SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Parlux Fragrances, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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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.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
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*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
Parlux Fragrances, Inc.
3725 S.W. 30th Avenue
Fort Lauderdale, FL 33312
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Notice is hereby given that the Annual Meeting of Stockholders of
Parlux Fragrances, Inc. (the "Company") will be held at the Wyndham Hotel, 1825
Griffin Road, Dania, Florida 33004, on Thursday, October 15, 1998, at 11:00 a.m.
for the following purposes as set forth in the accompanying Proxy Statement:
1. To elect seven directors;
2. To ratify the appointment of PricewaterhouseCoopers, L.L.P. as
independent certified public accountants for the Company for the
fiscal year ending March 31, 1999; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Holders of record of the Company's common stock at the close of
business on August 28, 1998, will be entitled to vote at the meeting.
By order of the Board of Directors
Ilia Lekach
Chairman of the Board and
Chief Executive Officer
Dated: August 28, 1998
YOUR VOTE IS IMPORTANT
----------------------
Whether or not you plan to attend the meeting, please sign and date the
enclosed proxy and return it in the envelope provided. Any person giving a proxy
has the power to revoke it at any time prior to the exercise thereof and if
present at the meeting may withdraw it and vote in person. Attendance at the
meeting is limited to stockholders, their proxies and invited guests of the
Company.
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
OF PARLUX FRAGRANCES, INC.
TO BE HELD OCTOBER 15, 1998
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation by the Board of Directors (the "Board") of Parlux
Fragrances, Inc. (the "Company") of proxies to be voted at the annual meeting of
stockholders (the "Annual Meeting") of the Company to be held at the Wyndham
Hotel, 1825 Griffin Road, Dania, Florida 33004, on Thursday, October 15, 1998,
at 11:00 a.m., or at any adjournment thereof. The Proxy Statement and the form
of proxy are being mailed on or about September 10, 1998, to stockholders as of
the Record Date.
VOTING SECURITIES; PROXIES; REQUIRED VOTE
Voting Securities
The Board of Directors has fixed the close of business on August 28,
1998, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting. As of
the Record Date, the Company had outstanding 14,744,019 shares of Common Stock,
par value $0.01 per share (the "Common Stock"). Only the holders of Common Stock
are entitled to notice of and to vote at the Annual Meeting. Holders of Common
Stock are entitled to one vote per share.
Proxies
Mr. Frederick Purches and Mr. Frank Buttacavoli, the persons named as
proxies on the proxy card accompanying this Proxy Statement, were selected by
the Board of Directors of the Company to serve in such capacity. Messrs. Purches
and Buttacavoli are directors of the Company. Each executed and returned proxy
will be voted in accordance with the directions indicated thereon, or if no
direction is indicated, such proxy will be voted in accordance with the
recommendations of the Board of Directors contained in this Proxy Statement.
Each stockholder giving a proxy has the power to revoke it at any time before
the shares it represents are voted. Revocation of a proxy is effective upon
receipt by the Secretary of the Company of either (i) an instrument revoking the
proxy or (ii) a duly executed proxy bearing a later date. Additionally, a
stockholder may change or revoke a previously executed proxy by voting in person
at the Annual Meeting.
Required Vote
The holders of at least a majority of the outstanding shares of Common
Stock represented in person or by proxy will constitute a quorum at the Annual
Meeting. At the Annual Meeting, the vote of a majority in the interest of
stockholders present in person or by proxy and entitled to vote thereon is
required to elect directors, and ratify the appointment of
PricewaterhouseCoopers, L.L.P. as the independent certified public accountants
of the Company's consolidated financial statements for the fiscal year ending
March 31, 1999.
The election inspectors appointed for the meeting will tabulate the
votes in person or by proxy at the Annual Meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstention as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum but as unvoted for the purposes of determining the approval of any
matter submitted to the stockholders for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to vote
on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
Page 2
<PAGE>
PROPOSAL 1:
NOMINEES FOR ELECTION AS DIRECTORS
The directors elected at the Annual Meeting will hold office until the
next annual meeting and until his/her successor is duly elected and qualified.
Unless the proxy specifies otherwise, the person named in the enclosed proxy
intends to vote the shares represented by the proxies given to him for the seven
nominees listed below. Messrs. I. Lekach, Z. Lekach, Buttacavoli, Purches,
Vercillo, Gopman, and Ms. de la Vega are all presently directors of the Company.
The Company has no reason to believe that any of the nominees will become
unavailable to serve as directors for any reason before the Annual Meeting.
However, in the event that any of them shall become unavailable, the person
designated as proxy reserves the right to substitute another person of his
choice when voting at the Annual Meeting.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C>
Ilia Lekach 50 Chairman of the Board and Chief Executive Officer
Zalman Lekach 31 President, Chief Operating Officer and Director
Frank A. Buttacavoli 43 Executive Vice President, Chief Financial Officer and Director
Frederick E. Purches 60 Vice Chairman of the Board
Albert F. Vercillo 68 Director
Glenn Gopman 42 Director
Mayi de la Vega 43 Director
</TABLE>
Ilia Lekach is Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Lekach became a director of the Company in November
1987 and resigned in November 1988. He was re-elected to the Board of Directors
in February 1989. Mr. Lekach assumed the position of Chairman of the Board of
the Company in November of 1990 and as Chief Executive Officer of the Company in
December 1993. Prior to resigning in April 1994, he was Chairman of the Board of
Directors and CEO of Perfumania, Inc. ("Perfumania"), an affiliated public
company based in Miami, Florida, and a leading specialty retailer of fragrances
with approximately 250 retail outlets in manufactures' outlet malls and regional
malls. Perfumania also maintains a wholesale operation supplying fragrances and
other beauty related items to customers in North America and internationally.
Zalman Lekach is President and Chief Operating Officer of the Company.
He became a director and an executive in Parlux, S.A., the Company's French
subsidiary, in May 1990. In May 1993, he resigned his executive position and
owned and operated a company exporting foods and health/beauty aids to South
America. In January of 1995, he rejoined the Company as its Chief Operating
Officer and a director. In June 1996, Mr. Zalman Lekach also assumed the
position of President. Messrs. Ilia Lekach and Zalman Lekach are brothers.
Frank A. Buttacavoli, a Certified Public Accountant, has been Vice
President and Chief Financial Officer of the Company since April 1993, and a
director for the Company since March 1993. From July 1979 through June 1992, Mr.
Buttacavoli was employed by Price Waterhouse, and was a Senior Manager from July
1987 to June 1992. From July 1992 through March 1993, he provided financial
consulting services to the Company. In June 1996, Mr. Buttacavoli was promoted
to Executive Vice President.
Frederick E. Purches has been a director of the Company since its
formation in July 1984. He has been engaged in the cosmetic/fragrance business
for over 30 years in various executive capacities with Helena Rubinstein, Inc.
and Revlon, Inc. From 1980 through 1988, he was President of Helena Rubinstein,
Inc. He resigned from the latter position in 1989 to take a more active role in
the direction of the Company's operations. In November of 1990, Mr. Purches
resigned as Chairman of the Board in favor of Mr. Lekach, and Mr. Purches
assumed the new position of Vice Chairman of the Board.
Page 3
<PAGE>
Albert F. Vercillo has been a director of the Company since May 1989.
Mr. Vercillo is President of Cambridge Development Corporation and President of
Schiaparelli, Inc. The companies are privately-held companies engaged in
providing administrative and business services, licensing and the distribution
of various products since April 1981.
Glenn Gopman has been a director of the Company since October 1995. Mr.
Gopman is the principal shareholder of the public accounting firm Thaw, Gopman
and Associates, and has been associated with that firm for over ten years. He is
a member of the Florida Institute of Certified Public Accountants and actively
participates on its committees and in community activities.
Mayi de la Vega, a director of the Company since October 1995, founded
International Metal Exports, Inc. in May of 1978, a company operating as a
distributor and supplier of aluminum, stainless steel, and other metals to the
aircraft industry. In 1992, the company was sold to a Swiss multi-national
corporation, and Ms. de la Vega continued as President and a director through
December 1994. Subsequently, she has been involved in private investing.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In fiscal year 1998, there were six meetings of the Board of Directors
(including regularly scheduled and special meetings), three of which were
conducted by teleconference. All directors attended at least 67% of the meetings
of the Board in fiscal 1998.
The Board of Directors has established two standing committees: the
Audit Committee and the Compensation Committee. The Board of Directors does not
have a Nominating Committee.
Audit Committee
The Audit Committee recommends the appointment of a firm of independent
public accountants to audit the Company's financial statements, as well as
reviews and approves the scope, purpose and type of audit services to be
performed by the external auditors. The Audit Committee is composed of Messrs.
Gopman and Vercillo and Ms. de la Vega. The Audit Committee held two meetings in
fiscal year 1998.
Compensation Committee
The duties of the Compensation Committee are to make recommendations to
the Board of Directors concerning the salaries of the Company's officers and to
advise and act for the Board of Directors on other compensation matters. The
Compensation Committee is composed of Messrs. Purches and Gopman and Ms. de la
Vega. The Compensation Committee held one meeting in fiscal year 1998.
EXECUTIVE COMPENSATION
The Company effected a two-for-one stock split in the form of a
dividend to shareholders of record as of November 3, 1995. All common stock and
warrant information contained in this proxy statement has been restated to
reflect the stock split. The words "warrant" and "option" have the same meaning
herein, and are used interchangeably.
The following table sets forth information with respect to compensation
paid by the Company for services to the Company during the fiscal year ended
March 31, 1998 and for the two prior fiscal years for (i) the Company's Chief
Executive Officer and (ii) the Company's two most highly compensated executive
officers other than the Chief Executive Officer (collectively the "Named
Executive Officers") whose base compensation and bonus exceeded $100,000 during
the fiscal year ended March 31, 1998.
Page 4
<PAGE>
<TABLE>
<CAPTION>
TABLE I
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
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Awards
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Other Compensation Securities
Name and Principal Salary ($) Bonus ($) ($) (1) Underlying
Positions Fiscal Year Options (#)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Ilia Lekach; 1996 185,000 0 0 0
Chairman 1997 239,808 250,000 0 0
and CEO 1998 260,000 0 6,000 0
Zalman Lekach; 1996 165,000 0 0 0
President and 1997 186,923 0 0 0
Chief Operating 1998 195,000 0 4,500 0
Officer
Frank Buttacavoli; 1996 145,000 0 0 0
Executive Vice 1997 165,000 0 0 0
President and 1998 180,000 0 3,461 0
Chief Financial
Officer
</TABLE>
(1) No executive officer named in the table received any other compensation
in an amount in excess of the lesser of either $50,000 or 10% of the
total annual salary and loans reported for him in the two preceding
columns for the periods covered by this table.
TABLE II
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table shows stock options exercised by each of the Named
Executives during fiscal 1998, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares covered
by both exercisable and non-exercisable stock options as of fiscal year-end, and
the values for unexercised options.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options At
Options at March 31, 1998 March 31, 1998 (2)
------------------------- ------------------
Shares
Acquired Value
On Realized
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ilia Lekach 0 $0 420,000 0 0 $0
Zalman Lekach 0 0 180,000 0 0 0
Frank Buttacavoli 0 0 188,000 0 $29,328 0
</TABLE>
Page 5
<PAGE>
(1) Based on the difference between the closing market price for Common
Stock on the date of exercise of the option and the option exercise
price. The above valuation may not reflect the actual value of
exercised options as the value of exercised options will fluctuate with
market activity.
(2) Based on the difference between the closing market price on March 31,
1998, for Common Stock, which was $1.656 per share, and the option
exercise price. The above valuation may not reflect the actual value of
unexercised options as the value of unexercised options will fluctuate
with market activity.
EMPLOYMENT AND CONSULTING AGREEMENTS
As of April 1, 1997, the Company entered into a three-year employment
agreement with Mr. Ilia Lekach, Chairman and Chief Executive Officer, which
called for an annual base salary of $260,000, with annual increases at the
discretion of the Board. There were no warrants granted with the agreement. In
the event of a change in control, the agreement calls for the remaining monies
due under the agreement to be doubled.
As of April 1, 1997, the Company entered into a three-year employment
agreement with Mr. Zalman Lekach, President and Chief Operating Officer, which
called for an annual base salary of $195,000, with annual increases at the
discretion of the Chief Executive Officer. There were no warrants granted with
the agreement. In the event of a change in control, the agreement calls for the
remaining monies due under the agreement to be doubled.
As of April 1, 1997, the Company entered into a three-year employment
agreement with Mr. Frank A. Buttacavoli, Executive Vice President and Chief
Financial Officer, which called for an annual base salary of $180,000 with
annual increases at the discretion of the Chief Executive Officer. There were no
warrants granted with the agreement. In the event of a change in control, the
agreement calls for the remaining monies due under the agreement to be doubled.
On April 1, 1997, the Company entered into a three-year agreement with
Cosmix, Inc., a company owned by Mr. Frederick Purches, the Vice Chairman of the
Board, which provides for annual payments of $100,000. The agreement calls for
Mr. Purches to assist the Company in the areas of banking, Securities and
Exchange Commission and stockholder relations, financial planning, assessment
and coordination of acquisitions and divestitures, and any other similar
activities which may be assigned by the Board of Directors. Mr. Purches receives
certain insurance benefits as part of his agreement, and in the event of a
change in control, the agreement calls for the remaining monies due under the
agreement to be doubled. There were no warrants granted with the agreement.
On April 1, 1997, the Company entered into a three-year consulting
agreement commencing on June 1, 1997, with the Cambridge Development
Corporation, a company owned by Mr. Albert F. Vercillo, director of the Company,
which provides for monthly payments of $5,416. The agreement calls for Mr.
Vercillo to assist the Company in the areas of U.S. and international financial
analysis and planning. Mr. Vercillo receives certain insurance benefits as part
of the agreement, and in the event of a change in control, the agreement calls
for the remaining monies due under the agreement to be doubled. There were no
warrants granted with the agreement.
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
In October 1995, a Compensation Committee was appointed. The Committee
consists of Mr. Frederick Purches, Mr. Glenn Gopman and Ms. Mayi de la Vega.
Prior to this date, the Board of Directors discussed compensation issues
regarding the Company's executive officers and directors. (See "Employment and
Consulting Agreements" and "Certain Relationships and Related Transactions".)
Page 6
<PAGE>
DIRECTOR COMPENSATION
The Company compensates outside (non-employee/consultant) members of the Board
of Directors for their activities as directors of the Company, at an annual rate
of $10,000, and awards 2,000 options annually on the anniversary date of each
directors election, at the closing price on such day as reported by the NASDAQ
National Market.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board (The "Compensation Committee"). The
Company's executive compensation program is structured to achieve the Company's
goals as they relate to maximizing corporate performance and stockholder return.
In general, executive compensation is made up of annual salaries, incentive
bonuses and option grants. The Board of Directors believes that total
compensation should increase or decrease with Company performance; as such,
incentive bonuses and option grants constitute a portion of executive
compensation to help align executive and stockholder interests. The Board of
Directors believes that compensation should attract, motivate and retain
executive talent to improve the Company's performance and therefore increase
shareholder returns.
In addition to base salaries and option grants, the Compensation
Committee may elect to award incentive bonuses as part of total compensation to
executive officers who have rendered services during the year that substantially
exceed those normally required or anticipated. These bonuses are intended to
reflect the Compensation Committee's determination to reward any executive who,
through extraordinary effort, has substantially benefited the Company and its
stockholders during the year.
In January of 1996, the Compensation Committee modified the employment
agreements with Messrs. I. Lekach, Z. Lekach, and Buttacavoli and issued warrant
agreements to double the warrants specified in their respective employment
contracts in the event of sale of or a change in control in the Company. These
warrant agreements extend through March 31, 2004 for Mr. Ilia Lekach and Mr.
Buttacavoli, and through March 31, 2005 for Mr. Zalman Lekach.
Compensation Deductible under Section 162(m) of the Internal Revenue Code
On August 10, 1993, the Revenue Reconciliation Act of 1993 was enacted
which amended the Internal Revenue Code of 1986, as amended, by adding Section
162(m) which eliminates the deductibility of most cash and non-cash compensation
over $1 million paid to certain "covered employees" (which generally is defined
as a corporation's chief executive officer and the four other highest
compensated employees). Contributions to qualified plans, items excluded from
the employee's gross income, compensation paid pursuant to a binding agreement
entered into on or before February 17, 1993, commission-based compensation, and
certain "performance-based" compensation are types of remuneration that are not
affected by the deduction limitation.
During the fiscal year ended March 31, 1998, none of the Named
Executive Officers received total compensation in excess of $1 million. However,
it is possible that in future years some portion of the compensation paid to the
Company's chief executive officer and its two highest compensated employees
will not be tax deductible under Section 162(m). When the compensation of any of
the Company's affected executives becomes closer to the $1 million deduction
limitation, the Compensation Committee plans to consider the requirements of
Section 162(m) and decide what actions, if any, will be taken when setting the
compensation levels for these executives.
Compensation Committee
- ----------------------
Frederick Purches, Chairman
Glenn Gopman
Mayi de la Vega
Page 7
<PAGE>
STOCKHOLDER RETURN PERFORMANCE: FIVE YEAR GRAPH
Set forth below is a line graph comparing the cumulative total return
on the Common Stock with the cumulative total return of the Standard and Poors
500 Index, and the Standard and Poors Cosmetic Segment Index for the fiscal
years of 1993 through 1998.
COMPUSTAT CUSTOM STUDY
TOTAL SHAREHOLDER RETURNS
-------------------------
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company/Index Mar 94 Mar 95 Mar 96 Mar 97 Mar 98
- --------------------------------------------------------------------------------
PARLUX FRAGRANCES INC 62.47 88.47 169.43 -80.31 -32.05
PERSONAL CARE-500 1.84 30.24 24.35 35.20 61.64
S&P 500 INDEX 1.48 15.54 32.00 19.79 48.00
<TABLE>
<CAPTION>
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Mar 93 Mar 94 Mar 95 Mar 96 Mar 97 Mar 98
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PARLUX FRAGRANCES INC 100 162.47 306.21 825.02 162.47 110.40
PERSONAL CARE-500 100 101.84 132.64 164.93 222.99 360.43
S&P 500 INDEX 100 101.48 117.25 154.77 185.40 274.39
</TABLE>
Prepared by Standard & Poor's Compustat
6/10/98
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date certain information
with respect to the number of shares of Common Stock beneficially owned by (i)
each director of the Company who beneficially owns Common Stock, (ii) the
Company's chief executive officer and the other most highly compensated
executive officers of the Company whose total salary and bonus exceeded $100,000
during fiscal 1998, (iii) all directors and executive officers of the Company as
a group and (iv) based on information available to the Company and a review of
statements filed with the SEC pursuant to Section 13(d) and 13(g) of the
Securities Act of 1934, as amended (the "Exchange Act"), each person or entity
that beneficially owns (directly or together with affiliates) more than 5% of
the Common Stock. The Company believes that each individual or entity named has
sole investment and voting power with respect to shares of Common Stock
indicated as beneficially owned by them, except as otherwise noted.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Percentage
Directors and Executive Officers: (1) Ownership (1)
------------------ -------------
<S> <C> <C>
Ilia Lekach (2) 1,811,248 11.9%
Zalman Lekach (3) 296,615 2.0%
Frank A. Buttacavoli (4) 200,000 1.3%
Frederick Purches (5) 105,000 .7%
Albert F. Vercillo (6) 100,000 .7%
Glenn Gopman (7) 9,000 *
Mayi de la Vega (8) 6,000 *
All Directors and Officers as a Group (7 Persons) 2,527,863 16.2%
Other Principal Stockholders:
Pacific Investment Group (9) 1,101,860 7.5%
Dimensional Fund Advisors Inc. (10) 837,300 5.7%
North Shore Associates, L.P. (11) 755,000 5.1%
</TABLE>
Page 8
<PAGE>
(1) Calculated pursuant to Rule 13d-3 of the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage
owned by such person, but not deemed outstanding for the purpose of
calculating the percentage owned by each other person listed. As of the
Record Date, the Company had 14,744,019 shares of Common Stock
outstanding.
(2) Consists of (a) 289,388 shares owned jointly by Mr. Lekach and his wife,
(b) 1,101,860 shares owned or controlled by Pacific Investment Group
Inc., a corporation owned by Mr. Lekach and (c) immediately exercisable
warrants to purchase 420,000 shares of Common Stock issued to Mr. Lekach
pursuant to his prior employment agreement. The address of Mr. Lekach is
3725 S.W. 30th Avenue, Fort Lauderdale, Florida 33312.
(3) Includes immediately exercisable warrants to purchase 180,000 shares of
Common Stock issued to Mr. Lekach pursuant to his prior employment
agreement.
(4) Includes immediately exercisable options to purchase 188,000 shares of
Common Stock issued to Mr. Buttacavoli pursuant to his prior employment
agreement.
(5) Includes immediately exercisable warrants for 30,000 shares of
Common Stock issued in connection with Mr. Purches' prior consulting
agreement.
(6) Includes immediately exercisable warrants for 30,000 shares of
Common Stock issued in connection with Mr. Vercillo's prior consulting
agreement.
(7) Includes immediately exercisable options to purchase 6,000 shares of
Common Stock.
(8) Includes immediately exercisable options to purchase 6,000 shares of
Common Stock.
(9) Address is c/o Mr. Ilia Lekach, 3725 S.W. 30th Avenue, Fort Lauderdale,
Florida 33312.
(10) Address is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
(11) Address is c/o North Country Capital Corp., 980 North Federal Highway,
Suite 310A, Boca Raton, FL 33432.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had sales of approximately $21,940,000, $26,568,000 and
$26,187,000 during the fiscal years ended March 31, 1998, 1997 and 1996,
respectively, to Perfumania, Inc. (Perfumania), and sales of $1,272,000 during
the fiscal year ended March 31, 1997, to L. Luria & Son, Inc. (Luria), companies
in which, the Company's Chairman and Chief Executive Officer has an ownership
interest. Net amounts due from Perfumania amounted to $17,973,000 and
$22,136,000 at March 31, 1998 and 1997, respectively. Amounts due from Luria
totaled $726,000 at March 31, 1997. Amounts due from related parties are
non-interest bearing and are realizable in less than one year.
On August 13, 1997, Luria filed for bankruptcy protection under Chapter
11 of the United States Bankruptcy Code, which has subsequently resulted in a
Chapter 7 liquidation. At the time of the filing Luria owed the Company
$690,886. The Company has filed its claim and has been characterized as an
insider in the liquidating plan of reorganization filed on April 6, 1998 by
Luria's in the United States Bankruptcy Court, Southern District of Florida. The
committee of unsecured creditors in Luria's bankruptcy proceedings is
investigating potential actions to recover substantial funds from alleged
insiders of Luria's and their affiliates, which might include actions against
the Company to recover amounts paid for merchandise sold to Luria's. Management
cannot presently predict the outcome of these matters, although management
believes, upon the advice of legal counsel, these matters should not have a
materially adverse effect on the Company's financial position or results of
operations. As of March 31, 1998, this receivable was fully reserved.
On September 3, 1997, the Company loaned $150,000 to its Chairman and
Chief Executive Officer. The loan is unsecured, bears interest at 10% per annum
and is due on December 31, 1998.
The Company has entered into various employment and consulting
agreements with its executive officers and directors (see "Employment and
Consulting Agreements").
In July 1995 and March 1996, Mr. Purches exercised options to acquire a
total of 60,000 shares of the Company's Common Stock at a price of $2.0625, of
which 30,000 shares were registered with an S-3 filing in September 1995, and
30,000 shares were registered with an S-3 filing in August 1996. In August 1995,
Mr. Vercillo exercised options to acquire 50,000 shares of the Company's Common
Stock at a price
Page 9
<PAGE>
of $1.875, which were registered with an S-3 filing in September 1995. In August
1995, Mr. Buttacavoli exercised options to acquire 12,000 shares of the
Company's Common Stock at a price of $1.50, which were registered with an S-3
filing in September 1995. In July 1998, Mr. Vercillo exercised options to
acquire 10,000 shares of the Company's common stock at a price of $1.625, which
were registered with an S-8 filing in July 1992.
PROPOSAL NO. 2:
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected PricewaterhouseCoopers, L.L.P
("Pricewaterhouse") as the independent certified public accountants of the
Company for the fiscal year ending March 31, 1999. Pricewaterhouse has served as
the Company's independent certified public accounting firm since 1988.
Representatives of Pricewaterhouse will be present at the Annual Meeting and
will be given the opportunity to make a statement if they so desire. They will
also be available to respond to appropriate questions.
If the Company's stockholders do not ratify the appointment of
Pricewaterhouse, other certified public accountants will be considered by the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS, L.L.P. AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
EXPENSE SOLICITATION
The cost of soliciting proxies, which also includes the preparation,
printing and mailing of the Proxy Statement, will be borne by the Company.
Solicitation will be made by the Company primarily through the mail.
Shareholders Communication Corporation, New York, New York, has been retained to
assist in the distribution of proxies at an estimated fee of $7,000, plus
expenses. Directors, officers and regular employees of the Company may also
solicit proxies personally, by telephone or telefax. The Company will request
brokers and nominees to obtain voting instructions of beneficial owners of stock
registered in their names and will reimburse them for any expenses incurred in
connection therewith.
PROPOSALS OF STOCKHOLDERS FOR 1999 ANNUAL MEETING
Stockholders of the Company who intend to present a proposal for action
at the 1999 Annual Meeting of Stockholders of the Company, must notify the
Company's management of such intention by notice received at the Company's
principal executive offices no later than May 20, 1999 for such proposal to be
included in the Company's proxy statement and form of proxy relating to such
meeting.
FINANCIAL STATEMENTS
The Company's Annual Report to Stockholders for the year ended March
31, 1998 is being delivered with the Proxy to the Company's stockholders. Also
accompanying this Notice of Annual Meeting and Proxy Statement is a copy of the
Company's quarterly report on Form 10-Q for the three-month period ended June
30, 1998, which contains financial information for that period.
Page 10
<PAGE>
OTHER MATTERS
The Board knows of no matters that are expected to be presented for
consideration at the Annual Meeting which are not described herein. However, if
other matters properly come before the meeting, it is intended that the person
named in the accompanying proxy will vote thereon in accordance with his best
judgment.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IN THE UNITED
STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE
THE EXPENSE OF FURTHER MAILINGS.
Fort Lauderdale, FL
August 28, 1998
By order of the Board of Directors
Ilia Lekach
Chairman of the Board and
Chief Executive Officer
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<PAGE>
PROXY CARD TEXT IS AS FOLLOWS:
- ------------------------------
(Front)
PROXY
PARLUX FRAGRANCES, INC.
Proxy for Annual Meeting of Stockholders October 15, 1998
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Parlux Fragrances, Inc. (the "Company")
acknowledges receipt of the Notice of the Annual Meeting of Stockholders and the
accompanying Proxy Statement for the 1998 Annual Meeting and, revoking all prior
proxies, hereby appoints Frederick E. Purches and Frank A. Buttacavoli with full
power of substitution as proxy to vote all the shares of Common Stock of the
Company owned or held by the undersigned at the 1998 Annual Meeting of
Stockholders to be held at the Wyndham Hotel, 1825 Griffin Road, Dania, Florida
33004, on Thursday, October 15, 1998, at 11:00 a.m. or any adjournment or
postponement hereof.
<TABLE>
<CAPTION>
1. Election of Directors
<S> <C> <C>
[ ] For All Nominees Listed Below [ ] Withhold Authority
(except as marked to the contrary) to vote for all nominees listed below
</TABLE>
Ilia Lekach, Zalman Lekach, Frank A. Buttacavoli, Frederick E. Purches,
Albert F. Vercillo, Glenn Gopman, Mayi de la Vega.
Instruction: To withhold authority to vote for any individual, write such
nominee's name in the space provided below.
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
<PAGE>
(Back)
2. Approval of PricewaterhouseCoopers, L.L.P. as Independent Certified
Public Accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Date:
---------------------------------------
---------------------------------------
(Stockholder's signature)
---------------------------------------
(Stockholder's signature)
This Proxy should be dated,
signed by the
stockholder(s) exactly as
the name appears on the
envelope in which this
material was mailed, and
returned at the earliest
convenience in the enclosed
return envelope. Persons
signing in a fiduciary
capacity should so
indicate.
