[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
January 5, 2007
VIA ELECTRONIC TRANSMISSION
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Christina Chalk, Esq.
Special Counsel
Office of Mergers and Acquisitions
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: Parlux Fragrances, Inc.
PREN14A filed on December 22, 2006 by Glenn Nussdorf
DFAN14A filed on December 27, 2006 by Glenn Nussdorf
DFAN14A filed on November 21, 2006 by Glenn Nussdorf
SEC File No. 0-15491
Schedule 13D filed on September 7, 2006, as amended
SEC File No. 5-38657
Dear Ms. Chalk:
On behalf of our client, Glenn Nussdorf ("Mr. Nussdorf"), we are responding
to the comments of the staff (the "Staff") of the Securities and Exchange
Commission (the "Commission") set forth in the letter dated December 28, 2006
(the "Comment Letter") with respect to Mr. Nussdorf's solicitation of written
consents from the stockholders of Parlux Fragrances, Inc. ("Parlux" or the
"Company") to remove, without cause, all existing members of the Board of
Directors of Parlux (the "Board") and to elect himself and five other nominees
to the Board.
Mr. Nussdorf's revised preliminary consent statement and revised
preliminary consent card (collectively, the "Revised Preliminary Consent
Solicitation Materials") are being filed with the Commission in accordance with
the provisions of Rule 14a-6(h) of Regulation 14A and Rule 310 of Regulation
S-T.
Set forth below are Mr. Nussdorf's responses to the Comment Letter. For
ease of reference, we reproduce below the comments, and include under each
comment Mr. Nussdorf's response. All page references in Mr. Nussdorf's responses
are to the marked copies of the
Christina Chalk, Esq.
Page 2
Revised Preliminary Consent Solicitation Materials which are being filed with
the Commission and submitted to the Staff.
PREN14A filed December 2, 2006 - General
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1. Item 5 of Schedule 14A requires you to describe the interests of all
participants in this solicitation, whether by share ownership or otherwise.
Please expand the consent statement to describe all possible interests of
the participants in this solicitation not shared in common with all other
shareholders. For example, we note that the participants own companies
engaged in business relationships with the Company and that may also be its
competitors. In addition, we note that Mr. Nussdorf has made an offer to
acquire the Company, and has stated that he is currently evaluating another
possible acquisition proposal. In addition, Stephen Nussdorf is currently
owed a significant sum of money by the current CEO of the Company, and that
loan is currently in default. Add an appropriately titled section of the
consent solicitation outlining clearly and in reasonable detail in a single
place in the consent statement each participant's interest in this
solicitation. This section should also address (as applicable) Model's
proposal to be acquired by ECMV.
The Revised Preliminary Consent Solicitation Materials have been revised by
adding a new section beginning on page 15 entitled "Interests of Participants in
this Solicitation and Certain Business Relationships between the Company and Mr.
Nussdorf, and their Respective Affiliates." This section outlines clearly in a
single place and under appropriate captions the interests of Mr. Nussdorf and
other participants in his solicitation and the business relationships between
the Nussdorfs and the Company and their respective affiliates.
Cover Page
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2. List the names of all participants in the consent solicitation on
the cover page, where Glenn Nussdorf is currently identified. To the extent
that participants are entities affiliated with other named participants,
describe the nature of the affiliation. To the extent that participants are
affiliated with the Company or its affiliates, describe the nature of these
relationships as well.
The Revised Consent Solicitation Materials have been revised by adding a
new fifth paragraph on page 1.
3. You state here that neither proposal is conditioned on the other; however,
in the same paragraph on the cover page you disclose that Proposal 2 cannot
be effected unless Proposal 1 is adopted. Doesn't this mean that Proposal 2
is effectively conditioned on the adoption of Proposal 1? Please revise or
advise.
The Revised Consent Solicitation Materials have been revised by modifying
the fourth paragraph on page 1.
Christina Chalk, Esq.
Page 3
4. Where you present the percentage of shares owned by Glenn Nussdorf, list
the percentage owned by all of the other participants in the solicitation
as well.
The Revised Consent Solicitation Materials have been revised by amending
the last two sentences in the fourth paragraph on page 1 to include the
requested disclosure.
Proposal 2, Election of Nominees, page 3
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5. In the second paragraph of this section, where you disclose that Mr.
Nussdorf and Mr. Katz would not be independent directors within the meaning
of NASDAQ listing standards if they are elected to the Company's board,
expand to explain why and to discuss the implications for the Company.
The Revised Consent Solicitation Materials have been revised by adding
disclosure to the second paragraph of the subsection "Proposal 2: Election of
Nominees" on page 3 to indicate that Messrs. Nussdorf and Michael Katz will not
be independent directors and the reasons therefor.
Background and Reasons for the Consent Solicitation, page 5
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6. Revise the first paragraph of this section to make clear that the
Nussdorfs, as the owners of QKD, made an offer to acquire the Company in
May 2003 but were unable to consummate the acquisition.
The Revised Consent Solicitation Materials have been revised by amending
the first paragraph of the section "Background and Reasons for the Consent
Solicitation" on page 5.
7. Refer to the last comment above. Since Mr. Nussdorf's offer was made in
collaboration with current Company CEO Ilia Lekach, whom you now seek to
remove from the Board, clarify this apparent change of heart with respect
to Mr. Lekach's ability to effectively manage the Company. That is, why
have you changed your mind about Mr. Lekach's abilities? Fully describe any
intervening events or disputes between the parties between the date of the
collaborative offer in May 2003 and this consent solicitation.
The Revised Consent Solicitation Materials have been revised by adding a
new second paragraph and revising the third paragraph in the section "Background
and Reasons for the Consent Solicitation" on page 5 to describe Mr. Nussdorf's
dissatisfaction with the performance of the Company's senior management, the
lack of Board oversight, and the Company's financial and stock price
performance.
8. See comment 2 above. Clarify whether Mr. Lekach is currently an affiliate
of ECMV.
The Revised Consent Solicitation Materials have been revised by including
in the third paragraph under the subsection "Perfumania and ECMV" on page 16
additional disclosure that Mr. Lekach is not currently an officer or a director
of ECMV and has not been since February 2004. Such paragraph also states that
according to Mr. Lekach's most recent Schedule 13D filed with the Commission on
October 31, 2006, he beneficially owns an aggregate of 120,000 shares
(approximately 4%) of ECMV's common stock.
Christina Chalk, Esq.
Page 4
9. Expand to discuss any further past dealings between the participants in
this solicitation, including Mr. Nussdorf, and existing affiliates of the
Company, including Mr. Lekach.
The Revised Consent Solicitation Materials have been revised by adding a
new section starting on page 15 entitled "Interests of Participants in this
Solicitation and Certain Business Relationships between the Company and Mr.
Nussdorf, and their Respective Affiliates."
10. Refer to the disclosure in the fourth paragraph of this section. Clarify
why Glenn and Stephen Nussdorf sought the Board's approval to purchase in
excess of fifteen percent of the Company's outstanding stock, since they
have apparently not purchased shares above that threshold. In addition,
discuss why the consent of the Board was needed, and the effect of its
receipt.
The Revised Consent Solicitation Materials have been revised by adding new
disclosure to the second paragraph on page 6 regarding the request that the
Parlux Board approve purchases of 15% or more of the outstanding shares.
11. See the comments 9 and 10 above. It appears from the Board's approval of
the purchases contemplated by Messrs. Glenn and Stephen Nussdorf that these
two men previously enjoyed a friendly relationship with the Company's
current Board. It is critical that shareholders understand the full history
of the dealings between the Company and the participants in this
solicitation, including the events that led to the current situation.
Please revise the consent solicitation generally to "flesh out" the
narrative history of the interactions between the parties. Explain the
interrelationship between events where not apparent from context.
The Revised Preliminary Consent Solicitation Materials have been revised by
adding a new second paragraph and revising the third paragraph in the section
"Background and Reasons for the Consent Solicitation" on page 5 and adding a new
section starting on page 15 entitled "Interests of Participants in this
Solicitation and Certain Business Relationships between the Company and Mr.
Nussdorf, and their Respective Affiliates."
Letter to the Board dated September 26, 2006, page 6
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12. In this letter, Mr. Nussdorf states that he has spoken with "other large
shareholders" of the Company, and that such shareholders share his view
that the proposed sale of the Perry Ellis fragrance rights to Victory
International (USA) would be a mistake. Provide the following details about
Mr. Nussdorf's contacts with other shareholders:
(i) the identities of the shareholders with whom you have had
contacts;
(ii) the context of these communications and when they occurred; and
(iii) the substance of the relevant communications, including but not
limited to any communications relating to this consent
solicitation.
The Revised Consent Solicitation Materials have been revised by adding a
new fifth paragraph on page 6 disclosing the nature of the conversations with a
limited number of
Christina Chalk, Esq.
Page 5
stockholders of the Company. Mr. Nussdorf supplementally advises the Staff of
the following information regarding contacts with other shareholders by Mr.
Nussdorf and Michael Katz:
In September 2006, representatives of Wellington Management Co.
("Wellington"), Pike Capital Management ("Pike"), Lotsoff Capital ("Lotsoff")
and Churchill Management ("Churchill") were contacted by Mr. Nussdorf or Michael
Katz to inquire about their views regarding the Company's performance.
Wellington declined to discuss their holdings or views about the Company, and
there were no substantive discussions with Wellington. Pike, Lotsoff and
Churchill expressed their general displeasure, among other things, with the
Company's financial performance, the decline of the Company's stock price, the
Company's management, the Company's failure to file required reports with the
Commission on a timely basis, the proposed sale of the Perry Ellis fragrance
rights to Victory and the potential sale by the Company of other assets.
Although Mr. Nussdorf and Michael Katz have had no further contact with
Wellington and Churchill, there have been several subsequent conversations with
Pike and Lotsoff who continue to express the same concerns about the Company
referred to above.
In addition, there have been several conversations with Marvin Braun, a
stockholder of Parlux. Mr. Braun has also expressed his displeasure about the
proposed sale of the Perry Ellis fragrance rights to Victory and the eventual
sale of Perry Ellis fragrance rights back to Perry Ellis. In December 2006,
there was a discussion with a representative of LaGrange Capital ("LaGrange").
LaGrange expressed similar concerns as the other institutional stockholders of
the Company.
13. See our last comment above. In your response letter, analyze whether such
contacts with major shareholders of the Company constituted "solicitations"
within the meaning of Rule 14a-1(1) of Regulation 14A. If you believe such
communications were solicitations, identify the exemption or exception from
the proxy rules upon which Mr. Nussdorf relied in order to conduct such
discussions without making filings under the proxy rules.
Mr. Nussdorf supplementally advises the Staff that he does not believe that
the conversations with major stockholders of the Company constituted
"solicitations" within the meaning of Rule 14a-1(l) of Regulation 14A, and in
any event, if such conversations may be deemed to constitute "solicitations"
within the meaning of Rule14a-1(l) of Regulation 14A, such conversations were
with fewer than ten stockholders and, therefore, were exempt under Rule
14a-2(b)(2) of Regulation 14A.
14. Refer to the disclosure in the last full paragraph on page 7. Expand to
summarize in greater detail the discussions between Mr. Nussdorf and his
representatives, and management of the Company, its Board and "other
stockholders." With respect to the last group, provide the information
requested in comment 12 above. To the extent that any of the material terms
of a potential acquisition proposal were discussed, including price per
share, deal structure, etc., please disclose.
Mr. Nussdorf supplementally advises the Staff that the stockholders
referred to in his Schedule 13D filing were the same limited number of
stockholders referenced in response to Comment No. 12. The subject matter of the
discussions referred to in his Schedule 13D filing
Christina Chalk, Esq.
Page 6
were generally the same subjects identified in the Revised Consent Solicitation
Materials in the fifth paragraph on page 6. Mr. Nussdorf and his representatives
informed the limited number of stockholders about his possible interest in
making an acquisition proposal. Mr. Nussdorf and his representatives had similar
discussions with the Company's directors and management. In no such discussion,
did Mr. Nussdorf or his representatives discuss the material terms of a
potential acquisition proposal, including the price or structure of such a
potential transaction.
15. Provide additional details concerning Mr. Nussdorf's intentions with
respect to an acquisition of the Company if this solicitation is
successful. We note your disclosure that no final decision has been made.
However, outline the factors on which Mr. Nussdorf would make such a
decision (please be specific) and why he might seek to acquire the Company
through a share acquisition if he already controlled its Board.
The Revised Consent Solicitation Materials have been revised by adding new
disclosure to the third paragraph on page 11 describing the factors Mr. Nussdorf
presently intends to consider in determining whether to make an acquisition
proposal. Supplementally, Mr. Nussdorf advises the Staff that any decision he
may make with respect to a potential acquisition would be independent of his
control of the Company. Any acquisition proposed by Mr. Nussdorf would be a
"going private" transaction which is not an uncommon type of transaction.
Disclosure describing the nature of a "going private" transaction is provided in
the Revised Consent Solicitation Materials in the last paragraph on page 11.
16. Refer to the first bullet point on page 9. Explain why the sale of the
Company's products outside of the United States and the possible "flow
back" of such products into the United States, is viewed as a negative from
your perspective. In addition, briefly explain the basis for your belief
that this may be happening.
The Revised Consent Solicitation Materials have been revised by revising
the first bullet point on page 10 to add disclosure regarding the "flow back" of
the Company's products.
17. To the extent known, disclose which nominees you intend to place on the
newly-constituted Compensation Committee of the Board, to the extent they
are elected in this consent solicitation.
The Revised Consent Solicitation Materials have been revised by adding a
new third paragraph to the subsection "Proposal 2: Election of Nominees" on page
3 discussing the composition of Board Committees, including the Compensation
Committee. In addition, the Revised Consent Solicitation Materials have been
revised by adding a new sentence at the end of the second paragraph on page 10.
18. Refer to the fourth bullet point on page 10. There you reference "more than
one occasion" when the Company was threatened with delisting by the Nasdaq
Stock Market. However, the disclosure in the consent solicitation statement
details only one such occasion. Please provide general details about the
others, including when they occurred and why.
Christina Chalk, Esq.
Page 7
The Revised Consent Solicitation Materials have been revised by amending
the first bullet point on page 11 to refer to the additional occasions when the
Company was threatened with delisting by NASDAQ and why.
19. If available to you, please provide on a supplemental basis copies of the
pleadings in the lawsuit you cite in the fifth bullet point on page 10. If
they have ever been filed with any of the Company's periodic reports,
please cite us to the appropriate report.
In response to the foregoing request, we enclose herewith copies of the
pleadings which are in Mr. Nussdorf's possession for the consolidated amended
class action complaint in Thomas Haugh, on behalf of himself and all others
similarly situated, Plaintiff v. Parlux Fragrances, Inc., Ilia Lekach and Frank
Buttacovoli, Defendants. Mr. Nussdorf is not aware that any pleadings in this
lawsuit have been filed as exhibits to any of the Company's periodic reports.
Certain Employment and Other Agreements, page 11
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20. For each identified individual with whom the Company has an employment
agreement with a severance provision, provide the approximate amount of
cash and the approximate number of stock options/warrants which would be
owed to such individual if your nominees are elected to the Board.
The Revised Consent Solicitation Materials have been revised on page 13 to
show in tabular format the approximate number of warrants that would be owed to
Messrs. Lekach and Buttacavoli following a change of control. Mr. Nussdorf
supplementally advises the Staff that it is not possible for him to determine
the approximate number of warrants that would be owed to the Consultants
following a change of control since the Company has not disclosed the number of
warrants that are still owned by these persons. The approximate amount of cash
owed to these individuals following a change of control cannot be determined by
Mr. Nussdorf since the Company takes into account, among other things, salaries,
bonuses, values realized upon option exercises and any other payments received
by the persons during the five years prior to the date of change of control when
determining average compensation. According to the employment and consulting
agreements, it appears that the minimum cash payments following the change of
control would be approximately $1,425,000 to Mr. Lekach, $975,000 to Mr.
Buttacavoli, $300,000 to Mr. Vercillo and $250,000 to Mr. Purches.
Certain Information Concerning Related Persons and Transactions, page 14
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21. Indicate whether there is any security (other than the guarantee by Deborah
Lekach) for the $3,500,000 loan made by Stephen Nussdorf to Ilia Lekach. If
so, please describe, particularly where such assets are in any way related
to the Company or its shares.
The Revised Consent Solicitation Materials have been revised by adding
additional disclosure under the caption "Stephen Nussdorf and Ilia Lekach" on
page 16 to indicate that there is no other guaranty or security for Mr. Lekach's
note.
Christina Chalk, Esq.
Page 8
Consent Procedures, page 15
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22. Disclose how shareholders will be notified of the Record Date once it has
been set by the Company.
Mr. Nussdorf supplementally advises the Staff that he has requested the
Parlux Board to set a record date for his consent solicitation. Under Section
213(b) of the DGCL, the record date for determining the stockholders of a
Delaware corporation entitled to consent to corporate action in writing without
a meeting, when no prior action by the corporation's board of directors is
required and the board has not fixed a record date, will be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of the
stockholders are recorded. If the Board fails to set a record date, Mr. Nussdorf
intends to deliver his written consent prior to the mailing of his Consent
Statement to stockholders and the definitive Consent Statement will disclose the
date of delivery of such written consent and the resulting record date.
23. Here or in "Special Instructions" on page 16, explain the effect of a vote
to abstain in the context of a consent solicitation.
The Revised Consent Solicitation Materials have been revised by adding a
new sentence to the third paragraph of the section "Special Instructions" on
page 19 disclosing that an "Abstain" vote will have the same effect as
withholding consent.
Forward-Looking Statements, page 17
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24. You state that the consent solicitation contains forward-looking statements
within the meaning of Section 21E of the Exchange Act and Section 27A of
the Securities Act, as amended. However, both Section 21E and 27A extend
the safe harbor protections for forward-looking statements only to (i) an
issuer reporting under Section 13(a) or 15(d) of the Exchange Act; or (ii)
a person acting on behalf such an issuer. Since the participants in this
solicitation are neither, revise the first sentence in this section to
clarify your reference to the provisions of the Private Securities
Litigation Reform Act.
The Revised Consent Solicitation Materials have been revised by amending
the first sentence in the section "Forward Looking Statements" on page 19.
Closing Comments
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The consent solicitation is being conducted solely by Mr. Nussdorf in his
personal capacity, and is not being conducted by any other individual or entity.
Persons other than Mr. Nussdorf identified in the Revised Consent Solicitation
Materials as participants are identified as such because they may be (i)
soliciting consents and thus are participants within the meaning of Instruction
3(a)(vi) of Item 4 of Schedule 14A and/or (ii) nominees and thus are
participants within the meaning of Instruction 3(a)(ii) of Item 4 of Schedule
14A. Accordingly, Mr. Nussdorf will supplementally be furnishing the Staff with
a representation letter. Mr. Nussdorf is on
Christina Chalk, Esq.
Page 9
vacation and will be returning to New York next week. Mr. Nussdorf will execute
the representation letter upon his return and we will furnish it supplementally
to the Staff at such time.
In addition to the changes in the Revised Consent Solicitation Materials
made in response to the Staff's comments as discussed above, there has been a
general updating of information contained in the document.
If there are any further questions relating to the enclosed materials,
please telephone the undersigned at (212) 735-3360 or Richard J. Grossman of
this firm at (212) 735-2116.
Very truly yours,
/s/ Daniel E. Stoller
Daniel E. Stoller
cc: Mr. Glenn Nussdorf
Fred Paliani, Esq.