PLEDGE SECURITY AGREEMENT
PLEDGE SECURITY AGREEMENT, dated May 28, 1998, made by AZUREL LTD., a
Delaware corporation having its principal office and place of business at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Pledgor" or the "Borrower"), to
▇▇▇▇▇ HOLDINGS, INC., a Delaware corporation, having an office at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender").
W I T N E S S E T H:
Borrower is indebted to Lender pursuant to a Credit Agreement, dated as
of May 28, 1999, between Lender and Borrower (the "Loan Agreement"); and
WHEREAS, it is a condition to Lender's obligations under the Loan
Agreement that Pledgor pledge certain collateral, in form and amount
satisfactory to Lender, to Lender as security for Borrower's obligations under
the Loan Agreement; and
WHEREAS, Pledgor is the legal and beneficial owner of the Collateral
described in Section 1 and Exhibit A hereof, and, to induce Lender to extend
credit to Borrower pursuant to the Loan Agreement, Pledgor desires to pledge the
Collateral to Lender;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Pledgor hereby agrees with Lender as follows:
1. DEFINITIONS.
(a) "Debt" means all debts, liabilities and obligations of
Borrower to Lender pursuant to and under the Loan Agreement and the Credit Note
issued thereunder and all amendments thereto, and any extensions and renewals
thereof or of a part thereof, together with interest, fees, charges, expenses
and costs of collection (including reasonable attorneys' fees).
(b) "Collateral" means all securities specifically described
on Exhibit A, together with any substitutions or replacements thereto and all
securities which are added thereto as a result of a stock split or similar event
with respect to the collateral (including, without limitation, any stock
dividend or distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any reorganization), option
or rights, whether as an addition to, in substitution of, or in exchange for any
shares of any Collateral, or otherwise, and all proceeds thereof. Exhibit A
hereto will be deemed to be amended automatically and immediately upon the
addition, substitution or replacement of the securities listed on Exhibit A and
upon such events, Pledgor shall promptly deliver all substitute, replacement or
additional securities to Lender as additional Collateral hereunder.
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2. GRANT OF SECURITY INTEREST AND PLEDGE.
(a) Pledgor hereby grants to Lender a first priority security
interest in and lien upon the Collateral as security for the Debt and all costs,
expenses and attorneys' fees incurred by Lender in collecting the Debt or
enforcing the Loan Agreement and the Note.
(b) Concurrently with the execution of this Pledge Security
Agreement, Pledgor shall deliver to the Lender, all certificates representing
the Collateral and, if the Collateral is uncertificated, shall sign one or more
financing statements evidencing the pledge of such Collateral to the Lender.
Notwithstanding any contrary provision or inference herein or elsewhere, Lender
shall have no right to vote the Collateral (if applicable) at any time unless
and until an Event of Default has occurred. The security interest in and lien
upon the Collateral granted to Lender hereunder shall attach upon delivery of
the Collateral to the Lender. Lender shall have, in addition to the rights and
remedies described in this Pledge Security Agreement, all the rights and
remedies of a secured party under the New York Uniform Commercial Code. Pledgor
irrevocably appoints Lender as its lawful attorney and agent on Pledgor's behalf
to execute any UCC-1 financing statements or UCC-3 amendments, to file such
documents signed by Lender alone in any appropriate public office, and to
register a pledge of any of the Collateral with any issuer of the Collateral.
(c) If, while this Agreement is in effect, (i) Pledgor shall
become entitled to receive or shall receive any securities or any stock
certificate (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any reorganization), option
or rights, whether as an addition to, in substitution of, or in exchange for any
shares of any Collateral, or otherwise, or (ii) if any additional shares of
common stock of Private Label Cosmetics, Inc. and/or Fashion Laboratories, Inc.
are released to Pledgor under the terms of that certain Escrow Agreement, dated
as of August 22, 1996, by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Pledgor and Gersten,
Savage, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (the "Escrow Agreement"), then Pledgor agrees to
accept the same as Lender's agent and to hold the same in trust on behalf of and
for the benefit of Lender and to deliver the same forthwith to the Lender in the
exact form received, with the endorsement of Pledgor when necessary and/or
appropriate undated stock powers duly executed in blank, to be held by the
Lender, subject to the terms hereof, as additional collateral security for the
Debt. Any sums paid upon or in respect of the Collateral upon the liquidation or
dissolution of any issuer of securities constituting Collateral shall be paid
over to the Lender to be held by it in trust as additional collateral security
for the Debts; and in case any distributions of capital shall be made on or in
respect of the Collateral or any property shall be distributed upon or with
respect to the Collateral pursuant to the recapitalization or reclassification
of the capital of any issuer of securities constituting Collateral or pursuant
to the reorganization thereof, the property so distributed shall be delivered to
the Lender to be held by it as additional collateral security for the Debt. All
sums of money and property so paid or distributed in respect of the Collateral
which are received by Pledgor shall, until paid or delivered to the Lender, be
held by Pledgor in trust as additional collateral security for the Debt.
(d) Pledgor will not sell, transfer, pledge, exchange, assign
or otherwise dispose of or encumber the Collateral, or any interest therein or
any proceeds thereof, whether by operation of law or otherwise
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(e) This Agreement is in addition to and without limitation of
any right of Lender under the Loan Agreement, or any other agreement, security
agreement, mortgage or guaranty granted by the Pledgor to Lender. This Agreement
is absolute and without any conditions. Lender can enforce its rights in the
Collateral immediately upon an Event of Default without having first to attempt
any collection from Borrower.
3. REPRESENTATIONS AND WARRANTIES.
Pledgor represents and warrants to Lender as follows:
(a) Pledgor owns and holds the Collateral free from any
security interest, lien, encumbrance or restriction whatsoever. No one (other
than Lender by reason of this Pledge Security Agreement) has any right, title,
claim or interest of any kind or nature in or to the Collateral.
(b) The security interest herein conferred upon Lender
constitutes the first and paramount lien upon all the Collateral.
(c) The securities which constitute the Collateral are fully
paid and non-assessable.
(d) The delivery of the Collateral to the Lender by Pledgor
under the terms of this Pledge Security Agreement and the compliance by Pledgor
with the other terms of this Pledge Security Agreement will not require the
consent of any governmental or regulatory authority or violate any provision of
or result in default under any other agreement to which Pledgor is a party or to
which its properties and assets are subject. Pledgor represents and warrants
that it is duly authorized to enter into this Pledge Security Agreement and the
transactions contemplated hereunder and that the person signing this Pledge
Security Agreement on behalf of Pledgor is duly authorized to act on its behalf.
Each delivery of additional Collateral and each delivery
of Collateral for substitution hereunder shall, in and of itself, constitute a
reaffirmation by Pledgor of the representations and warranties set forth above.
4. EVENTS OF DEFAULT AND REMEDIES.
(a) Each of the following shall constitute an Event of Default
under this Pledge Security Agreement:
1. An event occurs which constitutes an Event of Default
under the Loan Agreement;
2. The perfection of the security interest granted
Lender in the Collateral is impaired or is about to
become impaired; or
3. Pledgor fails to perform any term, condition or
covenant of this Agreement, or any representation or
warranty made by Pledgor in this Agreement or by
Borrower in the Loan Agreement or in connection
therewith is determined to be false.
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(b) Upon the occurrence of one or more of the foregoing Events
of Default, Lender may liquidate so much of the Collateral as is required to pay
the Debt and the costs, expenses and fees described in 2(a) hereof.
Upon the occurrence of an Event of Default, without limiting any other
right or remedy of Lender which may be available at law or in equity, Lender,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Pledgor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, assign, give an option or options to
purchase, contract to sell or otherwise dispose of and deliver said Collateral,
or any part thereof, at public or private sale or sales, at any exchange,
brokers' board or elsewhere upon such terms and conditions as Lender may deem
advisable. Lender or its agent shall pay over the net proceeds of any such
collection, receipt, appropriation, realization or sale, after deduction of all
reasonable costs and expenses of every kind incurred therein or in any way
relating to the rights of Lender hereunder, including reasonable attorneys' fees
and legal expenses, to Lender for application by Lender to the payment, in whole
or in part, of the Debt, Pledgor remaining liable for any deficiency remaining
unpaid after such application, and only after so paying over such net proceeds
and after the payment by Lender of any other amount required by any provision of
law need Lender account for the surplus, if any, to Pledgor. Pledgor agrees that
Lender need not give more than ten days' notice of the time and place of any
public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable notification of
such matters. No notification need be given to Pledgor if it has signed after an
Event of Default a statement renouncing or modifying any right to notification
of sale or other intended disposition. In addition to the rights and remedies
granted to Lender in this Agreement, Lender shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State of
New York.
5. DURATION AND WAIVERS.
Irrespective of any action, omission or course of dealing whatever by
Lender, this Pledge Security Agreement shall remain in full effect until the
Debt to Lender shall have been paid in full. Without limiting the generality of
the foregoing, Pledgor (a) agrees that Lender shall have no duty to make any
presentment or collection or to preserve any right of any kind with reference to
the Collateral, (b) agrees that Lender shall at all times have the right to
grant any indulgence to Borrower and to deal in any other manner with Borrower
including (without limitation) the granting of any extension or renewal, the
increase or decrease of any rate of interest, the forbearance from exercising
any right, power or privilege, including (without limitation) any right to
demand security, the release of any security or of any obligor, the effecting of
any other release, compromise or settlement, the forbearance from proceeding
against any security or obligor, the substitution of security (even if of a
different character or value), and (c) waives presentment, demand, protest or
notice of protest or nonpayment of the Debt to Lender or any part thereof or of
the Collateral or any part thereof, waives notice of any default by Borrower,
waives notice of any act, omission, or course of dealing by Lender and waives
any other notice to which Pledgor might be entitled but for the within waiver.
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6. PAYMENT OF DEBT.
Upon payment in full and cancellation of the debt secured hereby,
Lender shall, upon the request of Pledgor, promptly release the Collateral to
the Pledgor.
7. INTEREST AND INCOME FROM THE COLLATERAL.
Lender shall have no right to any interest or income paid or payable on
the Collateral and all such interest or income shall be the property of and
owned by Pledgor, unless and until an Event of Default has occurred.
8. DISPOSITION OF COLLATERAL. Pledgor recognizes that Lender may be
unable to effect a public sale of any or all the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws, but may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own account for investment
and not with a view to the distribution or sale thereof. Pledgor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
9. NOTICES.
All notices, statements, requests and demands given to or made upon
Lender or Pledgor in accordance with the provisions of this Pledge Security
Agreement shall be deemed to have been given or made when deposited in the mail,
postage prepaid, or in the case of telegraphic notice, when delivered to the
telegraph company, charges prepaid, addressed as follows:
If to Pledgor:
Azurel Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
If to Lender:
▇▇▇▇▇ Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
or such other person, firm, officer, or address as any party shall for itself
from time to time designate by written notice to the other parties hereto,
provided, however, that notices may be given by telex, telecopier, courier
service, telephone, personal delivery or otherwise, effective the date of such
communication; provided that notices given by such means of communication are
confirmed by mail as aforesaid postmarked within one business day after such
other form of communication. All notices mailed hereunder in the manner required
by this paragraph shall be effective when delivered.
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10. GENERAL PROVISIONS.
Each right, power or privilege specified or referred to in this Pledge
Security Agreement is in addition to any other rights, powers and privileges
that Lender may otherwise have or acquire by operation of law, by other contract
or otherwise. No course of dealing in respect of, nor any omission or delay in
the exercise of, any right, power or privilege by Lender shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
further or other exercise thereof, as each right, power or privilege may be
exercised by Lender either independently or concurrently with other rights,
powers and privileges as often and in such order as Lender may deem expedient.
No waiver or consent granted by either party in respect of this Pledge Security
Agreement shall be binding upon that party unless specifically granted in
writing, which writing shall be strictly construed. This Pledge Security
Agreement shall not be altered or modified except by a written agreement
executed by all the parties hereto. This Pledge Security Agreement shall bind
Pledgor, Lender and their respective successors and assigns. The provisions of
this Pledge Security Agreement, and the respective rights and duties of Borrower
and Lender hereunder shall be governed by and construed in accordance with the
laws of the State of New York.
11. FURTHER ASSURANCES. Pledgor agrees that at any time and from time
to time upon the written request of Lender, Pledgor will execute and deliver
such financing statements, assignments and further documents and do such further
acts and things as Lender may reasonably request in order to establish, perfect
and maintain a valid security interest in the Collateral as security for the
Debt and to effect the purposes of this Agreement.
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IN WITNESS WHEREOF, Pledgor has executed this Pledge Security Agreement
as of the date first above written.
PLEDGOR:
AZUREL LTD.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
AGREED AND ACCEPTED:
▇▇▇▇▇ HOLDINGS, INC.
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
EXHIBIT A
IDENTIFICATION OF COLLATERAL:
NUMBER OF SHARES
NAME OF COMPANY OF COMMON STOCK
Private Label Cosmetics, Inc. 670
Fashion Laboratories, Inc. 670