FORT LAUDERDALE, Fla., Jan. 29 /PRNewswire-FirstCall/ -- Parlux
Fragrances, Inc. ("Parlux") (Nasdaq: PARL) today announced that it has
commenced mailing of its definitive consent revocation solicitation
materials to Parlux stockholders of record as of the close of business on
January 17, 2007, in connection with Glenn H. Nussdorf's consent
solicitation. Parlux strongly urges stockholders NOT to sign any consent
card that you may receive from Mr. Nussdorf.
Below is the text of an open letter mailed to Parlux stockholders:
January 29, 2007
Dear Fellow Parlux Stockholder:
By now you have probably received a letter from Glenn H. Nussdorf, who
we believe is attempting to seize control of Parlux without properly
compensating you for your investment in the company. In his letter, he
makes a transparent attempt to create the appearance that his interests are
aligned with yours - he proclaims this is "a time for candor." We believe
that once you review the facts you will agree that Mr. Nussdorf has been
less than candid about many details concerning himself and his slate of
nominees.
Having failed in his previous attempts to acquire Parlux, he is now
seeking to replace your Board with his hand-picked slate of nominees. When
and if Mr. Nussdorf gets around to making another acquisition proposal for
Parlux, he is asking you to believe that his hand-picked directors are
better able to represent your interests than the current Board because his
nominees are "independent" for NASDAQ purposes. We believe this is a
cynical attempt to divert your attention away from the real issue - Mr.
Nussdorf's own relationships with his slate of director nominees. Simply
put, the independence of a director as defined by NASDAQ relates to that
director's relationship or lack thereof to Parlux. NASDAQ rules say
absolutely nothing about whether Mr. Nussdorf's nominees need to be
independent of him - a fact Mr. Nussdorf conveniently omits in his letters
to Parlux stockholders. In fact, under Delaware law, the Board would be
required to evaluate the independence of each director at the time of a
transaction based on all the facts and circumstances. Mr. Nussdorf also
conveniently omits that a majority of your existing Board is also
"independent" for NASDAQ purposes, and more importantly, independent of Mr.
Nussdorf.
LET'S BE CANDID: MR. NUSSDORF CONVENIENTLY OMITTED SOME KEY
FACTS ABOUT THE INDEPENDENCE AND BACKGROUND OF HIS NOMINEES
Stockholders should carefully consider whether Mr. Nussdorf, who
controls a web of companies that both compete and do business with Parlux,
and his hand-picked nominees can exercise judgment that is independent of
Mr. Nussdorf's many other business interests. We note that all but one of
Mr. Nussdorf's nominees are either current or former business associates of
Mr. Nussdorf, or of one or more of Mr. Nussdorf's affiliated entities -
entities that, like Parlux, are in the business of manufacturing,
distributing and/or selling designer fragrances. In light of Mr. Nussdorf's
assurances of nominating individuals with "integrity," here are some
important facts that you should consider:
- According to Mr. Nussdorf's own disclosures, his "independent" slate of
hand-picked nominees has already determined that they intend to appoint
Mr. Nussdorf as Chairman of the Board and CEO of Parlux if his slate is
elected. Mr. Nussdorf is also the Chairman of the Board and CEO of
Quality King Distributors, Inc. (Quality King), a direct competitor of
Parlux in certain segments of the fragrance market. Additionally, with
other members of his family, Mr. Nussdorf controls Model Reorg, Inc., a
"sister company" to Quality King in the wholesale and retail fragrance
business. You should ask yourself how independent Mr. Nussdorf's hand-
picked nominees will be if they have already determined to install Mr.
Nussdorf as Chairman and CEO of Parlux even though they have not even
been elected yet.
- In the interest of complete candor, you should know that according to an
April 10, 2006 Forbes article, Mr. Nussdorf used an "abusive tax
shelter" with his spouse, brother, sister-in-law and sister to shield
taxes on $80 million of income in 1999 and 2000. The IRS is seeking $45
million in taxes and penalties from Mr. Nussdorf and his family.
- Consider E Com Ventures, Inc. ("ECMV"), the publicly-traded holding
company for Perfumania and perfumania.com, a specialty retailer of
fragrances and a wholesale supplier to other retailers, whose Chairman
is Mr. Nussdorf's brother, Stephen Nussdorf, and whose Chief Executive
Officer is Michael Katz, Mr. Nussdorf's nominee to become Vice Chairman
of Parlux. The Nussdorf family owns 45% of the shares of ECMV and has
disclosed plans to increase its ownership above 80% by merging Model
Reorg into ECMV in a transaction in which ECMV's public shareholders
will receive no additional consideration. We believe that the
Nussdorfs use ECMV to absorb costs for Quality King and its affiliates.
As evidence, consider this: in fiscal year 2003, the wholesale business
of ECMV's Perfumania subsidiaries enjoyed a gross profit margin of
10.3%. In fiscal year 2004, the first year under the control of the
Nussdorfs, the margin was cut almost in half, to 5.6%, because,
according to ECMV's own public filings, it was not able to increase
prices paid by Quality King in an amount sufficient to offset increases
in the costs of goods sold to Quality King.
- Mr. Nussdorf and his family's investment in publicly traded ECMV is
worth tens of millions of dollars alone, and this does not include the
value of privately held Quality King. By contrast, the value of his
investment in Parlux is only approximately $12 million, of which
approximately $5.4 million is borrowed. Stockholders should ask
themselves where Mr. Nussdorf's true economic interests would lie.
- Mr. Nussdorf's family-controlled Quality King has been the subject of
dozens of civil and criminal matters relating to, among other things,
Quality King's distribution of counterfeit goods and infringement of
trademarks.
- Mr. Nussdorf's nominee Michael Katz is the Executive Vice President of
Quality King; Chief Financial Officer of QK Healthcare, Inc., a Quality
King subsidiary; and President and Chief Executive Officer of ECMV. Mr.
Katz was also recently an officer of Model Reorg, but stepped down as
part of the Model Reorg's proposed merger with ECMV.
- Mr. Nussdorf's nominee Joshua Angel is a lawyer who has been a legal
advisor to Quality King, Model Reorg and other of their affiliated
companies. Mr. Angel was sued for malpractice in 1999 for, among other
things, allegedly holding himself out to be a director of a company
called Biomade Plastics. Mr. Angel also allegedly waived an option that
would have allowed Biomade to receive stock, and instead kept the stock
for his law firm, which had been retained as Biomade's bankruptcy
counsel. Furthermore, Mr. Angel previously served as a director and
member of the Audit Committee of CattleSale Company from December 2000
to December 2003. Mr. Nussdorf conveniently fails to include this in
Mr. Angel's bio, perhaps because while Mr. Angel served on the Audit
Committee of CattleSale, the company twice issued late filing notices
with the SEC.
- Mr. Nussdorf's nominee Anthony D'Agostino has served as a consultant to
Quality King since 2004. In addition, Mr. D'Agostino was alleged to
have been one of several insiders at Standard Microsystems Corporation
who sold company stock while in possession of adverse material
information concerning the company's inventory.
- Mr. Nussdorf's nominee Neil Katz was previously a consultant for Mr.
Nussdorf, his family members and their affiliated companies.
CAN MR. NUSSDORF'S NOMINEES BEST REPRESENT YOUR INTERESTS
IN A SALE OF THE COMPANY?
Let's be clear. Mr. Nussdorf controls a web of companies that operate
in the fragrance industry and his interests may be different from the
interests of ordinary shareholders. Mr. Nussdorf is asking you to trust
that in the event he does make an acquisition proposal his hand-picked
slate of directors will solicit and fairly evaluate proposals from third
parties. We question how many third parties would invest the time, effort
and financial resources to make an acquisition proposal to a Board so
closely associated with Mr. Nussdorf.
Remember, Mr. Nussdorf has publicly expressed his own desire to buy the
Company. Ask yourself: When and if Mr. Nussdorf ever gets around to making
an acquisition proposal for Parlux, do you really want Mr. Nussdorf's
hand-picked slate of directors in charge of evaluating and negotiating that
proposal on Parlux's behalf? All directors of Parlux (including Mr.
Nussdorf's nominees if elected) have fiduciary duties to all Parlux
stockholders, but who do you think is better suited to carry out those
duties on your behalf?
WE BELIEVE MR. NUSSDORF'S SOLICITATION IS ANTICOMPETITIVE
Parlux competes in the fragrance business with Quality King, Model
Reorg, ECMV and multiple other affiliated companies owned and controlled by
Mr. Nussdorf and his family. If Mr. Nussdorf were to succeed in his attempt
to seize control of your company and have his hand-picked slate of nominees
installed on the Parlux Board:
- Parlux may no longer be able to independently compete against the
Nussdorf companies;
- Parlux's most confidential business information and trade secrets may
be revealed to individuals who run or have business relationships with
competing entities; and
- Parlux would likely be forced into an anti-competitive arrangement.
We believe these results would have an extremely damaging effect on the
stockholders and customers of Parlux. In fact, we believe his solicitation
is so blatantly anti-competitive, to protect your investment, on Tuesday,
January 23, 2007, Parlux filed a lawsuit in Federal Court alleging, among
other things, violations of Section 8 of the Clayton Act, which was enacted
to prevent overlapping directorships just like what Mr. Nussdorf is asking
you to approve.
YOUR BOARD IS COMMITTED TO ACTING IN THE BEST INTERESTS OF ALL PARLUX
STOCKHOLDERS
Regardless of the number of shares you own, your support is important
to us. We urge all Parlux stockholders NOT to sign any consent card that
you may receive from Mr. Nussdorf. If you have previously signed a white
consent card, then you may revoke that consent by simply signing, dating
and mailing the enclosed BLUE Consent Revocation Card immediately. Finally,
if you have not signed Mr. Nussdorf's white consent card, you can show your
support for your Board by signing, dating and mailing the enclosed BLUE
Consent Revocation Card. Please act today.
Thank you.
On behalf of the Board of Directors,
/s/ Ilia Lekach
Ilia Lekach
Chairman and Chief Executive Officer
Parlux Fragrances, Inc.
WE URGE YOU TO DISCARD ANY WHITE CONSENT CARDS
THAT YOU MAY HAVE RECEIVED FROM GLENN H. NUSSDORF
If you have any questions, please call MacKenzie Partners
at the phone numbers listed below.
105 Madison Avenue
New York, NY 10016
proxy@mackenziepartners.com
(212) 929-5500 (call collect)
(800) 322-2885 (toll free)
About Parlux Fragrances, Inc.
Parlux Fragrances, Inc. is a manufacturer and international distributor
of prestige products. It holds licenses for Paris Hilton fragrances,
watches, cosmetics, sunglasses, handbags and other small leather
accessories in addition to licenses to manufacture and distribute the
designer fragrance brands of GUESS?, XOXO, Ocean Pacific (OP), Maria
Sharapova, Andy Roddick, babyGund and Fred Hayman Beverly Hills.
Additional Information
On January 19, 2007, Mr. Nussdorf filed a definitive consent
solicitation statement with the SEC relating to his proposal to remove our
current Board of Directors and replace them with his nominees. In response,
on January 29, 2007, Parlux filed a definitive consent revocation statement
on Form DEFC14A (the "Definitive Consent Revocation Statement") with the
SEC in opposition to Mr. Nussdorf's consent solicitation. Parlux's
shareholders should read the Definitive Consent Revocation Statement
(including any amendments or supplements thereto) because it contains
additional information important to the shareholders' interests in Mr.
Nussdorf's consent solicitation.
This information is being furnished on behalf of Parlux by its Board of
Directors. Parlux will be sending definitive consent revocation
solicitation materials to shareholders of record on the record date. The
information contained in those materials is important to the interests of
shareholders, including information required to be presented about the
participants in the consent revocation solicitation. You may obtain a copy
of the Definitive Consent Revocation Statement and other public filings
made by Parlux with the SEC free of charge at the SEC's website at
http://www.sec.gov. Parlux will also provide you with a copy of these materials
without charge by directing your request to Parlux Fragrances, Inc.
Attention: Corporate Secretary.
Parlux and its directors are participants in a solicitation of proxies
for Parlux's consent revocation solicitation. Information regarding these
participants and their interests is contained in a filing under Rule 14a-12
filed by Parlux with the Securities and Exchange Commission on January 8,
2007.
Certain Information Regarding Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, regarding,
among other things, our plans, strategies and prospects, both business and
financial. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance
or achievements of Parlux or its industry to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements. These risks and uncertainties include,
among others, future trends in sales and Parlux's ability to introduce new
products in a cost-effective manner, general economic conditions and
continued compliance with the covenants in our credit facility. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date thereof. Parlux undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
SOURCE Parlux Fragrances, Inc.
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Related links:
http://www.parlux.com
CONTACT:
Dan Katcher, or Steve Frankel,
+1-212-355-4449, both of Joele Frank, Wilkinson Brimmer Katcher
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