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EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this
"Agreement") is entered into effective the 26 th day
of July, 2007 by and between Parlux Fragrances, Inc. (the
"Company") and Raymond J. Balsys (the "Executive" and, together
with the Company, the "Parties").
WHEREAS, the Company desires to employ the
Executive and the Executive agrees to be employed by the Company
as the Chief Financial Officer (“CFO”) of the
Company on the terms and conditions set forth in this
Agreement;
WHEREAS, the terms of this Agreement have been
reviewed and approved by the members of the Compensation
Committee of the Board of Directors of the Company (the
"Committee").
NOW THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and for other
valuable consideration the receipt and adequacy of which is
hereby acknowledged, the Parties hereby agree as follows:
1.
Position and Duties . The
Company hereby agrees to employ the Executive and the Executive
hereby accepts and agrees to serve as CFO of the Company.
The Executive shall report to the Board. Subject to
the advice, consent and direction of the Company's Board of
Directors, the Executive will perform all duties and
responsibilities and will have all authority inherent in the
position of CFO.
2.
Term of Agreement and Employment .
The term of the Executive's employment under this
Agreement will be for an initial period of three (3) years,
beginning on the effective date of this Agreement (the
“Term”), and terminating three years thereafter.
The Term will be automatically extended for two (2)
consecutive one (1) year periods, unless either party provides
six (6) months prior written notice of its desire not to so
extend the Term.
3.
Definitions .
A.
Cause . For purposes of this
Agreement, “Cause” for the termination of the
Executive’s employment hereunder shall be deemed to exist
if, in the good faith judgment of the Company’s Board of
Directors: (i) the Employee commits fraud, theft or
embezzlement; (ii) the Employee commits an act of dishonesty
affecting the Company or a felony or a crime involving moral
turpitude; (iii) the Employee breaches any non-competition,
confidentiality or non-solicitation agreement with the Company;
(iv) the Employee breaches any of the material terms of this
Agreement and fails to cure such breach within 30 days after the
receipt of written notice of such breach from the Company; (v)
the Employee engages in gross negligence or willful misconduct
that causes unreasonable harm to the business and operations of
the Company; or (vi) the Executive’s unreasonable failure
or refusal to diligently perform the duties and responsibilities
required to be performed by the Executive under the terms of
this Agreement.
B.
Company Transaction Events . For purposes
of this Agreement, (i) a "Going Private Event” means a
transaction in which 90% or more of the issued and
C.
outstanding shares of the capital stock of the
Company are to be sold or exchanged (pursuant to an agreement,
tender or exchange offer or otherwise) by the holders thereof
for cash or for securities, so that upon the closing of such a
transaction (or a second step merger related thereto), Parlux
common stock is no longer traded on any public stock exchange
(e.g., Nasdaq, AMEX, NYSE, etc.) or recognized trading market
(e.g., Nasdaq OTCBB) and the holders of Parlux common stock
prior to the closing of such a transaction hold cash or
non-publicly traded securities in a private company after the
transaction, (ii) a "Company Merger Event" means a transaction
in which 90% or more of the issued and outstanding shares of the
capital stock of the Company are to be exchanged (pursuant to an
agreement, exchange offer or otherwise) by the holders thereof
for securities of any public company, so that upon the closing
of such a transaction (or a second step merger related thereto),
all Parlux common stock has been exchanged or converted into
securities of a public company that are traded on a public stock
exchange (e.g., Nasdaq, AMEX, NYSE, etc.) or recognized trading
market (e.g., Nasdaq OTCBB) and the holders of Parlux common
stock prior to the closing of such a transaction hold publicly
traded securities in a public company after the transaction.
D.
Good Reason . For purposes of this
Agreement, termination by the Executive of his employment for
"Good Reason" shall mean a termination by the Executive
following a "Good Reason Event" provided (i) the Executive
provides notice to the Company of such Good Reason Event within
90 days of the initial existence of such Good Reason Event; (ii)
the notice provides the Company with 30 days during which it may
remedy the Good Reason Event; and (iii) the Company fails to
remedy the Good Reason Event within such 30 day period. A
"Good Reason Event shall be deemed to occur upon (i) a material
diminution in the Executive’s authority, duties, or
responsibilities or (ii) any action or inaction of the Company
which constitutes a material breach of this Agreement.
4.
Compensation .
A.
Annual Base Salary . Unless
terminated pursuant to Section 8 hereof, Executive shall be paid
an annual base salary of $190,000 (as applicable, the "Annual
Base Salary"). The Annual Base Salary shall be payable at
such regular times and intervals as the Company customarily pays
its executives from time to time. The Annual Base Salary
shall be reviewed annually by the Board of Directors of the
Company. The fact that the Company will review
Executive’s Annual Base Salary does not entitle Executive
to a raise in Annual Base Salary. Company maintains the
sole discretion to determine what, if any, salary adjustments
will be made to the Annual Base Salary, as determined within the
sole discretion of the Board of Directors of Company.
B.
Executive Bonus Plan . The
Executive shall be entitled to participate in an executive bonus
plan (the “Bonus Plan”), the terms and conditions of
which shall be established by the Committee for each fiscal year
and which will provide that Executive will be able to earn an
annual bonus of up to 50% of the Annual Base Salary, based
upon
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achievement by the Company of certain financial
measures and management objectives as determined by the
Committee.
5.
Executive Benefits . The
Executive will be entitled to four weeks of paid vacation per
fiscal year. Except as otherwise provided in this
Agreement, the Executive will be eligible for and may
participate in, without action by the Board or any committee
thereof, any benefits and perquisites available to executive
officers of the Company, including any group health, dental,
disability, or other form of executive benefit plan or program
of the Company existing from time to time on the same terms and
conditions as is available to all other executives
(collectively, the "Executive Benefits"). Executive shall
receive additional term life insurance coverage with an annual
cost to the Company not to exceed $2,000 per year, and shall be
provided with an automobile allowance of $800 per month, at the
Company’s expense.
6.
Stock Options . As
additional consideration for the Executive's services hereunder
and the covenants contained herein, the Company shall grant
Executive an option (the "Option") to purchase 60,000 shares of
common stock of the Company (the "Common Stock") pursuant to the
Company's 2007 Stock Incentive Plan (the "2007 Plan") upon
shareholder approval of the 2007 Plan. The Option (i)
shall provide for an exercise price equal to the market price of
the Common Stock as of the close of trading on a public stock
exchange or recognized trading market on the date the 2007 Plan
is approved by the shareholders of the Company, and (ii) shall
further provide that the Option shall vest as provided on
Schedule A, unless terminated pursuant to Section 8 hereof.
Immediately prior to the closing of a Going Private Event
or a Company Merger Event, any unvested portion of the Option
shall fully vest and be exercisable by the Executive prior to
the closing of the Going Private Event or Company Merger Event;
provided , however, that if the Company Merger Event is
with a public company that any individual shareholder or group
of affiliated shareholders of the Company beneficially owns 10%
or more of for a period of at least six months prior to the
closing of the Company Merger Event (an "Affiliated Public
Company"), then the vesting of the unvested portion of the
Executive's Option shall not be accelerated so long as the
Executive's Option to purchase shares of the Common Stock of the
Company is converted into an option to purchase shares of the
common stock of the Affiliated Public Company with the same
economic value as of the date of the closing of the
transaction.
7.
Death or Disability . The
Executive's employment will terminate immediately upon the
Executive's death. If the Executive becomes physically or
mentally disabled so as to become unable for a period of more
than three consecutive months to perform the Executive's duties
hereunder on a substantially full-time basis, the Executive's
employment will terminate as of the end of such three-month and
this shall be considered a "disability" under this Agreement.
The Executive agrees to submit to reasonable examination
by a licensed physician selected by the Company to confirm
existence or extent of any disability. Such termination
shall not affect the Executive's benefits under the Company's
disability insurance program, if any, then in effect.
8.
Termination . The Executive
may terminate this Agreement for any reason upon not less than
one hundred eighty (180) days written notice. The Company
may terminate this
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Agreement for Cause with no prior notice, or for
any other reason upon one hundred eighty (180) days written
notice.
A.
Termination of Employment Other Than by
Resignation of Executive or Termination for Cause .
Upon the termination of this Agreement for any reason
(including termination of employment by the Executive for Good
Reason, termination by the Company without Cause, or termination
upon the death or disability of the Executive) other than by the
resignation of Executive without Good Reason or a termination by
the Company for Cause, the following shall apply:
(i)
Termination Payment . The
Executive, or his estate and heirs following his death, shall be
entitled (A) to continue to receive, except as provided in
Section 10 of this Agreement, his Annual Base Salary in effect
at the time of such term
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