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EXHIBIT 10.1
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 Neil Katz (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 Executive Officer (“CEO”) 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 CEO 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 CEO.
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 9 hereof, Executive shall be paid an annual
base salary of (i) $500,000 for the first 12 months of the Term,
(ii) $550,000 for months 13 through 24 of the Term and (iii)
$600,000 for months 25 through 36 of the Term, and for any
extension of the Term pursuant to Section 2 (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.
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
achievement by the Company of certain financial measures and
management objectives as determined by the Committee.
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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.
Reimbursement for Relocation . The
Company will reimburse Executive for Executive's reasonable and
documented relocation expenses (which will include moving
expenses, travel expenses for Executive and Executive's fiance
or spouse, and temporary housing for up to three months
commencing on the date hereof, but which shall exclude any
closing costs, brokerage commissions and other expenses incurred
by Executive in connection with Executive's purchase of a
residence in Broward, Miami-Dade or Palm Beach Counties, Florida
("South Florida") and Executive's sale of his existing residence
in New York). If at any time during the Term of this Agreement,
the Company moves the location where the Executive is required
to work to a location outside of South Florida, the Company will
reimburse Executive for Executive's reasonable and documented
relocation expenses (which will include moving expenses, travel
expenses for Executive and Executive's fiance or spouse, and
temporary housing for up to three months commencing on the date
he is required to relocate, but which shall exclude any closing
costs, brokerage commissions and other expenses incurred by
Executive in connection with Executive's purchase of a residence
in the new location and Executive's sale of his residence in
South Florida). If, within one year from the date of any
relocation of the Executive, Executive's employment with the
Company is terminated for Cause or if Executive voluntarily
terminates his employment with the Company other than for Good
Reason, Executive will be required to refund all moving
expenses, but not the travel expenses or temporary housing
expenses, included within the relocation expenses paid to
Executive by the Company. The Company shall be entitled to
offset any amount owed by the Executive against any other
payment due to Executive. If the Executive's employment with the
Company is terminated without Cause or if Executive terminates
his employment with the Company for Good Reason, the Company
will reimburse Executive's reasonable and documented moving
expenses (but no other expenses) to relocate himself and his
fiance or spouse to New York within six months of such
termination.
7.
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 180,000 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
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provided on Schedule A, unless terminated
pursuant to Section 9 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.
8.
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 Exec
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