SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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):
|_| $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.
|X| No fee required.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
|_| 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: _________________________________________________
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___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
(032796DTI)
<PAGE>
Parlux Fragrances, Inc.
3725 S.W. 30th Avenue
Fort Lauderdale, FL 33312
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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 Sheraton Ft.
Lauderdale Airport Hotel, 1825 Griffin Road, Dania, Florida 33004, on Tuesday,
October 12, 1999, 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, 2000; 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 27, 1999, 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 27, 1999
YOUR VOTE IS IMPORTANT
----------------------
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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.
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<PAGE>
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Proxy Statement
- --------------------------------------------------------------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
OF PARLUX FRAGRANCES, INC.
TO BE HELD OCTOBER 12, 1999
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 Sheraton
Ft. Lauderdale Airport Hotel, 1825 Griffin Road, Dania, Florida 33004, on
Tuesday, October 12, 1999, 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,
1999, 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 27,
1999, 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 13,002,222 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. The Company instituted a series of
common stock buyback programs in fiscal 1997, and through March 31, 1999, the
Company acquired in the open market a total of 3,616,031 shares at a cost of
$8,093,595. During the period of April 1, 1999 through August 27, 1999, the
Company acquired an additional 805,225 shares, at a cost of $1,575,468. These
shares are held as treasury stock, and are not eligible for voting purposes.
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, 2000.
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.
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
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intends to vote the shares represented by the proxies given to him for the seven
nominees listed below. Messrs. I. Lekach, Buttacavoli, Purches, Vercillo, Z.
Lekach, 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.
Name Age Position
- ---- --- --------
Ilia Lekach 51 Chairman of the Board and Chief Executive Officer
Frank A. Buttacavoli 44 Executive Vice President, Chief Financial Officer
Frederick E. Purches 61 Vice Chairman of the Board
Zalman Lekach 32 Director
Albert F. Vercillo 69 Director
Glenn Gopman 43 Director
Mayi de la Vega 44 Director
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 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"), a related public company
based in Miami, Florida, and a leading specialty retailer of fragrances with
approximately 290 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. In
October 1998, Mr. Lekach reassumed the position of Chairman and Chief Executive
Officer for Perfumania, and continues to hold this position in both companies.
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, and in January 1999, he assumed additional
responsibilities following the resignation of Mr. Zalman Lekach.
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.
Zalman Lekach 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. In January 1999, Mr. Zalman Lekach resigned his
position as President and Chief Operating Officer to pursue opportunities
unrelated to the fragrance field. He remains a director. Messrs. Ilia Lekach and
Zalman Lekach are brothers.
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
Page 3
<PAGE>
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 real estate and 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 1999, there were seven meetings of the Board of
Directors (including regularly scheduled and special meetings), one of which was
conducted by teleconference. All directors attended at least 70% of the meetings
of the Board in fiscal 1999.
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 one meeting in
fiscal year 1999.
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 1999.
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, 1999 and for the two prior fiscal years for (i) the Company's Chief
Executive Officer and (ii) the Company's most highly compensated executive
officers other than the Chief Executive Officer (collectively the "Named
Executive Officers") whose base compensation and bonus exceeded $100,000 during
the fiscal year ended March 31, 1999.
TABLE I
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
- ---------------------------- -------------- ------------- ---------- ---------------------- -----------------
Awards
============================ ============== ============= ========== ====================== =================
Securities
Name and Principal Other Underlying
Positions Fiscal Year Salary ($) Bonus ($) Compensation ($) (1) Options (#)
============================ ============== ============= ========== ====================== =================
<S> <C> <C> <C> <C> <C>
Ilia Lekach; 1997 239,808 250,000 0 0
Chairman 1998 260,000 0 6,000 0
and CEO 1999 260,000 39,000 0 1,000,000
Frank Buttacavoli; 1997 165,000 0 0 0
Executive Vice 1998 180,000 0 3,461 0
President and CFO 1999 180,000 27,000 0 0
</TABLE>
Page 4
<PAGE>
(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 1999, 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, 1999 March 31, 1999 (2)
------------------------- ------------------
Shares
Acquired On Value
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------- ---------- --------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ilia Lekach 0 $0 1,420,000 0 0 $0
Frank Buttacavoli 0 0 188,000 0 0 0
</TABLE>
(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, 1999,
for Common Stock, which was $1.375 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. 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.
As of April 1, 1999, Mr. Buttacavoli's annual base salary was increased to
$205,000 in recognition of his expanded responsibilities.
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. In December 1998, the monthly
payments were increased to $7,000. 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.
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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".)
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, 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.
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, 1999, 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 6
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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 1994 through 1999.
Total Return To Shareholder's
(Dividends reinvested monthly)
<TABLE>
<CAPTION>
ANNUAL RETURN PERCENTAGE
Years Ending
Company / Index Mar95 Mar96 Mar97 Mar98 Mar99
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PARLUX FRAGRANCES INC 88.47 169.43 -80.31 -32.05 -16.97
S&P 500 INDEX 15.54 32.00 19.79 48.00 18.46
PERSONAL CARE-500 30.24 24.35 35.20 61.64 3.46
</TABLE>
<TABLE>
<CAPTION>
INDEXED RETURNS
Base Years Ending
Period
Company / Index Mar94 Mar95 Mar96 Mar97 Mar98 Mar99
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PARLUX FRAGRANCES INC 100 188.47 507.80 100.00 67.95 56.42
S&P 500 INDEX 100 115.54 152.51 182.70 270.39 320.30
PERSONAL CARE-500 100 130.24 161.95 218.96 353.92 366.15
</TABLE>
TOTAL SHAREHOLDER RETURNS
[GRAPHIC OMITTED]
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 1999, (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 Percentage
Directors and Executive Officers: Beneficially Owned (1) Ownership (1)
------------------ ---------
<S> <C> <C>
Ilia Lekach (2) 2,838,648 19.7%
Zalman Lekach (3) 299,000 2.3%
Frank A. Buttacavoli (4) 200,000 1.5%
Frederick Purches (5) 105,000 .8%
Albert F. Vercillo (6) 100,000 .8%
Glenn Gopman (7) 8,000 *
Mayi de la Vega (8) 6,000 *
All Directors and Officers as a Group (7 Persons) 3,556,648 23.9%
Other Principal Stockholders:
Pacific Investment Group (9) 1,129,260 8.7%
Dimensional Fund Advisors Inc. (10) 837,300 6.4%
North Shore Associates, L.P. (11) 855,000 6.6%
</TABLE>
(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
13,002,222 shares of Common Stock outstanding.
(2) Consists of (a) 289,388 shares owned jointly by Mr. Lekach and his wife,
(b) 1,129,260 shares owned or controlled by Pacific Investment Group Inc.,
a corporation owned by Mr. Lekach, (c) immediately exercisable warrants to
purchase 420,000 shares of Common Stock issued to Mr. Lekach pursuant to
his prior employment agreement, and (d) immediately exercisable warrants to
purchase 1,000,000 shares of Common Stock granted by the Compensation
Committee in January 1999. 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. Zalman 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.
Page 7
<PAGE>
(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 $22,527,000, $21,940,000, and
$26,568,000 during the fiscal years ended March 31, 1999, 1998 and 1997,
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 and holds/held identical management positions. Net amounts due from
Perfumania amounted to $18,258,000, and $17,973,000 at March 31, 1999 and 1998,
respectively.
The report of Perfumania's independent certified public accountants
that accompanied its audited financial statements as of January 30, 1999 and for
the year then ended expressed substantial doubt about Perfumania's ability to
continue as a going concern. Perfumania incurred net losses of approximately
$18,900,000 for its fiscal year 1999 and $4,100,000 (unaudited) for its
thirteen-week period ended May 1, 1999. Also, Perfumania had a working capital
deficit of approximately $3,800,000 and $5,600,000 (unaudited) at January 30,
1999 and May 1, 1999, respectively. In addition, Perfumania was in violation of
certain debt covenants contained in its bank line of credit agreement at both
January 30, 1999 and May 1, 1999. The bank has subsequently waived these debt
violations for a period of 90 days through September 30, 1999; however, there is
no assurance that Perfumania will be in compliance with the debt covenants at
the end of the waiver period.
The Company has developed a plan to reduce the balance due from
Perfumania. Management's plan initially consists of converting $8 million into a
short-term note receivable due the earlier of the completion of perfumania.com's
proposed public offering in which Perfumania would generate sufficient funds to
pay down the short term note, or May 31, 2000. In addition, on July 1, 1999,
Perfumania and the Company's Board of Directors approved the transfer of
1,512,406 shares of Perfumania treasury stock with a value of approximately $4.5
million, based on a per share price of $2.98, which approximates 90% of the
closing price of Perfumania's common stock for the previous 20 business days. As
indicated in various public press releases, Perfumania has reported both
aggregate and comparative store sales increases for each of the months during
the period February 1999 through June 1999. As of June 30, 1999, the receivable
balance due from Perfumania was approximately $21.3 million, which management
believes is in line with historical and anticipated seasonal payment patterns.
Based on the factors described above, management believes that the receivable
from Perfumania is fully collectible.
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, which was fully reserved as of March 31, 1998. The Company filed its
claim and was 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 threatened potential actions to recover
substantial funds from alleged insiders of Luria's and their affiliates, which
included actions against the Company to recover amounts paid for merchandise
sold to Luria's. On May 17, 1999, the Company settled this claim and recorded a
liability of $215,000 in the accompanying March 31, 1999 consolidated balance
sheet in connection with this matter. The agreed-upon settlement is payable in
six equal monthly installments, without interest.
As of March 31, 1999, the Company has loaned a total of $390,000 to its
Chairman/CEO, which is included in accounts receivable. The loans are unsecured,
bear interest at 10% per annum, were renewed and are due in one balloon payment
on December 31, 1999. During April 1999, the Company advanced an additional
$230,000 to the Chairman under the same terms and conditions for the previous
loans, except that the new advance is collateralized by 100,000 shares of the
Company's common stock. Interest payments are current through June 30, 1999.
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 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
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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, 2000. 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, 2000.
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. Georgeson
Shareholder Communications 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 2000 ANNUAL MEETING
Stockholders of the Company who intend to present a proposal for action
at the 2000 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 19, 2000 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, 1999 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, 1999, which contains financial information for that period.
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 By order of the Board of Directors
August 27, 1999
Ilia Lekach
Chairman of the Board and CEO
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PARLUX FRAGRANCES, INC. PROXY
Proxy for Annual Meeting of Stockholders October 12, 1999
(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 1999 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 1999 Annual Meeting of
Stockholders to be held at the Sheraton Fort Lauderdale Airport Hotel, 1825
Griffin Road, Dania, Florida 33004, on Tuesday, October 12, 1999, at 11:00 a.m.
or any adjournment or postponement hereof.
1. Election of Directors
For All Nominees Listed Below [ ] Withhold Authority [ ]
(except as marked to the contrary) to vote for all nominees listed below
Ilia Lekach, Frank A. Buttacavoli, Frederick E. Purches, Zalman Lekach, 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)
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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.
