06.28.06
Parlux Fragrances, Inc. was served with a shareholder's class action complaint (the "Class Action") filed in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida by Glen Hutton, purporting to act on behalf of himself and other public stockholders of Parlux, and a stockholder derivative action (the "Derivative Action") filed in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida by NECA-IBEW Pension Fund, purporting to act derivatively on behalf of Parlux.
The Class Action names Parlux Fragrances, Inc. as a defendant, along with its directors, and seeks equitable relief for inadequate and unfair consideration, without full disclosure of all material information, to the detriment of the public shareholders, all in breach of defendants' fiduciary duties.
The Derivative Action names the identical defendants as the Class Action and alleges that the unlawful plan to attempt to buy out the public shareholders of Parlux without having proper financing in place, and for inadequate consideration, violates applicable law by directly breaching and/or aiding the other defendants' breaches of their fiduciary duties of loyalty, candor, due care, independence, good faith and fair dealing, causing the complete waste of corporate assets, and constituting an abuse of control by the defendants.
Parlux and the other named defendants have engaged experienced Florida securities counsel and intend to respond to the Class Action and the Derivative Action in a timely manner, but Parlux believes that the Class Action and the Derivative Action are without merit.