PLEDGE AGREEMENT

PLEDGE AGREEMENT (this ?Agreement?), dated as of May __, 2006, made by each entity listed as a pledgor on the signature pages hereto (each a ?Pledgor? and collectively, the ?Pledgors?), in favor of CASTLERIGG MASTER INVESTMENTS LTD., a company organized under the laws of the British Virgin Islands, in its capacity as collateral agent (in such capacity, the "Collateral Agent") for the "Buyers" (as defined below) party to the Securities Purchase Agreement, dated as of even date herewith (as amended, restated or otherwise modified from time to time, the "Securities Purchase Agreement") (together with its successors, transferees and assigns, the ?Investor?).

W I T N E S S E T H:

WHEREAS, House of Taylor Jewelry, Inc. (the ?Company?) and each party listed as a "Buyer" on the Schedule of Buyers attached thereto (collectively, the "Buyers") are parties to a Securities Purchase Agreement, pursuant to which the Company shall be required to sell, and the Investor shall purchase or have the right to purchase, the ?Secured Notes? (as defined therein);

WHEREAS, it is a condition precedent to the Buyers entering into the Securities Purchase Agreement that the Company shall have executed and delivered to the Collateral Agent for the benefit of itself and the Buyers this Agreement to secure all of the Company?s obligations under the Securities Purchase Agreement, the ?Secured Notes?(as defined therein) issued pursuant thereto (as such Secured Notes may be amended, restated, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the ?Notes?) and the ?Transaction Documents? (as defined in the Securities Purchase Agreement, the ?Transaction Documents?);

WHEREAS, each of the Pledgors other than the Company shall have executed a Guaranty, dated as of the date hereof, in favor of the Collateral Agent (the ?Guaranty?), guaranteeing all present and future obligations of the Company under the Securities Purchase Agreement, the Notes and the other Transaction Documents and shall have executed, together with the Company, a Security Agreement granting the Collateral Agent a first priority perfected lien in all their personal property (the "Security Agreement");

WHEREAS, the Pledgors are mutually dependent on each other in the conduct of their respective businesses as an integrated operation, with the credit needed from time to time by each Pledgor often being provided through financing obtained by the other Pledgors and the ability to obtain such financing being dependent on the successful operations of all of the Pledgors as a whole; and

WHEREAS, each Pledgor has determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest of, such Pledgor.

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Collateral Agent to perform under the Securities Purchase Agreement, each Grantor agrees with the Collateral Agent as follows:

SECTION 1.

Definitions and Rules of Interpretation.

(a)

Definitions.  Reference is made to the Securities Purchase Agreement and the Notes for a statement of terms thereof.  All terms used in this Agreement which are defined in the Securities Purchase Agreement or in Article 8 or Article 9 of the Uniform Commercial Code  as in effect from time to time in the State of New York (the ?Code?), and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided, that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Collateral Agent may otherwise determine.  In the event that any such term is defined in both the Securities Purchase Agreement and the Code, the definition of such term in the Securities Purchase Agreement shall control.

(b)

Rules of Interpretation .  Except as otherwise expressly provided in this Agreement, the following rules of interpretation apply to this Agreement: (i) the singular includes the plural and the plural includes the singular; (ii) ?or? and ?any? are not exclusive and ?include? and ?including? are not limiting; (iii) a reference to any agreement or other contract includes permitted supplements and amendments; (iv) a reference to a law includes any amendment or modification to such law and any rules or regulations issued thereunder; (v) a reference to a person includes its permitted successors and assigns; and (vi) a reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the Article, Section, Annex, Exhibit or Schedule of this Agreement.

SECTION 2.

Pledge and Grant of Security Interest.  As collateral security for all of the Obligations (as defined in Section 3 hereof), each of the Pledgors hereby pledges and assigns and grants to the Collateral Agent a continuing security interest in, and Lien on, all of such Pledgor?s right, title and interest in and to the following (collectively, the ?Pledged Collateral?):

(a)

all present, as set forth in Schedule I, and all future, issued and outstanding shares of capital stock, or other equity or investment securities of, or partnership, membership, or joint venture interests in, each Subsidiary, whether now owned or hereafter acquired by such Pledgor and whether or not evidenced or represented by any stock certificate, certificated security or other instrument, together with the certificates representing such equity interests, all options and other rights, contractual or otherwise, in respect thereof and all dividends, distributions, cash, instruments, investment property and any other property (including, but not limited to, any stock dividend and any distribution in connection with a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing and all cash and noncash proceeds thereof (collectively, the ?Pledged Shares?);

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC