Office Sublease Agreement, dated as of November 30, 2007, between the Company and Tarragon South Development Corp

EXHIBIT 10.86

SUBLEASE AGREEMENT

This SUBLEASE AGREEMENT (this “Sublease”) is made and entered into as of November 30, 2007 by TARRAGON SOUTH DEVELOPMENT CORP., a Nevada corporation (“Sublessor”), and PARLUX FRAGRANCES, INC., a Delaware corporation (“Sublessee”).

RECITALS

A.

Sublessor and FBEC – Cypress Financial Center, L.P., a Delaware limited partnership (“Original Landlord”), entered into that certain Office Lease Agreement, dated as of August 24, 2005, pursuant to which Sublessor leased Suite 500 consisting of 19,072 square feet of rentable space (the “Leased Premises”) in the building (the “Building”) located at 5900 North Andrews Avenue, Fort Lauderdale, Florida 33309 (the “Lease”).

B.

Subsequent to the execution of the Lease, the Building was conveyed by Original Landlord to Tricony CFC, L.L.C., a Delaware limited liability company (“Landlord”).

C.

A copy of the Lease is attached hereto as Exhibit “A” and made a part hereof.

D.

Sublessor desires to sublease the Leased Premises to Sublessee, and Sublessee desires to so sublease the Leased Premises from Sublessor. The Leased Premises will also sometimes be referred to herein as the “Subleased Premises”.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

AGREEMENT

1.

TERMS AND CONFLICTS. All capitalized terms used herein, which are not separately defined herein and which are defined in the Lease, shall have the defined meanings ascribed to them in the Lease. In the event that the terms and provisions of this Sublease conflict with the terms and provisions of the Lease, the terms and provisions of the Lease shall govern and be controlling.

2.

SUBLEASE GRANT; “AS IS” CONDITION.

(a)

Grant. Sublessor hereby subleases and demises to Sublessee, and Sublessee hereby hires and subleases from Sublessor, the Subleased Premises.

(b)

“As Is” Condition. Sublessee acknowledges that prior to the execution of this Sublease, Sublessee, with Sublessor’s permission, was permitted to make a complete physical inspection of the Subleased Premises and that Sublessee has satisfied itself with the condition of the same. Sublessor makes no warranties or representations regarding the use or the

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condition of the Subleased Premises, or the suitability of the Subleased Premises for Sublessee’s purposes. Sublessee, moreover, acknowledges (a) that Sublessee has entered into this Sublease with the intention of making and relying upon its own investigation of the condition of the Subleased Premises, (b) that Sublessee is not relying upon any statements, representations or warranties made by Sublessor or anyone acting or claiming to act on Sublessor’s behalf concerning the Subleased Premises, and (c) neither Sublessor nor Landlord will perform any work to prepare the Subleased Premises for Sublessee’s occupancy. Sublessee accepts the Subleased Premises in their condition existing as of the date of this Sublease, “AS IS/WHERE IS/WITH ALL FAULTS,” subject to all applicable municipal, county, state and federal laws, ordinances and regulations governing the use of the Subleased Premises. Sublessor shall be responsible for the removal of all furniture and equipment from the Leased Premises with the exception of those items that constitute the Sublesse’s Fixtures and Equipment (as defined herein and listed on Exhibit “C” attached hereto and made a part hereof). All such furniture and equipment that does not constitute the Sublessee’s Fixtures and Equipment and is not so removed by the Commencement Date may be removed by Sublessee and the cost of such removal shall be reimbursed by Sublessor to Sublessee on demand. Any damage to the Leased Premises caused by such removal of such furniture and equipment shall be promptly repaired by Sublessor within thirty (30) days of such removal (or if not reasonably capable of being repaired in such time period, then within such time period that may be reasonably necessary to so complete such repair). If such repair is not completed within the time period set forth in the immediately preceding sentence, Sublessee shall be entitled to perform such repairs and the cost of the same shall be reimbursed by Sublessor to Sublessee on demand.

3.

TERM. The term of this Sublease (the “Term”) shall commence on February 1, 2008 (the “Commencement Date”) and expire on January 31, 2016, unless sooner terminated as provided herein. Notwithstanding anything contained herein to the contrary, if the Lease expires or is terminated, for any reason, then this Sublease also shall automatically expire or terminate as of the expiration or termination date of the Lease, and the parties will be relieved of any further liability or obligation under this Sublease, except for those matters that are to survive the expiration or termination of the Lease and this Sublease. Notwithstanding anything contained herein to the contrary, Sublessee shall be permitted access to the Subleased Premises on a date that is thirty (30) days prior to the Commencement Date for the purpose of performing the improvements described in Exhibit “B” attached hereto and made a part hereof, provided, that all of the terms and provisions of this Sublease have been complied with in all respects other than any payment of the Base Rent and the Additional Rent (as such terms are defined herein); it being understood that the payment of the Base Rent and the Additional Rent shall not commence until the dates provided in Schedule “A” and Schedule “B” attached hereto and made a part hereof. Furthermore, the parties hereto understand, acknowledge and agree that Sublessor shall be operating its normal and customary business activities at the Leased Premises prior to the Commencement Date and any such access prior thereto shall be performed so as not to interfere with such activities in any material respect. The parties agree to mutually cooperate with respect to such access prior to the Commencement Date and shall, subject to the terms hereof, reasonably cooperate with each other in connection the rewith.

4.

USE. Sublessee agrees to use the Subleased Premises for office purposes and no other use. Notwithstanding anything contained herein to the contrary, Sublessee shall not use or permit the Subleased Premises to be used in any manner which would constitute a public or

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private nuisance or waste or violate any terms and provisions of the Lease. Sublessee shall not use or occupy the Subleased Premises contrary to any statute, rule, order, ordinance, requirement, law or regulation applicable thereto nor in any manner that would interfere with the plumbing, mechanical, HVAC or electrical systems of the Building.

5.

BASE RENT AND ADDITIONAL RENT

(a)

Base Rent. Sublessee covenants and agrees to pay to Sublessor, as base rent for the Subleased Premises, in good funds at the time of payment, in advance, on the first day of July 2008, and on the first day of each month thereafter during the Term the applicable amount for that month as stated in Schedule “A” (the “Base Rent”). Sublessee shall not be responsible for any additional rents other than as provided in Section 5 (b) and Section 5(c) of this Sublease Agreement.

(b)

Rent Reimbursement. Notwithstanding the foregoing, commencing February 1, 2009 and continuing to the end of the term of this Sublease, monthly Base Rent shall be increased each month by $2,119.11 in accordance with the calculation reflected on Schedule “C” attached hereto and made a part hereof. Commencing February 1, 2009, the total amount of monthly Base Rent otherwise payable in accordance with Schedule “A” shall be increased by the said sum of $2,119.11 and the total thereof shall constitute the monthly Base Rent for the remainder of the Term.    

(c)

Additional Rent; Partial Payments Toward Sublessee’s Fixtures and Equipment. In addition to the payment of the Base Rent as above provided, Sublessee covenants and agrees to pay to Sublessor, as additional rent, on each date that the payment of the Base Rent is due and payable to Sublessor the amount stated on Schedule “B” applicable to that date for reimbursement to Sublessor for Sublessor’s share of Operating Expenses payable by Sublessor under the Lease. Any monies remaining after such reimbursement of Sublessor’s share of Operating Expenses (such remaining monies are hereinafter referred to as the “Additional Payment for Sublessee’s Fixtures and Equipment”) shall be payable to Sublessor and applied by Sublessor to the payment of the use by, and conveyance to as set forth in Section 33 hereof, Sublessee of improvements (including exis ting furniture, workstations and appliances as set forth herein) in the Leased Premises, a list of which is attached hereto as Exhibit “C” and made a part hereof (the “Sublessee’s Fixtures and Equipment”). The foregoing payments regarding the reimbursement of Operating Expenses, together with any and all other payments to be made by Sublessee to Sublessor hereunder, other than the Base Rent and other than the Additional Payment for Sublessee’s Fixtures and Equipment and the Initial Payment for Sublessee’s Fixtures and Equipment (as defined herein), shall be referred to herein as the “Additional Rent”.

(d)

Payment During Partial Month. In the event that the Term hereof shall end on a date that is not the last day in a calendar month, then all Rent (as defined herein) and other sums payable hereunder payable during such partial month shall be appropriately prorated. Notwithstanding anything contained herein to the contrary, the Base Rent, the Additional Rent and any Additional Payment for Sublessee’s Fixtures and Equipment that would be payable during the first full calendar month occurring during the Term shall be fully abated.

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(e)

Location of Payments. All of the Base Rent and the Additional Rent and all other amounts due and payable hereunder shall be paid by Sublessee directly to Sublessor by ACH transfer on the first day of each calendar month in accordance with the terms and provisions hereof pursuant to the instructions set forth on Exhibit “D” attached hereto and made a part hereof.

6.

PAYMENT OF RENT. All installments of the Base Rent and the Additional Rent and all other sums due from Sublessee to Sublessor under this Sublease (other than the Initial Payment for Sublessee’s Fixtures and Equipment and the Additional Payment for Sublessee’s Fixtures and Equipment) are hereinafter, collectively, referred to as “Rent”. All Rent shall be paid without offset, demand, deduction or notice of any kind or nature whatsoever, except as specifically provided in this Sublease, and shall include, when paid, applicable Florida sales tax payable thereon. If any installment of Rent is not paid within five (5) days after its due date, Sublessee shall pay to Sublessor a late payment charge equal to seven percent (7%) of such past due amount. In addition to the rental payments provided for in this Sublease, Sublessee shall pay to Sublessor any and all taxes imposed by any governmental entity on all amounts classified as rent (excluding federal income taxes), including all sales tax applicable to any payments of Rent or any other payments required of Sublessee hereunder immediately upon written notice from Sublessor (provided, however, no notice shall be required regarding the payment of applicable Florida sales tax other than as set forth herein in Section 12 (a) (i) regarding notices for late payment of Rent). The covenant to pay Rent shall be independent of all of the other covenants contained in this Sublease. Any tender by Sublessee of any Rent payment with conditions imposed upon its acceptance may be accepted by Sublessor without regard to such condition of tender and Sublessor is permitted to accept such payment and apply the same to any balance then due as if such condition were not imposed.

7.

LANDLORD’S SERVICES. It is understood and agreed that Sublessor shall not directly provide any services to Sublessee, but rather Sublessee shall look to Landlord to provide all such services provided by Landlord to Sublessor to be made available to Sublessee on the same basis as set forth in the Lease. Sublessor covenants and agrees that it shall do nothing which shall have the effect of creating a breach of any of the terms, covenants and conditions of the Lease. Failure on the part of Landlord to provide any services required under the Lease shall not be a default by Sublessor of its obligations under this Sublease and in connection therewith, the fact that Sublessee’s use and occupancy of the Subleased Premises may be disturbed or prevented from any such cause shall not in any way suspend, abate or reduce any amount of Rent due and payable under this Sublease unless, and then only to the extent that, such cause likewise acts to suspend, abate or reduce the rent Sublessor is obligated to pay under the Lease for the Leased Premises. Sublessee shall be entitled to any relief provided to Sublessor under the Lease regarding Landlord’s failure to provide services.

8.

COMPLIANCE WITH LEASE. Sublessee represents to Sublessor that it has read the entire Lease and is familiar with each of its terms, covenants and conditions, and Sublessee acknowledges and agrees that this Sublease is under, and subject and subordinate to, the terms, covenants and conditions of the Lease. Subject to Section 14 hereof, Sublessee hereby agrees to be bound by and to assume and perform all of Sublessor’s obligations as the “tenant” under the provisions of the Lease and all of such provisions are hereby incorporated as additional terms, covenants and conditions of this Sublease as if they were recited herein (even if already

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set forth herein), including, without limitation, all payment, maintenance, repair and replacement obligations under the Lease. Notwithstanding anything contained herein to the contrary, Sublessor, and not Sublessee, shall remain bound by the obligations as set forth in the Lease, and shall perform the obligations associated with, the payment of all “rent” as defined in the Lease. Furthermore, Sublessor shall be bound by and shall be in all respects responsible for any and all obligations of the tenant under the Lease that arose prior to the date hereof.

9.

INDEMNIFICATION. Sublessee shall indemnify and defend Sublessor against, and hold Sublessor harmless from, all claims, damages, costs, demands, liabilities and expenses (including reasonable attorneys’ fees) caused by (a) the act, neglect or omission or misconduct of Sublessee, or its agents, contractors, employees, licensees or invitees, or (b) the nonperformance or nonobservance of any of Sublessee’s obligations under this Sublease, including Sublessee’s obligations, nonperformance or nonobservance regarding the Lease, or (c) the conduct or management of Sublessee’s business or from any work or thing whatsoever done in or about the Subleased Premises by Sublessee, its agents, contractors, employees, licensees or invitees. Further, Sublessee shall indemnify and defend Sublessor against, and hold Sublessor harmless from, all claims, damages, costs, demands, liabili ties and expenses (including reasonable attorneys’ fees) with respect to any accident, injury or damage whatsoever to any person or to the property of any person or persons occurring in or about the Subleased Premises at any time during the Term, excluding, however, any such liability resulting from the gross negligence or willful misconduct of Sublessor. All personal property placed and moved into the Subleased Premises will be at the risk of Sublessee and Sublessor will not be liable to Sublessee for damage to person or property arising from theft, vandalism, HVAC malfunction, the bursting or leaking of water pipes or other leaks, or any act or omission of any co-tenant, the Landlord or any other occupant of the Building or of any other person. However, the foregoing will not relieve Sublessor of liability for damage or injury resulting solely from Sublessor’s gross negligence or willful misconduct. In no event will Sublessor be liable for consequential damages to Sublessee or any of Sublessee
46;s agents.

10.

INSURANCE. At Sublessee’s sole cost and expense, Sublessee shall maintain at all times during the Term those certain coverages, in amounts and in form, as is described in Article 17 of the Lease. Such insurance to be procured and maintained by Sublessee hereunder shall name Sublessor and Landlord as additional insured parties thereunder. Sublessee shall deliver to Sublessor certificates of insurance evidencing all policies and renewals thereof to be maintained by Sublessee pursuant to this Section 10 prior to taking possession of the Subleased Premises and not later than thirty (30) days prior to the stated expiration date of each policy. Additionally, all insurance policies to be procured, and maintained by Sublessee hereunder shall contain a provision which requires thirty (30) days’ written notice to be given to Sublessor by the insurance company before any such insurance policy is changed, lapses or is canceled. Finally, all insurance required to be procured and maintained by Sublessee hereunder shall be primary to any insurance maintained by Sublessor. Sublessor and Sublessee agree to have their respective insurance companies issuing property damage insurance waive any rights of subrogation such companies may have against Sublessee or Sublessor, as the case may be, so long as the insurance carried by Sublessor and Sublessee, respectively, is not invalidated thereby. As long as such waivers of subrogation are contained in their respective insurance policies, Sublessor and Sublessee hereby waive any right that either may have against the other on account of any loss or

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damage to their respective property to the extent such loss or damage is insurable under a policy of insurance for fire and all risk coverage, theft, public liability or similar insurance.

11.

ASSIGNMENT AND SUBLEASE

(a)

Prohibition. Sublessee shall not assign, pledge or encumber this Sublease, or sub-sublease the Subleased Premises, or any part thereof, without the prior written consent of Sublessor and Landlord. If this Sublease is assigned or sub-sublet without the prior written consent of Sublessor and Landlord, or if the Subleased Premises or any part thereof shall be sub-subleased or occupied by an occupant other than Sublessee, Sublessor may, after default by Sublessee, subject to any notice and/or cure provisions provided for herein, collect rent from the assignee, sub-subtenant or occupant, and apply the net amount collected to the rent reserved herein, but no such collection shall be deemed a waiver of this covenant not to transfer or encumber Sublessee's interest in the Subleased Premises without Sublessor's and Landlord's prior written consent, or the acceptance of such assignee, sub-subtenant o r occupant as a replacement tenant, or a release of Sublessee from further observance and performance of all of the covenants and obligations of Sublessee described in this Sublease. Sublessor shall not assign this Sublease without the prior written consent of Sublessee. Notwithstanding anything contained herein to the contrary, but subject in all respects to the terms of the Lease and any consent rights of Landlord thereunder, Sublessee shall have the right, without Sublessor’s consent, but after at least ten (10 business days’ prior written notice to Sublessor (which notice shall contain documentation reasonably acceptable to Sublessor describing and evidencing the transaction set forth in such notice with a covenant to forward copies of any further documentation that may be reasonably requested by Sublessor upon completion of the applicable transaction), at any time during the Term, to assign this Sublease and its rights hereunder to any corporation or other entity (i) controlling, controlled by or under common control with Sublessee; (ii) resulting from a merger or consolidation with Sublessee; or (iii) that has acquired or is simultaneously therewith acquiring ownership of substantially all of the stock or assets of Sublessee. Any such notice and any such documentation submitted by Sublessee shall constitute confidential material and disclosure which Sublessor hereby agrees may not be disclosed, in whole or in part, to any third party, except for disclosure to Landlord to the extent required by the terms of the Lease and as otherwise required pursuant to applicable law. In no event and under no circumstances shall any assignment relieve Sublessee of any of its obligations under this Sublease.

(b)

Obligations to Assume. Anything herein to the contrary notwithstanding, no assignment or sub-sublease approved by Sublessor and Landlord under the provisions of this Sublease shall be effective unless and until the assignee or sub-subtenant expressly assumes all of Sublessee's obligations under this Sublease as and to the same extent as if such assignee or sub-subtenant were the original sublessee named in this Sublease. Such assumption shall be in writing. No transfer shall be effective unless and until an executed copy of the assignment or sub-sublease and the assumption thereof shall be furnished to Sublessor and Landlord within thirty (30) days after the date of the execution thereof. In addition to the foregoing, if Sublessor and Landlord approve any proposed assignee or sub-subtenant, Sublessor's consent to any proposed assignment or sub-sublease shall be further conditioned upon the requirements that the assignment or sub-sublease shall expressly provide that (a) the assignment or sub-sublease is, without condition, subject to all of the limitations, terms and conditions of this Sublease and (b)

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the assignee’s or sub-subtenant's rights shall not survive the earlier of the termination of this Sublease or the Lease, whether such early termination was effected by voluntary cancellation by the parties thereto or otherwise. If consent is once given by Sublessor and Landlord to an assignment or sub-sublease of the Subleased Premises, Sublessor and Landlord shall not be barred from subsequently refusing to consent to any further assignment or sub-sublease. The consent by Sublessor and Landlord to any sub-sublease or assignment by Sublessee shall not relieve or release Sublessee from any of its duties or liabilities under this Sublease whether past, present or future and Sublessee shall remain liable for all of the obligations of “sublessee” hereunder, including, without limitation, the obligation to timely pay all Rent and other sums hereunder.

12.

DEFAULT.

(a)

Default by Sublessee. If (i) at any time Sublessee fails to pay any portion of the Rent by the day when the same shall become due and payable (provided, however, such failure shall not trigger a default one time in any given calendar quarter during the Term hereof unless such failure shall continue following the passage of three (3) business days after Sublessor gives Sublessee notice of such failure) or (ii) if Sublessee fails to perform any of the other terms, conditions or covenants of this Sublease to be performed by Sublessee, other than the payment of Rent, and said failure shall continue for a period of fifteen (15) days after the service of written notice of such breach from Sublessor to Sublessee (provided, however, that if the nature of the failure of performance is such that more than fifteen (15) days is reasonably required for its cure, then Sublessee shall have an additional p eriod of time as is reasonably required to cure such failure (but no more than an additional fifteen (15) day period) so long as Sublessee commences such cure within said initial fifteen (15) day period and thereafter diligently prosecutes such cure to completion by the additional fifteen (15) day period, or (iii) Sublessee vacates, abandons or surrenders all or any part of the Subleased Premises prior to the expiration date of this Sublease, or (iv) the appointment of a trustee or a receiver to take possession of all or substantially all of Sublessee’s assets occurs, or if the attachment, execution or other judicial seizure of all or substantially all of Sublessee’s assets located at the Subleased Premises, or of Sublessee’s interest in this Sublease, occurs, or (v) Sublessee or any of its successors or permitted assigns or sub-sublessees should file any voluntary petition in bankruptcy, reorganization or arrangement, or an assignment for the benefit of creditors or for similar relief under a ny present or future statute, law or regulation relating to the relief of debtors, or (vi) Sublessee or any of its successors or permitted assigns or sub-sublessees should be adjudicated bankrupt or have an involuntary petition in bankruptcy, reorganization or arrangement filed against it, or (vii) Sublessee (as a result of Sublessee’s or its agent’s actions or inactions, whether directly or indirectly) shall permit, allow or suffer to exist any lien, judgment, writ, assessment, charge, attachment or execution upon Sublessor’s or Sublessee’s interest in this Sublease or to the Subleased Premises and/or the fixtures, improvements and furnishings located thereon (and the same is not released, satisfied or transferred to bond pursuant to applicable Florida law within fifteen (15) days or any earlier time as may be required pursuant to the Lease as determined by Sublessor), or (viii) Sublessee breaches the provisions of Paragraph 15 of the Lease as if the same applied to Sublessee as the tena nt thereunder (Assignment or Subletting); then Sublessee shall be in default hereunder. In the event that Sublessee is in default hereunder, Sublessor may

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avail itself of all remedies allowed at law or in equity, including, but not limited to, the following:

(A)

Sublessor shall have the right, at its election, to cancel and terminate this Sublease and to remove all persons and properties therefrom by summary proceedings; provided, however, that any such termination of this Sublease shall be at the option or election of Sublessor only and such termination and cancellation shall not take effect unless Sublessor shall so elect.

(B)

Sublessor shall have the right (1) to pursuant to the requirements of applicable Florida law and any computation stated in the Lease (and as may then be interpreted by Landlord) accelerate and declare immediately due and payable all Rent and other charges to be paid by Sublessee hereunder to the end of the Term, and to collect such Rent and charges immediately by distress proceedings or otherwise, at Sublessor's election or (2) in the event that Sublessee vacates, abandons or surrenders the Subleased Premises or in the event that Sublessor dispossesses Sublessee but does not elect to terminate this Sublease, then, without waiving its right to acceleration, Sublessor shall have the right to re-let the Subleased Premises, or portions thereof, for Sublessee's account, for such terms, rent and conditions as Sublessor may elect, applying the net rentals or avails of such re-letting (x) first, to the payment of Sublessor's expenses and dispossessing Sublessee and the costs and expenses of making such repairs and improvements to the Subleased Premises as may be necessary in order to enable Sublessor to re-let the same, (y) second, to the payment of any brokerage commissions or other necessary expenses of Sublessor in connection with such re-letting; and (z) third, the balance, if any, shall be applied by Sublessor from time to time, but in any event no less than once a month, on account of the payments due or payable by Sublessee hereunder, if any, with the right reserved to Sublessor to bring such actions and proceedings for the recovery of any deficits remaining unpaid as Sublessor may deem advisable from time to time, without being obligated to await the end of the Term for a final determination of Sublessee's account. The commencement or maintenance of any one or more actions shall not bar Sublessor from bringing other or subsequent actions for further accruals p ursuant to the provisions of this section.