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Exhibit 10.9

 

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING

FROM

 

DEL LABORATORIES, INC.

 

To

 

Biberstein & Nunalee, LLP

as Trustee for the benefit of

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Note Collateral Agent

 

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Dated: October 28, 2005

 

Premises: Carver Road

                                                        Rocky Point, North
Carolina 28457

                           County of Pender

 

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COLLATERAL IS OR INCLUDES FIXTURES

(THIS DOCUMENT SERVES AS A FIXTURE FILING UNDER SECTION 25-9-502 OF THE

NORTH CAROLINA UNIFORM COMMERCIAL CODE.)

THIS DEED OF TRUST IS GIVEN PARTLY TO SECURE FUTURE OBLIGATIONS

WHICH MAY BE INCURRED HEREUNDER.

 

Prepared by and after recordation return to:

Latham & Watkins LLP

885 Third Avenue, Suite 1000

New York, New York 10022

Attn: Stephanie Quaranta

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TABLE OF CONTENTS

 

1.    DEFINITIONS    1 2.    GRANT    3 3.    WARRANTIES, REPRESENTATIONS AND
COVENANTS    3      3.1   

Title to Mortgaged Property and Lien of this Instrument

   3      3.2   

First Lien Status

   3      3.3   

Payment and Performance

   3      3.4   

Replacement of Fixtures and Personalty

   3      3.5   

Maintenance of Rights of Way, Easements and Licenses

   4      3.6   

Inspection

   4      3.7   

Other Covenants

   4      3.8   

Condemnation Awards and Insurance Proceeds

   4 4.    DEFAULT AND FORECLOSURE    4      4.1   

Remedies

   4      4.2   

Separate Sales

   6      4.3   

Remedies Cumulative, Concurrent and Nonexclusive

   6      4.4   

Release of and Resort to Collateral

   6      4.5   

Waiver of Redemption, Notice and Marshalling of Assets

   6      4.6   

Discontinuance of Proceedings

   7      4.7   

Application of Proceeds

   7      4.8   

Occupancy After Foreclosure

   7      4.9   

Protective Advances and Disbursements; Costs of Enforcement

   8      4.10   

No Beneficiary in Possession

   8 5.    ASSIGNMENT OF RENTS AND LEASES    8      5.1   

Assignment

   8      5.2   

No Obligation

   9      5.3   

Right to Apply Rents

   9 6.    SECURITY AGREEMENT    9      6.1   

Security Interest

   9      6.2   

Financing Statements

   9      6.3   

Fixture Filing

   9 7.    CONCERNING THE TRUSTEE    10      7.1   

Certain Rights

   10      7.2   

Retention of Money

   10      7.3   

Successor or Trustee

   10      7.4   

Perfection of Appointment

   10      7.5   

Trustee Liability

   10 8.    MISCELLANEOUS    11      8.1   

Notices

   11      8.2   

Covenants Running with the Land

   12      8.3   

Attorney-in-Fact

   12      8.4   

Successors and Assigns

   12      8.5   

No Waiver

   12      8.6   

Subrogation

   13

 

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     8.7   

Indenture

   13      8.8   

Release

   13      8.9   

Waiver of Stay, Moratorium and Similar Rights

   13      8.10   

Obligations of Grantor, Joint and Several

   13      8.11   

Governing Law

   13      8.12   

Headings

   13      8.13   

Entire Agreement

   13

 

Exhibit A: legal description

 

INDEX OF DEFINED TERMS

 

Beneficiary

  1

Covenants

  1

Deed of Trust

  1

Fixtures

  1

Grantor

  1

Improvements

  1

Land

  1

Leases

  2

Mortgaged Property

  1

Note Lien Obligations

  2

Note Lien Security Documents

  2

Permitted Liens

  3

Personalty

  1

Plans

  2

Property Agreements

  2

Rents

  2

UCC

  3

 

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DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT, FINANCING STATEMENT

AND FIXTURE FILING

 

This Deed of Trust, Assignment of Leases and Rents, Security Agreement,
Financing Statement and Fixture Filing (this “Deed of Trust”) is dated as of
October 28, 2005, by DEL LABORATORIES, INC., a Delaware corporation (“Grantor”),
having an address at 178 EAB Plaza, Uniondale, New York 11556, in favor of
Biberstein & Nunalee, LLP (“Trustee”), having an address at P.O. Box 428,
Burgaw, North Carolina 28425, for the benefit of WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (“Beneficiary”), having an address
at 213 Court Street, Suite 703, Middletown, CT 06457, as Note Collateral Agent
(as defined in the Indenture (as defined below)) for the holders of the Notes
(as defined below) under the Indenture more fully described below.

 

1. DEFINITIONS

 

As used herein, the following terms shall have the following meanings:

 

“Covenants”: All of the agreements, covenants, conditions and other obligations
made or undertaken by Grantor or any other person or entity to Beneficiary or to
any other Note Secured Party (as defined in the Indenture) as set forth in the
Note Lien Security Documents.

 

“Mortgaged Property”: All of Grantor’s right, title and interest in or to
(1) the real property described in Exhibit A, together with any greater estate
therein as hereafter may be acquired by Grantor (the “Land”), (2) buildings,
structures and other improvements, now or at any time situated, placed or
constructed upon the Land (the “Improvements”), (3) fixtures, materials,
supplies, equipment, apparatus and other items of personal property now owned or
hereafter acquired by Grantor and now or hereafter attached to, installed in or
used primarily in connection with any of the Improvements or the Land, and all
water, gas, electrical, storm and sanitary sewer facilities and all other
utilities whether or not situated in easements (the “Fixtures”), (4) all goods,
accounts, general intangibles, instruments, documents, chattel paper and all
other personal property of any kind or character, including such items of
personal property as defined in the UCC, now owned or hereafter acquired by
Grantor and now or hereafter affixed to, placed upon, used primarily in
connection with, or arising from or otherwise related to the Land and
Improvements or that may be used in or relating to the planning, development,
financing or operation of the Mortgaged Property, including, without limitation,
furniture, furnishings, equipment, machinery, money, insurance proceeds,
accounts, contract rights, goodwill, chattel paper, documents, property licenses
and/or franchise agreements, rights of Grantor under leases of Fixtures or other
personal property or equipment, inventory, all refundable, returnable or
reimbursable fees, deposits or other funds or evidences of credit or
indebtedness deposited by or on behalf of Grantor with any governmental
authorities, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable or reimbursable tap fees, utility deposits, commitment fees and
development costs but only to the extent assignable (the “Personalty”),
(5) reserves, escrows or impounds required under the Indenture and all deposit
accounts maintained by Grantor with respect solely to the Mortgaged Property,
(6) plans, specifications, shop drawings and other technical descriptions

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prepared for construction, repair or alteration of the Improvements, and all
amendments and modifications thereof (the “Plans”), (7) all leases, subleases,
licenses, concessions, occupancy agreements or other agreements (written or
oral, now or at any time in effect) which grant a possessory interest in, or the
right to use, all or any part of the Mortgaged Property (the “Leases”), together
with all related security and other deposits, (8) all of the rents, revenues,
income, proceeds, profits, security and other types of deposits, and other
benefits paid or payable by parties to the Leases other than Grantor for using,
leasing, licensing, possessing, operating from, residing in, selling or
otherwise enjoying the Mortgaged Property (the “Rents”), (9) to the extent
assignable, all other agreements, such as construction contracts, architects’
agreements, engineers’ contracts, utility contracts, maintenance agreements,
management agreements, service contracts, permits, licenses, certificates and
entitlements in any way relating to the development, construction, use,
occupancy, operation, maintenance, enjoyment, acquisition or ownership of the
Mortgaged Property (the “Property Agreements”), (10) all rights, privileges,
tenements, hereditaments, rights-of-way, easements, appendages and appurtenances
appertaining to the foregoing, and all right, title and interest, if any, of
Grantor in and to any streets, ways, alleys, strips or gores of land adjoining
the Land or any part thereof, (11) accessions, replacements and substitutions
for any of the foregoing and all proceeds thereof, (12) all proceeds of and any
unearned premiums on any insurance policies covering any of the above property
now or hereafter acquired by Grantor, (13) all mineral, water, oil and gas
rights now or hereafter acquired and relating to all or any part of the
Mortgaged Property and (14) any awards, remunerations, reimbursements,
settlements or compensation heretofore made or hereafter to be made by any
governmental authority pertaining to the Land, Improvements, Fixtures or
Personalty. As used in this Deed of Trust, the term “Mortgaged Property” shall
mean all or, where the context permits or requires, any portion of the above or
any interest therein.

 

“Note Lien Security Documents”: Include (1) the Indenture dated as of the date
hereof by and among Grantor, the Subsidiary Guarantors and Wells Fargo Bank,
National Association, as trustee (the “Indenture”), (2) Intercreditor Agreement,
dated as of the date hereof, among the Company, the Subsidiary Guarantors, the
Credit Agreement Agent, the Credit Facility Collateral Agent, the Trustee and
the Note Collateral Agent, (3) each Lien Sharing and Priority Confirmation with
respect to Note Lien Obligations, (4) the Collateral Agreement among the
Company, the Subsidiary Guarantors, the other grantors party thereto and the
Note Collateral Agent, (5) IP Security Agreement among the Company, each of the
Subsidiary Guarantors party thereto, the other grantors party thereto and the
Note Collateral Agent and (6) all security agreements, pledge agreements,
collateral assignments, mortgages, deeds of trust, collateral agency agreements,
control agreements or other grants or transfers for security executed and
delivered by the Company or any Subsidiary Guarantor creating (or purporting to
create) a Note Lien upon Collateral in favor of the Note Collateral Agent to
secure Note Lien Obligations, in each case, as amended, modified, renewed,
restated or replaced, in whole or in part, from time to time.

 

“Note Lien Obligations”: As defined in the Indenture, including, without
limitation, all other indebtedness, obligations and liabilities now or hereafter
existing of any kind of Grantor to Beneficiary under documents that recite that
they are intended to be secured by this Deed of Trust.

 

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“Permitted Liens”: The outstanding liens, easements, restrictions, security
interests and other exceptions to title set forth in the policy of title
insurance insuring the lien of this Deed of Trust issued on the date hereof,
together with the liens and security interests in favor of Beneficiary created
or permitted by the Indenture.

 

“UCC”: The Uniform Commercial Code of the State of North Carolina or the Uniform
Commercial Code in effect in any other state if applicable.

 

All terms used but not otherwise defined herein shall have the meanings ascribed
to them in the Indenture.

 

2. GRANT. To secure the full and timely payment and performance of the Note Lien
Obligations, Grantor MORTGAGES, GRANTS, BARGAINS, SELLS, TRANSFERS, ASSIGNS and
HYPOTHECATES and CONVEYS the Mortgaged Property to Trustee, IN TRUST, WITH POWER
OF SALE, subject, however, to the Permitted Liens. The latest scheduled maturity
date of the secured debt is October 28, 2011.

 

3. WARRANTIES, REPRESENTATIONS AND COVENANTS. Grantor warrants, represents and
covenants to Trustee and Beneficiary as follows:

 

3.1 Title to Mortgaged Property and Lien of this Instrument. Grantor owns the
Mortgaged Property free and clear of any liens, claims or interests, except the
Permitted Liens. This Deed of Trust creates a valid, enforceable first priority
lien and security interest against the Mortgaged Property subject only to the
Permitted Liens.

 

3.2 First Lien Status. Grantor shall preserve and protect the first lien and
security interest status of this Deed of Trust and the other Note Lien Security
Documents. If any lien or security interest other than a Permitted Lien is
asserted against the Mortgaged Property, Grantor shall promptly, and at its
expense, (a) give Beneficiary a detailed written notice of such lien or security
interest (including origin, amount and other terms), and (b) pay the underlying
claim in full or take such other action so as to cause it to be released or
contest the same in compliance with the requirements of the Indenture (including
the requirement of providing a bond or other security satisfactory to
Beneficiary to the extent required by the Indenture).

 

3.3 Payment and Performance. Grantor shall pay and perform the Note Lien
Obligations when due under the Note Lien Security Documents to which it is a
party and shall perform the Covenants under the Note Lien Security Documents to
which it is a party in full when they are required to be performed.

 

3.4 Replacement of Fixtures and Personalty. Except as permitted by the
Indenture, Grantor shall not, without the prior written consent of Beneficiary,
not to be unreasonably withheld, permit any of the Fixtures or Personalty to be
removed at any time from the Land or Improvements, unless the removed item is
removed temporarily for maintenance and repair or, if removed permanently, is
immaterial or is obsolete and in either case, is replaced by an article of equal
or better suitability and value, owned by Grantor subject to the liens and
security interests

 

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of this Deed of Trust and the other Note Lien Security Documents, and free and
clear of any other lien or security interest except such as may be first
approved in writing by Beneficiary.

 

3.5 Maintenance of Rights of Way, Easements and Licenses. Grantor shall
maintain, in the ordinary course of business, all rights of way, easements,
grants, privileges, licenses, certificates, permits, entitlements and franchises
necessary for the use of the Mortgaged Property and will not, without the prior
consent of Beneficiary, not to be unreasonably withheld or delayed, consent to
any public restriction (including any zoning ordinance) or private restriction
as to the use of the Mortgaged Property which restriction is reasonably likely
to materially and adversely affect the current use of the Mortgaged Property.
Grantor shall comply in all material respects with all restrictive covenants
affecting the Mortgaged Property, and all zoning ordinances and other public or
private restrictions as to the use of the Mortgaged Property.

 

3.6 Inspection. Grantor shall permit Beneficiary and its agents, representatives
and employees, upon reasonable prior notice to Grantor and during normal
business hours (except in the case of an emergency, in which case no notice
shall be necessary), to inspect the Mortgaged Property and conduct such
environmental, to the extent Beneficiary believes that there is a reasonable
possibility that a release of materials of environmental concern in violation of
environmental laws may have occurred or is occurring, engineering and other
studies as Beneficiary may reasonably require, provided that such inspections
and studies shall not materially interfere with the use and operation of the
Mortgaged Property. Beneficiary shall indemnify Grantor for all losses relating
to its or its agent’s gross negligence and willful misconduct in connection with
such inspection and studies.

 

3.7 Other Covenants. All of the covenants in the Indenture are incorporated
herein by reference.

 

3.8 Condemnation Awards and Insurance Proceeds.

 

3.8.1 Condemnation Awards. Grantor assigns all awards and compensation for any
condemnation or other taking, or any purchase in lieu thereof, to Beneficiary
and authorizes Beneficiary to collect and receive such awards and compensation
and to give proper receipts and acquaintances therefor, to be released by
Beneficiary or applied to the Note Lien Obligations in accordance with the terms
of the Indenture.

 

3.8.2 Insurance Proceeds. Grantor assigns to Beneficiary all proceeds of any
insurance policies insuring against loss or damage to the Mortgaged Property
(including flood insurance). Grantor authorizes and directs the issuer of each
of such insurance policies to make payment for all such losses to Beneficiary,
to be released by Beneficiary or applied toward the Note Lien Obligations in
accordance with the terms of Indenture.

 

4. DEFAULT AND FORECLOSURE

 

4.1 Remedies. During the occurrence and continuance of an Event of Default,
Beneficiary may, at Beneficiary’s election and by or through Trustee or
otherwise, exercise any or all of the following rights, remedies and recourses:

 

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4.1.1 Acceleration. To the extent permitted by the Indenture, declare the Note
Lien Obligations to be immediately due and payable, without further notice,
presentment, protest, notice of intent to accelerate, notice of acceleration,
demand or action of any nature whatsoever (each of which hereby is expressly
waived by Grantor), whereupon the same shall become immediately due and payable.

 

4.1.2 Entry on Mortgaged Property. Enter the Mortgaged Property and take
exclusive possession thereof and of all books, records and accounts relating
thereto. If Grantor remains in possession of the Mortgaged Property after an
Event of Default and without Beneficiary’s prior written consent, Beneficiary
may invoke any legal remedies to dispossess Grantor.

 

4.1.3 Operation of Mortgaged Property. Hold, lease, develop, manage, operate or
otherwise use the Mortgaged Property upon such terms and conditions as
Beneficiary may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time to
time, as Beneficiary deems necessary or desirable), and apply all Rents and
other amounts collected by Trustee in connection therewith in accordance with
the provisions of Section 4.7 hereof.

 

4.1.4 Remedies of Beneficiary upon Default. Upon the occurrence of any Event of
Default, Beneficiary may, at its option, without prior notice to Grantor,
declare the Note Lien Obligations to be immediately due and payable in full;
and, on application of Beneficiary, Trustee shall foreclose this Deed of Trust
in any manner permitted by North Carolina law, including selling the Mortgaged
Property or any part thereof at public sale to the last and highest bidder for
cash, free of any equity of redemption, homestead, dower, curtesy or other state
or federal exemption, all of which are expressly waived by Grantor, after
compliance with applicable North Carolina laws relating to foreclosure sales
under power of sale; and Trustee shall execute and deliver to the purchaser a
Trustee’s deed conveying the Mortgaged Property so sold without any covenant or
warranty, expressed or implied. The recitals in the Trustee’s deed shall be
prima facie evidence of the truth of the statements made therein. The proceeds
of any such sale shall be applied in the manner and in the order prescribed by
applicable North Carolina law, it being agreed that the expenses of any such
sale shall include a commission of five per cent of the gross sales price to
Trustee for holding such sale and for all services performed by him hereunder
excluding expenses incurred in making sale. In the event a foreclosure suit or
special proceeding is commenced, and no sale is held, then the Grantor shall pay
to the Trustee: (a) all expenses incurred by Trustee and (b) a partial
commission computed on five percent of the balance of the unpaid Note Lien
Obligations. Beneficiary may bid and become the purchaser at any sale under this
Deed of Trust. At any such sale Trustee may at his election require the
successful bidder immediately to deposit with Trustee cash in an amount equal to
all or any part of the successful bid and notice of any such requirement need
not be included in the advertisement of the notice of such sale. If foreclosure
proceedings are instituted under this Deed of Trust, Trustee is hereby
authorized to take possession of the Mortgaged Property and collect any rental
accrued or to accrue; or Trustee may lease the Mortgaged Property or any part
thereof, receive the rents and profits therefrom, and hold the proceeds
remaining after payment of the expenses of managing and operating the Mortgaged
Property subject to the order of the court for the benefit of Beneficiary,
pending final disposition on the foreclosure proceedings, and during any period
allowed by applicable law for the redemption from any foreclosure sale ordered
in

 

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such proceedings; and Trustee may act irrespective of the value of the Mortgaged
Property or its adequacy or inadequacy to secure or discharge the indebtedness
then owing.

 

4.1.5 Receiver. Make application to a court of competent jurisdiction for, and
obtain from such court as a matter of strict right and without notice to Grantor
or regard to the adequacy of the Mortgaged Property for the repayment of the
Note Lien Obligations, the appointment of a receiver of the Mortgaged Property,
and Grantor irrevocably consents to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain and otherwise operate the Mortgaged Property
upon such terms as may be approved by the court, and shall apply such Rents in
accordance with the provisions of Section 4.7 hereof.

 

4.1.6 Other. Exercise all other rights, remedies and recourses granted under the
Note Lien Security Documents or otherwise available at law or in equity
(including an action for specific performance of any covenant contained in the
Note Lien Security Documents, or a judgment on the Notes either before, during
or after any proceeding to enforce this Deed of Trust).

 

4.2 Separate Sales. The Mortgaged Property may be sold in one or more parcels
and in such manner and order as Beneficiary in its sole discretion may elect in
accordance with any applicable Requirement of Law; the right of sale arising out
of any Event of Default shall not be exhausted by any one or more sales
described in the foregoing sentence.

 

4.3 Remedies Cumulative, Concurrent and Nonexclusive. Trustee and Beneficiary
shall have all rights, remedies and recourses granted in the Note Lien Security
Documents and available at law or equity (including the UCC), which rights
(a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Grantor or others obligated under the Note
and the other Note Lien Security Documents, or against the Mortgaged Property,
or against any one or more of them, at the sole discretion of Beneficiary,
(c) may be exercised as often as occasion therefor shall arise, and the exercise
or failure to exercise any of them shall not be construed as a waiver or release
thereof or of any other right, remedy or recourse, and (d) are intended to be,
and shall be, nonexclusive. No action by Trustee or Beneficiary in the
enforcement of any rights, remedies or recourses under the Note Lien Security
Documents or otherwise at law or equity shall be deemed to cure any Event of
Default.

 

4.4 Release of and Resort to Collateral. Beneficiary may release, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Mortgaged Property, any part of the
Mortgaged Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interests created in
or evidenced by the Note Lien Security Documents or their stature as a first and
prior lien and security interest in and to the remaining Mortgaged Property. For
payment of the Note Lien Obligations, Beneficiary may resort to any other
security in such order and manner as Beneficiary may elect.

 

4.5 Waiver of Redemption, Notice and Marshalling of Assets. To the fullest
extent permitted by law, Grantor hereby irrevocably and unconditionally waives
and releases (a) all benefit that might accrue to Grantor by virtue of any
present or future statute of limitations or law or judicial

 

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decision exempting the Mortgaged Property from attachment, levy or sale on
execution or providing for any appraisement, valuation, stay of execution,
exemption from civil process, redemption or extension of time for payment,
(b) all notices of Trustee’s election to exercise or its actual exercise of any
right, remedy or recourse provided for under the Note Lien Security Documents,
and (c) any right to a marshalling of assets or a sale in inverse order of
alienation. Grantor waives any right or remedy which Grantor may have or be able
to assert pursuant to any provision of North Carolina law, including, without
limitation, the rights or remedies set forth in N.C. Gen. Stat. §26-7, et. seq.,
pertaining to the rights and remedies of sureties.

 

4.6 Discontinuance of Proceedings. If Beneficiary shall have proceeded to invoke
any right, remedy or recourse permitted under the Note Lien Security Documents
and shall thereafter elect to discontinue or abandon it for any reason,
Beneficiary shall have the unqualified right to do so and, in such an event,
Grantor, Trustee and Beneficiary shall be restored to their former positions
with respect to the Note Lien Obligations, the Note Lien Security Documents, the
Mortgaged Property and otherwise, and the rights, remedies, recourses and powers
of Trustee and Beneficiary shall continue as if the right, remedy or recourse
had never been invoked, but no such discontinuance or abandonment shall waive
any Event of Default that may then exist or the right of Trustee and Beneficiary
thereafter to exercise any right, remedy or recourse under the Note Lien
Security Documents for such Event of Default.

 

4.7 Application of Proceeds. The proceeds of any sale of, and the Rents and
other amounts generated by the holding, leasing, management, operation or other
use of the Mortgaged Property, shall be applied by Beneficiary or Trustee (or
the receiver, if one is appointed) in the following order unless otherwise
required by the Indenture or applicable law:

 

4.7.1 to the payment of the out-of-pocket costs and expenses actually incurred
by Beneficiary in taking possession of the Mortgaged Property and of holding,
using, leasing, repairing, improving and selling the same, including, without
limitation: (1) trustee’s and receiver’s reasonable fees and expenses, (2) court
costs, (3) reasonable out-of-pocket attorneys’ and accountants’ fees and
expenses, (4) costs of advertisement, and (5) the payment of all ground rent,
real estate taxes and assessments, except any taxes, assessments or other
charges subject to which the Mortgaged Property shall have been sold;

 

4.7.2 to the payment of all amounts (including interest), other than the payment
of the Note Lien Obligations, which may be due to Beneficiary under the Note
Lien Security Documents;

 

4.7.3 to the payment of the Note Lien Obligations and performance of the
Covenants under the Note Lien Security Documents in such manner and order of
preference as Beneficiary in its sole discretion may determine in accordance
with the terms of the Indenture; and

 

4.7.4 the balance, if any, to the payment of the persons legally entitled
thereto.

 

4.8 Occupancy After Foreclosure. The purchaser at any foreclosure sale pursuant
to Section 4.1.4 shall become the legal owner of the Mortgaged Property. All
occupants of the Mortgaged Property shall, at the option of such purchaser,
become tenants of the purchaser at the foreclosure sale and shall deliver
possession thereof immediately to the purchaser upon demand. It shall not

 

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be necessary for the purchaser at said sale to bring any action for possession
of the Mortgaged Property other than the statutory action of forcible detainer
in any justice court having jurisdiction over the Mortgaged Property.

 

4.9 Protective Advances and Disbursements; Costs of Enforcement.

 

4.9.1 If any Event of Default exists, Beneficiary shall have the right, but not
the obligation, to cure such Event of Default in the name and on behalf of
Grantor. All sums advanced and expenses incurred at any time by Beneficiary
under this Section, or otherwise under this Deed of Trust or any of the other
Note Lien Security Documents or applicable law, shall bear interest from the
date that such sum is advanced or expense incurred, to and including the date of
reimbursement, computed at the interest rate applicable to overdue reimbursement
obligations under the Indenture, and all such sums, together with interest
thereon, shall be secured by this Deed of Trust.

 

4.9.2 Grantor shall pay all expenses (including reasonable out-of-pocket
attorneys’ fees and expenses) of or incidental to the perfection and enforcement
of this Deed of Trust and the other Note Lien Security Documents, or the
enforcement, compromise or settlement of the Note Lien Obligations or any claim
under this Deed of Trust and the other Note Lien Security Documents, and for the
curing thereof, or for defending or asserting the rights and claims of
Beneficiary in respect thereof, by litigation or otherwise.

 

4.10 No Beneficiary in Possession. Neither the enforcement of any of the
remedies under this Article, the assignment of the Rents and Leases under
Article 5, the security interests under Article 6, nor any other remedies
afforded to Trustee or Beneficiary under the Note Lien Security Documents, at
law or in equity shall cause Trustee or Beneficiary to be deemed or construed to
be a Beneficiary in possession of the Mortgaged Property, to obligate Trustee or
Beneficiary to lease the Mortgaged Property or attempt to do so, or to take any
action, incur any expense, or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise.

 

5. ASSIGNMENT OF RENTS AND LEASES

 

5.1 Assignment. Grantor hereby grants to Beneficiary a present, absolute
assignment of the Leases and Rents. While any Event of Default exists,
Beneficiary shall be entitled to (a) notify any person that the Leases have been
assigned to Beneficiary and that all Rents are to be paid directly to
Beneficiary, whether or not Trustee or Beneficiary has commenced or completed
foreclosure or taken possession of the Mortgaged Property; (b) settle,
compromise, release, extend the time of payment of, and make allowances,
adjustments and discounts of any Rents or other obligations under the Leases;
(c) enforce payment of Rents and other rights under the Leases, prosecute any
action or proceeding, and defend against any claim with respect to Rents and
Leases; (d) enter upon, take possession of and operate the Mortgaged Property;
(e) lease all or any part of the Mortgaged Property; and/or (f) perform any and
all obligations of Grantor under the Leases and exercise any and all rights of
Grantor therein contained to the full extent of Grantor’s rights and obligations
thereunder, with or without the bringing of any action or the

 

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appointment of a receiver. For so long as no Event of Default exists, Grantor
shall have a revocable license to deal with and enjoy the rights otherwise
described in the preceding sentence.

 

5.2 No Obligation. Notwithstanding Beneficiary’s rights hereunder, Beneficiary
shall not be obligated to perform, and Beneficiary does not undertake to
perform, any obligation, duty or liability with respect to the Leases or Rents
on account of this Deed of Trust. Trustee and Beneficiary shall have no
responsibility on account of this Deed of Trust for the control, care,
maintenance or repair of the Mortgaged Property, for any waste committed on the
Mortgaged Property, for any dangerous or defective condition of the Mortgaged
Property, or for any negligence in the management, upkeep, repair or control of
the Mortgaged Property except to the extent any of the foregoing are caused by
Beneficiary or its agents.

 

5.3 Right to Apply Rents. Beneficiary shall have the right, but not the
obligation, to use and apply any Rents received hereunder in such order and such
manner as Beneficiary may determine, including, without limitation, for: (a) the
payment of out-of-pocket costs and expenses of enforcing or defending the terms
of this Deed of Trust or the rights of Beneficiary hereunder, and collecting any
Rents and (b) the payment of costs and expenses of the operation and maintenance
of the Mortgaged Property.

 

6. SECURITY AGREEMENT

 

6.1 Security Interest. This Deed of Trust constitutes a “Security Agreement” on
personal property within the meaning of the UCC and other applicable law and
with respect to the Personalty, Fixtures, Plans, Leases, Rents and Property
Agreements. To this end, Grantor grants to Trustee and Beneficiary a first and
prior security interest in the Personalty, Fixtures, Plans, Leases, Rents and
Property Agreements and all other Mortgaged Property, to the extent the
Mortgaged Property may be subject to UCC, that is personal property to secure
the payment of the Note Lien Obligations and performance of the Covenants under
the Note Lien Security Documents, and agrees that Trustee and Beneficiary shall
have all the rights and remedies of a secured party under the UCC with respect
to such property. Any notice of sale, disposition or other intended action by
Beneficiary with respect to the Personalty, Fixtures, Plans, Leases, Rents and
Property Agreement sent to Grantor at least ten (10) days prior to any action
under the UCC shall constitute commercially reasonable notice to Grantor.

 

6.2 Financing Statements. Grantor shall execute and deliver to Beneficiary, in
form and substance satisfactory to Beneficiary, such UCC financing statements
and such further forms as Beneficiary may, from time to time, reasonably
consider necessary to create, perfect and preserve Beneficiary’s lien priority
and security interest hereunder and Beneficiary may cause such statements and
assurances to be recorded and filed, at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.

 

6.3 Fixture Filing. This Deed of Trust shall constitute a fixture filing in
accordance with N.C. Gen. Stat. § 25-9-502, to be recorded in the real estate
records of the appropriate county in which the land is located. For purposes of
complying with the requirement of N.C. Gen. Stat. § 25-9-502, the name of
Grantor, as “debtor”, and Beneficiary, as “secured party”, and the respective
addresses of Grantor, as “debtor”, and Beneficiary, as “secured party”, are set
forth on

 

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the first page of this Deed of Trust; the types or items of “collateral” are
described in the definition of “Mortgaged Property” appearing in the granting
clauses of this Deed of Trust; and the description of the “land” is set forth on
Exhibit “A” attached hereto.

 

7. CONCERNING THE TRUSTEE

 

7.1 Certain Rights. With the approval of Beneficiary, Trustee shall have the
right to select, employ and consult with counsel. Trustee shall have the right
to rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by him hereunder, believed by him in good
faith to be genuine. Trustee shall be entitled to reimbursement for actual,
reasonable expenses incurred by him in the performance of his duties, including
those arising from the joint, concurrent or comparative negligence of Trustee;
however, Grantor shall not be liable under such indemnification to the extent
such liability or expenses result solely from Trustee’s gross negligence or
willful misconduct hereunder. Grantor shall, from time to time, pay the
compensation due to Trustee hereunder and reimburse Trustee for, and indemnify,
defend and save Trustee harmless against, all liability and reasonable expenses
which may be incurred by him in the performance of his duties other than
liabilities or expenses arising or accruing as a result of Trustee’s gross
negligence or willful misconduct. Grantor’s obligations under this Section shall
not be reduced or impaired by principles of comparative or contributory
negligence.

 

7.2 Retention of Money. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by law), and Trustee shall be under no liability
for interest on any moneys received by him hereunder.

 

7.3 Successor or Trustee. If Trustee or any successor Trustee shall die, resign
or become disqualified from acting in the execution of this trust, or
Beneficiary shall desire to appoint a substitute Trustee, Beneficiary shall have
full power to appoint one or more substitute Trustees and, if preferred, several
substitute Trustees in succession who shall succeed to all the estates, rights,
powers and duties of Trustee. Such appointment may be executed by any authorized
agent of Beneficiary, and as so executed, such appointment shall be conclusively
presumed to be executed with authority, valid and sufficient, without further
proof of any action.

 

7.4 Perfection of Appointment. Should any deed, conveyance or instrument of any
nature be required from Grantor by any successor Trustee to more fully and
certainly vest in and confirm to such successor Trustee such estates, rights,
powers and duties, then, upon request by such Trustee, all such deeds,
conveyances and instruments shall be made, executed, acknowledged and delivered
and shall be caused to be recorded and/or filed by Grantor.

 

7.5 Trustee Liability. In no event or circumstance shall Trustee or any
substitute Trustee hereunder be personally liable under or as a result of this
Deed of Trust, either as a result of any action by Trustee (or any substitute
Trustee) in the exercise of the powers hereby granted or otherwise, except due
to Trustee’s gross negligence or willful misconduct.

 

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8. MISCELLANEOUS

 

8.1 Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, addressed as
follows in the case of Grantor, the Beneficiary and the Trustee, or to such
other address as may be hereafter notified by the respective parties hereto:

 

If to Grantor, to:

 

Del Laboratories, Inc.

Attention: Chief Financial Officer

Telephone: (516) 844-2020

Telecopy: (631) 293-1515

 

with a copy to:

 

Attention: David A. Brittenham

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Phone: (212) 909-6000

Fax: (212) 909-6836

 

If to Beneficiary, to:

 

Wells Fargo Bank, National Association

213 Court Street, Suite 703

Middletown, CT 06457

Facsimile No.: (860) 704-6219

Attention: Corporate Trust Office

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue, Suite 1000

New York, NY 10022

Attn: Michelle Kelban

Telephone: 212-906-1200

Telecopy: 212-751-4864

 

If to the Trustee, to:

 

Attention: Richard von Biberstein

Telephone: (910) 259-6823

Telecopy: (910) 259-6823

 

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No notice, request or demand to or upon the Grantor, Beneficiary or the Trustee
shall be effective until received. Grantor shall be conclusively deemed to have
received any notice, request or demand if such notice, request or demand is sent
by courier service and delivery thereof is confirmed by the courier, if it is
sent by fax and receipt thereof is confirmed orally, if it is sent by certified
mail or if it is served by any manner of service of process permitted by law.
Notices and other communications to Grantor or Trustee hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Beneficiary. Approval of such procedures may be limited to
particular notices or communications.

 

8.2 Covenants Running with the Land. All Note Lien Obligations contained in this
Deed of Trust are intended by Grantor, Trustee and Beneficiary to be, and shall
be construed as, covenants running with the Mortgaged Property. As used herein,
“Grantor” shall refer to the party named in the first paragraph of this Deed of
Trust and to any subsequent owner of all or any portion of the Mortgaged
Property (without in any way implying that Beneficiary has or will consent to
any such conveyance or transfer of the Mortgaged Property). All persons or
entities who may have or acquire an interest in the Mortgaged Property shall be
deemed to have notice of, and be bound by, the terms of the Indenture and the
other Note Lien Security Documents; however, no such party shall be entitled to
any rights thereunder without the prior written consent of Beneficiary.

 

8.3 Attorney-in-Fact. Grantor hereby irrevocably appoints Beneficiary, and its
successors and assigns, as its attorney-in-fact, which agency is coupled with an
interest, (a) to execute and/or record any notices of completion, cessation of
labor or any other notices that Beneficiary deems appropriate to protect
Beneficiary’s interest, if Grantor shall fail to do so within ten (10) days
after written request by Beneficiary, (b) upon the issuance of a deed pursuant
to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of
foreclosure, to execute all instruments of assignment, conveyance or further
assurance with respect to the Leases, Rents, Personalty, Fixtures, Plans and
Property Agreements in favor of the grantee of any such deed and as may be
necessary or desirable for such purpose, (c) to prepare, execute and file or
record financing statements, continuation statements and applications for
registration necessary to create, perfect or preserve Beneficiary’s security
interests and rights in or to any of the collateral, and (d) while any Event of
Default exists, to perform any obligation of Grantor hereunder; however:
(1) Beneficiary shall not under any circumstances be obligated to perform any
obligation of Grantor; (2) any out-of-pocket sums advanced by Beneficiary in
such performance shall be added to and included in the Note Lien Obligations and
shall bear interest at the interest rate applicable to overdue reimbursement
obligations under the Indenture; (3) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are actually received by Beneficiary; and
(4) Beneficiary shall not be liable to Grantor or any other person or entity for
any failure to take any action that it is empowered to take under this Section.

 

8.4 Successors and Assigns. This Deed of Trust shall be binding upon and inure
to the benefit of Beneficiary and Grantor and their respective successors and
assigns. Except to the extent expressly permitted by the Indenture, Grantor
shall not, without the prior written consent of Beneficiary, assign any rights,
duties or obligations hereunder.

 

8.5 No Waiver. Any failure by Beneficiary to insist upon strict performance of
any of the terms, provisions or conditions of the Note Lien Security Documents
shall not be deemed to be a

 

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waiver of same, and Beneficiary shall have the right at any time to insist upon
strict performance of all of such terms, provisions and conditions.

 

8.6 Subrogation. To the extent proceeds of the Loan have been used to
extinguish, extend or renew any indebtedness against the Mortgaged Property,
then Beneficiary shall be subrogated to all of the rights, liens and interests
existing against the Mortgaged Property and held by the holder of such
indebtedness and such former rights, liens and interests, if any, are not
waived, but are continued in full force and effect in favor of Beneficiary.

 

8.7 Indenture. If any conflict or inconsistency exists between this Deed of
Trust and the Indenture, the Indenture shall govern.

 

8.8 Release. Beneficiary, at Grantor’s expense, shall release the liens and
security interests created by this Deed of Trust or, at Grantor’s request (but
at no cost to Beneficiary), assign this Deed of Trust to a Beneficiary
designated by Grantor in accordance with the terms and conditions set forth in
the Indenture.

 

8.9 Waiver of Stay, Moratorium and Similar Rights. Grantor agrees, to the full
extent that it may lawfully do so, that it will not at any time insist upon or
plead or in any way take advantage of any appraisement, valuation, stay,
marshalling of assets, extension, redemption or moratorium law now or hereafter
in force and effect so as to prevent or hinder the enforcement of the provisions
of this Deed of Trust or the indebtedness secured hereby, or any agreement
between Grantor and Beneficiary or any rights or remedies of Beneficiary.

 

8.10 Obligations of Grantor, Joint and Several. If more than one person or
entity has executed this Deed of Trust as “Grantor,” the obligations of all such
persons or entities hereunder shall be joint and several.

 

8.11 Governing Law. This Deed of Trust shall be governed by the laws of the
State in which the Land is located.

 

8.12 Headings. The Article, Section and Subsection titles hereof are inserted
for convenience of reference only and shall in no way alter, modify or define,
or be used in construing, the text of such Articles, Sections or Subsections.

 

8.13 Entire Agreement. This Deed of Trust and the other Note Lien Security
Documents embody the entire agreement and understanding between Beneficiary and
Grantor and supersede all prior agreements and understandings between such
parties relating to the subject matter hereof and thereof. Accordingly, the Note
Lien Security Documents may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

 

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IN WITNESS WHEREOF, this Deed of Trust has been duly executed and delivered to
Trustee by Grantor on the date of the acknowledgment attached hereto.

 

DEL LABORATORIES, INC., a Delaware

corporation

By    

Name:

   

Title:

   

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STATE OF_________________

  )     ) ss:

COUNTY OF_______________

  )

 

I,                     , a Notary Public of the County and State aforesaid,
certify that                      personally came before me this day and
acknowledged that he is                      of Del Laboratories, Inc., a
Delaware corporation, and that he as                     , being authorized to
do so, executed the foregoing on behalf of the corporation. Witness my hand and
official stamp or seal, this      day of             , 2005.

 

  Notary Public

 

My commission expires:                     

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EXHIBIT A

Legal Description

 

(see attached)