collectively referred to here as the “Employment Term”.

2.                                       Duties, Responsibilities and Positions.

(a)                                  During the Employment
Term, subject to a Permitted Change (as defined below) the Executive shall
serve as the President and Chief
Financial Officer of the Company and its subsidiary, iParty Retail Stores
Corp., and in such other positions that he may be appointed to by the Board
from time to time, and perform all duties and accept all responsibilities
incidental to such position or positions, including without limitation acting
as the principal financial and accounting officer of the Company for its 2006
fiscal year.  The Executive shall report
to the Chief Executive Officer (the “CEO”) of the Company and shall also
cooperate fully with the Board of Directors of the Company (the “Board”)
and other executive officers of the Company.  As used herein a “Permitted Change”
shall mean the appointment by the Company of a person or persons as President
and/or Chief Financial Officer of the Company and/or iParty Retail Stores
Corp.  At any time during the Employment
Term that the Executive is not the President and/or Chief Financial Officer of
the Company or iParty Retail Stores Corp. he shall be a special advisor to the
CEO.

(b)                                 Upon termination of
the Executive’s employment for any reason,

 

the Executive shall immediately resign from
any other office or offices within the Company and any subsidiary of the
Company that the Executive may then hold, and from the Board and the board of
directors of any subsidiary, if applicable.

(c)                                  During the
Continuation Period, the Executive shall devote substantially all his full
working time, energy and efforts to the business of the Company and  shall be based in the Company’s executive
offices in  Dedham, MA.  During the Transition Period, the Executive
shall be available to assist the CEO and other executive level employees  on corporate finance, transition and other
special projects as reasonably requested by the CEO, it being expected that he
shall devote an average of ten hours per week to the business of the Company
during such period.  During the
Transition Period the Executive shall be allowed to “telecommute” and shall not
be required to be based in the Company’s executive offices in Dedham, MA.

(d)                                 The Executive
represents to the Company that  (i) the Executive has the legal capacity to
execute and perform this Agreement and (ii) that he is not currently
subject to or bound by any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant, understanding or
restriction of any nature whatsoever which would prohibit the Executive from
executing this Agreement and performing fully his duties and responsibilities
hereunder, or which would in any manner, directly or indirectly, materially
limit the duties and responsibilities which it is now reasonably foreseeable
may now or in the future be assigned to the Executive by the CEO or the Board.

(e)                                  The Executive shall
at all times comply in all material respects with policies and procedures
adopted by the Company applicable to executives of the Company, including
without limitation, procedures and policies regarding conflicts of interest.

3.                                       Compensation.  For all services rendered by the Executive in
any capacity during the Employment Term, including without limitation, services
as an officer, director, or member of any committee of the Company, or any
subsidiary, affiliate or division thereof, the Executive shall be compensated
as follows (subject, in each case, to the provisions of Section 11
below):

(a)                                  Base Salary.  During the Employment Term, the Company shall
pay to the Executive a base salary on an annualized basis (the “Base Salary”)
of $200,400.  The Base Salary shall be
payable in accordance with the customary payroll practices of the Company.

(b)                                 Bonus.  In
addition to the Base Salary provided herein, the Executive shall be entitled to
participate in, and may receive performance bonus payments under, such annual
bonus plan or plans as the Compensation Committee of the Board may establish
from time to time for senior executive officers of the Company, including for
fiscal 2006 and for that portion of the Continuation Period in fiscal 2007,  it being agreed, however, that any such bonus
plan applicable to the Executive related to fiscal 2007 shall relate to the
Continuation Period, and be pro rated accordingly, and that continued
employment on December 31, 2007 is not a condition to the payment thereof.  Any such performance bonus or bonuses shall
be determined in the sole discretion of the Compensation Committee of the
Board.  Without limiting the generality
of the foregoing, such performance bonus or bonuses, if paid, may be paid in

 2
 

 

stock, stock options, restricted stock, cash, or any combination
thereof.

(c)                                  Benefits.  During the Employment Term, the Executive
shall be entitled to participate in all employee benefit and equity plans and
fringe benefits and prerequisites generally provided to senior executives of
the Company, in each case subject to the eligibility requirements and other
terms and provisions of such plans and programs.  The Company may amend, modify or rescind any
employee benefit plan or program and change employee contribution amounts or
benefit costs without notice in its discretion.

4.                                       [Intentionally Omitted].

5.                                       Expenses; Vacations.  The Executive shall be entitled to
reimbursement for reasonable travel and other out-of-pocket expenses
necessarily incurred in the performance of his duties hereunder, upon
submission and approval of written statements and bills in accordance with the
then regular procedures of the Company. 
The Executive shall be entitled to four weeks paid vacation per calendar
year, with such vacation to be scheduled and taken in accordance with the
Company’s standard vacation policies.  Up
to two (2) weeks accrued but unused vacation time may be carried forward from
year to year; provided, however, in no event shall more than an
aggregate of six (6) weeks of unused vacation time be accrued during the
Employment Term.

6.                                       Representations and Warranties of the Company.  The Company represents and warrants to, and
agrees with, the Executive that (i) pursuant to the Delaware General
Corporation Law, the Company’s Certificate of Incorporation, as amended to date
(the “Charter”), provides for indemnification of officers and directors
of the Company and that so long as the Executive serves as an executive officer
of the Company, unless required by applicable law, the Charter will not be
amended to limit such indemnification without the written consent of the
Executive and (ii) the Company maintains an officers and directors liability
insurance policy which insures the Executive (subject to the limitations
contained therein) and will maintain such a policy for so long as the Executive
serves as an executive officer of the Company.

7.                                       Developments.  All developments, including inventions,
whether patentable or otherwise, trade secrets, discoveries, improvements,
ideas and writings which relate to or may be useful in the business of the
Company, and which the Executive, either by himself or in conjunction with any
other person or persons, has conceived, made, developed, acquired or acquired
knowledge of while engaged in any activity on behalf of or while acting for the
Company during the course of his employment by the Company (the “Developments”),
shall, on and after the start of the Employment Term, become the sole and
exclusive property of the Company.  The
Executive hereby assigns, transfers and conveys, and agrees to so assign,
transfer and convey to the Company, all of his right, title and interest in and
to any and all such Developments and to disclose in writing to the Board, as
soon as practicable, all Developments that he believes in his good faith
judgment may be of material significance to the Company, and to reduce any such
Developments to writing at the request of Board if he has not already done
so.  At any time, and from time to time,
upon the request and at the expense of the Company, the Executive will execute
and deliver any and all instruments, documents and papers, give evidence and do
any and all other acts which, in the reasonable opinion of counsel for the
Company, are or may reasonably be necessary or desirable to document such transfer
or to enable the Company to

 3
 

 

file and prosecute
applications for and to acquire, maintain and enforce any and all patents,
trademark registrations or copyrights under United States or foreign law with
respect to any such Developments or to obtain any extension, validation,
reissue, continuance or renewal of any such patent, trademark or copyrights;
provided only that any such actions requested following termination of
employment shall not unreasonably interfere with Executive’s then employment,
business or other activities.  The
Company will be responsible for the preparation of any such instruments,
documents and papers and for the prosecution of any such proceedings and will
reimburse the Executive for all reasonable expenses incurred by him in compliance
with the provisions of this Section 7. 
The Developments shall not include any knowledge or information of any
kind acquired by or disclosed to the Executive while serving in his capacity as
a member of the board of directors of any non-Company entity, in his capacity
as a private investor, or in any other circumstance during which the Executive
is not or was not engaged in any activity on behalf of or acting for the
Company.  Furthermore, nothing herein
shall preclude Executive from utilizing Developments applicable to retailing
generally (whether from stores, via catalog, via e-commerce or otherwise)
following termination of employment, subject always to the provisions of Section
8 below.

8.                                       Non-Competition and Non-Solicitation.

(a)                                  Non-Competition.  The Executive agrees that the Executive will
not, during the “Restrictive Period”, as defined below, 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, co-venturer, member or partner of, or
use or expressly permit the Executive’s name to be used by (collectively an “Engagement
With”), any business, entity or organization which has a primary line of
business (i.e. representing more than 4.9% of its revenue) involving the sale
at retail, whether from store locations, and/or by or from direct mail,
catalogues and/or websites, of party goods and/or supplies anywhere in the
United States (a “Competing Entity”); provided, however,
that in each case the provisions of this Section 8(a) will not be deemed
breached merely because the Executive owns not more than five percent (5.0%) of
the outstanding common stock of a Competing Entity, if, at the time of its
acquisition by the Executive, 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; and provided, further,
however, that, subject to the provisions of Section 8(b), nothing
herein shall prevent the Executive from working for a business segment or
department of a Competing Entity, or a subsidiary, division or other entity
that controls or is controlled by a Competing Entity if (and only if), the
business segment or department of the Competing Entity for which the Executive
provides services, or the subsidiary, division or other entity by which the
Executive has an Engagement With (as the case may be), (1) does not itself
compete with the Company, and (2) the Executive does not provide any services,
advice, assistance and/or guidance to any business segment or department,
subsidiary, division, or other entity of the Competing Entity which competes
with the Company.  As used in this
Section the “Restrictive Period” shall be (i) the period the Executive is
employed by the Company and (ii) the period of one (1) year after the Executive
ceases to be employed by the Company for any reason, or, in the case of the
Executive’s Engagement With any Competing Entity that operates retail stores
which are located in any states where the Company has retail stores on the date
of the Executive’s cessation of employment, the period of eighteen (18) months
period after the Executive ceases to be employed by the Company for any reason.

 4
 

 

(b)                                 Non-Solicitation.
 During the Restrictive Period, the
Executive will not, either directly or indirectly, (i) call on or solicit (for
the purpose of diverting business from the Company) any person, firm,
corporation or other entity who or which at the time of such termination was,
or within one (1) year prior thereto had been, a customer of the Company or
(ii) solicit the employment of any person (other than any family member) who
was employed the Company on a full or part-time basis at any time during the
six (6) months prior to the termination of Executive’s employment, unless such
person prior to such solicitation of employment was involuntarily discharged by
the Company.

9.                                       Confidential Information.  The Executive recognizes and acknowledges
that by reason of his employment by and service to the Company, he has had and
will have access to confidential information of the Company and its affiliates,
including without limitation, information and knowledge pertaining to products
and services offered, ideas, plans, trade secrets, proprietary information,
advertising, distribution and sales methods and systems, sales and profit
figures, customer and client lists, and relationships between the Company and
its customers, clients, suppliers and others who have business dealings with
the Company (collectively, “Confidential Information”).  The Executive acknowledges that such
Confidential Information is a valuable and unique asset and covenants that he
will not, either during or at any time after the end of the Employment Term,
use or disclose any such Confidential Information to any person or entity for
any reason whatsoever (except as his duties described herein may require)
without the prior authorization of the Board, unless such information is in or
enters the public domain through no fault of the Executive or is otherwise
lawfully known by third parties.  In the
event the Executive becomes or may become legally compelled to disclose any
Confidential Information (whether by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or other process or otherwise),
the Executive shall provide to the Board prompt prior written notice of such
requirement so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the terms of this Section 9.  In the event that such protective order or
other remedy is not obtained, or that the Company waives compliance with the
provisions this Section 9, the Executive shall furnish only that portion
of the Confidential Information which it is advised by counsel is legally
required to be disclosed, and shall use his best efforts to insure that
confidential treatment shall be afforded such disclosed portion of the
Confidential Information.

10.                                 Equitable Relief.

(a)                                  The Executive
acknowledges that the restrictions contained in Sections 7, 8, and 9
hereof are reasonable and necessary to protect the legitimate interests of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions, and that any violation of any provision of those
Sections will result in irreparable injury to the Company.  The Executive represents that his experience
and capabilities are such that the restrictions contained in Section 8
hereof will not prevent the Executive from obtaining employment or otherwise
earning a living at the same general level of economic benefit as is
anticipated by this Agreement.  THE  EXECUTIVE FURTHER
REPRESENTS AND ACKNOWLEDGES THAT (i) HE HAS BEEN ADVISED BY THE COMPANY TO
CONSULT HIS OWN LEGAL COUNSEL IN RESPECT OF THIS AGREEMENT, (ii) THAT HE HAS
HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS AGREEMENT, TO REVIEW
THOROUGHLY THIS AGREEMENT WITH HIS

 5
 

 

COUNSEL, AND (iii) HE HAS READ AND FULLY
UNDERSTANDS THE TERMS AND PROVISIONS OF THIS AGREEMENT.

(b)                                 The Executive agrees
that the Company shall be entitled to preliminary and permanent injunctive
relief, without the necessity of proving actual damages, as well as an
equitable accounting of all earnings, profits and other benefits arising from
any violation of Sections 7, 8, or 9 hereof, which rights shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled.  In the event that any
of the provisions of Sections 7, 8, or 9 hereof
should ever be adjudicated to exceed the time, geographic, product or service,
or other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.

(c)                                  The Company and the
Executive each irrevocably and unconditionally (i) agree that any suit, action
or other legal proceeding arising out of this Agreement, including without
limitation, any action for preliminary or permanent injunctive relief or other
equitable relief, may be brought in the United States District Court for the
District of Eastern Massachusetts, or if such court does not have jurisdiction
or will not accept jurisdiction, in any court of general jurisdiction in the
Commonwealth of Massachusetts, (ii) consent to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding, and (iii) waive any
objection which such party may have to the laying of venue of any such suit,
action or proceeding in any such court. 
The Company and the Executive each also irrevocably and unconditionally
consent to the service of any process, pleadings, notices or other papers in a
manner permitted by the notice provisions of Section 15 hereof.

(d)                                 The Executive agrees
that he will provide a copy of Sections 7, 8, and 9 of this Agreement to
any for-profit business or enterprise (i) which he may directly or indirectly
own, manage, operate, finance, join, participate in the ownership, management,
operation, financing, control or control of, or (ii) with which he may be
connected with as an officer, director, employee, partner, principal, agent,
representative, or consultant, or in connection with which he may use or
expressly permit his name to be used; provided, however, that
this provision shall not apply in respect of Section 8 of this
Agreement after expiration of the time periods set forth therein.

11.                                 Termination.

(a)                                  Cause.  Notwithstanding anything herein contained, if
on or after the date hereof and prior to the end of the Employment Term, the
Executive is terminated “For Cause” (as defined below) then the Company
shall have the right to give notice of termination of the Executive’s services
hereunder as of a date to be specified in such notice, and the Employment Term
shall terminate on the date so specified. 
Termination “For Cause” shall mean the Executive shall (i) be
charged with the commission 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 the Board and continue to fail to follow such
direction within ten (10) days of written notification of same; (iv) commit an
act of fraud against the Company; (v) knowingly provide materially false
information concerning the Company to the Board, any governmental body, any
regulatory

 6
 

 

agency, any lender or other financing source
of the Company, or any shareholder of the Company; or (vi) breach any term of
this Agreement and fail to correct such breach within ten (10) days after
written notice of commission thereof.  In
the event that this Agreement is terminated “For Cause” pursuant to this Section
11(a), then the Executive shall be entitled to receive only the Base Salary
at the rate provided in Section 3(a) to the date on which termination
shall take effect, any accrued vacation and unpaid expenses as contemplated
under Section 5, and (iii) any performance bonus earned and unpaid for
any prior plan periods and, if applicable under any performance bonus plan for
the year of termination, the amount, if any, earned thereunder to the date of
termination (collectively, “Accrued Bonus Payments”).

(b)                                 Disability.  In the event that the Executive shall be
physically or mentally incapacitated or disabled or otherwise unable fully to
discharge his duties hereunder, with reasonable accommodation, for more than
180 days during any rolling 12-month period, then the Company may terminate the
Executive’s employment hereunder for “Disability” upon thirty (30) days’
written notice to the Executive, and no further compensation shall be payable
to the Executive, except for any accrued and unpaid Base Salary as contemplated
under Section 3(a), any accrued vacation and unpaid expenses as
contemplated under Section 5, any Accrued Bonus Payments and as may
otherwise be provided under any disability insurance policy, if any.

(c)                                  Death.  In the event that the Executive shall die,
then his employment shall terminate on the date of his death, and no further
compensation shall be payable to the Executive, except for any accrued and
unpaid Base Salary as contemplated under Section 3(a), any accrued
vacation and unpaid expenses as contemplated under Section 5, any
Accrued Bonus Payments and as may otherwise be provided under any insurance
policy or similar instrument.

(d)                                 Expiration.  Unless the Company and the Executive otherwise
agree in writing, this Agreement shall automatically terminate upon the
expiration of the Employment Term on November 15, 2007, and upon such
expiration the Company shall be obligated to pay to the Executive Base Salary
earned, but not yet paid to the Executive, prior to the date of such expiration
in accordance with Section 3(a), and reimburse the Executive for any
accrued vacation and unpaid expenses incurred by the Executive through the date
of termination in accordance with Section 5, and any Accrued Bonus
Payments.  Upon the expiration of this
Agreement the Executive shall not be entitled to any severance or similar
payment, it being understood and agreed that expiration of this Agreement shall
not be deemed a termination without Cause.

(e)                                  Termination
Without Cause.  In the event that the
Company terminates the Executive for any reason other than as provided under
Section 11(a), 11(b), 11(c) or 11(d), then the Executive’s employment shall
terminate upon thirty (30) days’ written notice to the Executive and, the
Company shall be obligated to pay to the Executive Base Salary earned, but not
yet paid to the Executive, prior to the date of such termination in accordance
with Section 3(a), and reimburse the Executive for any accrued vacation and
unpaid expenses incurred by the Executive through the date of termination in
accordance with Section 5, and any Accrued Bonus Payments.  In addition, subject to the provisions of
Section 11(i) hereof and the Executive’s compliance (and continued compliance)
with the provisions of Sections 7, 8 and 9 hereof, (i) the Company shall pay to
the Executive a severance payment equal to the amount of Base Salary

 7
 

 

Executive would have been entitled to receive
had he remained an employee of the Company through November 15, 2007, payable
in accordance with the Company’s regular payroll practices (such lesser amount
of time, the “Severance Period”). 
During the Severance Period, the Executive shall be entitled to continue
to receive his then current health, life and disability insurance benefits or,
in the case of health insurance benefits, payment by the Company of applicable “COBRA”
payments.

(f)                                    [Intentionally
Omitted]

(g)                                 Termination
by Executive.  In the event that the
Executive desires to resign voluntarily from the Company, the Executive
covenants to provide the Company with not less than ninety (90) days written
notice of any such voluntary resignation; and further the Executive covenants
to cooperate in good faith in order to facilitate a smooth transfer of
authority during the period from notice of resignation to the date of
termination.  In the event that the
Executive’s employment is terminated by the Executive pursuant to this Section
11(f), then the Executive shall be entitled to receive an amount payable in
a lump sum within ten (10) business days following the date of termination,
equal to the sum of any accrued and unpaid Base Salary as contemplated by Section
3(a), any accrued vacation and unpaid expenses as contemplated by Section
5 and any Accrued Bonus Payments.

(h)                                 [Intentionally
Omitted].

(i)                                     Release.  Notwithstanding anything to the contrary
contained in this Agreement, the Executive (or his estate) shall not be
entitled to receive the payments and benefits set forth in this Section 11
(other than Base Salary through the effective date of termination in accordance
with Section 3(a) hereof and reimbursement of expenses in accordance
with Section 5) prior to (i) the execution and delivery by the Executive
to the Company of a  valid and fully
effective general release and nondisparagement agreement (in form and substance
reasonably satisfactory to the Company) of all claims, including but not
limited to the Age Discrimination in Employment Act, Title VII of the Civil
Rights Act of 1964, which the Executive might have at such time against the
Company and (ii) the resignation of the Executive from all positions of any
nature which the Executive may then have held with the Company and any
subsidiary of the Company.

(j)                                     [Intentionally
Omitted].

12.                                 Survival.  Except as otherwise provided in this
Agreement, notwithstanding the termination of this Agreement or the Executive’s
employment for any reason, the Executive’s obligations under Sections 2(b),
7, 8 and 9 hereof shall survive and remain in full force and effect for the
periods therein provided, and the provisions for equitable relief against the
Executive in Section 10 hereof shall continue in force, along with the
provisions of Sections 12 through 20 hereof.  In addition, the obligations of the Company
set forth in Section 11 shall survive any termination (as applicable)
and shall remain in full force and effect until such obligations are satisfied
in full (subject, as applicable, to the Executive’s compliance with the
provisions of Section 11(i)).

13.                                 Assignment. 
All of the terms and provisions of this Agreement shall be

 8
 

 

binding upon and
inure to the benefit of and be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of the Executive hereunder
are of a personal nature and shall not be assignable or delegatable in whole or
in part by the Executive.

14.                                 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.

15.                                 Notices. 
All notices and other communications required or permitted hereunder or
necessary or convenient in connection herewith shall be in writing and shall be
deemed to have been given when hand delivered or three (3) days after being
mailed by registered or certified mail, as follows (provided that notice of
change of address shall be deemed given only when received):

If to the Company:

iParty
Corp.

270
Bridge Street

Suite
301

Dedham,
MA 02026

Attn: Corporate Secretary

If to the Executive:

Mr.
Patrick Farrell

70
Perkins Street, No. 4

Jamaica Plains, MA 02130

16.                                 Remedies Cumulative; No Waiver.  No remedy conferred upon the Company by this
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity.  No delay or omission by the Company in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the Company from time to time and as often as may be deemed
expedient or necessary by the Company in its sole discretion.

17.                                 Binding Effect.  The Executive’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 the Executive’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 the Executive 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
13.

 9
 

 

18.                                 Entire Agreement; Contents of Agreement.

(a)                                  This Agreement
supersedes all prior agreements in their entirety, including without limitation
the Prior Employment Agreements, effective as of the date hereof, and sets
forth the entire understanding among the parties hereto with respect to the
subject matter hereof and cannot be changed, modified, extended or terminated
except upon written amendment executed by the Executive and approved by the
Board and executed on behalf of the Company by a duly authorized officer.  The Executive acknowledges that the effect of
this provision is that no oral modifications of any nature whatsoever to this
Agreement shall be permitted.

(b)                                 The Executive acknowledges
that from time to time, the Company may establish, maintain and distribute
manuals or handbooks or personnel policy manuals, and officers or other
representatives of the Company may make written or oral statements relating to
personnel policies and procedures.  Such
manuals, handbooks and statements are intended only for general guidance.  No policies, procedures or statements of any
nature by or on behalf of the Company (whether written or oral, and whether or
not contained in any manual or handbook or personnel policy manual), and no
acts or practices of any nature, shall be construed to modify this Agreement or
to create express or implied obligations of any nature to the Executive.

19.                                 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.

20.                                 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 Commonwealth of Massachusetts, without giving
effect to the rules governing the conflicts of laws.

[Signature Page follows]

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

	
   

  	
  iPARTY CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SAL PERISANO

  	
   

  
	
   

  	
  Name: Sal
  Perisano

  
	
   

  	
  Title:   Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ PATRICK FARRELL

  	
   

  
	
   

  	
  Patrick Farrell

  

 

 11

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