Exhibit 10.2
iParty Corp.
OPTION CANCELLATION
AGREEMENT
THIS AGREEMENT, made as of the
eighth day of December, 2006 (the “Cancellation Date”),
between iParty Corp., a Delaware corporation
(“iParty”), and Patrick Farrell (the
“Grantee”).
WHEREAS, there are approximately
300,000 shares available for future issuance under the iParty
Amended and Restated 1998 Stock Incentive and Nonqualified Stock
Option Plan (the “Plan”), which iParty’s Board of
Directors (the “Board”) has determined to be an
insufficient number of shares for future issuance in respect of
iParty’s anticipated needs regarding employee, management,
executive, and director compensation;
WHEREAS, iParty has granted Grantee,
among other stock option grants, (i) a stock option on October 10,
1999 exercisable for 75,000 shares of iParty’s common stock
at an exercise price of $3.81 per share, and (ii) a stock option on
April 4, 1999 exercisable for 115,000 shares of iParty’s
common stock at an exercise price of $3.63 per share;
WHEREAS, the Grantee has offered to
cancel the two stock option grants described above exercisable for
an aggregate of 190,000 shares with an exercise price equal to or
greater than $3.63 per share without any further consideration
apart from that that would inure or arise from the fact that iParty
would thereby be afforded the ability and opportunity to increase
the number of shares available for future issuance under the Plan
in respect of iParty’s anticipated requirements for employee,
management, executive, and director compensation; and
WHEREAS, the Grantee and iParty
hereby acknowledge and recognize that while the Grantee shall
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