Consulting Agreement - Parlux Fragrances Inc. and Cambridge Development Corp.
CONSULTING AGREEMENT
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This Consulting Agreement (hereinafter "Agreement")dated as of
November 1, 1999, between PARLUX FRAGRANCES, INC., a corporation organized and
existing under the laws of the State of Delaware (hereinafter "Corporation")and
CAMBRIDGE DEVELOPMENT CORPORATION, 14 Vanderventer Avenue, Port Washington, New
York 11050 (hereinafter "Consultant"), and Albert F. Vercillo (hereinafter
"Vercillo"), the President of Consultant residing at 74 Summit Road, Port
Washington, New York 11050. Collectively hereinafter referred to as "Parties".
WHEREAS, Corporation, Consultant and Vercillo are parties to a
Consulting Agreement dated April 1, 1997 and Consulting Agreement Amendment
dated December 1, 1998 which are hereby terminated without liability to either
party.
WHEREAS, the parties wish to enter into a new Consulting Agreement under
revised terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual understanding set forth
herein, the Parties agree as follows:
1. Consultant's Duties: The Corporation hereby engages the Consultant as its
business and financial consultant. Subject at all times to the control and
direction of the Corporations's Chief Executive Officer, Chief Operating Officer
and Chief Financial Officer (hereinafter Management), the Consultant shall have
the duties as the general advisor and consultant to Management on all matters
pertaining to the business and to render all other services relevant thereto.
The Consultant, by Vercillo, shall perform all other duties that may be
reasonably assigned to it by Management provided said duties be consistent with
the prestige and responsibility of Vercillo's position. The Consultant shall,
through its agents, servants and employees, devote its best efforts at all times
necessary to perform its duties and to advance the Corporation's best interests,
subject to reasonable vacations. The Consultant and the Corporation acknowledge
that the Consultant and its agents, servants and employees have other business
interests and shall not be required to devote its exclusive time and attention
to the performance of its duties hereunder.
2. Term: Unless sooner terminated as provided in Section 7 below, this Agreement
shall be for a term of three (3)years
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CONSULTING AGREEMENT
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and seven (7)months commencing as of November 1, 1999 and ending on May 31,
2003; provided however, that the term of this Agreement shall be automatically
extended on the same terms and conditions for a one year period and from year to
year thereafter unless either the Corporation or the Consultant shall give
written notice of the termination of this Agreement to the other at least six
(6)months prior to the expiration of said term or extended term.
3. Compensation: For all services rendered by the Consultant under this
Agreement, the Corporation shall pay to Consultant as compensation the sum of
$84,000 per annum, payable in equal bi-weekly installments of $3,230.76 for the
period from November 1, 1999 to May 31, 2000; thereafter, effective June 1, 2000
Consultant's compensation shall be increased to $96,200 per annum payable in
equal bi-weekly installments of $3,700.00.
4. Health and Life Insurance: The Corporation shall, at no cost to the
Consultant or Vercillo, provide Vercillo with full health insurance, basic,
major medical and dental as well as group life insurance. Said coverage shall be
identical to that afforded the Corporation's Management.
5. Expenses: Consultant will be reimbursed by the Corporation for all reasonable
business expenses incurred by the Consultant in the performance of its duties.
Said reimbursement shall be made no less frequently than monthly upon submission
by the Consultant of a written request for same.
6. Stock Options (Warrants): Vercillo shall be granted non qualified stock
options (warrants)to purchase 30,000 shares of Corporation's common stock at an
exercise price of $2.25 per share being the closing price of the shares of
common stock on November 1, 1999. The options (warrants)shall be exercisable at
the rate of 10,000 on May 31, 2001, 10,000 on May 31, 2002 and 10,000 on May 31,
2003. Each option (warrant)shall be exercised within a period of ten (10)years
after the date of the grant unless earlier terminated in accordance with its
terms or those of this Agreement. The rights of Vercillo with respect to any
stock option (warrant)granted to Vercillo shall be determined exclusively by
the plans and agreements relating to the options (warrants)and this Agreement
shall not affect, in any way, the rights and obligations of the plans and
agreements.
7. Early Termination: The Corporation may terminate the
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CONSULTING AGREEMENT
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Consultant's relationship under this Agreement prior to the expiration of the
term set forth in Section 2 above only under the following circumstances:
i. Death. Upon the death of Vercillo.
ii. Disability. If, as a result of Vercillo's
incapacity due to physical or mental illness,
Vercillo having been unable to perform his
duties under this Agreement for a period of six
consecutive calendar months, then thirty (30)
days after written notice of termination is
given to Consultant (which may only be given
after the end of the six consecutive calendar
month period)provided that Vercillo has not
returned to his duties under this Agreement.
iii. Cause. For Cause. The Corporation shall have
"Cause" to terminate this Agreement upon
(a) the willful and continued failure by
Consultant to substantially perform its duties
under this Agreement (other than any failure
resulting from Vercillo's incapacity due to
physical or mental illness) for thirty (30)
days after written demand for substantial
performance is delivered by the Corporation
specifically identifying the manner in which
the Corporation believes Consultant has not
substantially performed its duties, or
(b) the willful engaging by Consultant or
Vercillo in misconduct (including embezzlement
and criminal fraud) which is materially
injurious to the Corporation, or
(c) the conviction of Vercillo of a felony.
For purposes of this paragraph, no act, or
failure to act, by the Consultant shall be
considered "willful" unless done or omitted to
be done, by Consultant not in good faith and
without reasonable belief that its action or
omission was in the interest of the
Corporation. Consultant shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to Consultant a
copy of a resolution, duly adopted by the
affirmative vote of a majority of the entire
membership of the Board of Directors (Board) at
a meeting of the Board called and held for such
purpose (after a reasonable notice to the
Consultant and an opportunity for Consultant,
together with its counsel, to be heard before
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CONSULTING AGREEMENT
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the Board), finding that in the good faith
opinion of the Board, Consultant was guilty of
conduct set forth above and specifying the
particulars of the conduct in detail.
iv. Termination by Consultant or Vercillo.
Consultant or Vercillo may terminate this
Agreement (a) for Good Reason (as defined
below) or (b) Vercillo's health should become
impaired to any extent that makes the
performance of his duties under this Agreement
hazardous to his physical or mental health or
his life, provided that Vercillo shall have
furnished the Corporation with a written
statement from a qualified doctor to that
effect and provided further that at the
Corporation's request and expense Vercillo
shall submit to an examination by a doctor
selected by the Corporation, and the doctor
shall have concurred in the conclusion of
Vercillo's doctor. Consultant shall give the
Corporation thirty (30) days prior written
notice of its intent to terminate this
agreement.
"Good Reason" means the Corporation has
had a Change in Control. For purposes of
this Agreement, a Change in Control means
the occurrence of an event or series of
events (whether or not approved by the
Board) by which any person or other
entity or group of persons or other
entities acting in concert as determined
in accordance with Section 12(d) of the
Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or
not applicable, together with its or
their affiliates or associates shall, as
a result of a tender offer or exchange
offer, open market purchases, privately
negotiated purchases, merger or otherwise
(including pursuant to receipt of
revocable proxies) (a) be or become
directly or indirectly the beneficial
owner (within the meaning of Rule 13d-3
and Rule 13d-5 under the Exchange Act,
whether or not applicable, except that a
person shall be deemed to have beneficial
ownership of all securities that such
person has the right to acquire whether
such right is exercisable immediately or
only after the passage of time) of more
than thirty (30) percent of the
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combined voting power of the then
outstanding common stock of the
Corporation or (b) otherwise have the
ability to elect, directly or indirectly,
a majority of the Board.
v. Notice of Termination. Any termination of this
Agreement shall be communicated by written
Notice of Termination to the other party of this
Agreement. "Notice of Termination" means a
notice which indicates the specific termination
provision in this Agreement relied upon and
shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for
the termination of the Consultant's retention
under the provision so indicated.
vi. Date of Termination. Date of termination means
(a) if the Agreement is terminated by Vercillo's
death, the date of his death,
(b) if the Consultant's retention is terminated
pursuant to subsection 7(iii) (a) above, thirty
(30) days after Notice of Termination is given
provided that Vercillo shall not have returned
to the performance of his duties during the
thirty (30) day period,
(c) if the Consultant's retention is terminated
pursuant to subsection 7(iii) (c) above, the date
specified in the Notice of Termination after the
expiration of any cure periods, and
(d) if the Consultant's retention is terminated
for any other reason, the date on which Notice
of Termination is given.
8. Compensation Upon Termination or During Disability:
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i. Upon Vercillo's death, the Corporation shall pay
to the person designated by Consultant in a
notice filed with the Corporation or, if no
person is designated, to Vercillo's estate as a
lump sum death benefit, Consultant's full
compensation for a period of three months after
the date of Vercillo's death. Upon full payment
of amounts required to be paid under this
subsection, the Corporation shall have no
further obligation under this Agreement.
ii. During any period that Vercillo fails to perform
his duties under this Agreement as a result of
incapacity due to physical or mental illness,
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CONSULTING AGREEMENT
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Consultant shall continue to receive its full
compensation until the Consultant's relationship
is terminated pursuant to Section 7(ii) of this
Agreement, or until Consultant shall receive a
lump sum of six months' compensation.
iii. If the Consultant's retention is terminated for
Cause as defined in subsection 7(iii), the
Corporation shall pay the Consultant its
compensation through the date of termination at
the rate in effect at the time Notice of
Termination is delivered and the Corporation
shall have no further obligation to Consultant
under this Agreement.
iv. If (a) in breach of this Agreement, the
Corporation shall terminate the Consulting
relationship other than pursuant to Sections
7(iii) (b) or 7(iii) (c) (it being understood that
a purported termination pursuant to Sections
7(iii) (b) or 7(iii) (c) which is disputed and
finally determined not to have been proper shall
be a termination by the Corporation in breach of
this Agreement), or (b) the Consultant shall
terminate the relationship for Good Reason, then
(1) The Corporation shall pay the Consultant its full compensation
through the date of termination at the rate then in effect at
the time Notice of Termination is given
through the end of the Term;
(2) In the event of a Change in Control as defined in Section 7(iv),
the Corporation shall pay Consultant, in a lump sum, an amount
equal to the greater of (a) twice the amount then due through the
end of the Term; or (b) two times the annual compensation paid to
Consultant.
(3) In the event of a Change in Control of the Corporation as defined
in Section 7(iv) above, the total number of outstanding
unexercised options (warrants) granted to Consultant under this
Agreement as well as any previous employment, consultant or other
agreements, shall be doubled in quantity while retaining the
original exercise price.
(4) The Corporation shall pay all reasonable
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CONSULTING AGREEMENT
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legal fees and expenses incurred by Consultant in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit in this Agreement.
v. Unless the Consultant is terminated for Cause,
the Corporation shall maintain in full force and
effect, for the continued benefit of Consultant
for the greater of the remaining term of this
Agreement or eighteen (18) months after
termination of this Agreement, all health and
hospitalization plans and programs in which
Consultant was entitled to participate in
immediately prior to the Date of Termination as
defined in Section 4 of this Agreement, provided
that Consultant's continued participation is
possible under the general terms and provisions
of the plans and programs. If Consultant's
participation in any plan or program is barred,
the Corporation shall arrange to provide the
Consultant with benefits substantially similar
to those which Consultant would otherwise have
been entitled to receive under the plan and
program from which his continued participation
is barred.
9. Savings Clause: The determination that any provision of this Agreement is
unenforceable shall not terminate this Agreement or otherwise affect the other
provisions of this Agreement, it being the intention of the parties hereto that
this Agreement shall be construed to permit the equitable reformation of such
provision to permit the enforcement thereof, if possible, and otherwise to
permit the enforcement of the remaining provisions of this Agreement as if such
unenforceable provision were not included herein.
10. Equitable Relief: The parties hereto agree and declare that legal remedies
may be inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.
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11. Notices: Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given and received on the
date when personally delivered or deposited in the United States Mail,
registered postage prepaid, addressed:
a. if to the Corporation to:
Mr. Ilia Lekach
Parlux Fragrances, Inc.
3725 S.W. 30th Avenue
Fort Lauderdale, FL 33312
b. if to the Consultant or Vercillo to:
Mr. Albert Vercillo
74 Summit Road
Port Washington, NY 11050
or to such other address as the Corporation or the Consultant may designate in
writing.
12. Amendments: This Agreement may be amended or modified only by a writing.
13. Governing Law: This Agreement shall be governed and construed under the laws
of the State of Florida.
14. Entire Agreement: This Agreement constitutes the entire Agreement between
the Consultant, Vercillo and the Corporation, with respect to its subject
matter, and all prior and other agreements between them, oral or written
concerning the same subject matter are merged into this Agreement and thus
extinguished.
15. Survival of Covenants: Any of the provisions in this Agreement which would
by their terms continue after the termination of this Agreement shall be deemed
to survive such termination.
16. Assignability and Binding Effect: This Agreement shall be binding upon and
inure to the benefit of the Corporation and its successors and assigns. This
Agreement may not be assigned by either party without the written consent of the
other party hereto.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first written above.
PARLUX FRAGRANCES, INC.
By: /s/ Ilia Lekach
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Ilia Lekach, Chief
Executive Officer
Consultant:
CAMBRIDGE DEVELOPMENT CORPORATION
By: /s/ Albert F. Vercillo
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Albert F. Vercillo, President
and Albert F. Vercillo
Individually