Consulting Agreement - Parlux Fragrances Inc., Cosmix Inc. and Frederick Purches
CONSULTING AGREEMENT
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
COSMIX, INC. 333 East 69th Street, New York 10021 (hereinafter "Consultant"),
and Frederick Purches (hereinafter "Purches"), the President of Consultant
residing at 333 East 69th Street New York, New York 10021. Collectively
hereinafter referred to as "Parties".
WHEREAS, Corporation, Consultant and Purches are parties to a
Consulting Agreement extending through March 31, 2000 which is 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 Purches, 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 Purches'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 and five (5) months commencing as of
November 1, 1999 and ending on March 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
$100,000 per annum, payable in equal bi-weekly installments of $3,846.15.
4. Health and Life Insurance: The Corporation shall, at no cost to the
Consultant or Purches, provide Purches 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.
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CONSULTING AGREEMENT
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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): Purches 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 March 31, 2001, 10,000 on March 31, 2002 and 10,000 on
March 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 Purches with respect to
any stock option (warrant) granted to Purches 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 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 Purches.
ii. Disability. If, as a result of Purches's incapacity due to
physical or mental illness, Purches 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 Purches 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
Purches'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 Purches in
misconduct (including embezzlement and criminal
fraud) which is materially injurious to the
Corporation, or
(c) the conviction of Purches 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,
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CONSULT1NG AGREEMENT
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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 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 Purches. Consultant or
Purches may terminate this Agreement (a) for Good Reason (as
defined below) or (b) Purches'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 Purches 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 Purches shall submit to an examination by
a doctor selected by the Corporation, and the doctor shall
have concurred in the conclusion of Purches'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 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 Purches's death, the date of his
death,
(b) if the Consultant's retention is terminated pursuant to
subsection 7(iii)(a)
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CONSULTING AGREEMENT
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above, thirty (30) days after Notice of Termination is given
provided that Purches 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:
i. Upon Purches'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 Purches's
estate as a lump sum death benefit, Consultant's full
compensation for a period of three months after the date of
Purches'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 Purches fails to perform his duties
under this Agreement as a result of incapacity due to physical
or mental illness, 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.
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CONSULTING AGREEMENT
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(4) The Corporation shall pay all reasonable 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.
11. Notice: 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 Purches to:
Mr. Frederick Purches
333 East 69th Street
New York, New York 10021
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.
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CONSULTING AGREEMENT
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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, Purches 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.
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
--------------------
Ilia Lekach, Chief
Executive Officer
Consultant:
COSMIX INC
By: /s/ Frederick Purches
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Frederick Purches, President
and Frederick Purches Individually