Document:

Prepared by MerrillDirect

EXHIBIT
10.3

 

MEDIA
100 INC.

Key
Employee Incentive Plan (1992),

as amended through May 5, 2000

1.          Plan;
Purpose; General.  The purpose of
this Key Employee Incentive Plan (1992) (the "Plan") is to advance
the interests of Media 100 Inc. (formerly Data Translation, Inc.) (the
"Company") by enhancing the ability of the Company and its
subsidiaries to attract and retain selected advisers, consultants, key
employees and directors, by creating for such persons incentives and rewards
for their contributions to the success of the Company, and by encouraging such
persons to become owners of shares of the Company's Common Stock, par value
$0.01 per share (the "common stock" or "stock").  Options granted pursuant to the Plan may be
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") (such options being referred to
herein as "incentive options") or non-incentive options.  The proceeds received from the sale of stock
pursuant to the Plan shall be used for general corporate purposes.  Except as otherwise expressly provided with
respect to an option grant, no option granted pursuant to the Plan shall be an
incentive option.

2.          Effective
Date of Plan.  This Plan will become
effective upon approval by at least a majority of the votes cast at the next
duly called Annual Meeting of Stockholders of the Company at which a quorum
representing a majority of the voting power of all outstanding voting stock of
the Company is, either in person or by proxy, present and voting thereon or at
any adjournment thereof.  Grants of
awards under the Plan may be made prior to that date (but after Board adoption
of the Plan), subject to approval of the Plan by such shareholders.1

1  The Plan was approved by the requisite vote
of stockholders at the Annual Meeting of Stockholders of the Company held on
April 8, 1992.

 

3.          Administration
of the Plan.  The Plan will be
administered by the Board of Directors (the "Board") of the
Company.  The Board will have authority
to take all action necessary or appropriate hereunder, to interpret its
provisions, and to decide all questions and resolve all disputes which may
arise in connection therewith.  Such
determinations of the Board shall be conclusive and shall bind all parties.

             The
Board may, in its discretion, delegate some or all of its powers with respect
to the Plan to the Executive Compensation and Stock Option Committee or any
other committee (the "Committee"), in which event all references to
the Board hereunder, except the references in Section 11 hereof, shall be
deemed to refer to the Committee.  The
Committee, if one is appointed, shall consist of not fewer than two members,
and each member of the Committee shall be, at the time of his appointment and
at any time he exercises discretion in administering the Plan, a
"non-employee director" as that term is defined in Rule 16b-3 adopted
pursuant to the Securities Exchange Act of 1934, as amended.  A majority of the members of any such Committee
shall constitute a quorum, and all determinations of the Committee shall be
made by a majority of its members.  Any
determination of the Committee under the Plan may be made without notice or
meeting of the Committee by a writing signed by a majority of the Committee
members.

4.          Eligibility.  The "Participants" in the Plan
will be such key employees, including part-time employees, advisers,
consultants and directors whether or not they are employees, of the Company or
of any of its present or future subsidiaries (as defined in Section 10) as may be
selected from time to time by the Board in its discretion.

             No
incentive option shall be granted to a Participant who is not an
"employee" as defined in the provisions of the Code or regulations
thereunder applicable to incentive options. 
No incentive option shall be granted to a Participant who at the time of
grant owns, directly or indirectly through application or the attribution rules
of Section 424(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its
subsidiaries (a "Ten-Percent Shareholder") unless (i) the option
price at the time it is granted is at least 110% of the fair market value of
the stock subject to the option, and (ii) the period of the option does not exceed
five years from the date of grant.

5.          Grant
of Awards.  Subject to the express
provisions of the Plan, the Board shall have the sole authority and discretion
(a) to determine which Participants will be granted awards; (b) to grant awards
consisting of options or stock appreciation rights ("SARs"), or both
to Participants; (c) to determine whether the options granted to any
Participants shall be incentive options or non-incentive options; (d) to
determine the time or times when awards will be granted and the number of
shares of common stock to be subject to each award; (e) to determine the option
price of the shares subject to each option in accordance with Section 6(a)
hereof and the value of the shares subject to each SAR on the exercise date of
such SAR in accordance with Section 6(d) hereof, and the method of payment of
such price; (f) to determine the time or times when each award becomes
exercisable and the duration of the exercise period; (g) to impose additional
conditions or restrictions on any award, such conditions or restrictions, if
any, to be set forth in the award form or other instrument evidencing the
award; (h) to prescribe the form or forms of any instruments evidencing any
awards granted under the Plan and of any other instruments required under the
Plan and to make changes in such forms from time to time; (i) to determine the
price, vesting schedule and other attributes of awards granted to Participants
working abroad; and (j) to adopt, amend and rescind rules and regulations for
the administration of the Plan and the awards and for its own acts and
proceedings.  Subject to Section 12
hereof, the Board shall also have the authority, in its sole discretion, both
generally and in particular instances, to waive compliance by a Participant
with any obligation to be performed by him under an award, to waive any
condition or provision of an award, and to amend or cancel any award (and if an
award is cancelled, to grant a new award on such terms as the Board shall
specify) except that the Board may not take any action with respect to an
outstanding award that would adversely affect the rights of the Participant
under such award without such Participant's consent.  Nothing in the preceding sentence shall be construed as limiting
the power of the Board to make adjustments required by Section 8(c) hereof.

             No
award shall be granted on or after February 20, 2002 but awards previously
granted may extend beyond that date.

6.          Terms
and Conditions of Awards.

a.          Exercise Price of Options.  The purchase price per share for shares
issuable upon exercise of options shall be determined by the Board but in the
case of incentive options shall not be less than 100% (110% in the case of an
incentive option granted to a Ten-Percent Shareholder) of the fair market value
of the stock on the date of grant; nor shall the option price be less, in the
case of an original issue of authorized stock, than par value per share.  For this purpose, "fair market
value" will be determined as set forth in Section 10 hereof.

b.          Period of Options.  An option shall be exercisable during such
period or periods as the Board may specify. 
The latest date on which an option may be exercised (the "Final
Exercise Date") shall be the date which is ten years (five years, in the
case of an incentive option granted to a Ten-Percent Shareholder) from the date
the option was granted or such earlier date as may be specified by the Board at
the time the option is granted.

c.          Exercise of Options.

(i)          Unless the Board at the time of grant
or at any other time otherwise specifies in the case of a particular option or
options, each option shall first become exercisable with respect to one-fifth
of the shares covered by it upon the completion of one year from the date of
the grant of the option (the "Initial Exercise Date"), and with
respect to an additional one-fifth each succeeding year until the option
becomes exercisable with respect to all of the shares covered by it.

(ii)         In the case of options intended to be
incentive options, any award forms or other instruments evidencing such options
shall contain such provisions relating to exercise and other matters as are
required of incentive options under the applicable provisions of the Code and
Treasury Regulations, as from time to time in effect.

(iii)        A person electing to exercise part or
all of his options shall give written notice to the Company, as specified by
the Board, of his election and of the number of shares he has elected to
purchase, such notice to be accompanied by the instrument evidencing such
option and any other documents required by the Board, and shall at the time of
such exercise tender the purchase price of the shares he has elected to
purchase.  If the notice of election to
exercise is given by the executor or administrator of a deceased Participant,
or by the person or persons to whom the option has been transferred by the
Participant's will or the applicable laws of descent and distribution, the
Company will be under no obligation to deliver shares pursuant to such exercise
unless and until the Company is satisfied that the person or persons giving
such notice is or are entitled to exercise the option.

(iv)       In the case of an option that is not an
incentive option, the Board shall have the right to require that the
Participant exercising the option remit to the Company an amount sufficient to
satisfy any federal, state, or local withholding tax requirements (or make
other arrangements satisfactory to the Company with regard to such taxes) prior
to the delivery of any common stock pursuant to the exercise of the
option.  If permitted by the Board,
either at the time of the grant of the option or the time of exercise, the
Participant may elect, at such time and in such manner as the Board may
prescribe, to satisfy such withholding obligation by (i) delivering to the
Company common stock owned by such individual having a fair market value equal
to such withholding obligation, or (ii) requesting that the Company withhold
from the shares of common stock to be delivered upon exercise of the option a
number of shares of common stock having a fair market value equal to such
withholding obligation.

 

In the case of an incentive option, if at
the time the option is exercised the Board determines that under applicable law
and regulations the Company could be liable for the withholding of any federal,
state or local tax with respect to a disposition of the common stock received
upon exercise, the Board may require as a condition of exercise that the
Participant exercising the option agree (i) to inform the Company promptly of
any disposition (within the meaning of Section 424(c) of the Code and the
regulations thereunder) of common stock received upon exercise, and (ii) to
give such security as the Board deems adequate to meet the potential liability
of the Company for the withholding of tax, and to augment such security from
time to time in any amount reasonably deemed necessary by the Board to preserve
the adequacy of such security.

d.          Stock Appreciation Rights.  The Board in its discretion may grant SARs
either in tandem with or independent of options awarded under the Plan.  Except as hereinafter provided, each SAR
will entitle the Participant to receive upon exercise, with respect to each
share of common stock to which the SAR relates, the excess of (i) the share's
value on the date of exercise, over (ii) the share's fair market value on the
date it was granted.  For purposes of
clause (i), "value" shall mean fair market value; provided,
that the Board may adjust such value to take into account dividends on the stock
and may also grant SARs that provide, in such limited circumstances following a
change in control of the Company (as determined by the Board) as the Board may
specify, that "value" for purposes of clause (i) is to be determined
by reference to a specified value (which may include an average of values) for
the common stock during a period immediately preceding the change in control,
all as determined by the Board.  The
amount payable to a Participant upon exercise of an SAR shall be paid either in
cash or in shares of common stock, as the Board determines.  Each SAR shall be exercisable during such
period or periods and on such terms as the Board may specify.  No SAR shall be exercisable after the date
which is ten years from the date of grant.

e.          Payment for and Delivery of Shares.  Shares which are subject to options shall be
issued only upon receipt by the Company of full payment of the purchase price
for the shares as to which the award is exercised.  The purchase price shall be payable by the option holder to the
Company either (i) in cash or by check, bank draft or money order payable to
the order of the Company; or (ii) if so permitted by the Board (which in the
case of an incentive option, shall specify such method of payment at the time
of grant), (A) through the delivery of shares of common stock (duly owned by
the option holder and for which the option holder has good title free and clear
of any liens and encumbrances and which, in the case of common stock acquired
from the Company, shall have been held for at least six months) having a fair
market value on the last business day preceding the date of exercise equal to
the purchase price or (B) by delivery of a promissory note of the option holder
to the Company, such note to be payable on such terms as are specified by the
Board or (C) by delivery of an unconditional and irrevocable undertaking by a
broker to deliver promptly to the Company sufficient funds to pay the exercise
price; or (iii) by a combination of the permissible forms of payment as provided
in (i) and (ii) above; provided, that if the common stock delivered upon
exercise of the option is an original issue of authorized common stock, at
least so much of the exercise price as represents the par value of such common
stock shall be paid other than with a personal check or promissory note of the
person exercising the option.

             The Company shall not be obligated
to deliver any shares unless and until, in the opinion of the Company's
counsel, all applicable federal and state laws and regulations have been
complied with, nor, if the outstanding common stock is at the time listed on
any securities exchange, unless and until the shares to be delivered have been
listed (or authorized to be added to the list upon official notice of issuance)
upon such exchange, nor unless and until all other legal matters in connection
with the issuance and delivery of shares have been approved by the Company's
counsel.  Without limiting the
generality of the foregoing, the Company may require from the person exercising
an option such investment representation or such agreement, if any, as counsel
for the Company may consider necessary in order to comply with the Securities
Act of 1933, as amended, and may require that such person agree that any sale
of the shares will be made only on a national securities exchange or in such
other manner as is permitted by the Board and that he will notify the Company
before he makes any disposition of the shares whether by sale, gift or
otherwise.

             A Participant shall have the rights
of a shareholder only as to shares actually acquired by him under the Plan.

f.           Nontransferability of Awards.  No award may be sold, assigned or otherwise
transferred or disposed of in any manner whatsoever other than by will or by
the laws of descent and distribution, and during the Participant's lifetime the
award may be exercised only by him.

g.          Forfeiture of Awards upon
Termination of Employment.  If a
Participant’s (other than a non-employee director’s) employment or service with
the Company and its subsidiaries terminates for any reason other than death,
the portion of any award held by the Participant that was not exercisable
immediately prior to such termination of employment or service shall
immediately expire and except as the Board may otherwise determine, in its sole
discretion, the remaining portion, if any, of the award shall continue to be
exercisable for a period of ninety (90) days immediately following the date of
termination of the Participant’s employment or other service with the Company
and its subsidiaries.  Notwithstanding
the foregoing, if the Participant was terminated for cause all awards held by
the Participant immediately prior to such termination, whether or not then
exercisable, shall immediately expire.2  For purposes of this Section 6(g), employment shall not be
considered terminated (i) in the case of sick leave or other bona fide leave of
absence approved for purposes of the Plan by the Board, so long as the
Participant's right to reemployment is guaranteed either by statute or by
contract, (ii) in the case of a transfer of employment between the Company and
a subsidiary or between subsidiaries, or to the employment of a corporation (or
a parent or subsidiary corporation of such corporation) issuing or assuming an
option in a transaction to which Section 424(a) of the Code applies, or (iii)
in the case of a transfer of employment between the Company and its
wholly-owned subsidiary Data Translation, Inc. (formerly Data Translation II,
Inc.) ("DTI") and subsequent distribution  of the stock of such subsidiary to the Company's stockholders
(the "Distribution"); provided, that this clause (iii) shall
apply only in the case of Participants whose transfer of employment to DTI
occurs in connection with the Distribution; and further provided, that in the case of
any such Participant, post-Distribution service for DTI shall be treated for
purposes of this paragraph as service for the Company and any post-Distribution
termination of employment with DTI shall be treated for purposes of this
paragraph as a termination of employment with the Company and its
subsidiaries.  The Company may require
that any Participant described in clause (iii) above provide, prior to any
post-Distribution exercise of an award hereunder by such Participant and as a
condition thereto, evidence satisfactory to the Company as to the period of
such Participant's employment with DTI.

2  The preceding two sentences were adopted by
amendment dated January 19, 1998 and are effective as to awards granted,
regranted or amended on or after such date, except as the Board may otherwise
determine; provided, that any incentive option granted prior to such date that
is amended on or after such date shall not be subject to such amendment without
the consent of the Participant holding the option if application of such
amendment would cause the option (as amended) to fail to qualify as an
incentive stock option.  With respect to
all awards which are not subject to the foregoing amendment, the following
provision shall apply:

"If
a Participant's (other than a non-employee director's) employment or service
with the Company and its subsidiaries terminates for any reason other than
death, all awards held by the Participant shall terminate unless the Board
determines, in its sole discretion, that such awards as were exercisable
immediately prior to termination shall continue to be exercisable for a period
of time after termination shall continue to be exercisable for a period of time
after termination (but in no event beyond the Final Exercise Date). If the
Board determines that a post-termination exercise period for exercisable awards
is appropriate, such awards shall terminate and be forfeited after completion
of such period to the extent not previously exercised, expired or terminated."

 

h.          Death.  If a Participant dies at a time when he is
entitled to exercise an option, then at any time or times within one year after
his death (or such further period as the Board may allow) such option may be
exercised, as to all or any of the shares which the Participant was entitled to
purchase immediately prior to his death, by his executor or administrator or
the person or persons to whom the option is transferred by will or the
applicable laws of descent and distribution, and except as so exercised such
option will expire at the end of such period. 
In no event, however, may any option be exercised after the Final
Exercise Date.

i.           Confidentiality Agreement.  Each Employee, including employees of DTI
who received options while employees of the Company, shall execute, prior to or
contemporaneously with the grant of any option to such Participant hereunder,
the Company's then standard form of agreement relating to confidentiality,
inventions and the like.

7.          Replacement
Awards.  The Company may grant awards
under the Plan on terms differing from those provided in Section 6, where such
awards are granted in substitution for awards held by employees of another
corporation who concurrently become employees of the Company or a subsidiary as
the result of a merger or consolidation of that corporation with the Company or
a subsidiary, or the acquisition by the Company or a subsidiary of property or
stock of that corporation.  The Board
may direct that the substitute awards be granted on such terms and conditions
as the Board considers appropriate in the circumstances.  Such awards will be in addition to those
which may be granted under the Plan and will not be counted as granted under
the Plan.

8.          Shares Subject to Plan.

a.          Number of Shares and Stock to be
Delivered.  Shares delivered
pursuant to this Plan shall in the discretion of the Board be authorized but
unissued shares of common stock or previously issued stock acquired by the
Company.  Subject to adjustment as
described below and exclusive of the shares that are subject to the options
provided for in Section 13, the aggregate number of shares which may be
delivered under this Plan shall not exceed 4,200,000 shares of common stock of
the Company.

b.          Limitations on Grants to
Individuals.   Subject to adjustment
as described below and exclusive of the shares that are subject to the options
provided for in Section 13, the aggregate number of shares for which options
may be granted under this Plan to any individual in any calendar year shall not
exceed 500,000 shares of common stock of the Company.

c.          Changes in Stock.  In the event of a stock dividend, stock
split or combination of shares, recapitalization, merger in which the Company
is the surviving corporation or other change in the Company's capital stock, the
number and kind of shares of stock or securities of the Company to be subject
to the Plan and to options then outstanding or to be granted thereunder, the
maximum number of shares or securities which may be delivered under the Plan,
the option price and other relevant provisions shall be appropriately adjusted
by the Board, whose determination shall be binding on all persons.  In the event of a consolidation or merger in
which the Company is not the surviving corporation or which results in the
acquisition of substantially all the Company's outstanding stock by a single
person or entity, or in the event of the sale or transfer of substantially all
the Company's assets, all outstanding awards shall thereupon terminate,
provided that at least twenty days prior to the effective date of any such
merger, consolidation or sale of assets, all outstanding awards shall become
exercisable immediately prior to consummation of such merger, consolidation or
sale of assets, unless the Board shall have arranged for the surviving or
acquiring corporation or an affiliate of that corporation to assume the awards
or to grant to the Participants replacement awards having equivalent terms and
conditions as determined by the Board including, in the case of incentive
options, terms and conditions that satisfy the requirements of Section 424(a)
of the Code.

             The
Board may also adjust the number of shares subject to outstanding awards
granted under Sections 5 or 6 hereof, the exercise price of outstanding options
and the terms of outstanding options to take into consideration material
changes in accounting practices or principles, consolidations or mergers
(except those described in the immediately preceding paragraph), acquisitions
or dispositions of stock or property or any other event if it is determined by
the Board that such adjustment is appropriate to avoid distortion in the
operation of the Plan, including without limitation, the special option
adjustments made in connection with the Distribution and described in Section 14
herein.

9.          Employment
Rights.  Neither the adoption of the
Plan nor the grant of awards shall confer upon any Participant any right to
continued employment with the Company or a subsidiary or affect in any way the
right of the Company to terminate the employment of a Participant at any
time.  Except as specifically provided
by the Board, in its sole discretion, in any particular case, the loss of
existing or potential profit in awards granted under this Plan shall not
constitute an element of damages in the event of termination of the
relationship of a Participant even if the termination is in violation of an
obligation of the Company to the Participant by contract or otherwise.

10.        Definitions.

a.          For purposes of the Plan a subsidiary
is any corporation (i) in which the Company owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock, or (ii) over which the Company has effective operating control;
provided, however, that no corporation shall be deemed a subsidiary for the
purpose of any provisions applicable to incentive options, and no incentive
options shall be granted to employees of such corporation, unless in each case,
such corporation shall constitute a subsidiary as defined in clause (i) above.  For special rules relating to DTI, see
Section 14, below.

b.          The fair market value of the common
stock shall be determined in accordance with the applicable provisions of the
Code or regulations issued thereunder, or in the absence of any such provisions
or regulations, shall be deemed to be the last sale price at which such common
stock is traded on the date in question as reported in the Wall Street Journal;
or, if the Wall Street Journal is not published at the date in question or does
not list the common stock, then in such other appropriate newspaper of general
circulation as the Board may prescribe; or, if there is no sale of the common
stock on the date in question or the last price at which the common stock
traded is not listed, then the mean between the bid and asked price at the
close of the market on such day.

11.        Indemnification
of Board.  In addition to and
without affecting such other rights of indemnification as they may have as
members of the Board or otherwise, each member of the Board shall be
indemnified by the Company to the extent legally possible against reasonable
expenses, including attorneys' fees, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which he may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any option
granted thereunder, and against all judgments, fines and amounts paid by him in
settlement thereof; provided that such payment of amounts so indemnified is
first approved by a majority of the members of the Board who are not parties to
such action, suit or proceeding, or by independent legal counsel selected by
the Company, in either case on the basis of a determination that such member
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; and except that no
indemnification shall be made in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Board member is liable
for negligence or misconduct in his duties; and provided, further that the
Board member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.

12.        Amendments.  The Board may at any time discontinue
granting awards under the Plan.  The
Board may at any time or times amend the Plan or amend any outstanding award or
awards for the purpose of satisfying the requirements of Section 422 of the
Code or of any changes in applicable laws or regulations, to comply with any
applicable laws and requirements of foreign jurisdictions or for any other
purpose that may at the time be permitted by law, provided that no such
amendment will adversely affect the rights of any Participant (without his
consent) under any award theretofore granted.

13.        Non-Employee
Directors.  Notwithstanding anything
to the contrary contained elsewhere herein:

a.          Eligible Directors and Grant.  Each director of the Company who is not a
full-time employee of the Company or any of its subsidiaries and is a director
on April 8, 1992 shall be automatically granted on such date non-incentive
stock options covering 10,000 shares of common stock and each non-employee
director who is initially elected after April 8, 1992 and prior to February 20,
2002 shall be granted on the date of such election non-incentive stock options
covering 10,000 shares of common stock (notwithstanding the two-for-one split
of the common stock effected on July 31, 1995), all such options to be
exercisable with respect to one-fifth of the covered shares one year from the
date of grant and with respect to an additional one-fifth each succeeding year.

b.          Terms of Options.  The Final Exercise Date of options granted
pursuant to Section 13(a) hereof shall be 10 years from the date of grant.  If a director's service with the Company
terminates for any reason other than death, in lieu of the provisions of
Section 6(g) hereof, all options held by the director that are exercisable on
the date of termination shall continue to be exercisable for a period of six
months, but shall terminate immediately if the director was removed for cause
or resigned under circumstances which in the opinion of the Board of Directors
casts such discredit on the Company or him as to justify termination of his
options.  After completion of said
six-month period, such options shall terminate to the extent not previously
exercised, expired or terminated.  All
options held by a director that are not exercisable on the date such director's
service with the Company terminates shall immediately terminate.  The purchase price for shares of common
stock issuable upon the exercise of options granted pursuant to Section 13(a)
hereof shall be the fair market value of the common stock at the close of
business on the date the option is granted, determined in accordance with
Section 10(b) hereof; provided, however, that in no event shall
the exercise price be less than par value per share.

14.        Special
Option Adjustments.  Notwithstanding
any other provision of the Plan, each option outstanding under the Plan
immediately prior to the Distribution (an "affected option") shall be
adjusted in accordance with Section 8.7 of the Distribution Agreement between
the Company and DTI dated as of November 19, 1996 (the "Distribution
Agreement"). Except as otherwise provided herein, the adjusted option
shall have substantially the same terms as prior to the Distribution.  To the extent any such adjustment shall be
treated as an option grant for purposes of Section 8.7 of such Agreement, it
shall be made in accordance with the terms of said Section 8.7 and without
regard to the option-grant rules and limitations set forth in this Plan.EXHIBIT 4.29

                    TENTH FORBEARANCE AND AMENDMENT AGREEMENT

         THIS TENTH FORBEARANCE AND AMENDMENT AGREEMENT (this "Agreement"),
dated as of May 31, 2001, is made by and between PARLUX, LTD., a New York
corporation ("Borrower"), PARLUX FRAGRANCES, INC., a Delaware corporation
("Parent") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
acting in its capacities as the Agent and the sole Lender under the Credit
Agreement described below ("GE Capital").

                              W I T N E S S E T H:

         WHEREAS, GE Capital, Parent and Borrower have entered into certain
financing arrangements pursuant to the Credit Agreement, dated as of May 24,
1997, as amended, by and among GE Capital, Parent and Borrower (as the same may
be amended, modified, supplemented, extended, renewed, restated or replaced from
time to time, the "Credit Agreement"); and

         WHEREAS, as of the date hereof, Borrower is in default under the Credit
Agreement as more particularly described as the Specified Defaults below; and

         WHEREAS, the Specified Defaults constitute Events of Default under the
Credit Agreement; and

         WHEREAS, GE Capital, Parent and Borrower are parties to that certain
Forbearance and Amendment Agreement, dated as of May 25, 2000, that certain
Amended and Restated Forbearance and Amendment Agreement, dated as of August 18,
2000, that certain Third Forbearance and Amendment Agreement, dated as of
September 28, 2000, that certain Fourth Forbearance and Amendment Agreement,
dated as of November 28, 2000, that certain Fifth Forbearance and Amendment
Agreement, dated as of December 27, 2000, that certain Sixth Forbearance and
Amendment Agreement, dated as of January 31, 2001, that certain Seventh
Forbearance and Amendment Agreement, dated as of February 28, 2001, that certain
Eighth Forbearance and Amendment Agreement, dated as of March 31, 2001 (the
"Eighth Forbearance Agreement"), and that certain Ninth Forbearance Agreement,
dated as of April 30, 2001 (whereby GE Capital agreed to forbear from exercising
certain of its rights and remedies and provide certain further Revolving Credit
Loans and other financial accommodations to Borrower until May 31, 2001); and

         WHEREAS, Borrower has requested that GE Capital continue to forbear
from exercising its rights as a result of the Specified Defaults, which are
continuing, and that GE Capital continue to provide further Revolving Credit
Loans and other financial accommodations to Borrower notwithstanding the
Specified Defaults; and

         WHEREAS, GE Capital is willing to agree to continue to forbear from
exercising certain of its rights and remedies and continue to provide certain
further Revolving Credit Loans and other financial accommodations to Borrower
for the period and on the terms and conditions specified herein;

<PAGE>

         NOW, THEREFORE, in consideration of the foregoing, and the respective
agreements, warranties and covenants contained herein, the parties hereto agree,
covenant and warrant as follows:

SECTION 1.  DEFINITIONS

         1.1 Interpretation. All capitalized terms used herein (including the
recitals hereto) shall have the respective meanings assigned thereto in the
Credit Agreement unless otherwise defined herein.

         1.2 Additional Definitions. As used herein, the following terms shall
have the respective meanings given to them below and the Credit Agreement is
hereby amended to include, in addition and not in limitation, each of the
following definitions:

             (a) "Specified Defaults" shall mean the failure on the part of the
Credit Parties to comply with the following covenants during or as of the end of
the periods described below: (i) the Restricted Payment covenant in Section 6.15
of the Credit Agreement during the Fiscal Months ended December 31, 1999,
January 31, 2000, February 28, 2000, March 31, 2000, April 30, 2000 and May 31,
2000, (ii) the employee and officer loan covenant in Section 6.2(iii) of the
Credit Agreement during the Fiscal Months ended December 31, 1999, January 31,
2000, February 28, 2000, March 31, 2000, April 30, 2000 and May 31, 2000, (iii)
the minimum Tangible Net Worth covenant in part (b) of Schedule 6.11 to the
Credit Agreement as of the end of the Fiscal Quarters ended December 31, 1999
and March 31, 2000, (iv) the minimum Fixed Charge Coverage Ratio in part (c) of
Schedule 6.11 to the Credit Agreement for the Fiscal Months ended December 31,
1999, January 31, 2000, February 28, 2000, March 31, 2000, April 30, 2000 and
May 31, 2000, (v) the maximum Capital Expenditure covenant in part (f) of
Schedule 6.11 for the Credit Agreement for the Fiscal Year ended March 31, 2000,
and (vi) the minimum Current Ratio in part (d) of Schedule 6.11 to the Credit
Agreement for the Fiscal Quarter ended March 31, 2000.

             (b) "Forbearance Period" shall have the meaning set forth in
Section 3.2(a) hereof.

SECTION 2.  ACKNOWLEDGMENTS

         2.1 Acknowledgment of Obligations. Each of Borrower and Parent hereby
acknowledges, confirms and agrees that as of the close of business on May 30,
2001, Borrower and Parent were indebted to GE Capital in respect of the
Revolving Credit Loans and the Letter of Credit Obligations in the aggregate
principal amount of $9,888,627.57. All such Obligations, together with interest
accrued and accruing thereon, and fees, costs, expenses and other charges now or
hereafter payable by Borrower or Parent to GE Capital, are unconditionally owing
by Borrower and Parent to GE Capital, all without offset, defense or
counterclaim of any kind, nature or description whatsoever.

                                       2

<PAGE>

         2.2 Acknowledgment of Liens. Each of Borrower and Parent hereby
acknowledges, confirms and agrees that GE Capital has and shall continue to have
valid, enforceable and perfected first-priority liens upon and security
interests in the Collateral heretofore granted to GE Capital pursuant to the
Loan Documents or otherwise granted to or held by GE Capital.

         2.3 Binding Effect of Documents. Each of Borrower and Parent hereby
acknowledges, confirms and agrees that: (a) each of the Loan Documents to which
it is a party has been duly executed and delivered to GE Capital by such Credit
Party, and each is in full force and effect as of the date hereof, (b) the
agreements and obligations of such Credit Party contained in such documents and
in this Agreement constitute the legal, valid and binding obligations of such
Credit Party, enforceable against it in accordance with their respective terms,
and such Credit Party has no valid defense to the enforcement of such
obligations, and (c) GE Capital is and shall be entitled to the rights, remedies
and benefits provided for it in the Loan Documents and applicable law.

SECTION 3.  FORBEARANCE IN RESPECT OF SPECIFIED DEFAULTS

         3.1 Acknowledgment of Defaults. Each of Borrower and Parent hereby
acknowledges and agrees that the Specified Defaults have occurred and are
continuing and constitute Events of Default which entitle GE Capital to exercise
its rights and remedies under the Loan Documents, applicable law or otherwise.
Each of Borrower and Parent hereby acknowledges and agrees that GE Capital has
the presently exercisable right to declare the Obligations to be immediately due
and payable under the terms of the Loan Documents. GE Capital has not waived,
presently does not intend to waive and may never waive any of the Specified
Defaults and nothing contained herein or the transactions contemplated hereby
shall be deemed to constitute any such waiver.

         3.2 Forbearance.

             (a) In reliance upon the representations, warranties and covenants
of Borrower and Parent contained in this Agreement, and subject to the terms and
conditions of this Agreement and any documents or instruments executed in
connection herewith, GE Capital agrees to forbear from exercising its rights and
remedies under the Loan Documents or applicable law in respect of or arising out
of the Specified Defaults, subject to the conditions, amendments and
modifications contained herein for the period (the "Forbearance Period")
commencing on the date hereof and ending on the earlier of: (i) June 30, 2001 or
(ii) the occurrence or existence of any Event of Default other than the
Specified Defaults.

             (b) Upon the termination of the Forbearance Period, the agreement
herein of GE Capital to forbear shall automatically and without further action
terminate and be of no force and effect, it being expressly agreed that the
effect of such termination will be to permit GE Capital to exercise such rights
and remedies immediately, including, but not limited to, (i) ceasing to make any
further Loans and (ii) the acceleration of all of the Obligations; in either
case without any further notice, passage of time or forbearance of any kind.

                                       3

<PAGE>

         3.3 No Other Waivers; Reservation of Rights.

             (a) GE Capital has not waived, is not by this Agreement waiving,
and may never waive, any Events of Default which may be continuing on the date
hereof or any Events of Default which may occur after the date hereof (whether
the same or similar to the Specified Defaults or otherwise), and GE Capital has
not agreed to forbear with respect to any of its rights or remedies concerning
any Events of Default (other than, during the Forbearance Period, the Specified
Defaults to the extent expressly set forth herein), which may have occurred or
are continuing as of the date hereof or which may occur after the date hereof.

             (b) Subject to Section 3.2 above (and solely with respect to the
Specified Defaults), GE Capital reserves the right, in its discretion, to
exercise any or all of its rights and remedies under the Credit Agreement and
the other Loan Documents as a result of any Events of Default which may be
continuing on the date hereof or any Event of Default which may occur after the
date hereof, and GE Capital has not waived any of such rights or remedies, and
nothing in this Agreement, and no delay on its part in exercising any such
rights or remedies, should be construed as a waiver of any such rights or
remedies.

SECTION 4. AMENDMENT AND SUPPLEMENTARY PROVISIONS

         4.1 Extending Commitment Termination Date. Subject to the terms and
conditions of this Agreement, Borrower, Parent and GE Capital hereby agree that,
effective from and after the date of this Agreement (but subject to the
fulfillment of the conditions set forth in Section 6 hereof), the definition of
the term "Commitment Termination Date" in Annex A to the Credit Agreement shall
be amended by deleting the reference to the date "May 31, 2001" in clause (i)
thereof and by substituting in lieu thereof a reference to the date "June 30,
2001".

         4.2 Additional Reports. Commencing with the date of this Agreement and
continuing thereafter, Borrower shall provide GE Capital on each Business Day
with a report of the Borrower's sales and collections since the preceding
Business Day together with an accounts receivable roll-forward, and Borrower
also shall provide GE Capital with a weekly report of its Inventory balances.

         4.3 Interest Rate. From and after the date of this Agreement, the Loans
and all other Obligations shall bear interest at the Default Rate and the
Default Rate shall be equal to the Prime Rate plus the Applicable Margin plus an
additional two percentage points (2.0%) per annum, and from and after this date
Borrower shall not be entitled to have any Loan bear interest at a Floating
Rate.

         4.4 Access. Commencing with the date of this Agreement, each of Parent
and Borrower shall permit GE Capital (or any Person designated by GE Capital) to
visit and inspect any of the properties of such Credit Party, to examine the
books and records of such Credit Party and such other documents as GE Capital
may reasonably request and make copies thereof or extracts therefrom and to
discuss the affairs, finances, operations and assets of any such Credit Party
with the officers and employees of such Credit Party and with such Credit
Party's independent public accountants, all at such reasonable times and as
often as GE Capital may reasonably request.

                                       4

<PAGE>

         4.5 Strict Compliance. GE Capital hereby notifies Parent and Borrower
that, effective from and after the date of this Agreement, GE Capital intends to
enforce all of the provisions of the Loan Documents, including without
limitation the provisions of Section 6.15 of the Credit Agreement that, among
other things, prohibits the Credit Parties from making any further purchases of
the Parent's Stock and that GE Capital expects that the Credit Parties will
strictly comply with the terms of the Loan Documents (including without
limitation Section 6.15 of the Credit Agreement) from and after this date.
Without limiting the generality of the foregoing, Parent and Borrower
acknowledge and agree that any purchase after the date of this Agreement by any
Credit Party of any of the Parent's Stock shall constitute an immediate Event of
Default which will terminate the Forbearance Period and entitle GE Capital to
exercise its rights and remedies as Agent and sole Lender under the Loan
Documents, applicable law or otherwise.

         4.6 Fees.

             (a) The due date of the $30,000 fee earned on this date under
Section 4.6(a) of the Eighth Forbearance Agreement shall be deferred until June
15, 2001, when such fee shall be due and payable in full; provided that GE
Capital hereby agrees to waive the payment of such fee if (i) on or before June
15, 2001 Borrower obtains (and presents GE Capital with a copy of ) a signed and
effective written commitment from General Motors Acceptance Corporation (or an
Affiliate thereof) for a refinancing of all of the Revolving Credit Loans,
Letter of Credit Obligations and other Obligations on terms sufficient (in GE
Capital's judgment) to enable such refinancing to occur on or before June 30,
2001 and (ii) such refinancing and the related payment of all Obligations and
termination of the Credit Agreement occur on or before June 30, 2001.

             (b) The fee specified in Section 4.6(a) shall be in addition to all
other fees, interests, costs and expenses payable by Borrower to GE Capital
under the Credit Agreement and the other Loan Documents and may be charged by GE
Capital to Borrower's loan account with GE Capital.

SECTION 5.  REPRESENTATIONS, WARRANTIES AND COVENANTS

         Each of Borrower and Parent hereby further represents, warrants and
covenants with and to GE Capital as follows:

         5.1 Representations in Loan Documents. Each of the representations and
warranties made by or on behalf of each Credit Party to GE Capital in any of the
Loan Documents was true and correct when made and in all material respects is,
except for the representation and warranty set forth in the Credit Agreement
relating to the non-existence of an Event of Default, true and correct on and as
of the date of this Agreement with the same full force and effect as if each of
such representations and warranties had been made by such Credit Party on the
date hereof and in this Agreement.

         5.2 Binding Effect of Documents. This Agreement and the other Loan
Documents have been duly executed and delivered to GE Capital by such Credit
Party and are in full force and effect, as modified hereby.

                                       5

<PAGE>

         5.3 No Conflict, Etc. The execution and delivery and performance of
this Agreement by such Credit Party will not violate any law, rule, regulation
or order or contractual obligation of such Credit Party and will not result in,
or require, the creation or imposition of any Lien on any of its properties or
revenues.

         5.4 Additional Events of Default. The parties hereto acknowledge,
confirm and agree that any misrepresentation by any Credit Party in, or any
failure of any Credit Party to comply with the covenants, conditions and
agreements contained in, this Agreement shall constitute an Event of Default
under the Credit Agreement.

SECTION 6. CONDITIONS TO EFFECTIVENESS OF CERTAIN PROVISIONS

         The effectiveness of the terms and provisions of Section 3.2 and
Section 4.1 of this Agreement shall be subject to the receipt by GE Capital of
an original of this Agreement, duly authorized, executed and delivered by
Borrower and Parent.

SECTION 7. PROVISIONS OF GENERAL APPLICATION

         7.1 Effect of this Agreement. Except as modified pursuant hereto, no
other changes or modifications to the Loan Documents are intended or implied and
in all other respects the Loan Documents are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To
the extent of conflict between the terms of this Agreement and the other Loan
Documents, the terms of this Agreement shall control. The Credit Agreement and
this Agreement shall be read and construed as one agreement.

         7.2 Costs and Expenses. Borrower absolutely and unconditionally agrees
to pay to GE Capital, on demand by GE Capital at any time and as often as the
occasion therefore may require, whether or not all or any of the transactions
contemplated by this Agreement are consummated: all fees and disbursements of
any counsel to GE Capital in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements delivered in
connection with the transactions contemplated hereby and expenses which shall at
any time be incurred or sustained by GE Capital or any participant of GE Capital
or any of their respective directors, officers, employees or agents as a
consequence of or in any way in connection with the preparation, negotiation,
execution, or delivery of this Agreement and any agreements prepared,
negotiated, executed or delivered in connection with the transactions
contemplated hereby.

         7.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.

         7.4 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or any other document furnished in connection
with this Agreement shall survive the execution and delivery of this Agreement
and the other documents, and no investigation by GE Capital or any closing shall
affect the representations and warranties or the right of GE Capital to rely
upon them.

                                       6

<PAGE>

         7.5 Release.

             (a) In consideration of the agreements of GE Capital contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of Borrower and Parent, on
behalf of itself and its successors, assigns, and other legal representatives,
hereby absolutely, unconditionally and irrevocably releases, remises and forever
discharges GE Capital, and its successors and assigns, and its present and
former shareholders, affiliates, subsidiaries, divisions, predecessors,
directors, officers, attorneys, employees, agents and other representatives (GE
Capital and all such other Persons being hereinafter referred to collectively as
the "Releasees" and individually as a "Releasee"), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a "Claim" and collectively, "Claims")
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which such Credit Party or any of its successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Agreement, including, without limitation, for
or on account of, or in relation to, or in any way in connection with the Credit
Agreement or any of the other Loan Documents or transactions thereunder or
related thereto.

             (b) Each of Borrower and Parent understands, acknowledges and
agrees that its release set forth above may be pleaded as a full and complete
defense and may be used as a basis for an injunction against any action, suit or
other proceeding which may be instituted, prosecuted or attempted in breach of
the provisions of such release.

             (c) Borrower and Parent agree that no fact, event, circumstance,
evidence or transaction which could now be asserted or which may hereafter be
discovered shall affect in any manner the final, absolute and unconditional
nature of the release set forth above.

         7.6 Covenant Not to Sue. Each of Borrower and Parent, on behalf of
itself and its successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably, covenants and agrees with and in
favor of each Releasee that it will not sue (at law, in equity, in any
regulatory proceeding or otherwise) any Releasee on the basis of any Claim
released, remised and discharged by such Credit Party pursuant to Section 7.5
above. If Borrower, Parent or any of their respective successors, assigns or
other legal representations violates the foregoing covenant, Borrower and
Parent, for themselves and their successors, assigns and legal representatives,
jointly and severally agree to pay, in addition to such other damages as any
Releasee may sustain as a result of such violation, all attorneys' fees and
costs incurred by any Releasee as a result of such violation.

         7.7 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement.

                                       7

<PAGE>

         7.8 Reviewed by Attorneys. Each of Borrower and Parent represents and
warrants to GE Capital that it (a) understands fully the terms of this Agreement
and the consequences of the execution and delivery of this Agreement, (b) has
been afforded an opportunity to have this Agreement reviewed by, and to discuss
this Agreement and document executed in connection herewith with, such attorneys
and other persons as such Credit Party may wish, and (c) has entered into this
Agreement and executed and delivered all documents in connection herewith of its
own free will and accord and without threat, duress or other coercion of any
kind by any Person. The parties hereto acknowledge and agree that neither this
Agreement nor the other documents executed pursuant hereto shall be construed
more favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation and preparation of this Agreement and the other documents
executed pursuant hereto or in connection herewith.

         7.9 Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS
ARISING UNDER THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.

         7.10 Counterparts. This Agreement may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement.

         IN WITNESS WHEREOF, this Agreement is executed and delivered as of the
day and year first above written.

                                          PARLUX, LTD.

                                          By:      /s/ Frank A. Buttacavoli
                                               ---------------------------------
                                                   Executive VP/COO/CFO

                                          PARLUX FRAGRANCES, INC.

                                          By:      /s/ Frank A. Buttacavoli
                                               ---------------------------------
                                                   Executive VP/ COO/CFO

                                          GENERAL ELECTRIC CAPITAL CORPORATION,
                                          as the Agent and sole Lender

                                          By:      /s/ Ronald J. Banks
                                               ---------------------------------
                                                   Duly Authorized Signatory

                                       8

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