UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy Statement
Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the
Registrant
x
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Filed by a Party other
than the Registrant
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Check the appropriate
box:
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Preliminary Proxy
Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material
Pursuant to §240.14a-12
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iParty Corp.
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(Name of
Registrant as Specified In Its Charter)
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(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
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Payment of Filing Fee
(Check the appropriate box):
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No fee required.
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o
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Fee computed on table below
per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of
securities to which transaction applies:
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Aggregate number of
securities to which transaction applies:
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it
was determined):
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Proposed maximum
aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously
with preliminary materials.
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Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or
Registration Statement No.:
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iParty
Corp.
270 Bridge Street, Suite 301
Dedham, MA 02026
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2010 Annual Meeting
of Stockholders of iParty Corp. will be held as follows:
Date:
Wednesday, June 2, 2010
Time:
11:00 a.m., local time
Place:
Posternak Blankstein & Lund LLP
Prudential Tower
800 Boylston Street, 33rd
Floor
Boston, MA 02199
Matters to be voted on:
1.
The election of the five directors;
2.
Ratification of the selection of Ernst &
Young LLP as our independent registered public accounting firm for the fiscal
year ending December 25, 2010; and
3.
Any other matters properly brought before the annual
meeting or any adjournment thereof.
The Board of Directors
has fixed the close of business on April 5, 2010 as the record date for
determining stockholders entitled to notice of and to vote at the annual
meeting. Representation in person or by
proxy of at least a majority of all outstanding shares of each class of stock
entitled to vote at the meeting is required to constitute a quorum. Accordingly, it is important that your shares
be represented at the annual meeting.
The list of stockholders entitled to vote at the annual meeting will be
available for examination by any stockholder at our offices at 270 Bridge
Street, Suite 301, Dedham, MA 02026 for ten (10) days prior to June 2,
2010. Enclosed with the proxy statement
for the meeting, you will find a copy of our Annual Report on Form 10-K
for fiscal 2009.
Your
vote at the meeting is very important to us regardless of the number of shares
you own. Please vote your shares,
whether or not you plan to attend the meeting, by completing the enclosed proxy
card and returning it to us in the enclosed envelope. Should you want to change your vote prior to
the annual meeting you may do so in accordance with the instructions contained
in the accompanying proxy statement.
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By Order of the Board
of Directors,
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/s/ David Robertson
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DAVID ROBERTSON
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Secretary
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This notice, proxy statement, and
form of proxy are being distributed on or about April 21, 2010.
iParty Corp.
270 Bridge Street, Suite 301
Dedham, MA 02026
PROXY STATEMENT
for Annual Meeting of Stockholders to Be Held on June 2,
2010
GENERAL
INFORMATION
Our Board of Directors (the
Board
) is furnishing you this proxy
statement to solicit proxies on its behalf to be voted at the Annual Meeting of
Stockholders of iParty Corp. (
iParty
or the
Company
). The meeting
will be held at the offices of Posternak Blankstein & Lund LLP, at the
Prudential Tower, 33
rd
Floor, 800 Boylston Street, Boston MA, 02199,
on June 2, 2010, at 11:00 a.m., local time. The proxies also may be
voted at any adjournments or postponements of the meeting.
The mailing address of our principal executive offices
is iParty Corp., 270 Bridge Street, Suite 301, Dedham, MA, 02026. We are
first furnishing the proxy materials to stockholders on or about April 21,
2010.
All properly executed written proxies that are
delivered pursuant to this solicitation will be voted at the meeting in
accordance with the directions given in the proxy, unless the proxy is revoked
prior to completion of voting at the meeting.
Only owners of record of shares of common stock, Series B
convertible preferred stock (
Series B
Preferred Stock
), Series C convertible preferred stock (
Series C Preferred Stock
), Series D
convertible preferred stock (
Series D
Preferred Stock
), Series E convertible preferred stock (
Series E Preferred Stock
) and Series F
convertible preferred stock (
Series F
Preferred Stock
and together with the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, the
Convertible Preferred
Stock
) of the Company at the close of business on April 5,
2010, the record date, are entitled to notice of and to vote at the meeting, or
at any adjournments or postponements of the meeting.
QUESTIONS AND ANSWERS ABOUT THE
MEETING AND VOTING
What is this document?
This is the Notice of our 2010 Annual Meeting of Stockholders of iParty Corp. (
iParty
or the
Company
), combined with our Proxy Statement which provides important information for your use in voting your shares of our common stock, or our various series of Convertible Preferred Stock, at the annual meeting.
Who can vote?
You can vote your shares of common stock or your shares of Convertible Preferred Stock if our records show that you owned the shares at the close of business on April 5, 2010, which is the record date for the annual meeting. As of the record date, shares representing a total of 37,677,416 votes are eligible to vote at the meeting.
Common Stock.
You are permitted one vote for each share of common stock you owned at the close of business on April 5, 2010, including (i) shares held in your name as a stockholder of record, and (ii) shares held in street name for you as the beneficial owner through a broker, trustee, or other nominee, such as a bank. Thus, as of April 5, 2010, there were 22,798,647 votes eligible to vote at the meeting associated with shares of common stock. The enclosed proxy card shows the number of shares you can vote.
Convertible Preferred Stock.
Except as otherwise required by Delaware General Corporation Law, the Convertible Preferred Stock is entitled to vote together with the common stock on all matters to which the common stock is entitled to vote. When the Convertible Preferred Stock votes together with the common stock as one class, you are permitted one vote for each whole number of shares of our common stock into which the shares of Convertible Preferred Stock are convertible. Thus, as of April 5, 2010, the number of votes eligible to vote at the meeting were 5 ,969,249 votes associated with 459,173 shares of Series B Preferred Stock (you are permitted
3
thirteen (13) votes for each share of Series B Preferred Stock), 1,300,000 votes associated with 100,000 shares of Series C Preferred Stock (you are permitted thirteen (13) votes for each share of Series C Preferred Stock), 3,500,000 votes associated with 250,000 shares of Series D Preferred Stock (you are permitted fourteen (14) votes for each share of Series D Preferred Stock), 2,966,660 votes associated with 296,666 shares of Series E Preferred Stock (you are permitted ten (10) votes for each share of Series E Preferred Stock), and 1,142,860 votes associated with 114,286 shares of Series F Preferred Stock (you are permitted ten (10) votes for each share of Series F Preferred Stock).
In each such case, the number of votes is calculated based on the number of shares you owned at the close of business on April 5, 2010, including shares held in your name as a stockholder of record and shares held in street name for you as the beneficial owner through a broker, trustee, or other nominee, such as a bank. The enclosed proxy card shows the number of shares you can vote.
Special Voting Rights of Series C and Series D Preferred Stock with Respect to Election of Directors.
So long as at least fifty percent (50%) of the initially issued shares of Series C Preferred Stock remains outstanding, the holders of the Series C Preferred Stock are entitled to vote alone for the election of a Series C Director. So long as at least fifty percent (50%), of the initially issued shares of Series D Preferred Stock remains outstanding, the holders of the Series D Preferred Stock are entitled to vote alone for the election of a Series D Director. The holders of the Series C and Series D Preferred Stock have each informed us that they will not be nominating directors at the annual meeting this year.
Special Voting Rights of the Convertible Preferred Stock.
Under the various Certificates of Designations, each series of Convertible Preferred Stock has a separate class vote in the following instances:
·
The creation and issuance of any series of preferred stock or other security which is senior as to liquidation and or dividend rights to such Convertible Preferred Stock; and
·
An action that repeals, amends, or otherwise changes the Certificate of Designation or Certificate of Incorporation in a manner that would alter or change the powers, preferences, rights, privileges, restrictions and conditions of the particular class of Convertible Preferred Stock to adversely affect such class.
Unless otherwise specified in the Certificate of Designation, when voting as a separate class, you are permitted one vote for each share of Convertible Preferred Stock you owned at the close of business on April 5, 2010, including (i) shares held in your name as a stockholder of record, and (ii) shares held in street name for you as the beneficial owner through a broker, trustee, or other nominee, such as a bank.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each proposal to be considered at the annual meeting. Sign and date the proxy card and mail it back in the enclosed envelope. The proxy holders named on the proxy card will vote your shares as you instruct. If you sign and return the proxy card but do not vote on a proposal, the proxy holders will vote for you on that proposal. Unless you instruct otherwise, the proxy holders will vote in accordance with the Board of Directors recommendation below.
How does the Board of Directors recommend that I vote on the proposals?
The Board of Directors recommends that you vote:
FOR
the election of
all five nominees to serve as directors;
FOR
the ratification
of the selection of Ernst & Young LLP as our independent registered
public accounting firm for the fiscal year ending December 25, 2010.
What if other matters come up at the meeting?
The matters described in this proxy statement are the only matters we know that will be voted on at the meeting. If other matters are properly presented at the meeting, the proxy holders will vote your shares in their discretion.
4
Can I change my vote after I return my proxy card?
Yes. At any time before the annual meeting, you can change your vote either by sending our Chief Financial Officer, David E. Robertson, a written notice revoking your proxy card or by signing, dating, and returning to us a new proxy card. We will honor the proxy card with the latest date.
Can I vote in person at the meeting rather than by completing the proxy card?
Although we encourage you to complete and return the proxy card even if you plan to attend the meeting to ensure that your vote is counted, you can always vote your shares in person at the meeting. If you are not a record holder, but hold your shares through a broker, trustee or other nominee, such as a bank, and wish to vote your shares in person at the annual meeting, please contact such nominee for instructions on how to vote your shares at the meeting.
Who will count the votes?
The votes cast by holders of shares of our common stock and our Convertible Preferred Stock will be counted, tabulated and certified by the transfer agent and registrar of our Common Stock and Series B Preferred Stock, Continental Stock Transfer & Trust Co. David E. Robertson, our Chief Financial Officer, will serve as the inspector of elections at the annual meeting.
Will my vote be kept confidential?
Yes, your vote will be kept confidential and we will not disclose your vote, unless (1) we are required to do so by law (including in connection with the pursuit or defense of a legal or administrative action or proceeding), (2) a stockholder makes a written comment on the proxy card or otherwise communicates his or her vote to management, (3) to allow the inspector of elections to certify the results of the vote, or (4) there is a contested election for the Board of Directors. The inspector of elections will forward any written comments that you make on the proxy card to our Board of Directors and Chief Executive Officer without providing your name, unless you expressly request disclosure on your proxy card.
What do I do if I am a beneficial owner and my shares are held in street name?
If your shares are held in the name of your broker, a bank, or other nominee, that party will give you instructions for voting your shares, which should be enclosed with this document.
What
constitutes a quorum?
In order for business to be
conducted at the meeting, a quorum must be present. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of each class of stock entitled
to vote at the annual meeting is necessary to constitute a quorum at the annual
meeting.
Shares of common stock and Convertible Preferred Stock represented in person or by proxy (including broker non-votes, if any, and shares that abstain or do not vote with respect to one or more of the matters to be voted upon) will be counted for the purpose of determining whether a quorum exists. Broker non-votes are those shares that are held in street name by a broker, bank, or other nominee that indicates on its proxy that it does not have discretionary authority to vote on a particular matter.
If a quorum is not
present, the meeting will be adjourned until a quorum is obtained. Under our bylaws, notice need not be given of
any such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken.
At the adjourned meeting, our stockholders may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, our by-laws require that a notice of the
adjourned meeting be given to each stockholder of record entitled to vote at
the meeting.
What is
the voting requirement to approve each proposal?
In the
election of directors, the persons receiving the greatest number of
FOR
votes at the meeting will be elected.
The proposal to ratify
the selection of Ernst & Young LLP as our independent registered
public accounting firm for the fiscal year ending December 25, 2010
requires the affirmative vote of a majority of the votes cast at the meeting by
the holders of outstanding shares of all classes of our stock entitled to vote
thereon who are present at the meeting either in person or by proxy.
Votes withheld for a
particular director nominee will have no effect on the outcome of the election
of directors. Neither abstentions nor
broker non-votes, if any, will have an effect on the voting for the
ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm.
5
What are broker non-votes?
If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute broker non-votes. Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from you, as the beneficial owner. Brokers, banks and other nominees may be able to use their discretionary authority for the matters involving the ratification of our independent registered public accounting firm for the fiscal year ended December 25, 2010.
Where can I find the voting results?
We will announce the results of the voting at the annual meeting and report the voting results in an 8-K filing which we are required to file with the Securities and Exchange Commission (
SEC
) within four business days after our Annual Stockholders Meeting. The results will be contained in the 8-K, which will be available via Internet on the Investor Relations page of our licensed website at www.iparty.com and on the SECs website, www.sec.gov.
Who pays for this proxy solicitation?
We do. In addition to sending you these materials, one of our officers, directors or employees may contact you by telephone, by mail, or in person. None of these persons will receive any extra compensation for doing this.
How and when may I submit a stockholder proposal for consideration at next years annual meeting of stockholders or to recommend nominees to serve as directors?
You may submit proposals, including director nominations, for consideration at future stockholder meetings.
Stockholder Proposals:
If you are interested in submitting a proposal for inclusion in our proxy statement for next years annual meeting, or would like to recommend a nominee for director, we must receive your written proposal at our principal executive offices no later than December 22, 2010, which is the 120th calendar day before the one-year anniversary of the proxy statement we are releasing to our stockholders for this years annual meeting. If the date of next years annual meeting (or special meeting in lieu of the annual meeting) is moved more than 30 days before or after the anniversary date of this years meeting, the deadline for inclusion of proposals in our proxy statement will instead be a reasonable time before we begin to print and mail our proxy materials next year. Such proposals also will need to comply with SEC regulations under Rule 14a-8 (Shareholder Proposals) regarding the inclusion of shareowner proposals in company-sponsored proxy materials. Any proposals should be addressed to:
iParty Corp.
270 Bridge Street, Suite 301
Dedham, MA 02026
ATTN: David E. Robertson, Chief Financial Officer
Fax:
(781) 326-7143
Except in the case of proposals made in accordance
with SEC Rule 14a-8 (Shareholder Proposals), the Companys proxy holders
are allowed to use their discretionary voting authority on stockholder
proposals that the Company did not receive written notice of at least
45 days prior to the anniversary of the date on which the Company first
mailed its proxy materials for its immediately preceding annual meeting of
stockholders, which for the 2011 Annual Meeting of Stockholders is March 7,
2011.
Copy of By-Law Provisions:
You may contact our Chief Financial Officer (Mr. Robertson) at our principal executive offices for a copy of the relevant by-law provisions regarding the requirements for making stockholder proposals. Our by-laws also are available on the Investor Relations page on our licensed website at www.iparty.com
.
How may I communicate with the board of directors or the non-management directors on the board of directors?
You may submit an e-mail to our Board of Directors at bod@iparty.com. All directors have access to this e-mail address. Communications intended for our non-management independent directors should be directed to the attention of Frank Haydu at fwh23@yahoo.com. You may report your concerns anonymously or confidentially.
6
Does iParty have a policy regarding the attendance of directors at the meeting?
Our by-laws do not mandate that members of the Board of Directors must attend the annual meeting of stockholders and we have no separate policy regarding such attendance.
How many directors attended last years annual meeting?
All of our directors were present in person at last years annual meeting.
Does iParty have a code of conduct applicable to all directors, officers, and employees?
Yes. In accordance with Section 406 of the Sarbanes-Oxley Act, Item 406 of SEC Regulation S-K, and Section 807 of the enhanced corporate governance rules of the NYSE Amex, we have adopted a code of business conduct and ethics that is applicable to all our directors, officers and employees and is available on the Investor Relations page on our licensed website at www.iparty.com. Our written code of business conduct and ethics provides for an enforcement mechanism and requires that waiver of its provisions for any of our directors or officers must be approved by our Board of Directors. We are required to disclose any such waivers on the Investor Relations page of our corporate website at www.iparty.com.
Where can I see the Companys corporate documents and SEC filings?
iPartys website contains its by-laws, the Board Committee charters, corporate governance guidelines, code of business conduct and ethics and the Companys SEC filings. To view the by-laws, the Boards committee charters, corporate governance guidelines, or code of business conduct and ethics, go to www.iparty.com, and click on Investor Relations. To view iPartys SEC filings, including Forms 3, 4, and 5 filed by the Companys directors and executive officers, go to www.iparty.com, click on Investor Relations and then click on SEC Filings.
iParty will also promptly deliver free of charge, upon request, a copy of the Companys Restated Certificate of Incorporation, bylaws, Board Committee charters, corporate governance guidelines or the code of business conduct and ethics to any stockholder requesting a copy. Requests for these documents may be made in the same manner as requests for a copy of iPartys Annual Report on Form 10-K.
How can I obtain an annual report on Form 10-K?
A copy of our Annual Report on Form 10-K for the year ended December 26, 2009 is enclosed with this proxy statement. Stockholders may request another free copy of our proxy statement and our 2009 Annual Report on Form 10-K by email at investorrelations@iparty.com, by toll free telephone at 888-290-2945, or by making a written or oral request to:
iParty Corp.
270 Bridge Street, Suite 301
Dedham, MA 02026
ATTN: David E. Robertson, Chief Financial Officer
Telephone: (781) 329-3952
Our proxy statement and Annual Report on Form 10-K for fiscal 2009 are also available on the Investor Relations page of our licensed website at www.iparty.com, as noted below, and the SECs website at www.sec.gov.
Where can I get directions to the meeting?
The meeting will be held in the offices of Posternak Blankstein & Lund LLP on the 33rd floor of the Prudential Tower, 800 Boylston Street, Boston, MA. Directions to the meeting location are available at www.pbl.com.
Who should I contact if I have any questions?
If you have any questions about the annual meeting or any matters relating to this proxy statement, please contact David E. Robertson, our Chief Financial Officer, at the address and telephone number above.
7
Important Notice of Internet Availability of Proxy Materials for the Annual Meeting
This proxy statement and our 2009 Annual Report are available at www.iparty.com/proxy. This web page does not have cookies that identify visitors to the web page.
ITEMS TO BE ACTED
ON AT THE MEETING
PROPOSAL
NO. 1
ELECTION OF DIRECTORS
Our entire Board of Directors, to consist of five (5) members,
will be elected at the meeting. Each
nominee for director currently serves on our Board of Directors. The directors elected will hold office until
their successors are elected and qualified, which should occur at the next
annual meeting or special meeting in lieu thereof, in accordance with our
by-laws.
We have no reason to
believe that any of the nominees will not be a candidate or will be unable to
serve as a director. However, in the
event any nominee is not a candidate or is unable or unwilling to serve as a
director at the time of the election, the Board of Directors (on recommendation
of the Nominating Committee) may either propose to reduce the number of
directors or propose a substitute nominee.
Under the Certificate of
Designations-Series C, for so long as at least 50% of the initially issued
shares of Series C Preferred Stock remain outstanding, the holders of the Series C
Preferred Stock have the exclusive right, voting separately as a class, to
elect one director of the Company (the
Series C
Director
). The holders of
the Series C Preferred Stock have not elected to designate a Series C
Director at the 2010 Annual Meeting.
Under the Certificate of
Designations-Series D, for so long as at least 50% of the initially issued
shares of Series D Preferred Stock remain outstanding, the holders of the Series D
Preferred Stock have the exclusive right, voting separately as a class, to
elect one director of the Company (the
Series D
Director
). The holders of
the Series D Preferred Stock have not elected to designate a Series D
Director at the 2010 Annual Meeting.
The Board recommends that you vote
FOR each of the following nominees:
·
Sal V. Perisano
·
Daniel I. DeWolf
·
Frank W. Haydu III
·
Eric Schindler
·
Joseph S. Vassalluzzo
Biographical information about
each of these nominees can be found on pages 12 through 13 of this proxy
statement.
Unless you specify otherwise, the
Board intends the accompanying proxy to be voted for these nominees. Thus,
unless you withhold authority or your proxy contains contrary instructions, a
properly signed and dated proxy will be voted
FOR
the election of these
nominees.
Votes
withheld will not affect the outcome of the voting with respect to the election
of any nominee.
8
PROPOSAL NO. 2
TO RATIFY THE SELECTION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has
selected the independent registered public accounting firm of Ernst &
Young LLP (
E&Y
) to examine
and audit our financial statements for the year ending December 25,
2010. A resolution to ratify this
selection will be presented at the meeting.
Stockholder ratification of the selection of E&Y
is not required under our by-laws or Delaware corporate law. Although not required to do so, the Board is
submitting the selection of E&Y for ratification by iPartys stockholders
for their views, as a matter of good corporate governance. If the stockholders do not ratify the
selection, the Audit Committee will consider the engagement of other
independent auditors and whether to retain E&Y but may ultimately determine
to retain E&Y. However, the Audit
Committee retains the ultimate discretion to appoint or terminate the
appointment of our independent registered public accounting firm, irrespective
of the outcome of this Proposal No. 2.
E&Y audited and reported upon our financial
statements for fiscal 2009. In
connection with that audit, E&Y also reviewed our Annual Report on Form 10-K
for the fiscal year ended December 26, 2009, quarterly financial
statements for the fiscal quarters ended March 28, 2009, June 27,
2009 and September 26, 2009, and our filings with the SEC, and consulted
with management as to the financial statement implications of matters under
consideration. E&Y has been our independent auditor for over six years.
We expect that one or
more representatives of E&Y will be present at the annual meeting. They
will be afforded an opportunity to make a statement at the annual meeting if
they desire to do so and to respond to appropriate questions by stockholders.
E&Y has advised us that it has no direct, nor any
indirect, financial interest in iParty or any of its subsidiaries.
This Proposal No. 2
to ratify the selection of E&Y as our independent registered public
accounting firm for fiscal 2010 requires the affirmative vote of a majority of
the votes cast at the meeting by the holders of outstanding shares of all classes
of our stock entitled to vote thereon who are present at the meeting either in
person or by proxy.
The Board recommends that you vote
FOR
this Proposal No. 2 to ratify the
selection of Ernst & Young LLP.
Unless you specify
otherwise, the Board intends the accompanying proxy to be voted for this
Proposal No. 2.
Information about the fees and services we paid to
E&Y in 2008 and 2009 is contained on page 25 of this proxy statement.
9
OWNERSHIP OF iPARTY STOCK
The following table shows
the number of shares of our common stock beneficially owned as of April 5,
2010 by:
·
each person or entity that we believe beneficially owns more than 5% of
our common stock,
·
each director and nominee for director,
·
each executive officer shown in the summary compensation table on page 20
below, and
·
all executive officers and directors as a group.
Name of Beneficial Owner
(1)
|
|
Number of
Common Shares
Beneficially Owned
(2)
|
|
Percent of
Class
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Lessin
|
|
10,905,693
|
(3)
|
34.9
|
%
|
Jefferies &
Co.
520 Madison Ave., 12
th
Floor
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
Roccia Partners, L.P.
|
|
3,080,926
|
(4)
|
12.1
|
%
|
c/o
Lorenzo Roccia
220
East 67
th
Street
New
York, NY 10021
|
|
|
|
|
|
|
|
|
|
|
|
Naida S. Wharton
|
|
2,474,100
|
(5)
|
10.9
|
%
|
c/o
Sandra Minardo
520 Madison Ave., 12
th
Floor
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
Highbridge International LLC
|
|
2,083,334
|
(6)
|
8.4
|
%
|
c/o
Eleazer N. Klein
Schulte Roth & Zabel LLP
919
Third Avenue
New
York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
Boston Millennia Partners, LP
|
|
1,365,200
|
(7)
|
5.6
|
%
|
30
Rowes Wharf, Suite 500
Boston, MA 02110
|
|
|
|
|
|
|
|
|
|
|
|
Patriot Capital Limited
|
|
1,184,803
|
(8)
|
4.9
|
%
|
c/o
Stephen Rasch
Loeb, Block and Partners LLP
505
Park Avenue
New York, NY 10022
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Directors,
Nominees for Director, and Executive Officers
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Sal V. Perisano
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5,717,958
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(9)
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20.3
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%
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Dorice P. Dionne
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5,717,958
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(10)
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20.3
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%
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David Robertson
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216,148
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(11)
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.9
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%
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Daniel I. DeWolf
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470,000
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(12)
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2.0
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%
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Joseph S. Vassalluzzo
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666,915
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(13)
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2.9
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%
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Frank W. Haydu III
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310,000
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(14)
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1.3
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%
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Eric Schindler
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285,000
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(15)
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1.2
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%
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All executive officers and directors as a group (7
persons)
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7,666,021
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25.7
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%
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10
1.
Unless
otherwise indicated, all addresses are c/o iParty Corp., 270 Bridge Street, Suite 301,
Dedham, MA 02026.
2.
The
number of shares beneficially owned by each entity, person, director or named
executive officer is determined under SEC rules, particularly Rule 13d-3,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rules,
each entity or individual is considered the beneficial owner of any shares as
to which they have the sole or shared voting power or investment power. Such persons and entities are also deemed
under the same rules to beneficially own any shares that they have the
right to acquire within sixty (60) days of April 5, 2010 (i.e., June 4,
2010) through the conversion of convertible preferred stock, the exercise of
stock options or warrants or other similar rights. This stock ownership information is based
upon information furnished to us by the persons named in the table or as set
forth in the Companys stock ledger. The
percentage of class is calculated in accordance with Rule 13d-3 and is
based on 22,798,647 shares outstanding as of April 5, 2010 plus, as to
each holder thereof and no other person, the number of shares (if any) that the
person has the right to acquire on or prior to June 4, 2010, through the
exercise of stock options or warrants or other similar rights and the
conversion of Convertible Preferred Stock. Unless otherwise set forth herein,
each holder has sole voting and investment power over such shares.
3.
Mr. Lessin
beneficially owns (1) 2,474,100 shares of common stock, (2) 175,000
shares of common stock that may be acquired upon the exercise of presently
exercisable options, , (3) 1,841,950 shares of common stock that may be
acquired upon the conversion of 137,500 shares of presently convertible Series B
Preferred Stock, (4) 3,652,250 shares of Common Stock which may be
acquired upon the conversion of 250,000 shares of presently convertible Series D
Preferred Stock, which constitutes all of the Series D Preferred Stock, and
(5) 2,762,393 shares of Common Stock which may be acquired upon the
conversion of 266,666 shares of presently convertible Series E Preferred
Stock. The figure listed in the table
does not include any shares reflected as owned by Ms. Wharton, who was formerly
Mr. Lessins spouse (see footnote (5) below). Mr. Lessin is the beneficial holder of
more than 5% of the outstanding Series B Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock.
4.
The
figure in the table for Roccia Partners, L.P. includes 2,406,056 shares of
common stock, which may be acquired upon the conversion of 179,610 shares of
presently convertible Series B Preferred Stock held in the name of Roccia
Partners, L.P. The figure also includes (1) 364,100
shares of common stock held in the name of Roccia Venture Partners, L.P. and (2) 310,770
shares of common stock, which may be acquired upon the conversion of 30,000
shares of presently convertible Series E convertible preferred stock held
in the name of Roccia Venture Partners, L.P.
Roccia Venture Partners, L.P. is the beneficial holder of more than 5%
of the outstanding Series B Preferred Stock, and Series E Preferred
Stock.
5.
Ms. Wharton
beneficially owns 2,474,100 shares of common stock.
6.
The
figure in the table for Highbridge International LLC includes 2,083,334 shares
of common stock which may be acquired upon the exercise of a presently
exercisable warrant.
7.
The
figure in the table for Boston Millennia Partners, LP includes 1,365,200 shares
of common stock that may be acquired upon the conversion of 100,000 shares of
presently convertible Series C Preferred Stock owned by Boston Millennia
Partners, LP and an affiliated entity, which constitutes all of the Series C
Preferred Stock.
8.
The
figure in the table for Patriot Capital Limited includes 1,184,803 shares of
common stock, which may be acquired upon the conversion of 114,286 shares of
presently convertible Series F Preferred Stock, which constitutes all of
the outstanding Series F Preferred Stock.
9.
Mr. Perisano
holds 304,700 shares of Common Stock jointly with his wife, Ms. Dionne,
and holds options for 5,413,258 shares, which are presently exercisable or will
be exercisable within 60 days of April 5, 2010.
The figure in the table includes options for 3,439,645 shares granted to
Mr. Perisano and options for 1,973,613 shares granted to Ms. Dionne.
10.
Ms. Dionne
holds 304,700 shares of Common Stock jointly with her husband, Mr. Perisano,
and holds options for 5,413,258 shares, which are presently exercisable or will
be exercisable within 60 days of April 5, 2010.
The figure in the table includes options for 3,439,645 shares granted to
Mr. Perisano, and options for 1,973,613 shares granted to Ms. Dionne.
11
11.
Mr. Robertson
holds options for 475,000 shares, of which 216,148 are presently exercisable or
will be exercisable within 60 days of April 5, 2010.
12.
Mr. DeWolf
beneficially owns 10,000 shares of common stock and holds options for 460,000
shares, which are presently exercisable or will be exercisable within 60 days
of April 5, 2010. The owner of record of the 10,000 shares of common stock
is Pine Street Ventures LLC, a Delaware limited liability company. The beneficial owners of Pine Street Ventures
are Mr. DeWolfs children. Mr. DeWolf
controls sole voting power.
13.
Mr. Vassalluzzo
beneficially owns 351,915 shares of common stock and holds options for 315,000
shares, which are presently exercisable or will be exercisable within 60 days
of April 5, 2010.
14.
Mr. Haydu
beneficially owns 25,000 shares of common stock and holds options for 285,000
shares, which are presently exercisable or will be exercisable within 60 days
of April 5, 2010.
15.
Mr. Schindler
beneficially holds options for 285,000 shares, which are presently exercisable
or will be exercisable within 60 days of April 5, 2010.
BOARD
OF DIRECTORS AND CORPORATE GOVERNANCE MATTERS
The following table sets
forth the name and age of each of our directors, his or her position with us,
and the period during which he has served as a director. Each of our currently serving directors is a
nominee for reelection as a director at the meeting.
Name
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Age
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Position
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Director
Since
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Sal V. Perisano
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59
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Chairman of the Board,
Chief Executive Officer
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1998
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Daniel I. DeWolf
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53
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Director
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2003
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Frank W. Haydu III
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62
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Director
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2003
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Eric Schindler
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49
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Director
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2003
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Joseph S. Vassalluzzo
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62
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Director
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2004
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Sal V. Perisano, age 59,
has served as a director of iParty since 1998 and its Chief Executive Officer
since 1999. Mr. Perisano served as
Chairman of the Board and President of The Big Party Corporation from 1992 to
1998, and continued serving as a director until 2000. In 1981, he co-founded Videosmith, which
became a leading video retailer in the Boston area. In 1989, Videosmith was sold to a publicly
traded company called Xtravision PLC, which owned 250 stores throughout the
U.K. and Ireland. Mr. Perisano
stayed on as a director and was later named Chief Executive Officer of the parent
company, which was subsequently acquired by Blockbuster Video. Mr. Perisano holds a bachelors degree
from Boston College and a masters degree from Harvard University. Mr. Perisano is married to Ms. Dorice
Dionne, who is employed by iParty as its Senior Vice President, Merchandising
and Marketing. Under Mr. Perisanos employment agreement, we are required
to nominate him as a director.
Daniel I. DeWolf, age 53,
has served as a director of iParty since 2003.
Mr. DeWolf is a member of the corporate practice in the New York
office and Co-Chair of the Venture and Emerging Companies Group of the law firm
of Mintz, Levin, Cohen, Ferris, Glovsky, and Popeo PC. Mr. DeWolf is also a Managing Director
of Dawntreader Ventures, an early stage venture capital firm, and an adjunct
professor at the New York University Law School, where he teaches venture
capital law. From 1999 to 2003, Mr. DeWolf
was Director of Venture Capital Funds for SoundView Technology Group. Prior to
joining SoundView, Mr. DeWolf was Of Counsel with the law firm of Cahmy,
Karlinsky & Stein LLP (CKS) in New York City. Mr. DeWolf established the Corporate and
Securities Practice Group at CKS in 1994 and was the head of that firms New
Media and E-Law Group. Mr. DeWolf
has over 25 years of corporate transactional experience and has been an advisor
to many early and developmental stage companies. Mr. DeWolf is a graduate
of the University of Pennsylvania as well as the University of Pennsylvania
School of Law. Mr. DeWolf currently
serves as a director of various privately-held
12
companies, including HNW, Inc.,
Tutor.com, and Visible World. The Company believes that Mr. DeWolfs
diversified background in capital finance and legal and regulatory matters give
him the qualities and skills to serve as a director.
Frank W. Haydu III, age
62, has served as a director of iParty and Chairman of our Audit Committee
since November 2003. Mr. Haydu
is a professional director and consultant to public and private businesses. Mr. Haydu
currently serves as a director and Chairman of the Board of CombinatoRx, Inc.,
a public company, and several private companies. Mr. Haydu holds a
Bachelor of Arts degree in economics from Muhlenberg College. The Company believes
that Mr. Haydus broad based experience in business and finance, including
his extensive background in business consulting and management gives him the
qualities and skills to serve as a director.
Eric Schindler, age 49,
has served as a director of iParty since 2003. Mr. Schindler has served as
CEO of ESSA, a medical aesthetics group in Argentina since 2007. Before 2007, Mr. Schindler
headed the investment banking division at Calyon Securities (USA) Inc., which
was formerly known as Crédit Lyonnais Securities (USA) Inc. Before joining
Crédit Lyonnais Securities in 1995, Mr. Schindler was employed by Crédit
Lyonnais La Défense in France, and was responsible for a team of senior bankers
for the banks global relationships with multinational corporations in the
infrastructure, engineering, telecommunications, transportation, auto parts,
and information systems sectors. Prior
to this position, from 1989 to 1992, Mr. Schindler was a Vice President
responsible for Latin American debt restructurings and debt/equity swaps. He also headed the investment banking
activities at Crédit Lyonnais Argentina from 1987 to 1989. Mr. Schindler is a former director of
Crédit Lyonnais Securities in New York and Crédit Lyonnais in Brazil. Mr. Schindler has a National Public
Accountant degree from Universidad Católica Argentina and a B.A. in two
languages with a specialization in Economic Sciences from Académie de Poitiers.
The Company believes that Mr. Schindlers extensive financial and
international business experience, including as an international banker,
qualifies him to serve as a director of the Company.
Joseph S. Vassalluzzo,
age 62, has served as a director of iParty since 2004. From 2000 to 2005, Mr. Vassalluzzo
served as Vice Chairman of Staples, Inc., in which capacity he was
responsible for Staples store growth, both domestic and abroad, oversaw
Staples corporate environmental initiatives, and was responsible for its
merger and acquisition activities worldwide.
He first joined Staples, Inc. in 1989 as its Executive Vice
President, Growth & Support Services.
He was named Executive Vice President, Global Growth and Development of
Staples, Inc. in 1993, was promoted to President, Staples Realty &
Development in 1997, and was further promoted to Vice Chairman of Staples, Inc.
in 2000. Before joining Staples, Mr. Vassalluzzo
held executive positions at American Stores Co., Acme Supermarkets, Mobil Corp.
and Amerada Hess Corp. Mr. Vassalluzzo
currently serves as an independent director, member of the Nominating and
Corporate Governance Committee, and non-executive Chairman of the Board of
Federal Realty Investment Trust, a publicly-held REIT. He also serves as an independent director,
member of the Finance Committee, Chairman of the Compensation Committee and
non-executive Lead Director of Life Time Fitness, Inc. Previously, Mr. Vassalluzzo served as an
independent director and member of the Compensation, Audit and Real Estate
Committees of Commerce Bancorp., Inc.
Mr. Vassalluzzo holds a B.S. degree in Marketing from Pennsylvania
State University and an M.B.A. from Temple University. The Company believes
that Mr. Vassalluzzos broad based experience in business, including his
extensive experience in retail businesses, such as his tenure as Vice Chairman
of Staples, Inc., and in real estate matters, gives him the qualities to
serve as a director of the Company.
Director Independence
Our Board of Directors has determined that each of our
director-nominees is an independent director as defined under applicable rules of
the SEC and NYSE Amex, except for
Mr. Perisano, who serves as our Chief Executive Officer. As a result, the Board of Directors has
determined that a majority of the director-nominees are independent under
applicable rules of the SEC and NYSE Amex.
Board Diversity
Our Corporate Governance
Guidelines provide that our Nominating Committee is to take into account such
factors as diversity, age and skills such as understanding of the retail
industry, finance, accounting, marketing, technology, and other knowledge
needed on the Board. The Nominating
Committee utilizes a broad meaning of diversity to include factors such as
geographic, background, experience, skills, accomplishments, financial
expertise,
13
professional interests,
personal qualities and other traits. The Committee implements that policy, and
assesses its effectiveness, by examining the diversity of all of the directors
on the Board when it selects nominees for directors. The diversity of directors
is one of the factors that the Nominating Committee considers, along with the
other selection criteria described above.
Board Leadership and Risk Management
The Board of Directors
believes that Mr. Perisanos service as both Chairman of the Board and CEO
is in the best interest of the Company and its stockholders. In managing the
day-to-day operations of the Company, Mr. Perisano possesses detailed and
extensive knowledge of the issues, opportunities and challenges facing the
Company and its businesses. This
knowledge helps Mr. Perisano develop agendas that focus on and ensure that
the critical issues and matters are brought before the Board in a timely and
thorough manner. The Company also
believes that during the recent economic turmoil it has been beneficial to the
Companys stockholders to have a combined role allowing Mr. Perisano to
present to our customers, suppliers and stockholders a clear and consistent
message on how the Company is managing through the recent recession and looking
for growth opportunities. Each of the
directors other than Mr. Perisano is independent and the Board believes
that the independent directors provide effective oversight of management. The
independent directors regularly hold executive sessions and each member is
fully engaged. Each director also has
full access to Mr. Perisano to provide any feedback from executive
sessions or to suggest items for the agenda for future board meetings, as the
Company does not believe it is necessary to have any hierarchy among its
independent directors.
The Board as a whole has responsibility for risk
oversight, with reviews of certain areas being conducted by the relevant
committees that report on their deliberations to the Board. The oversight
responsibility of the Board and its Committees is enabled by management
reporting processes that are designed to provide visibility to the Board about
the identification, assessment and management of critical risks and managements
risk mitigation strategies. These areas of focus include competitive, economic,
operational, financial (accounting, credit, liquidity, and tax), legal,
regulatory, compliance, health, safety and environment, and reputational risks.
The Board and its Committees oversee risks associated with their respective principal
areas of focus. Each Committee meets in executive session, if necessary with
representatives of outside advisors and key members of management.
Attendance at Annual Meeting and at Meetings of the Board and
Its Committees
Although we do not have a policy on our directors
attending our annual meeting, we normally expect each of our directors to be
present at the stockholders meeting. At last years annual meeting, all
of our six directors attended the meeting.
Our Board held a total of six meetings during 2009. Other than Mr. Schindler,
who attended 67% of all the board and committee meetings on which he served in
2009, each director attended 75% or more of all board meetings and committee
meetings on which he served during 2009.
Board Committee Matters
Our Board of Directors
met six (6) times during 2009. Our
Board of Directors has three principal committees: the Audit Committee, the
Compensation Committee, and the Nominating Committee. All of the members of each of these
committees are independent directors as defined under applicable NYSE Amex rules and
rules of the SEC, including, in the case of the Audit Committee, the
additional independence criteria for determining eligibility for director
service on audit committees under applicable NYSE Amex and SEC rules.
In addition to the
principal committees described above, our Board of Directors also has a Real
Estate Committee, consisting of Messrs. Perisano and Vassalluzzo, which
considers, from time to time, store location and store lease issues in
conjunction with our senior management.
Our Board of Directors has adopted corporate
governance guidelines which are available on the Investor Relations page on
our licensed website at www.iparty.com.
The following charts describe the function and number
of times that each committee of the Board of Directors met in 2009 and the
membership of each committee:
14
Audit Committee 5 Meetings
Function
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Members
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·
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Engage the independent
registered public accounting firm
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Frank W. Haydu III
(Chairman)
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Review the annual and
quarterly financial statements
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Daniel I. DeWolf
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Review control
procedures and accounting practices
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Eric Schindler
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·
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Monitor accounting and
reporting practices
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·
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Review compliance with
the conflict-of-interest policy
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·
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Review our capital
structure
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·
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Exercise such other
functions as mandated by the Sarbanes-Oxley Act and other applicable laws and
regulations
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We have a
separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934. Each member of our Audit Committee is independent
as defined under applicable rules of the SEC and the NYSE Amex. Our Board of Directors has also determined
that each of Messrs. Haydu, DeWolf and Schindler is an audit committee
financial expert as defined by applicable regulations promulgated by the SEC
pursuant to Section 407 of the Sarbanes-Oxley Act.
The Audit Committee has
adopted a charter which is available on the Investor Relations page on our
licensed website at www.iparty.com. We have also adopted a whistleblower
policy which is available on the Investor Relations page on our licensed
website at www.iparty.com.
See the report of the
Audit Committee on page 16 below.
Compensation Committee 2 Meetings
Function
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Members
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·
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Review and approve
compensation and benefit programs
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Daniel I. DeWolf
(Chairman)
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Determine compensation
of senior executives
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Frank W. Haydu III
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Make recommendations to
the full Board regarding director compensation
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Eric Schindler
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Administer stock option
plans
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The
Compensation Committee, currently composed of three non-employee directors who
qualify as independent under applicable SEC and NYSE Amex rules, is
responsible for approving all matters concerning our total compensation
practices and philosophy, including the conducting of periodic reviews of those
practices and the philosophy that underlies them to ensure that they support
the objectives of iParty and the interests of its stockholders. In
particular, the Compensation Committee is responsible for the review and
recommendation to the full Board of Directors of the compensation of iPartys
Chief Executive Officer, review and approval of the compensation of our other
executive officers pursuant to employment agreements between iParty and such
executive officers, and review and approval of other employee benefit
plans. The Committee is also primarily responsible for assisting the full
Board in administering and interpreting our 2009 Stock Incentive Plan. The
Committee also reviews and makes recommendations to the full Board regarding
compensation arrangements involving iPartys directors.
The
Companys Chief Executive Officer, Mr. Perisano, is not a member of the
Compensation Committee and does not vote at Compensation Committee meetings. Mr. Perisano
does, however, regularly attend Compensation Committee meetings, but does not
participate in executive sessions or deliberations about his compensation.
Pursuant to the
Compensation Committees charter, the Committee may form and delegate to
subcommittees of the Committee its responsibilities. To date, however, the
Compensation Committee has not formed or delegated any of its responsibilities
to any subcommittees. To the extent permitted by and consistent with applicable
law and the provisions of a given equity-based plan, the Compensation Committees
charter allows the Committee to
15
delegate to one or more executive officers of the
Company the power to grant options or other stock awards pursuant to an equity
based plan to employees of the Company who are not directors or executive
officers of the Company. To date, however, the Compensation Committee has not
delegated to any executive officer this power, nor does it presently intend to do
so.
The Compensation
Committee has sole authority to retain and/or terminate all external
consultants to the Compensation Committee and to commission surveys or analyses
that it determines necessary to fulfill its responsibilities. Additionally, the
Compensation Committee has sole authority to approve the fees of the external
consultants. The Compensation Committees
charter is available on the Investor Relations page on our licensed
website at www.iparty.com.
Nominating Committee 1 Meeting
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Function
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Members
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·
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Review and recommend to
the full Board nominations for election to the Board of Directors
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Eric Schindler
(Chairman)
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Daniel I. DeWolf
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Frank W. Haydu III
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Joseph S. Vassalluzzo
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The Nominating Committee has adopted a charter which is
available on the Investor Relations page on our licensed website at
www.iparty.com.
The Nominating Committee will consider candidates for
our Board that are recommended by our stockholders to the extent such
nominations are provided no later than the deadline for stockholder proposals
and in the manner for stockholder proposals outlined above on page 6. The Nominating Committee is committed to
evaluating nominees recommended by our stockholders no differently than other
nominees. The Nominating Committee
believes that all nominees must possess, as a minimum qualification, the
personal integrity necessary to comply with all applicable legal and regulatory
duties imposed on directors of public companies, including without limitation,
the fiduciary duties of care and loyalty, and must possess sufficient business
and other relevant experience to be able to exercise business judgment in the
best interests of iParty and its stockholders.
Stockholder recommendations for director should
include: (i) the name and address of the stockholder recommending the
person to be nominated; (ii) a representation that the stockholder is a
holder of record of stock of iParty, including the number of shares held and
the period of holding; (iii) a description of all arrangements or
understandings between the stockholder and the recommended nominee; (iv) such
other information regarding the recommended nominee as would be required to be
included in a proxy statement filed pursuant to Regulation 14A promulgated
by the SEC pursuant to the Securities Exchange Act of 1934, as amended; and (v) the
consent of the recommended nominee to serve as a director of iParty, if so
elected.
It is expected that the
Nominating Committee will have direct input from the Chief Executive Officer.
Input on nominees will also be solicited from the other members of the
Board. Management and other external
sources may also identify prospective Director nominees.
Report of the Audit
Committee
The Audit Committee
hereby states that it:
·
Has reviewed and discussed the audited financial statements as of and for the year ended December 26, 2009 with iPartys management;
·
Has discussed with iPartys independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards Vol. 1, AU Section 380), as
16
adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T, as may be modified or supplemented, relating to the conduct of the audit;
·
Has received the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent auditors communication with the audit committee concerning independence, and has discussed with the independent auditors the independent auditors independence; and
·
Based upon the above mentioned reviews and discussions, has recommended to the Board of Directors of iParty (and the Board of Directors has approved) that the audited financial statements be included in iPartys Annual Report on Form 10-K for the fiscal year ended December 26, 2009 for filing with the Securities and Exchange Commission, which was filed with the SEC on March 23, 2010.
The Audit Committee is solely responsible for the selection, compensation and oversight of the work of the independent registered public accounting firm for the purpose of preparing and issuing an audit report.
Management has primary responsibility for iPartys financial statements and the overall reporting process, including iPartys system of internal controls.
The independent auditors audit the annual financial statements prepared by management, express an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of iParty in conformity with generally accepted accounting principles and discuss with us any issues they believe should be raised with us.
The Audit Committee oversees the financial reporting process on behalf of the Board of Directors, reviews iPartys financial disclosures, and meets privately, outside the presence of management, with the independent auditors to discuss internal accounting control policies and procedures. These discussions address the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in iPartys financial statements. The Audit Committee reports on these meetings to the Board of Directors.
Pursuant to applicable
NYSE Amex rules, the Audit Committee certifies that it has adopted a formal
written Audit Committee Charter and that the Audit Committee has a policy in
accordance with said rules of the NYSE Amex of reviewing and reassessing
the adequacy of the Audit Committee Charter on an annual basis.
During 2009, iParty paid
no fees to Ernst & Young LLP for consulting work outside the review
and audit of their financial statements and related tax research and compliance
tax return preparation.
Submitted
by:
Frank W. Haydu III,
Chairman
Daniel I. DeWolf
Eric Schindler
DIRECTOR
COMPENSATION
At the
meeting of our Board of Directors held on May 27, 2009, the board (on
recommendation of the Compensation Committee) voted that each independent
director (determined to be each of Messrs. DeWolf, Haydu, Schindler and
Vassalluzzo) would be granted an option on May 27, 2009 exercisable for
the purchase of 25,000 shares of our common stock and be paid a $25,000 cash
payment in respect of his service as a director. The Board of Directors approved the
Compensation Committees recommendation that each such option would vest
quarterly over a one-year period and the $25,000 cash payment would be paid
quarterly over a one-year period. As a
result of these determinations, each of Messrs. DeWolf, Haydu, Schindler,
and Vassalluzzo was granted an option exercisable for 25,000 shares. Each of these stock option grants was made
pursuant to the 2009 Stock Incentive Plan, at an exercise price equal to the market
price of our common stock at the close of business on the grant date.
17
These options expire on
the earlier of 10 years from the date of grant or three years from the date the
grantee ceases to serve as a director.
At that same meeting held on May 27, 2009, the Board of Directors
also voted to accept the Compensation Committees recommendation to engage Mr. Vassalluzzo
as a part-time consultant to our company for a one-year period at an annual fee
of $60,000. The Board of Directors voted
in favor of the Compensation Committees recommendation and our managements
proposal in this regard. Pursuant to
this arrangement, our Chairman and CEO, Mr. Perisano, consults with Mr. Vassalluzzo
with respect to various retail, operational, strategic, real estate and store
location issues, as may from time to time be necessary and appropriate. Such services on occasion require Mr. Vassalluzzos
presence at our corporate headquarters in Dedham, Massachusetts and/or current
or proposed store location sites, principally in New England and Florida.
Also at the May 27, 2009 meeting, the Board of Directors (on
recommendation of the Compensation Committee) voted that each independent
director would be paid an annual fee of the following amounts in cash, payable
in equal quarterly installments, for serving on the various committees of our
Board of Directors. This amount is in
addition to the annual director fee described above.
Director
|
|
Annual Committee
Compensation
|
|
|
|
|
Frank W. Haydu III
|
|
$
|
20,000
|
|
|
|
Eric Schindler
|
|
$
|
10,000
|
|
|
|
Daniel I. DeWolf
|
|
$
|
10,000
|
|
|
|
Joseph S. Vassalluzzo
|
|
$
|
25,000
|
Also, at the May 27, 2009 meeting, on
recommendation of the Compensation Committee, the Board of Directors voted to
award Frank W. Haydu III a one-time additional annual fee of $15,000 for his
service on the various committees of the Board of Directors.
18
DIRECTOR
COMPENSATION TABLE
The table below
summarizes the compensation that we paid our non-employee, independent
directors for the fiscal year ended December 26, 2009. Our one employee-director, our Chairman of
the Board and Chief Executive Officer, Mr. Perisano, earned no
compensation for his service as a director in 2009. Similarly, Mr. Jevon, who was our other
non-independent director until his resignation on December 17, 2009,
earned no compensation for his services as a director in 2009.
|
|
|
|
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
Non-Equity
|
|
Value
and
|
|
|
|
|
|
|
|
or Paid
|
|
|
|
|
|
Incentive
|
|
Nonqualified
|
|
|
|
|
|
|
|
in
|
|
Stock
|
|
Option
|
|
Plan
|
|
Deferred
|
|
All
Other
|
|
|
|
Name
|
|
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
Total
|
|
Daniel I. DeWolf
|
|
$
|
35,000
|
|
|
|
$
|
2,317.50
|
(1)
|
|
|
|
|
|
|
$
|
37,317.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank W. Haydu III
|
|
60,000
|
|
|
|
2,317.50
|
(1)
|
|
|
|
|
|
|
62,317.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Schindler
|
|
35,000
|
|
|
|
2,317.50
|
(1)
|
|
|
|
|
|
|
37,317.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph S. Vassalluzzo
|
|
50,000
|
|
|
|
2,317.50
|
(1)
|
|
|
|
|
$
|
60,000
|
(2)
|
112,317.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Reflects the full fair value of options granted in
accordance with FASB ASC Topic 718. For
a description of the assumptions made in the valuation of these awards, see
footnote 12 of the Companys financial statements for the fiscal year ended December 26,
2009. There can be no assurance that the options will ever be exercised (in
which case no value will be realized by the holder). As of December 26,
2009, Mr. DeWolf held options for 460,000 shares, Mr. Vassalluzzo
held options for 315,000 shares, Mr. Haydu held options for 285,000
shares, and Mr. Schindler held options for 285,000 shares.
(2)
Reflects payments for consulting services rendered to
us by Mr. Vassalluzzo pursuant to consulting agreements in effect.
EXECUTIVE COMPENSATION
Executive
Officers
The following sets forth
our current executive officers, their ages, the positions and offices held by
each person, and the year each person first served as an executive officer of
iParty. The officers serve at the
discretion of the Board of Directors.
Mr. Perisanos
background is
summarized on page 12 above.
Dorice P. Dionne,
age 58, has been iPartys Senior Vice
President, Merchandising and Marketing since April 1999. She co-founded The Big Party Corporation with
her husband, Sal Perisano, in 1992 in Boston.
She served as chief merchant and creative director of The Big Party and
has been involved in the party retailing industry since 1985. She is a graduate of Boston College.
David E. Robertson,
age 60, has served as iPartys Chief
Financial Officer since April 2007.
From January 2005 until April 2007, Mr. Robertson was
employed as a private accounting consultant, primarily in the area of
Sarbanes-Oxley compliance, for a variety of public and private
companies. From 1999 to 2005, Mr. Robertson
served as Vice President and Chief Financial Officer of Kitchen Etc. Inc., a
specialty (cooking and dining) retailer, headquartered in Exeter, New
Hampshire, which filed for Chapter 11 bankruptcy protection in 2004. From 1996 to 1999, he established and
operated a professional services firm based in Nashua, New Hampshire. From 1985 to
19
1996,
he held a variety of positions in the audit, accounting, and financial
operations of Lechmere, Inc. From
1980 to 1985, Mr. Robertson worked as an audit and accounting manager at
Zayre Corp. (now TJX Companies). From 1975 to 1979, he was employed in
the audit division of Ernst & Young.
Mr. Robertson is a Certified Public Accountant. He holds a bachelors degree from Harvard
College, and a masters degree from Northeastern University.
SUMMARY
COMPENSATION TABLE
The following table summarizes the compensation earned
during 2008 and 2009 by our Chief Executive Officer, Chief Financial Officer
and other executive officers that received total compensation during 2009 in
excess of $100,000.
Name and Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
(1)
|
|
Option
Awards (2)
|
|
All Other
Compensation
|
|
Total
|
|
Sal
V. Perisano,
Chief Executive Officer.
|
|
2009
|
|
$
|
325,000
|
|
$
|
32,500
|
|
$
|
42,642
|
|
$
|
2,893
|
(3)
|
$
|
403,035
|
|
|
|
2008
|
|
$
|
321,635
|
|
$
|
0
|
|
$
|
0
|
|
$
|
2,838
|
(3)
|
$
|
367,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dorice
P. Dionne,
Senior Vice President, Merchandising and Marketing
|
|
2009
|
|
$
|
195,000
|
|
$
|
19,500
|
|
$
|
24,102
|
|
$
|
2,814
|
(3)
|
$
|
241,416
|
|
|
|
2008
|
|
$
|
192,981
|
|
$
|
0
|
|
$
|
0
|
|
$
|
2,730
|
(3)
|
$
|
213,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Robertson,
Chief Financial Officer (4)
|
|
2009
|
|
$
|
166,400
|
|
$
|
16,640
|
|
$
|
16,215
|
|
$
|
944
|
(3)
|
$
|
200,199
|
|
|
|
2008
|
|
$
|
164,677
|
|
$
|
0
|
|
$
|
22,110
|
|
$
|
594
|
(3)
|
$
|
178,707
|
|
1.
These amounts reflect discretionary bonuses for the
executives performance during fiscal 2009 which were paid in 2010. The Compensation Committee determined not to
pay any bonuses for fiscal 2008.
2.
These amounts reflect the full fair value of options
granted in 2008 and 2009 in accordance with FASB ASC Topic 718. For a description of the assumptions made in
the valuation of these awards, see footnote 12 of the Companys financial
statements for the fiscal year ended December 26, 2009. There can be no
assurance that the options will ever be exercised (in which case no value will
be realized by the holder).
3.
These amounts are for additional term life insurance.
Individual Compensation of Executive Officers
Sal
V. Perisano (Chief Executive Officer).
At the
beginning of fiscal 2008, we paid Mr. Perisano at an annualized base
salary rate of $312,500. On April 1,
2008, pursuant to the terms of the three-year employment
agreement with Mr. Perisano, dated March 22,
2007, we increased Mr. Perisanos annualized base salary rate to $325,000.
The agreement further provided that Mr. Perisanos annualized base salary
would increase to $337,500 for the period April 1, 2009 through March 31,
2010. However, Mr. Perisano waived
his right to the salary increase that would have been effective April 1,
2009. The employment agreement provided
that Mr. Perisano was also eligible to participate in bonus plans as the
Compensation Committee of the Board might establish from time to time for our
senior executive officers. The agreement
with Mr. Perisano also contained provisions regarding payments of varying amounts of
severance upon involuntary termination
of employment, or voluntary termination for good reason (as specified in the
agreement) within 13 months of a change in control. Our Board of Directors
granted Mr. Perisano a stock option on May 27, 2009 exercisable for
up to 460,000 shares of our Common Stock, at an exercise price per share equal
to the closing price of our Common Stock on that date.
On April 1, 2010, we
entered into a new employment agreement with Mr. Perisano that provides
that we pay him a base salary of $334,750 for the period April 1, 2010
through March 31, 2011. Mr. Perisanos salary will
20
increase to $351,488 for
the period April 1, 2011 through March 31, 2012 and increase to
$369,062 for the period April 1, 2012 through March 31, 2013. Mr. Perisano
will also participate in our annual bonus and fringe benefit plans for senior
executives. In addition, our new
agreement with Mr. Perisano entitles him to the grant of a stock option on
July 1, 2010 (provided that Mr. Perisano is still employed by us on
such date) for up to 410,000 shares of our common stock, at an exercise price
per share equal to the closing price of our common stock on such date.
This option will vest in three installments of 136,653 shares immediately on
the grant date, 136,653 shares on June 30, 2011, and 136,694 shares on June 30,
2012 (provided, in each case, that Mr. Perisano remains employed by us on
each of such future dates). In addition, our new agreement with Mr. Perisano
provides that the options to purchase up to 460,000 shares of our common stock
granted to him on May 27, 2009 became fully vested as of April 1,
2010.
Under the terms of his
new employment agreement, in the event of a termination by the Company not for
cause or by Mr. Perisano for good reason (each as defined in the
agreement), Mr. Perisano will be entitled to receive a severance payment
equal to 12 months salary at the base salary rate then in effect, payable in 12
equal monthly installments, as well as the continuation of his then current
health, life and disability insurance benefits or, in the case of health insurance
benefits, payment by us of applicable COBRA payments, for a period of 12
months. The agreement also provides that in the event of a termination by the
Company not for cause or by Mr. Perisano for good reason (as defined in
the agreement) that occurs within 13 months of a change in control (as defined
in the agreement), Mr. Perisano will be entitled to receive a severance
payment equal to not less than 2.5 times and not more than 3.0 times his annual
salary rate then in effect, payable in a lump sum, as well as the continuation
of his then current health, life and disability insurance benefits or, in the
case of health insurance benefits, payment by us of applicable COBRA
payments, for a period of 12 months. The
agreement also contains certain confidentiality, non-competition and
non-solicitation provisions substantially similar to our previous agreement
with Mr. Perisano. The agreement also provides for automatic renewals for
successive one-year terms, unless terminated by either party as provided in the
agreement. Our Compensation Committee
may determine under the agreement to increase the executives base salary for
any renewal term, or following a material acquisition.
Dorice
P. Dionne (Senior Vice President, Merchandising and Marketing).
At the beginning of fiscal 2008, we paid
Dorice Dionne at an annualized base salary rate of $187,500. On April 1, 2008, pursuant to the terms
of the three-year employment agreement with Ms. Dionne, dated March 22,
2007, we increased Ms. Dionnes annualized base salary to $195,000. The
agreement further provided that Ms. Dionnes annualized base salary would
increase to $202,500 for the period April 1, 2009 through March 31,
2010. Ms. Dionne waived her rights
to the salary increase that would have been effective April 1, 2009. The employment agreement provided that Ms. Dionne
was also eligible to participate in bonus plans as the Compensation Committee
of the Board might establish from time to time for our senior executive
officers. The agreement with Ms. Dionne
also contained provisions regarding
payments of varying amounts of severance
upon involuntary termination of employment, or voluntary termination for
good reason (as specified in the agreement) within 13 months of a change in
control. Our Board of Directors granted Ms. Dionne a stock option on May 27,
2009 exercisable for up to 260,000 shares of our Common Stock, at an exercise
price per share equal to the closing price of our Common Stock on that date.
On April 1, 2010, we
entered into a new employment agreement with Ms. Dionne that provides we
pay her a base salary of $200,850 for the period April 1, 2010 through March 31,
2011. Ms. Dionnes salary will increase to $206,875 for the period April 1,
2011 through March 31, 2012 and increase to $213,082 for the period April 1,
2012 through March 31, 2013. Ms. Dionne will also participate
in our annual bonus and fringe benefit plans for senior executives. In addition, our new agreement with Ms. Dionne
entitles her to the grant of a stock option on July 1, 2010 (provided that
Ms. Dionne is still employed by us on such date) exercisable for up to
265,000 shares of our common stock, at an exercise price per share equal to the
closing price of our common stock on such date. This option will vest in
three installments of 88,325 shares immediately on the grant date, 88,325
shares on June 30, 2011, and 88,350 shares on June 30, 2012
(provided, in each case, that Ms. Dionne remains employed by us on each of
such future dates). In addition, our new
agreement with Ms. Dionne provides that the options to purchase up to
260,000 shares of our common stock granted to her on May 27, 2009 became
fully vested as of April 1, 2010.
Under the terms of her
employment agreement, in the event of a termination by the Company not for
cause or by Ms. Dionne for good reason (each as defined in the agreement),
Ms. Dionne will be entitled to receive a severance payment equal to 12
months salary at the base salary rate then in effect, payable in 12 equal
monthly installments, as well as the continuation of her then current health,
life and disability insurance benefits or, in the case of health insurance
benefits, payment by us of applicable COBRA payments, for a period of 12
months. The
21
agreement also provides
that in the event of a termination by the Company not for cause or by Ms. Dionne
for good reason (as defined in the agreement) that occurs within 13 months of a
change in control (as defined in the agreement), Ms. Dionne will be
entitled to receive a severance payment equal to 18 months of her base salary,
payable in a lump sum, as well as the continuation of her then current health,
life and disability insurance benefits or, in the case of health insurance
benefits, payment by us of applicable COBRA payments, for a period of 12
months. The agreement also contains
certain confidentiality, non-competition and non-solicitation provisions
substantially similar to our previous agreement with Ms. Dionne. The
agreement provides for automatic renewals for successive one-year terms, unless
terminated by either party as provided in the agreement.
David
E. Robertson (Chief Financial Officer).
On March 22,
2007, we entered into a letter agreement with David E. Robertson, pursuant to
which Mr. Robertson commenced employment with us as our Chief Financial
Officer effective April 2, 2007.
Our letter agreement with Mr. Robertson provides that we shall pay
him an annualized salary of $160,000, with annual salary and performance
reviews starting April 1, 2008. Mr. Robertsons
annualized salary was raised to $166,400 as of April 1, 2008. Pursuant to the letter agreement, our Board
of Directors granted Mr. Robertson a stock option on June 6, 2007
exercisable for up to 125,000 shares of our common stock, at an exercise price
per share equal to the closing price of the common stock on that date. Our
letter agreement with Mr. Robertson also entitles him to participate in
iPartys Executive Incentive Compensation Plan and various additional employee
benefits, including health, dental and life insurance and participation in our
401(k) defined contribution retirement savings plan. Under the terms of
the letter agreement, in the event of termination not for cause, as defined in
the letter agreement, Mr. Robertson would be entitled to receive 6 months
of severance pay, payable in accordance with the normal payroll policies and
procedures of the Company, as well as the continuation of health, dental and
life insurance benefits on the Companys plans for a period of 6 months. On June 4, 2008, March 4, 2009 and
on May 27, 2009, the Board of Directors granted Mr. Robertson
additional options to purchase up to 100,000 shares, up to 200,000 shares and
up to 50,000 shares, respectively, of our Common Stock at exercise prices equal
to the closing prices of our Common Stock on the dates of grant.
Equity
Compensation Plans
On May 27,
2009, the Companys stockholders approved a new equity incentive plan entitled
the 2009 Stock Incentive Plan (the 2009 Plan). The Company will no longer grant equity
awards under its former equity incentive plan,
the Amended and Restated 1998 Incentive and Nonqualified Stock Option
Plan (the 1998 Plan and with the 2009 Plan, the Plans).
The
following table provides certain information as of December 26, 2009 about
our common stock that may be issued under our existing equity incentive
compensation plans:
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
(C)
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
(A)
|
|
|
|
for Future Issuances
|
|
|
|
Number of Securities
|
|
(B)
|
|
under Equity
|
|
|
|
to be Issued
|
|
Weighted Average
|
|
Compensation Plans
|
|
|
|
upon Exercise of
|
|
Exercise Price of
|
|
(Excluding Securities
|
|
Plan
Category
|
|
Outstanding Options
|
|
Outstanding Options
|
|
Reflected in Column a)
|
|
Equity compensation
plans approved by security holders
|
|
10,034,761
|
|
$
|
0.45
|
|
529,978
|
|
Equity compensation
plans not approved by security holders
|
|
|
|
|
|
|
|
Total
|
|
10,034,761
|
|
$
|
0.45
|
|
529,978
|
|
Under the Plans, we are authorized to grant options for the
purchase of up to 11,000,000 shares of our common stock. As of December 26, 2009, 435,261 shares
had been issued pursuant to the exercise of previously issued stock
options. As of December 26, 2009,
there were options outstanding to purchase 10,034,761 shares of our common
stock. Consequently, as of December 26,
2009, options for the purchase of up to 529,978 common shares remain available
for future grants.
22
Executive Incentive Compensation
Plan
Each of the named
executive officers participates in the executive incentive compensation plan
and is eligible to receive a bonus for 2010 of up to 20% of base salary if
certain objective performance metrics are met. Under the executive compensation
plan, the performance metrics are weighted as follows: 25% of the bonus is
dependent upon achievement of certain levels of growth in comparable store
sales over 2009 levels, 25% of the bonus upon the achievement of certain levels
of total sales and 50% of the bonus upon the achievement of certain levels of
EBITDA (earnings before interest, taxes, depreciation and amortization). If we
do not achieve a minimum level of performance for the particular metric, the
named executive officer would not be eligible to receive a bonus amount with
respect to that metric under the Plan.
Indemnification
of Directors and Executive Officers
Our restated certificate
of incorporation, as amended, and bylaws provide that iParty shall indemnify
all of its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law. Under
our restated certificate of incorporation, as amended, and bylaws, any director
or officer, who in his or her capacity as such is made or threatened to be
made, party to any suit or proceeding, will be indemnified. A director or officer will be indemnified if
it is determined that the director or officer acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, iPartys best
interests. Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended, may be
permitted to directors, officers and persons controlling iParty pursuant to the
foregoing provision, or otherwise, we have been advised that in the opinion of the
SEC such indemnification is against public policy and is, therefore,
unenforceable.
We maintain a directors
and officers liability insurance policy covering certain liabilities that may
be incurred by directors and officers in connection with the performance of
their duties. We pay the entire premium
for the liability insurance. We have
key-person life insurance policies on the lives of each of Mr. Perisano
and Ms. Dionne in the amount of $2,000,000 each.
Related
Party Transactions
Under SEC rules, we are required to disclose
transactions in excess of $120,000 in which iParty was a participant in which related
persons had or will have a direct or indirect material interest. Related persons include any of our directors,
nominees for director, or executive officers, and any immediate family members
of such persons and any person (including any group as such term is used in Section 13(d) of
the Exchange Act) who is known to iParty as a beneficial owner of more than 5%
of its voting common stock, and any immediate family member of a
significant shareholder. The term transaction is broadly defined under SEC rules to
include any financial transaction, arrangement or relationship, including any
indebtedness transaction or guarantee of indebtedness. Based on information available to us and
provided to us by our directors and executive officers, we do not believe that
there were any such transactions in effect since December 28, 2008, or any
such transactions proposed to be entered into during fiscal year 2010, except
as follows:
·
On September 15, 2006, we entered into a
Securities Purchase Agreement pursuant to which we raised $2.5 million through
a combination of subordinated debt and warrants issued on September 15,
2006 to Highbridge International LLC (Highbridge), an institutional
accredited investor. Under the terms of the financing, we issued Highbridge a
three-year subordinated note (the Highbridge Note) that bears interest at an
interest rate of prime plus one percent. The note was paid in full on September 15,
2009. In addition, we issued Highbridge a warrant (the Highbridge
Warrant) exercisable for 2,083,334 shares of iParty common stock at an
exercise price of $0.475 per share, or 125% of the closing price of iPartys
common stock on the day immediately prior to the closing of the
transaction. The agreements entered into by iParty and Highbridge in
connection with the financing granted Highbridge resale registration rights
with respect to the shares of common stock underlying the Highbridge Warrant
and provided for certain anti-dilution rights and other covenants with respect
to the listing of our common stock. In
connection with the foregoing financing, we also amended our Rights Agreement
dated as of November 9, 2001, as amended September 15, 2006 (the
Rights Agreement
) to clarify that issuance
of the Highbridge Warrant does not constitute a triggering event under our
Rights Agreement.
23
Compensation Committee Interlocks and Insider
Participation
None of our executive officers serves as a member of
the compensation committee of any other company that has an executive officer
serving as a member of our Board of Directors. None of our executive officers
serves as a member of the board of directors of any other company that has an
executive officer serving as a member of our Boards Compensation
Committee. None of the directors is a
director or executive officer of any other corporation that has a director or
executive officer who is also a director of the Company.
Outstanding
Equity Awards at end of Fiscal 2009
The following table sets forth information concerning
outstanding equity awards as of the end of fiscal 2009 on December 26,
2009:
Name
|
|
Number of Securities
Underlying Unexercised
Options (Exercisable)
|
|
Number of Securities
Underlying Unexercised
Options (Unexercisable)
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Sal
V. Perisano
|
|
464,260
|
|
|
|
$
|
0.69
|
|
6/16/2010
|
|
|
|
1,478,772
|
|
|
|
$
|
0.25
|
|
3/9/2011
|
|
|
|
201,613
|
|
|
|
$
|
0.31
|
|
5/2/2012
|
|
|
|
460,000
|
|
|
|
$
|
0.95
|
|
3/31/2014
|
|
|
|
250,000
|
|
125,000
|
(1)
|
$
|
0.42
|
|
6/06/2017
|
|
|
|
|
|
460,000
|
(2)
|
$
|
0.11
|
|
5/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
Dorice
P. Dionne
|
|
299,245
|
|
|
|
$
|
0.69
|
|
6/16/2010
|
|
|
|
913,400
|
|
|
|
$
|
0.25
|
|
3/9/2011
|
|
|
|
120,968
|
|
|
|
$
|
0.31
|
|
5/2/2012
|
|
|
|
230,000
|
|
|
|
$
|
0.95
|
|
3/31/2014
|
|
|
|
100,000
|
|
50,000
|
(1)
|
$
|
0.42
|
|
6/06/2017
|
|
|
|
|
|
260,000
|
(2)
|
$
|
0.11
|
|
5/27/2019
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Robertson
|
|
78,124
|
|
46,876
|
(3)
|
$
|
0.42
|
|
6/6/2017
|
|
|
|
37,501
|
|
62,499
|
(3)
|
$
|
0.29
|
|
6/4/2018
|
|
|
|
|
|
200,000
|
(3)
|
$
|
0.07
|
|
3/4/2019
|
|
|
|
|
|
50,000
|
(3)
|
$
|
0.11
|
|
5/27/2019
|
|
(1)
These options vest in three
equal installments on each of March 31, 2008, March 31, 2009 and March 31,
2010.
(2)
Under the original terms of
these option grants, these options vested in three equal installments on each
of May 27, 2010, May 27, 2011 and May 27, 2012. Under the terms of the new employment
agreements with Mr. Perisano and Ms. Dionne, these options became
fully vested on April 1, 2010.
(3)
Mr. Robertsons stock
options vest 25% on the anniversary of the grant dates, then in equal monthly
increments over the subsequent three years, vesting in full on the fourth
anniversary of the grant dates.
24
Other Potential Post Employment
Payments
Upon the occurrence of certain triggering events, our
past and current employment agreements with each of Mr. Perisano and Ms. Dionne
and our letter agreement with Mr. Robertson require us to pay certain
amounts related to salary and insurance benefits to or on behalf of those
executive officers, as described below. The payments are subject to certain
non-competition, non-solicitation and confidentiality obligations. The following table presents estimates of the
amounts that would have been payable under our new agreements upon the
occurrence of each such event as of the end of our last fiscal year ended December 26,
2009 (assuming each such agreement had been in effect on such date):
Name
|
|
Termination
Without
Cause
|
|
Change in
Control (1)
|
|
Disability (2)
|
|
Sal
V. Perisano
|
|
$
|
341,711
|
|
$
|
996,711
|
|
$
|
216,711
|
|
Dorice
P. Dionne
|
|
$
|
205,101
|
|
$
|
302,601
|
|
$
|
44,051
|
|
David
E. Robertson
|
|
$
|
89,713
|
|
|
|
|
|
(1)
In the event executive is terminated by
the Company or executive terminates for good reason within 13 months of a
change of control, the salary related amounts would be paid as a lump sum, and
the insurance related amounts in monthly installments. For all other triggering events, all amounts
would be paid in monthly or weekly installments.
(2)
The amounts set forth reflect the payment
under the respective employment agreement as reduced by amounts payable under
the Companys disability plan.
Pension
Benefits
We did not have any plan that provides for payments or
other benefits at, following, or in connection with retirement with any of our
named executive officers during the fiscal year ended December 26, 2009.
Accordingly, we have omitted the table otherwise required to be included
detailing such compensation to our named executive officers during our most
recently completed fiscal year.
Nonqualified
Deferred Compensation
We did not give any nonqualified deferred compensation
to any of our named executive officers during the fiscal year ended December 26,
2009. Accordingly, we have omitted the
table otherwise required to be included detailing such compensation made for
the last fiscal year to our named executive officers.
INDEPENDENT REGISTERED ACCOUNTING FIRMS FEES AND SERVICES
The following table
specifies the fees for professional services rendered by E&Y for the audit
of our annual financial statements for fiscal 2008 and fiscal 2009 and fees
billed for audit-related services, tax services, and all other services by
E&Y in fiscal 2008 and fiscal 2009.
|
|
Fiscal 2008
|
|
Fiscal 2009
|
|
Audit
Fees
|
|
$
|
280,000
|
|
$
|
319,500
|
|
Audit
Related Fees
|
|
|
|
|
|
Tax
Fees
|
|
38,000
|
|
46,250
|
|
All
Other Fees
|
|
|
|
3,000
|
|
Totals
|
|
$
|
318,000
|
|
$
|
368,750
|
|
25
Audit
Fees
These are fees related to
professional services rendered in connection with the audit of our annual
financial statements included in our Annual Report on Form 10-K for fiscal
2008 and fiscal 2009, the reviews of the financial statements included in each
of our Quarterly Reports on Form 10-Q, and accounting consultations that
relate to the audited financial statements and are necessary to comply with
generally accepted auditing standards.
E&Y expresses its views concerning, but does not audit, and is not
required to audit, our internal control over financial reporting.
Audit-Related
Fees
We did not pay E&Y
for any audit-related fees in fiscal 2008 or fiscal 2009. Audit-related fees would be fees for things
such as assurance and related services, such as audits of employee benefit
plans.
Tax
Fees
These are fees for
professional services related to tax return preparation services and tax
compliance services.
Other
Fees
These are fees for
professional services related to the inclusion of Ernst and Youngs consent
letter related to our Registration Statement on Form S-8 covering common
stock that may be offered or sold pursuant to our 2009 Stock Incentive Plan.
Audit
Committees Pre-approval Policy and Procedures
The Audit Committee of
our Board of Directors has adopted policies and procedures for the pre-approval
of audit and non-audit services for the purpose of maintaining the independence
of our independent auditors. We may not
engage our independent auditors to render any audit or non-audit service unless
either the service is approved in advance by the Audit Committee or the engagement
to render the service is entered into pursuant to the Audit Committees
pre-approval policies and procedures.
The Audit Committee may pre-approve services that are expected to be
provided to iParty by the independent auditors during the following 12 months. At the time such pre-approval is granted, the
Audit Committee must (1) identify the particular pre-approved services in
a sufficient level of detail so that management will not be called upon to make
judgment as to whether a proposed service fits within the pre-approved services
and (2) establish a monetary limit with respect to each particular
pre-approved service, which limit may not be exceeded without obtaining further
pre-approval under the policy. At
regularly scheduled meetings of the Audit Committee, management or the
independent auditors must report to the Audit Committee regarding each service
actually provided to iParty.
During fiscal 2009, no
services were provided to iParty by E&Y other than in accordance with the
pre-approval policies and procedures described above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Except as described in
this paragraph, no person who, during the fiscal year ended December 26,
2009, was a director, officer or beneficial owner of more than ten percent of
our common stock (which is the only class of our securities registered under Section 12
of the Exchange Act), failed to file on a timely basis, reports required by Section 16
of the Exchange Act during the most recent fiscal year. A required Form 4 report was not filed
on a timely basis to report the award of stock options for 200,000 shares
granted on March 4, 2009 to David Robertson, an executive officer. In this
case, the report was filed on March 10, 2009, which was two business days
after the required filing date. The foregoing is based solely upon our review
of Forms 3 and 4 during the most recent fiscal year as furnished to us under Rule 16a-3(d) under
the Exchange Act, and Forms 5 and amendments thereto furnished to us with
respect to our most recent fiscal year.
26
OTHER MATTERS
The Board of Directors is
not aware of any other matters, which may come before the annual meeting. If any other matters should properly come
before the annual meeting, the persons named in the enclosed proxy will vote on
such matters as they may determine, in their discretion.
27
|
FOLD AND DETACH
HERE AND READ THE REVERSE SIDE For each of the following nominees for
director: Sal V. Perisano, Daniel I. De Wolf, Frank
W. Haydu III, Eric Schindler and Joseph S. Vassalluzzo, as more fully described in the accompanying
Proxy Statement. Withhold authority as to all listed nominees. For all
nominees except the following: CHECK HERE ONLY IF YOU PLAN TO ATTEND THE
ANNUAL MEETING IN PERSON COMPANY ID: PROXY NUMBER: ACCOUNT NUMBER: Proposal 1
- YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSALS NOS.
1 AND 2. Please mark your votes like this Proposal 2 - To ratify the
selection of Ernst & Young LLP as the
independent registered public accounting firm for the Company for the fiscal
year ending December 25, 2010, as more fully described in the accompanying
Proxy Statement. Signature Signature Date , 2010. Print and sign your name below exactly as it
appears on the records of iParty Corp. and date
this card. When signing as attorney, executor,
administrator, trustee, guardian or in another
representative capacity, please give full title, as such. Joint owners should
each sign. If a corporation, please sign in full corporate name by president
or authorized officer. If a partnership, please sign in partnership name by
an authorized person. X FOR AGAINST ABSTAIN
|
|
FOLD AND DETACH
HERE AND READ THE REVERSE SIDE iParty Corp. THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF iPARTY
CORP. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 2, 2010 The
undersigned, as a holder of shares of common stock, par value $.001 per
share, and/or shares of Series B convertible preferred stock, par value $.001
per share, and/or shares of Series C convertible preferred stock, par value
$.001 per share, and/or shares of Series D convertible preferred stock, par
value $.001 per share, and/or shares of Series E convertible preferred stock,
par value $.001 per share, and/or shares of Series F convertible preferred
stock, par value $.001 per share (collectively, Shares), of iParty Corp., a Delaware corporation (the Company),
hereby appoints Mr. Sal V. Perisano and Mr. David
E. Robertson, and each of them individually, as proxies for the undersigned,
with full power of substitution in each of them, to attend the Annual Meeting
of Stockholders of the Company to be held at the offices of Posternak Blankstein & Lund
LLP located at Prudential Tower, 800 Boylston St.,
33rd Floor, Boston, MA 02199, on Wednesday, June 2, 2010 at 11:00 a.m., local
time, and any adjournments or postponements thereof (the Annual Meeting),
to cast on behalf of the undersigned all votes that the undersigned is
entitled to cast at such meeting with respect to Proposals Nos. 1 and 2 set
forth on the other side and to vote and otherwise represent the undersigned
on any other matter that may properly come before the meeting or any
adjournment or postponement thereof in the discretion of the proxy holder.
The undersigned hereby acknowledges receipt of the accompanying Proxy
Statement and revokes any proxy heretofore given with respect to such
meeting. You may revoke this proxy at any time before it has been exercised
by filing a written revocation with the Secretary of the Company at the
address of the Company, by filing a duly executed proxy bearing a later date
or by appearing in person and voting by ballot at the Annual Meeting. The
votes entitled to be cast by the undersigned will be cast as instructed on
the reverse side. If this proxy is executed but no instruction is given, the
votes entitled to be cast by the undersigned will be cast for each of the
nominees for director in Proposal No. 1 and for Proposal No. 2 and in the
discretion of the proxy holder on any other matter that may properly come
before the meeting or any adjournment or postponement thereof. (Continued, and
to be marked, dated and signed, on the other side)
|
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