Document:

M2799482.DOC;3

EXHIBIT 10.4

April 3, 2009

Iconic Fragrances, LLC

1850 N.W. 84th Avenue, Suite 100

Miami, FL 33126

Rene Garcia

1850 N.W. 84th Avenue, Suite 100

Miami, FL 33126

Re:   Agreement dated April 3, 2009 by and between Parlux Fragrances, Inc. and Iconic Fragrances, LLC (the "Agreement").  

Gentlemen:

Reference is made to the Agreement identified above, and to those certain Initial Warrants to be issued to Iconic, the Licensors, the Artists, and their respective designees pursuant to the Agreement and Warrant Certificate.  All defined terms in this letter shall have the same meaning ascribed to such terms in the Agreement or the Warrant Certificate, except as otherwise defined in this letter.

Vesting

Notwithstanding anything to the contrary in the Agreement or in the Warrant Certificate, this letter confirms that if a Fundamental Transaction (as defined below) which is either consummated prior to April 3, 2012, or if definitive agreements for such Fundamental Transaction are entered into by April 3, 2012, and such Fundamental Transaction is consummated within ninety (90) days thereafter (or, if later, within thirty days following receipt of required clearance, or expiration of the applicable waiting period, with respect to such transaction pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), then the vesting of the right to purchase all Warrant Shares under Section 1.1(a) of the Warrant Certificate representing the 4,000,000 Initial Warrants shall be accelerated to the date that is five (5) business days prior to the record date of such Fundamental Transaction, and the Holders accordingly shall have the right to exercise immediately on or after such date, and prior to the closing of the Fundamental Transaction, all of their respective remaining Initial Warrants of the original 4,000,000 Initial Warrants at the exercise price of $5.00 per share (subject to adjustment, as set forth in the Initial Warrants).   To the extent the form of Fundamental Transaction does not involve the establishment of a record date (such as in the event of a Change of Control (as hereinafter defined), then such acceleration of the vesting schedule shall occur upon the occurrence of the Fundamental Transaction.

1

Additional Payment – Exercise of Initial Warrants

Iconic will be entitled to subsequently receive an Additional Payment (as hereinafter defined) to the extent that the Holders exercise the Initial Warrants by either (i) paying Parlux $5.00 per share or (ii) solely for purposes of this letter and only in connection with a Fundamental Transaction (and for no other reason), by effectuating a cashless exercise of the Initial Warrants pursuant to the procedures set forth on Exhibit A hereto, in either case, in order to sell or exchange Warrant Shares in the Fundamental Transaction that occurs prior to April 3, 2012.  For purposes of this letter, the number of shares of Common Stock used to effectuate a cashless exercise in connection with a Fundamental Transaction (that is, the shares that are valued at the aggregate exercise price and thus not issued upon the surrender of the Warrant in accordance with Exhibit A) shall be hereinafter referred to as the “Cashless Exercise Shares”.

In addition to the consideration, if any, the Holders would receive in a Fundamental Transaction that occurs prior to April 3, 2012 (the “Fundamental Transaction Consideration”), Iconic (but not any other Holder) shall be paid by Parlux or its successor an additional amount (the "Additional Payment") equal to the following:  

(A) if the price per share being paid to Parlux shareholders in the Fundamental Transaction (such price per share is referred to herein as the "Transaction Price") is more than $5.00 per share of Common Stock and less than $15.00 per share of Common Stock, then the Additional Payment shall be equal to the product of (i) the difference of $15.00 minus the Transaction Price, multiplied by (ii) the sum of (x) the number of Warrant Shares being purchased from all of the Holders (including Iconic) at the Transaction Price in the Fundamental Transaction plus (y) if applicable, the number of  Cashless  Exercise Shares.  

(B) if the Transaction Price is equal to or less than $5.00 per share of Common Stock, then the Additional Payment shall be equal to the product of (i) $10.00 multiplied by (ii) the number of Initial Warrants which are tendered back to the Company for cancellation and termination (i.e., which do NOT participate in the Fundamental Transaction).

(C) if the Transaction Price is equal to or greater than $15.00 per share, then the Additional Payment shall be zero (that is, no payment will be made to Iconic).  

If the $5.00 per share exercise price of the Initial Warrants is adjusted pursuant to the terms thereof, then a similar adjustment will be made to the $15.00 per share price, and the $10 price referred to in clause (B) above and under the heading “Additional Payment – No Warrant Exercise” below, as the case may se, set forth in this letter.   In no event shall the Additional Payment exceed the sum of $40,000,000.

2

Payment of the Additional Payment (if any) to Iconic shall be made by Parlux or its successor within five (5) business days following the closing of the Fundamental Transaction.   To the extent the Transaction Price is payable to shareholders in a form of consideration other than cash, the value of such Transaction Price shall be determined by the exchange ratio or other similar measure contained in the definitive documentation provided to shareholders of Parlux in connection with the Fundamental Transaction.  Regardless of the form of the Transaction Price in connection with the Fundamental Transaction, payment of the Additional Payment shall be made in cash; provided, however, that in a Fundamental Transaction with a public company with a market capitalization in excess of $500 million at the time of consummation of the Fundamental Transaction (a "Large Company"), in which the Large Company is issuing either shares of its capital stock or a combination of its shares of capital stock and cash to effect the Fundamental Transaction, then at the election of the Large Company, the Additional Payment may be made to Iconic (i) with the capital stock it issues to Parlux shareholders in the Fundamental Transaction or (ii) if the consideration being paid to shareholders of Parlux consists of a combination of capital stock and cash, then in such same proportion of such consideration offered to Parlux shareholders.

For example, for the avoidance of doubt, if Parlux engages in a Fundamental Transaction prior to April 3, 2012 in which the buyer is paying Parlux shareholders the sum of $12.00 per share of Common Stock, then the Additional Payment would be calculated as follows:  the product of (i) $3.00 and (x) the sum of all of the Warrant Shares tendered in the Fundamental Transaction and (y) if applicable, the Cashless Exercise Shares.  In that event, Iconic would receive the Fundamental Transaction Consideration, plus the foregoing Additional Payment.  Accordingly:

		
	Example of Cash Exercise

	Example of Cashless Exercise

	·

Initial Warrants are partially exercised; Holder sells 1mm shares into market; retains Warrants for 3mm shares

	·

Initial Warrants are partially exercised; Holder sells 1mm shares into market; retains Warrants for 3mm shares

	·

Fundamental Transaction is effected at $10 per share

	·

Fundamental Transaction is effected at $10 per share

	·

Holder exercises 3mm Warrants; Company receives $15mm upon exercise

	·

Holder cashless exercises balance of Initial Warrants (based on $10 per share market price, uses 1.5mm shares to finance exercise price, which shares are the ‘Cashless Exercise Shares’); after cashless exercise, Holder left with 1.5mm shares 

	·

Holder tenders 3 mm shares in Fundamental Transaction; receives $30mm from buyer

	·

Holder tenders 1.5 mm shares in Fundamental Transaction; receives $15mm from buyer 

	·

Iconic receives from Parlux or successor ($15-$10) x (3mm shares tendered in Fundamental Transaction) = $15 million.

	·

Iconic receives from Parlux or successor ($15-$10) x (1.5mm shares tendered in Fundamental Transaction plus 1.5mm Cashless Exercise Shares) = $15 million.

3

		

If the buyer in this example were paying Parlux shareholders the sum of $4.00 per share in the Fundamental Transaction, then in that event the Additional Payment per share would be $10.00 per Initial Warrant which is tendered back to the Company for cancellation and termination, and which is NOT exercised and which underlying Warrant Shares are NOT tendered in the Fundamental Transaction; thus all of the Initial Warrants are tendered back to the Company for cancellation and termination (rather than the Initial Warrants being exercised, with the underlying Warrants Shares being tendered to the buyer in connection with the Fundamental Transaction), then the Additional Payment shall be $40 million.  

In addition, Iconic will not be entitled to the Additional Payment with respect to any Warrant Shares previously sold by any Holder (including Iconic) into the market or otherwise disposed of by the Holder in a bona fide third party transaction, other than in the Fundamental Transaction.  Iconic is only entitled to the Additional Payment for those Warrant Shares sold or exchanged (or if cashless exercised, the sum of the Warrant Shares sold or exchanged and the Cashless Exercise Shares) by the Holders (including Iconic) in the Fundamental Transaction.  For sake of clarification, if any Warrant Shares have been gifted or otherwise transferred to a trust or other estate planning vehicle, such Warrant Shares shall not be deemed to have been disposed of by the Holder. 

Additional Payment – No Warrant Exercise

In the event of a Fundamental Transaction that occurs prior to April 3, 2012 in which the Initial Warrants are not required to be exercised (such as a Change of Control), Iconic may either (i) retain the Initial Warrants (in which case Iconic shall not receive any Additional Payment unless and until a subsequent transaction occurs which again invokes the provisions of this Agreement) or (ii) receive an Additional Payment calculated as the product of (x) $10.00 and (y) the number of Initial Warrants which are tendered back to the Company for cancellation and termination.  The Additional Payment, however, shall be reduced on a pro rata basis to the extent Warrant Shares have been previously sold by any Holder (including Iconic) into the market or otherwise disposed of by the Holder in a bona fide third party transaction, other than gift or transfer to a trust or other similar estate planning vehicle, prior to the consummation of the Fundamental Transaction.

Other Matters

Iconic and Rene Garcia further agree, during the term of the Initial Warrants, not to, and will not permit their respective Affiliates to, directly or indirectly, engage or offer or propose to engage in a Fundamental Transaction with Parlux unless the price to be paid to the shareholders of Parlux by Iconic or Rene Garcia and their Affiliates in such Fundamental Transaction is at least $5 per share of Common Stock (or the then current exercise price of the Initial Warrants).   For purposes of this Agreement, an “Affiliate” shall mean with respect to Iconic or Rene Garcia, any other person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or under common control with Iconic or Rene Garcia.  For purposes of this definition, “control” (including the terms “ controlling,” “ controlled by ” and “ under common 

4

control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of Iconic, whether through the ownership of voting securities, by contract or otherwise.

Notwithstanding the foregoing, (i) if either (x) Iconic or its Affiliates, (y) Rene Garcia or any entity or trust controlled by Mr. Garcia or members of his immediate family (collectively, the “Garcia Parties”), or (z) Shawn Carter or any entity or trust controlled by Mr. Carter or members of his immediate family (collectively, the "Carter Parties") proposes to engage in a Fundamental Transaction, Parlux shall have no obligation to pay the Additional Payment, regardless of the Transaction Price paid by Iconic or the Garcia Parties or the Carter Parties, and (ii) if Iconic transfers any Warrant Certificate to a Permitted Transferee, the rights and obligations hereunder shall not be assigned therewith, and Iconic shall retain the sole and unilateral right to be paid the Additional Payment.

For purposes of this letter, the term "Fundamental Transaction" means: (i) any public or private cash (in whole or in part) tender offer, merger, consolidation, going private or going dark transaction or other business combination of Parlux with or into another Person (unless Parlux is the surviving corporation and the holders of its outstanding Common Stock immediately prior to such transaction own more than 50% of such Common Stock immediately following such transaction) which results in a change of control of Parlux (meaning one person or a group of persons has acquired beneficial ownership of 50% or more of the outstanding common stock of Parlux); (ii) one or more purchases by a third party, other than the Garcia Parties and Carter Parties, of 50% or more of the outstanding Common Stock of Parlux as a result of direct issuance(s) by Parlux of its capital stock and/or any derivative securities convertible into capital stock (which, for these purposes, would include any capital or preferred stock providing such third parties with 50% or more of the voting power of Parlux); but shall not include the mere accumulation by a third party, other than the Garcia Parties and Carter Parties, of 50% or more of the outstanding Common Stock of Parlux through open market transactions or other privately arranged transactions with other third parties; provided, further, however, that any combination of such direct issuances and market accumulations by such third party shall constitute a Fundamental Transaction; and/or or (iii) Parlux effects any sale, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, and distributes or dividends all or substantially all of the proceeds received to its shareholders in a liquidating distribution or otherwise, provided, however, that the granting of a lien on all or substantially all of Parlux's assets as collateral shall not be deemed a Fundamental Transaction.  

This letter shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns, and shall be governed by the laws of the State of Delaware.

5

Rene Garcia and Iconic agree to the foregoing by signing a counterpart of this letter where indicated below.  

			
	Sincerely,

	 

	 
	 
	 

	Parlux Fragrances, Inc.

	 

	 
	 
	 

	 
	 
	 

	By:

	 /s/ Neil J. Katz

	 

	 
	Neil J. Katz, Chairman & CEO

	 

	 
	 
	 

	Agreed and accepted: 

	 

	 
	 
	 

	Iconic Fragrances, LLC 

	 

	 
	 
	 

	 
	 
	 

	By:

	 /s/ Rene Garcia

	 

	 
	Rene Garcia, Manager

	 

	 
	 
	 

	 
	 
	 

	Rene Garcia, individually

	 

	 
	 
	 

	 
	 
	 

	/s/ Rene Garcia

	 

	Rene Garcia

	 

6

EXHIBIT A – CASHLESS EXERCISE PROCEDURES

In connection with a Fundamental Transaction, the Warrant may be exercised by surrendering the Warrant, together with irrevocable instructions to Parlux to issue in exchange for the Warrant the number of shares of Common Stock equal to the product of (x) the number of shares of Common Stock underlying the Warrants being surrendered multiplied by (y) a fraction, the numerator of which is the Market Value (as defined below) of the Common Stock less the Exercise Price and the denominator of which is such Market Value.  As used herein, the phrase “Market Value” at any date shall be deemed to be (i) the last reported sale price on the day prior to such date, or (ii) in case no such reported sale takes place on such day, the average of the last reported sale prices for the last three (3) trading days, in either case as (a) officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading or as reported in the Nasdaq National Market System, or, (b) if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the Nasdaq National Market System, the closing sale price as furnished by (i) the National Association of Securities Dealers, Inc. through Nasdaq or (ii) similar organization if Nasdaq is no longer reporting such information, or (c) if such information is no longer reported by NASDAQ or similar organization, the fair market value of the Common Stock as determined in good faith by resolution of the Board of Directors of Parlux, based on the best information available to it, but in the case of any such determination made under this clause (c), in no event less than the greater of (x) the per share Common Stock price of the last sale or issuance by Parlux or (y) the last closing sale price as available under clause (a) or (b) above prior to such date. Notwithstanding anything to the contrary contained herein, the Holder may only exercise the Warrants as to those Warrant Shares that are fully vested.

7M2769544.DOC;8

EXHIBIT 10.5

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into the 5th day of June, 2009 by and between Parlux Fragrances, Inc. (the “Company”) and Frank A. Buttacavoli (the “Executive” and, together with the Company, the “Parties”).

WHEREAS, the Company desires to continue to employ the Executive and the Executive agrees to continue to be employed by the Company as the Executive Vice President and Chief Operating Officer of the Company on the terms and conditions set forth in this Agreement; 

WHEREAS, the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company (the “Committee”).

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

1.

Position and Duties.  The Company hereby agrees to continue to employ the Executive and the Executive hereby accepts and agrees to continue to serve as the Executive Vice President and Chief Operating Officer of the Company.  The Executive shall report to the Company's Chief Executive Officer.  Subject to the advice, consent and direction of the Company’s Board of Directors, the Executive will perform all duties and responsibilities and will have all authority inherent in the position of Executive Vice President and Chief Operating Officer.

2.

Term of Agreement and Employment.  The term of the Executive’s employment under this Agreement will be for an initial period of approximately three (3) years, beginning on the date hereof, and terminating on March 31, 2012 (the “Term”).  The Term may be extended for two (2) consecutive one (1) year periods, as follows:  The Executive will, at his option if he so desires, provide written notice both to the Chief Executive Officer and to the Chair of the Compensation Committee of the Company's Board of Directors, not less than six months prior to, but not more than eight months prior to, the expiration of the current Term stating his desire to extend the Term for one additional year.  If the Executive does not provide such notice timely, then this Agreement will expire of the end of its then current Term.  If the Executive provides such notice timely, then the Chair of the Compensation Committee will, after consulting with the Executive and the Chief Executive Officer and after convening a meeting of the Compensation Committee (and taking such other actions as the Chair deems necessary), advise the Executive within 60 days of the Committee's decision either to extend the Term of this Agreement for the additional one year period or not to extend the Term of this Agreement for the additional one year period.  The Committee's decision to extend or to not extend the Term will be final and binding on the parties.

3.

Definitions.

A.

Cause.  For purposes of this Agreement, “Cause” for the termination of the Executive’s employment hereunder shall be deemed to exist if, in the good faith judgment of the Company’s Board of Directors:  (i) the Executive commits fraud, theft or embezzlement; (ii) the Executive commits an act of dishonesty affecting the Company or a felony or a crime involving moral turpitude; (iii) the Executive willfully breaches any non-competition, confidentiality or non-solicitation agreement with the Company; (iv) the Executive breaches any of the material terms of this Agreement and fails to cure such breach within 30 days after the receipt of written notice of such breach from the Company; (v) the Executive engages in gross negligence or willful misconduct that causes unreasonable harm to the business and operations of the Company; or (vi) the Executive’s unreasonable failure or refusal to diligently perform the duties and responsibilities required to be performed by the Executive under the terms of this Agreement.

B.

Company Transaction Events.  For purposes of this Agreement, (i) a “Going Private Event” means a transaction in which 90% or more of the issued and outstanding shares of the capital stock of the Company are to be sold or exchanged (pursuant to an agreement, tender or exchange offer or otherwise) by the holders thereof for cash or for securities, so that upon the closing of such a transaction (or a second step merger related thereto), Parlux common stock is no longer traded on any public stock exchange (e.g., Nasdaq, AMEX, NYSE, etc.) or recognized trading market (e.g., Nasdaq OTCBB) and the holders of Parlux common stock prior to the closing of such a transaction hold cash or non-publicly traded securities in a private company after the transaction, (ii) a “Company Merger Event” means a transaction in which 90% or more of the issued and outstanding shares of the capital stock of the Company are to be exchanged (pursuant to an agreement, exchange offer or otherwise) by the holders thereof for securities of any public company, so that upon the closing of such a transaction (or a second step merger related thereto), all Parlux common stock has been exchanged or converted into securities of a public company that are traded on a public stock exchange (e.g., Nasdaq, AMEX, NYSE, etc.) or recognized trading market (e.g., Nasdaq OTCBB) and the holders of Parlux common stock prior to the closing of such a transaction hold publicly traded securities in a public company after the transaction.

C.

Good Reason.  For purposes of this Agreement, termination by the Executive of his employment for “Good Reason” shall mean a termination by the Executive following a “Good Reason Event” provided (i) the Executive provides notice to the Company of such Good Reason Event within 90 days of the initial existence of such Good Reason Event; (ii) the notice provides the Company with 30 days during which it may remedy the Good Reason Event; and (iii) the Company fails to remedy the Good Reason Event within such 30 day period.  A “Good Reason Event shall be deemed to occur upon (i) a material diminution in the Executive’s authority, duties, or responsibilities, or (ii) any action or inaction of the Company which constitutes a material breach of this Agreement, or (iii) if any Going 

2

Private Event or Company Merger Event closes with a successor entity acquiring the business and operations of the Company and such successor entity does not, within ten (10) days following the closing, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform had no such successor entity acquired the Company's business and operations. 

4.

Compensation.

A.

Annual Base Salary.  Unless terminated pursuant to Section 8 hereof, Executive shall be paid an annual base salary of $400,000 during the Term, and for any extension of the Term pursuant to Section 2 (as applicable, the “Annual Base Salary”).  The Annual Base Salary shall be payable at such regular times and intervals as the Company customarily pays its executives from time to time, but in no event less frequently than monthly.

B.

Executive Bonus Plan.  The Executive shall be entitled to participate in an executive bonus plan (the “Bonus Plan”), the terms and conditions of which shall be established by the Committee for each fiscal year and which will provide that Executive will be able to earn an annual bonus of up to 50% of the Annual Base Salary, based upon achievement by the Company of certain financial measures and management objectives as determined by the Committee.  To the extent earned, bonuses shall be paid no later than 75 days following the end of the  fiscal year in which the bonus was earned. 

5.

Executive Benefits.  The Executive will be entitled to the greater of four weeks of paid vacation, or the maximum number of "Paid Time Off (PTO)" days provided by the Company to employees of similar longevity and classification, per fiscal year.  Except as otherwise provided in this Agreement, the Executive will be eligible for and may participate in, without action by the Board or any committee thereof, any benefits and perquisites available to executive officers of the Company, including any group health, dental, disability, or other form of executive benefit plan or program of the Company existing from time to time on the same terms and conditions as is available to all other executives (collectively, the “Executive Benefits”).  Executive shall receive additional term life insurance coverage with an annual cost to the Company not to exceed $2,000 per year, and shall be provided with an automobile allowance of $800 per month, at the Company’s expense.

6.

Stock Options.  As additional consideration for the Executive’s services hereunder and the covenants contained herein, the Company shall grant Executive an option on the date hereof (the “Option”) to purchase 100,000 shares of common stock of the Company (the “Common Stock”) pursuant to the Company’s 2007 Stock Incentive Plan (the “2007 Plan”).  The Option (i) shall provide for an exercise price equal to the market price of the Common Stock as of the close of trading on the date hereof and (ii) shall further provide that the Option shall vest as provided on Schedule A, unless terminated pursuant to Section 8 hereof.  Immediately prior to the closing of a Going Private Event or a Company Merger Event, any unvested portion of the Option shall fully vest and be 

3

exercisable by the Executive prior to the closing of the Going Private Event or Company Merger Event; provided, however, that if the Company Merger Event is with a public company that any individual shareholder or group of affiliated shareholders of the Company beneficially owns 10% or more of for a period of at least six months prior to the closing of the Company Merger Event  (an “Affiliated Public Company”), then the vesting of the unvested portion of the Executive’s Option shall not be accelerated so long as the Executive’s Option to purchase shares of the Common Stock of the Company is converted into an option to purchase shares of the common stock of the Affiliated Public Company with the same economic value as of the date of the closing of the transaction.

7.

Death or Disability.  The Executive’s employment will terminate immediately upon the Executive’s death.  If the Executive becomes physically or mentally disabled so as to become unable for a period of more than three consecutive months to perform the Executive’s duties hereunder on a substantially full-time basis, the Executive’s employment will terminate as of the end of such three-month and this shall be considered a “disability” under this Agreement.  The Executive agrees to submit to reasonable examination by a licensed physician selected by the Company to confirm existence or extent of any disability.  Such termination shall not affect the Executive’s benefits under the Company’s disability insurance program, if any, then in effect.

8.

Termination.  The Executive may terminate this Agreement for any reason upon not less than one hundred eighty (180) days written notice.  The Company may terminate this Agreement for Cause with no prior notice, or for any other reason upon one hundred eighty (180) days written notice.

A.

Termination of Employment Other Than by Resignation of Executive or Termination for Cause.  Upon the termination of this Agreement for any reason (including termination of employment by the Executive for Good Reason, termination by the Company without Cause, or termination upon the death or disability of the Executive) other than by the resignation of Executive without Good Reason or a termination by the Company for Cause, the following shall apply:

B.

Termination Payment.  The Executive, or his estate and heirs following his death, shall be entitled (A) to continue to receive, except as provided in Section 10 of this Agreement, his Annual Base Salary in effect at the time of such termination for a period of twelve (12) months following the date of such termination (the “Severance Period”), (B) to have any unvested portion of his Option fully vest as of the date of such termination, and (C) except as provided in Section 10 of this Agreement, to be paid any bonus that would have been earned by Executive through the date of his termination at such time as the bonus would have otherwise been paid if Executive's employment had not been terminated (the “Termination Payment”).  The Termination Payment shall be determined after the end of the Company's fiscal year during which the termination occurs and shall be based solely on the actual results for such fiscal year and shall not exceed a pro rata portion of the actual bonus the Executive would otherwise have been eligible to receive had the Executive remained employed with the Company for the full fiscal 

4

year.   The Executive shall not be required to mitigate the amount of any payment provided for in this Section 8.B for any reason including seeking other employment, and the amount of any payment during the Severance Period shall not be reduced or offset by any compensation earned by the Executive as a result of employment by another employer during the Severance Period.

(i)

Termination Benefits.  The Company shall continue to provide the Executive with the Executive Benefits for the Severance Period in accordance with Section 10 of this Agreement, except Executive Benefits shall cease should the Executive commence employment with another employer during the Severance Period.

(ii)

Condition to Severance.  In the event Executive breaches any of the covenants contained in Section 9, then (A) the Company shall have no further obligation to make Termination Payments to Executive or to continue to provide the Executive Benefits to Executive during the Severance Period, and (B) any unexercised Option shall be forfeited and be cancelled.

C.

Termination of Employment by Resignation of Executive or by the Company With Cause.  Upon the termination of Executive’s employment by the Company with Cause or the resignation of the Executive without Good Reason, the Executive shall be due no further compensation under this Agreement other than what is due and owing through the effective date of Executive’s resignation or termination, as applicable.

9.

Restrictive Covenants.

A.

General.  The Company and the Executive hereby acknowledge and agree that (i) the Executive will come into the possession of trade secrets (as defined in Section 688.002(4) of the Florida Statutes) of the Company (the “Trade Secrets”), (ii) the restrictive covenants contained in this Section 9 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, in accordance with Section 542.335(1)(e) of the Florida Statutes, and (iii) the restrictive covenants contained in this Section 9 are reasonably necessary to protect such legitimate business interests of the Company.

B.

Non-Competition.  During the period of the Executive’s employment with the Company and for two years after the termination of the Executive’s employment with the Company, the Executive will not, directly or indirectly, on the Executive’s own behalf or as a partner, officer, director, trustee, executive, agent, consultant, investor or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with the principal business or activity conducted by Company and any of its majority-owned subsidiaries, namely, the licensing, manufacture, and/or distribution to wholesalers of fragrances, without 

5

the prior written consent of the Company.  The business or activity conducted by the Company and its majority-owned subsidiaries shall be deemed to also include any business not currently conducted by the Company, but which during the Term of this Agreement comes to comprise 30% of the Company’s net sales or operating income for any fiscal quarter.  The foregoing shall not be deemed to prevent the Executive from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Executive is not deemed to be the beneficial owner of more than 5% of the class of securities that are so publicly traded.

C.

Confidentiality.  During and following the period of the Executive’s employment with the Company, the Executive will not use for the Executive’s own benefit or for the benefit of others, or divulge to others, any information, trade secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its affiliates and which was acquired by the Executive at any time prior to or during the Term of the Executive’s employment with the Company, except with the specific prior written consent of the Company.

D.

Work Product.  The Executive agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its affiliates, and all existing or future products or services, which are conceived, developed or made by the Executive (alone or with others) during the Term of this Agreement (“Work Product”) belong to the Company.  The Executive will cooperate fully in the establishment and maintenance of all rights of the Company and its affiliates in such Work Product.  The provisions of this Section 9(D) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Executive after the termination of the Agreement with respect to Work Product created during the Term of this Agreement.

E.

Non Solicitation.  During the Term of this Agreement, and until two years after the termination of Executive’s employment with the Company, the Executive shall not, directly or indirectly  (i) induce any person or entity that is a contract manufacturer, supplier or wholesale distributor of the Company’s products to manufacture for, supply, distribute for or otherwise patronize any business or activity which is the same as or competitive with any business or activity conducted by the Company or any of its majority-owned subsidiaries, (ii) canvass, solicit or accept any business with respect to any fragrance from any person or entity which is an actual or proposed licensor of brands or fragrance product lines to the Company, (iii) request or advise any person or entity which is a customer of the Company to withdraw, curtail or cancel any such customer’s business with the Company (provided that the Executive after the Term of this Agreement, if it is terminated without Cause by the Company or for Good Reason by the Executive, 

6

may engage in the sale of other fragrance products to the same resellers that the Company sells its fragrance products to), or (iv) employ, solicit for employment or knowingly permit any entity or business directly or indirectly controlled by him to employ or solicit for employment, any person who was employed by the Company or its majority-owned subsidiaries at or within the then prior six months, or in any manner seek to induce any such person to leave his or her employment.

F.

Non-Disparagement.  The Executive will not during employment or at anytime thereafter criticize, ridicule, or make any statement or perform any act which disparages or is derogatory of the Company or of any subsidiary, officer, director, agent, employee, contractor, customer, vendor, supplier, licensor or licensee of the Company.  The Company will not, during the Term hereof or at anytime thereafter, criticize, ridicule or make any statement or perform any act which disparages or is derogatory of the Executive.

G.

Enforcement.  The parties agree and acknowledge that the restrictions contained in this Section 9 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates.  If any covenant or agreement contained in this Section 9 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified.  The Executive agrees and acknowledges that the breach of this Section 9 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 9, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; provided, however, that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages).

10.

Section 409A Compliance.

A.

General.  It is the intention of both the Company and the Executive that the benefits and rights to which the Executive is entitled pursuant to this Agreement comply with Code Section 409A, to the extent that the requirements of Code Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.

B.

Distributions on Account of Separation From Service.  To the extent required to comply with Code Section 409A, any payment or benefit required to be paid under this Agreement on account of termination of the Executive’s service (or any other similar term) shall be made only in connection with a "separation from service" with respect to the Executive within the meaning of Code Section 409A.

7

C.

No Acceleration of Payments.  Neither the Company nor the Executive, individually or in combination, may accelerate any payment or benefit that is subject to Code Section 409A, except in compliance with Code Section 409A and the provisions of this Agreement, and no amount that is subject to Code Section 409A shall be paid prior to the earliest date on which it may be paid without violating Code Section 409A.

D.

Six Month Delay For Specified Employees.  In the event that the Executive is a “specified employee” (as described in Code Section 409A), and any payment or benefit payable pursuant to this Agreement constitutes deferred compensation under Code Section 409A, then no such payment or benefit shall be made before the date that is six months after the Executive’s “separation from service” (as described in Code Section 409A) (or, if earlier, the date of the Executive’s death). Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

E.

Treatment of Each Installment as a Separate Payment.  For purposes of applying the provisions of Code Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment.  In addition, to the extent permissible under Code Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

F.

Executive Benefits. With respect to any Executive Benefits that do not comply with (or are not exempt from) Code Section 409A, to the extent applicable, the Executive shall be deemed to receive from the Company a monthly payment necessary for the Executive to purchase the benefit in question. 

11.

Representations.  Executive hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject; (ii) the Executive is not a party or bound by any employment agreement, consulting agreement, agreement not to compete, confidentiality agreement or similar agreement with any other person or entity; and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement will be the Executive’s valid and binding obligation, enforceable in accordance with its terms.

12.

Assignment.  The Executive may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the Executive or any rights which the Executive may have under this Agreement.  Neither the Executive nor the Executive’s beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement.  This Agreement will inure to the benefit of and will be binding upon any successor to the Company and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, 

8

including the terms and conditions of the restrictive covenants contained in Section 9 hereof.  As used in this Agreement, the term “successor” means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company.  This Agreement may not otherwise be assigned by the Company.

13.

Governing Law.  This Agreement shall be governed by the laws of Florida without regard to the application of conflicts of laws.

14.

Entire Agreement.  This Agreement constitutes the only agreement between Company and the Executive regarding the Executive’s employment by the Company.  This Agreement supersedes any and all other agreements and understandings, written or oral, between the Company and the Executive regarding the subject matter hereof and thereof.  A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision.  This Agreement may be amended, modified or changed only by further written agreement between the Company and the Executive, duly executed by both Parties.

15.

Dispute Resolution and Venue.  If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to litigation.  In the event any party to this Agreement commences any litigation, proceeding or other legal action with respect to any claim arising under this Agreement,  the Parties hereby (a) agree that any such litigation, proceeding or other legal action shall be brought exclusively in a court of competent jurisdiction located within Broward County, Florida, whether a state or federal court; (b) agree that in connection with any such litigation, proceeding, or action, such parties will consent and submit to personal jurisdiction in any such court described in clause (a) and to service of process upon them in accordance with the rules and statutes governing service of process or in accordance with the notice provisions contained herein; and (c) agree to waive to the full extent permitted by law any objection that they may now or hereafter have to the venue of any such litigation, proceeding or action was brought in an inconvenient forum.  The Parties expressly agree that any breach of this Agreement shall be deemed to have occurred in such County.  EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

16.

Severability; Survival.  In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the parties intention.  The provisions of 

9

Section 9 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Executive’s relationship with the Company.

17.

Notices.  Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid.  Any notice to be given by the Executive hereunder will be addressed to the Company to the attention of the Committee at its main offices, currently 5900 N. Andrews Avenue, Suite 500, Fort Lauderdale, FL 33309 with a copy provided to the Company’s counsel, Akerman Senterfitt, One S.E. 3rd Ave., Miami, FL 33131, Attn: Jonathan Awner.  Any notice to be given to the Executive will be addressed to the Executive at the Executive’s residence address last provided by the Executive to Company.  Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section.

18.

Headings.  Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions.

[Signatures on Next Page]

10

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.

			
	 
	PARLUX FRAGRANCES, INC.

	 
	 
	 

	 
	 
	 

	                                                             

	By:

	/s/ Neil J. Katz

	 
	Name:

	Neil J. Katz

	 
	Title:

	CEO and Chairman of the Board

	 
	 
	 

	 
	 
	 

	 
	EXECUTIVE

	 
	 
	 

	 
	 
	 

	 
	By:

	/s/ Frank A. Buttacavoli

	 
	Name:

	Frank A. Buttacavoli

11

SCHEDULE A

			
	Date

	 
	Amount Vested

	 
	 
	 

	March 31, 2010

	     

	33,333

	March 31, 2011

	 
	33,333

	March 31, 2012

	 
	33,334

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]