AZUREL LTD, SB-2, 1996-10-30

AZUREL LTD
SB-2, 1996-10-30

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As filed with the Securities and Exchange Commission on October 30, 1996
Registration No. 333-

------------------------------------------------------------------------------

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------------------

AZUREL LTD.
(Name of small business issuer in its charter)

-----------------------

Delaware 2844 13-3842844
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Identification Number)
Incorporation or Number)
Organization)
----------------------------

509 Madison Avenue
New York, New York 10022
(212) 317-0712
(Address and telephone number of principal executive
offices and place of business)

----------------------------

Gerard Semhon, Chief Executive Officer
AZUREL LTD.
509 Madison Avenue
New York, New York 10022
(212) 317-0712
(Name, address and telephone number of agent for service)

------------------------------

Copies to:
Jay M. Kaplowitz, Esq. Jack Becker, Esq.
Gersten, Savage, Kaplowitz & Curtin, LLP Snow Becker Krauss P.C.
575 Lexington Avenue 605 Third Avenue
New York, New York 10022 New York, New York 10158-0125
(212) 752-9700 (212) 687-3860
(212) 752-9713 (FAX) (212) 949-7052 (FAX)

------------------------------

Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE>

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

<S> <C> <C> <C> <C>
Proposed
Title of Each Maximum Proposed
Class of Offering Price Maximum Aggregate Amount of
securities To Amount To Be Per Offering Registration
Be Registered Registered(1) security(2) Price(2) Fee

Common Stock, $.001
par value (3) 1,150,000 $5.00 $5,750,000 $1,742.42

Redeemable Common
Stock Purchase
Warrants (4) 1,150,000 $.10 $ 115,000 $34.85

Common Stock (5) 1,150,000 $6.00 $6,900,000 $2,090.91

Underwriter's
Warrants (6) 100,000 $.001 $ 100 -- (7)

Common Stock (8) 100,000 $5.00 $500,000 $151.51

Redeemable Common
Stock Purchase
Warrants (9) 100,000 $.001 $100 $.03

Common Stock (10) 100,000 $6.00 $600,000 $181.81

Common Stock (11) 1,868,747 $5.00 $9,343,735 $2,831.43

Redeemable Common
Stock Purchase
Warrants (12) 300,000 $.10 $30,000 $9.09

TOTAL
REGISTRATION FEE $7,042.05

<FN>
(1) Pursuant to Rule 416, the Registration Statement also relates to an
indeterminate number of additional shares of Common Stock issuable upon
the exercise of Redeemable Warrants pursuant to anti-dilution provisions
contained therein, which shares of Common Stock are registered hereunder.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
(3) Includes 150,000 shares of Common Stock subject to the Underwriter's over-
allotment option.
(4) Includes 150,000 Redeemable Common Stock Purchase Warrants subject to the
Underwriter's over-allotment option.
(5) Issuable upon exercise of the Redeemable Common Stock Purchase Warrants.
Includes shares of Common Stock issuable upon exercise of the Underwriter's
over-allotment option.
(6) To be issued to the Underwriter, entitling the Underwriter to purchase up
to 100,000 Shares of Common Stock and/or 100,000 Redeemable Common Stock
Purchase Warrants.
(7) No fee due pursuant to Rule 457(g).
(8) Issuable upon the exercise of the Underwriter's Warrants.
(9) Issuable upon exercise of the Underwriter's Warrants.
(10) Issuable upon the exercise of the Redeemable Common Stock Purchase Warrants
included in the Underwriter's Warrants.
(11) Includes (i) 1,568,747 shares of Common Stock owned by Selling
Securityholders; and (ii) 300,000 shares of Common Stock underlying
Redeemable Common Stock Purchase Warrants owned by Selling
Securityholders.
(12) Consists of Redeemable Common Stock Purchase Warrants registered on behalf
of Selling Securityholders.
</FN>
</TABLE>

<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: (i) one
to be used in connection with an offering by the Company of shares of Common
Stock and Redeemable Common Stock Purchase Warrants (the "Prospectus") and (ii)
one to be used in connection with the sale of shares of Common Stock by certain
selling securityholders (the "Selling Securityholder Prospectus"). The
Prospectus and the Selling Securityholder Prospectus will be identical in all
respects except for the alternate pages for the Selling Securityholder
Prospectus included herein which are labeled "Alternate Page for Selling
Securityholder Prospectus."

iii

<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities law of any such state.

PROSPECTUS PRELIMINARY PROSPECTUS DATED _____, 1996
- ---------- SUBJECT TO COMPLETION

AZUREL LTD.

1,000,000 Shares of Common Stock, $.001 par value
1,000,000 Redeemable Common Stock Purchase Warrants

Azurel Ltd. (the "Company") hereby offers 1,000,000 shares of common
stock, par value $.001 per share (the "Common Stock"), and 1,000,000 redeemable
common stock purchase warrants (the "Redeemable Warrants" and together with the
Common Stock the "Securities") to the general public (hereinafter referred to as
the "Offering"). The Securities must be purchased on the basis of one Redeemable
Warrant for each share of Common Stock purchased and will be separately
transferable immediately upon issuance. Each Redeemable Warrant expires on
________, 2001, five years after the date of this Prospectus (the "Expiration
Date") and entitles the holder thereof, commencing one year from the date of
this Prospectus, to purchase one share of Common Stock at an exercise price of
$______ [120% of initial public offering price of Common Stock] (the "Exercise
Price"), subject to adjustment in certain events. The Redeemable Warrants are
redeemable by the Company, at a price of $.10 per Redeemable Warrant, at any
time commencing one year after the date of this Prospectus and prior to the
Expiration Date, on 30 days prior written notice to the registered holders of
the Redeemable Warrants (the "Warrantholders"), provided that the closing bid
price per share of the Common Stock if traded on the NASDAQ SmallCap Market
("NASDAQ"), or the last sales price per share if listed on a national exchange,
exceeds 150% of the Exercise Price for a period not less than 20 trading days in
any 30 day trading period ending not more than 15 days prior to the date of any
redemption notice. The Redeemable Warrants shall be exercisable until the close
of the business day preceding the date fixed for redemption. See "Underwriting"
and "Description of Securities-Redeemable Warrants."

Prior to this Offering, no public market for the Securities has
existed, and no assurance can be given that any market for such Securities will
develop or be sustained on completion of the Offering. The offering price for
the shares of Common Stock and Redeemable Warrants, and the Exercise Price of
the Redeemable Warrants, have been determined by negotiations between the
Company and Network 1 Financial Securities, Inc., the underwriter of this
Offering (the "Underwriter"), and are not necessarily related to the Company's
asset value, earnings, net worth or any established criteria of value. The
anticipated offering price of the Common Stock and Redeemable Warrants is
expected to be between $4.00 and $5.00 and $.10, respectively. The Company
intends to apply to NASDAQ for inclusion of the Securities for trading. The
proposed trading symbols for the Common Stock and Redeemable Warrants are AZUR
and AZURW, respectively. See "Underwriting."

THESE SECURITIES ARE SPECULATIVE SECURITIES INVOLVING A HIGH
DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT IN THE COMPANY. PURCHASERS SHOULD CAREFULLY
CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" AND

<PAGE>

"DILUTION" COMMENCING ON PAGES 11 AND 21, RESPECTIVELY, OF THIS PROSPECTUS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C>
Underwriting
Discounts and
Commissions Proceeds to Company
Price to Public (1) and (3) (2) and (3)
--------------- ----------- -----------
Per Share... ----- ----- -----
Per Redeemable Warrant ----- ----- -----
Total (3) ----- ----- -----

- ----------------
<FN>
(1) Does not include additional compensation to the Underwriter consisting
of (i) a non-accountable expense allowance of $153,000 ($175,950 if the
Over-Allotment Option (as hereinafter defined) is exercised in full);
(ii) a 24-month financial advisory and investment banking agreement
providing for an aggregate payment of $48,000, payable in full at the
closing of the Offering ("Closing"); and (iii) warrants (the
"Underwriter's Warrants") exercisable for a period of four years
commencing one year from the date of this Prospectus to purchase an
aggregate of 100,000 shares of Common Stock and/or 100,000 Redeemable
Warrants at a price of $____ per share and $___ per Redeemable Warrant
[150% of initial public offering price of Common Stock and Redeemable
Warrants]. In addition, the Company has agreed to indemnify the
Underwriter against certain liabilities, including those arising under
the Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."

(2) After deducting discounts and commissions payable to the Underwriter, but before payment
the Underwriter's non-accountable expense allowance or other expenses of this Offering
(estimated at $350,000) payable by the Company. See "Underwriting."

(3) The Company has granted the Underwriter an option, exercisable within
30 calendar days after the Closing to purchase up to 150,000 additional
shares of Common Stock and/or 150,000 Redeemable Warrants upon the same
terms and conditions set forth above, solely for the purpose of
covering over-allotments, if any (the "Over-Allotment Option"). If the
Over-Allotment Option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company would be
$_________, $________ and $_________, respectively.
</FN>
</TABLE>

<PAGE>

The Securities are being offered by the Underwriter on a "firm
commitment" basis, subject to prior receipt and acceptance, the approval of
certain legal matters by counsel and prior sale, if and when issued. The
Underwriter reserves the right to withdraw, cancel or modify the Offering and to
reject any order in whole or in part. Delivery of the certificates representing
the Securities is expected to be made against payment therefor at the offices of
the Underwriter, One Financial Galleria, 2 Bridge Avenue, Red Bank, New Jersey
07701 on or about ___________, 1996.

NETWORK 1 FINANCIAL SECURITIES, INC.

The date of this Prospectus is ,1996

<PAGE>

INSIDE FRONT COVER

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AND/OR THE REDEEMABLE WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ
SMALLCAP MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.

A SIGNIFICANT AMOUNT OF THE SECURITIES IN THIS OFFERING MAY BE SOLD TO
CUSTOMERS OF THE UNDERWRITER WHICH MAY AFFECT THE MARKET FOR AND LIQUIDITY OF
THE COMPANY'S SECURITIES IN THE EVENT THAT ADDITIONAL BROKER-DEALERS DO NOT MAKE
A MARKET IN THE COMPANY'S SECURITIES, OF WHICH THERE CAN BE NO ASSURANCE. SUCH
CUSTOMERS SUBSEQUENTLY MAY ENGAGE IN TRANSACTIONS FOR THE SALE OR PURCHASE OF
THE SECURITIES THROUGH AND/OR WITH THE UNDERWRITER.

ALTHOUGH IT HAS NO OBLIGATION TO DO SO, THE UNDERWRITER MAY FROM TIME
TO TIME ACT AS A MARKET MAKER AND OTHERWISE EFFECT TRANSACTIONS IN THE COMPANY'S
SECURITIES. THE UNDERWRITER, IF IT PARTICIPATES IN THE MARKET, MAY BECOME A
DOMINATING INFLUENCE IN THE MARKET FOR THE SECURITIES. HOWEVER, THERE IS NO
ASSURANCE THAT THE UNDERWRITER WILL OR WILL NOT CONTINUE TO BE A DOMINATING
INFLUENCE. THE PRICES AND LIQUIDITY OF THE SECURITIES OFFERED HEREUNDER MAY BE
SIGNIFICANTLY AFFECTED BY THE DEGREE, IF ANY, OF THE UNDERWRITER'S PARTICIPATION
IN SUCH MARKET. THE UNDERWRITER MAY DISCONTINUE SUCH ACTIVITIES AT ANY TIME OR
FROM TIME TO TIME. SEE "RISK FACTORS - NO ASSURANCE OF PUBLIC MARKET; VOLATILITY
OF STOCK PRICE."

THE COMPANY INTENDS TO FURNISH TO ITS STOCKHOLDERS ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS EXAMINED BY ITS INDEPENDENT AUDITORS.
IN ADDITION, THE COMPANY MAY FURNISH TO ITS STOCKHOLDERS QUARTERLY OR SEMI-
ANNUAL REPORTS CONTAINING UNAUDITED FINANCIAL INFORMATION AND SUCH OTHER
INTERIM REPORTS AS THE COMPANY MAY DETERMINE.

<PAGE>

PROSPECTUS SUMMARY

The following summary does not purport to be complete and is qualified
in its entirety, and should be read in conjunction with the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. As used in this Prospectus, except as otherwise
indicated or the context otherwise requires, the "Company" or "Azurel" refers to
Azurel Ltd., a Delaware corporation, and its wholly-owned subsidiaries, Private
Label Cosmetics, Inc., a New Jersey corporation ("Private Label"), P.L.C.
Specialties Inc., a New Jersey corporation ("PLC"), Fashion Laboratories, Inc.,
a Delaware corporation ("Fashion Labs"), International Cosmetic Group, Inc., a
New Jersey corporation ("International"), and Scent 123, Inc., a Delaware
corporation ("Scent 123").

THE COMPANY

Azurel Ltd. (the "Company" or "Azurel"), directly and through
wholly-owned subsidiaries, manufactures, markets and sells cosmetics, fragrances
and skin care products. Through four wholly-owned subsidiaries comprising its
Private Label Group, acquired by the Company in August 1996, the Company
operates a manufacturing and filling facility which sells cosmetics principally
to major cosmetic companies for sale by each customer under the customer's own
brand name. In order to take advantage of the Company's manufacturing
capabilities and product development expertise, the Company currently is
developing cosmetic, skin care and fragrance lines which it intends to market
under brand names created internally or owned by others and licensed to the
Company. These products are sometimes referred to as "Branded Products". In
addition, the Company intends, through its Scent 123 subsidiary, to sell
well-recognized men's cologne and women's fragrances directly to the consumer by
overnight delivery through toll-free telephone numbers. These products are
sometimes referred to as "Distributed Fragrances."

Virtually all of the Company's present business is conducted through
the Private Label Group which manufactures, fills and packages a broad range of
cosmetics, including lipsticks, powders, eye shadows and eye liners. The
Company's manufacturing plant (the "Facility") includes a laboratory which
develops cosmetic products formulae for customers according to their specific
requirements. The laboratory also develops and maintains a library of cosmetic
product formulae for use by customers who have not developed their own formulae
for a specific product. See "Business - Products and Services."

The first Branded Product the Company has developed and commenced
marketing is an original unisex fragrance and related grooming products under
the Sports Extreme USA(TM) trade name. Presently, the Sports Extreme USA(TM)
line consists of a unisex fragrance, bath and shower gel, muscle and body
relaxer and face moisturizer containing sunscreen and alphahydroxy fruit acids.
The marketing of the Sports Extreme USA(TM) line will feature "extreme" sports
such as ice climbing, bungee jumping, sky surfing and mountain biking. The
Company anticipates retail sales of this line to commence in the spring of 1997.
See "Business - Products and Services."

<PAGE>

The Company is also in the process of developing cosmetics, fragrances
and related products for sale under the Members Only trade name in the United
States and certain other countries pursuant to a license agreement with the
owner of the Members Only trade name. The Members Only trade name is presently
used on clothing and a wide variety of other goods and has been successfully
marketed in the United States. The Company anticipates that retail sales of the
Members Only line will commence in the spring of 1997. See "Business - Products
and Services."

The Company expects that it will sell Branded Products directly to
retail outlets in the United States, and to international distribution
companies. As a complement to its marketing of Branded Products, the Company,
through its Scent 123 subsidiary, intends to sell Distributed Fragrances
directly to the consumer, initially by overnight delivery, through toll-free
telephone numbers. The Company has commenced locating sources of supply,
developing concepts, logos, designs and advertising campaigns, and engaging in
other activities preliminary to the commencement of the sale of Distributed
Fragrances. See "Business - Products and Services" and "Certain Transactions."

The Company was incorporated in Delaware on June 26, 1995, Private
Label was incorporated in New Jersey on July 5, 1967, PLC was incorporated in
New Jersey on July 5, 1967, Fashion Labs was incorporated in Delaware on May 1,
1978, International was incorporated in New Jersey on May 30, 1979 and Scent 123
was incorporated in Delaware on September 6, 1996. The Company's offices are
located at 509 Madison Avenue, New York, New York, 10022, and its telephone
number is (212) 317-0712.

<PAGE>

THE OFFERING

Securities Offered by the Company (1) 1,000,000 shares of Common Stock and
1,000,000 Redeemable Warrants

Common Stock Outstanding Before 3,878,747
the Offering (2)

Common Stock Outstanding After the 5,058,747
Offering (2)(3)

Redeemable Warrants Outstanding 1,000,000
After the Offering (4)

Terms of the Redeemable Warrants Each Redeemable Warrant is exercisabl
from one year of the date of this
Prospectus to five years of the date
of this Prospectus and entitles the
holder thereof to purchase one share
of Common Stock at an exercise price
of $___, [120% of the initial public
offering price per share of Common
Stock] subject to adjustment in
certain circumstances (the "Exercise
Price"). The Redeemable Warrants are
redeemable by the Company, at any time
commencing one year after the date of
this Prospectus, at a price of $.10
per Redeemable Warrant, provided that
the closing bid price of the Common
Stock on NASDAQ exceeds 150% of the
Exercise Price for a period not less
than 20 trading days in any 30 trading
day period ending not more than 15
days prior to the day on which the
Company gives notice of redemption.
See "Description of Securities-
Redeemable Warrants."

<PAGE>

Use of Proceeds The Company intends to use the net
proceeds of this Offering for
repayment of indebtedness incurred in
connection with acquisitions and
bridge financings, marketing, to
purchase inventory, to pay accrued
expenses and for working capital.

Risk Factors The Securities involve a high degree
of risk and immediate substantial
dilution and should not be purchased
by investors who cannot afford to
lose their entire investment.
Prospective investors should consider
carefully the factors set forth under
"Risk Factors" and "Dilution."

Proposed NASDAQ Common Stock - AZUR
Symbols(5) Redeemable Warrants - AZURW

(1) Does not include (i) 1,478,747 shares of Common Stock, and (ii) 300,000
shares of Common stock issuable upon exercise of Redeemable Warrants being
offered concurrently with this Offering by selling securityholders pursuant
to the Selling Securityholders' Prospectus. See "Concurrent Registration
of Securities."

(2) Does not include (i) up to 750,000 shares of Common Stock reserved for
issuance pursuant to stock options which may be granted pursuant to the
Company's 1996 Stock Option Plan, (ii) 270,000 shares of Common Stock
reserved for issuance pursuant to options and warrants issued in
connection with financing and consulting agreements or (iii) 300,000
shares of Common Stock reserved for issuance pursuant to Redeemable
Warrants being offered concurrently with this Offering by selling
securityholders pursuant to the Selling Securityholders' Prospectus.
See "Management - Stock Option Plan," "Certain Transactions" and
"Concurrent Registration of Securities."

(3) Does not include (i) up to an additional 150,000 shares of Common Stock
and 150,000 Redeemable Warrants issuable upon exercise of the
Underwriter's Over-Allotment Option; (ii) 150,000 shares of Common
Stock issuable upon exercise of the Redeemable Warrants included in the
Underwriter's Over-Allotment Option; (iii) 1,000,000 shares of Common
Stock reserved for issuance upon the exercise of the Redeemable
Warrants; (iv) up to 100,000 shares of Common Stock issuable upon
exercise of the Underwriter's Warrants or (v) up to 100,000 shares of
Common Stock issuable upon exercise of the Redeemable Warrants included
in the Underwriter's Warrants. Includes (i) 1,000,000 shares of Common
Stock offered hereby and (ii) 180,000 shares of Common Stock issuable
upon the closing of

<PAGE>

this Offering in connection with the acquisition of the companies
comprising the Private Label Group. See "Description of Securities,"
"Underwriting" and "Certain Transactions."

(4) Does not include (i) 150,000 Redeemable Warrants issuable upon exercise
of the Underwriter's Over-Allotment Option, (ii) 100,000 Redeemable
Warrants issuable upon exercise of the Underwriter's Warrants or (iii)
300,000 Redeemable Warrants being offered concurrently with this
Offering by selling securityholders pursuant to a Selling
Securityholders' Prospectus. See "Underwriting" and "Concurrent
Registration of Securities."

(5) The proposed trading symbols do not imply that an active trading market
will develop for the Common Stock or Redeemable Warrants upon the
completion of this Offering.

<PAGE>

SUMMARY OF FINANCIAL INFORMATION

The following sets forth summary financial information regarding Azurel
and the four companies comprising the Private Label Group. The pro forma summary
financial information includes adjustments to reflect the acquisition of the
Private Label Group and Scent Overnight, Inc.

AZUREL

The summary financial information as of December 31, 1995 and June 30,
1996 and for the period June 26, 1995 (inception) to December 31, 1995 and the
six months ended June 30, 1996, has been abstracted from the financial
statements of the Company included elsewhere herein (audited, with the exception
of the six months ended June 30, 1996 and all of the pro forma information).

<TABLE>
<S> <C> <C> <C> <C>
Historical Pro forma (1)
For the Period
June 26, 1995 Six Months
(inception) Through Six Months Ended Year Ended Ended
December 31, 1995 June 30, 1996 December 31, 1995 June 30, 1996
----------------- ----------------- ----------------- -------------

Statement of Operation Data: (Dollars in thousands)

Net Sales . . . . . . . . . . $ - $ - $ 8,413 $ 4,964

Cost of goods sold . . . . . - - 6,628 4,018

Net Income (Loss) . . . . . (277) (733) (1,143) (833)

Balance Sheet Data:

Current Assets . . . . . . $ 276 $1,198 $ 6,569

Total Assets . . . . . . . 351 1,393 11,462

Current Liabilities . . . . 403 961 2,137

Long term debt . . . . . . 450 200 3,587

Stockholders' Equity
(Deficiency) . . . . . . (502) 232 5,739

<FN>
(1) See "Notes to Unaudited Pro Forma Financial Statements" for description
of pro forma adjustments.
</FN>
</TABLE>

<PAGE>

PRIVATE LABEL GROUP

The summary financial information as of December 31, 1995 and June 30,
1996 and for the years ended December 31, 1995 and 1994 and the six months ended
June 30, 1996 and 1995, has been abstracted from the financial statements of the
Private Label Group included elsewhere herein (audited, with the exception of
the six months ended June 30, 1996 and 1995).

<TABLE>
Historical
<S> <C> <C> <C> <C>
Years ended December 31, Six months ended June 30,
1995 1994 1996 1995

Statement of Operations: (Dollars in thousands)

Net Sales . . . . . . . . . . . $8,413 $9,745 $4,964 $3,739

Cost of goods sold . . . . . . . 6,628 7,650 4,018 2,935

Net Income (Loss) . . . . . . . (516) (290) (136) (188)

Number of shares used in
computation . . . . . . . . .

Balance Sheet Data:

Current Assets . . . . . . . . . $2,598 $2,825

Total Assets . . . . . . . . . . 3,157 3,651

Current Liabilities . . . . . . . 2,519 2,729

Long term debt . . . . . . . . . . 1,566 1,986

Stockholder's Equity (Deficiency). (927) (1,064)

</TABLE>

<PAGE>

RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT IN THE
COMPANY. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS, AS WELL AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS.

Lack of History Upon Which to Evaluate the Company. Although the
Company was organized in June 1995, it only recently (i) has commenced marketing
certain of its proposed products, (ii) acquired the companies comprising its
Private Label Group and (iii) acquired certain assets related to the Scent 123's
operations. The financial statements of the Private Label Group for the years
ended December 31, 1995 and 1994 and for the six months ended June 30, 1996 and
1995 (unaudited) included elsewhere in this Prospectus reflect the results of
operations under prior management and not under the management of the Company.
Therefore, the financial statements cannot be used by prospective investors to
evaluate the ability of the Company's management to operate the Company's
business. Accordingly, the Company's prospects must be considered in light of
the risks, expenses, problems and difficulties frequently encountered in the
establishment of a new business in an industry characterized by intense
competition and changing consumer preferences, as well as in the
commercialization and marketing of new products. See "Business" and Azurel's
financial statements and related notes thereto included elsewhere in this
Prospectus.

Dependency Upon Integration of Acquired Operations; History of Losses;
No Assurance of Profitability. The business of the Private Label Group, acquired
in August 1996, currently represents a substantial portion of the assets and
revenue of the Company. The success of the Company substantially depends upon
the successful integration of the Private Label Group into the Company's
operations. Moreover, while the Private Label Group has been in business for
more than 49 years, and its current management is remaining with the Company, it
has operated at a loss for the years ended December 31, 1995 and 1994 and for
the six months ended June 30, 1996. There can be no assurance that the Company
will be able to integrate successfully the business of the Private Label Group
into the Company, or operate the remainder of the Company's business profitably.
See "Business - The Company" and Private Label Group financial statements and
the related notes thereto included elsewhere in this Prospectus.

Going Concern Qualification in Certified Public Accountant's Report.
Both Azurel and the Private Label Group incurred significant net losses for each
of the fiscal periods included in this Prospectus. In addition, the Private
Label Group, as of June 30, 1996, had a deficit in stockholders equity of
$1,063,594 and the Company, as at such date on a pro forma basis prior to pro
forma adjustments, had a stockholders equity of $232,489. In connection with the
audit of Azurel's and Private Label Group's respective financial statements
as of December 31, 1995, the Company has received a report from its independent
certified public accountants, Feldman Radin & Co., P.C., which includes a going
concern qualification in its opinion. See

<PAGE>

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Azurel's and the Private Label Group's financial statements
and the related notes thereto included elsewhere in this Prospectus.

Possible Need for Additional Financing. The Company expects that cash
flow from operations, together with the net proceeds of this Offering, will fund
its cash requirements for at least 12 months following the consummation of the
Offering. However, additional financing may be required in the event that the
Company incurs operating losses in the future or operations do not generate
sufficient funds. Because there can be no assurance that adequate additional
financing will be available on terms acceptable to the Company, if at all, the
Company may be forced to limit or discontinue its existing or planned
operations. Any future financings that involve the sale of the Company's equity
securities may result in dilution to the then current stockholders. See "Use of
Proceeds."

Possible Inability to Meet Substantial Debt Service. The principal
amount of the Private Label Group's indebtedness as of June 30, 1996 is
approximately $4,715,000. Consequently, a significant portion of the Company's
cash flow will be used to pay the principal and interest on such indebtedness.
It is unlikely that the Company can meet its debt service and other cash
requirements if the Private Label Group's operations are not profitable, in
which case the Company may require alternative financing. There can be no
assurance that alternative financing will be available to the Company on
acceptable terms, if at all. See "Certain Transactions."

Secured Loans - Existence of Liens on All of Private Label Group's
Assets. All of the Private Label Group's assets have been pledged to secure
certain indebtedness. In the event that the Private Label Group defaults on
payment of its obligations, including the making of required payments of
principal and interest, the Private Label Group's indebtedness could be
accelerated and, in certain cases, the Private Label Group's assets could be
subject to foreclosure. Moreover, to the extent that the Private Label Group's
assets continue to be pledged to secure outstanding indebtedness, such assets
will remain unavailable to secure additional debt financing. Such unavailability
may adversely affect the Company's ability to borrow in the future. See "Certain
Transactions."

Uncertainty of Market Acceptance of Branded Products; Dependence on
Marketing Efforts. The Company has not yet commenced significant marketing
activities for its Branded Products and has limited financial, personnel and
other resources to undertake marketing such activities. Moreover, the market for
fragrances, cosmetics and beauty products is sensitive to changing consumer
preferences and demand. Achieving successful market acceptance for Branded
Products will require substantial marketing efforts and expenditure of
significant funds to create consumer awareness and demand. Considering the
Company's limited financial resources, it will not be able to utilize various
promotional techniques used by competitors but will be able only to engage in
limited promotional and marketing efforts. There can be no assurance that the
Company will have sufficient funds or other resources to achieve successful

<PAGE>

market acceptance of its Branded Products or make sufficient sales to achieve
profitability. See "Business - Products and Services."

Dependency Upon License Agreements for Branded Products. The Company's
ability to develop cosmetic, skin care and fragrance lines for other companies
under brand names licensed to the Company is dependent upon the Company's
ability to obtain new licenses and retain its existing license of the Members
Only trade name. The Company's current license of the Members Only trade name
expires on September 30, 2001, subject to certain conditions, including the
requirement that the Company achieve certain minimum sales of the Members Only
fragrances, grooming products and cosmetics. There can be no assurance that the
Company will have the ability to satisfy all of its obligations under the
Members Only license agreement, that such license agreement will be renewed or
result in profitable operations or that the Company will be able to obtain
additional license agreements on favorable terms, if at all. The failure to
retain the Members Only license agreement or to obtain new license agreements
could have a material adverse effect on the Company's business related to the
Branded Products. See "Business - Products and Services."

Marketing Uncertainties Related to Distributed Fragrances. The
Company's ability to market the Distributed Fragrances will depend upon various
factors, many of which are not within the control of the Company. These factors
include, but are not limited to, (i) consumer acceptance of the Company's
marketing concept for the Distributed Fragrances, (ii) the economic climate,
(iii) government regulations concerning the shipment of fragrances, (iv) the
availability of sources of supply of the fragrances and (v) the successful
performance of the Company's advertising and fulfillment firms engaged to assist
the Company in selling the Distributed Fragrances. See "Business - Products and
Services."

Dependence Upon Obtaining Sources of Supply for Distributed Fragrances.
The Company's success in selling the Distributed Fragrances depends upon
obtaining an adequate supply of fragrances in order to maintain an appropriate
inventory, and to ensure that such inventory is readily available to its
customers. The Company does not expect to enter into supply agreements with
fragrance manufacturers; but rather, it expects to purchase fragrances from
manufacturers and others on an "as-needed" basis. There can be no assurance that
the Company will be able to acquire such inventory, in which case the Company's
expansion into this market would be adversely affected. See "Business - Products
and Services."

Competition. All aspects of the cosmetic, fragrance and skin care
industry are subject to intense competition throughout the world. In all
aspects of its business, the Company will compete with numerous companies, many
of which are better known in the industry and have established channels of
distribution and substantially all of which have greater financial and other
resources than the Company.

In selling the Branded Products, the Company will compete against
numerous companies, many of which have international reputations and broad
distribution channels in place. To date,

<PAGE>

the Company has (i) not sold any Branded Products, (ii) developed only one line
of Branded Products using a trade name developed by it and (iii) entered into
only one formal agreement with a third party regarding the marketing of
cosmetics and fragrances under a brand name owned by such third party. There can
be no assurance that the Company will successfully develop or market any Branded
Product.

The Company expects to compete in the sale of the Distributed
Fragrances based on the implementation of its marketing concept, which includes
convenient, overnight order fulfillment. The Company's method of selling the
Distributed Fragrances is not proprietary in nature and may be replicated by
others. In addition, the Company's possible lack of exclusivity with suppliers
may allow such suppliers or other third parties to engage in the direct
marketing of fragrance brands including, but not limited to, the fragrance
brands offered by the Company. There can be no assurance that the Company will
be successful in selling the Distributed Fragrances. See "Business -
Competition."

Government Regulation. The Company's manufacturing activities and the
Facility are subject to extensive and rigorous governmental regulation
concerning the protection of the environment and the quality of manufacturing.
Federal, state and local regulatory agencies actively enforce these regulations
and conduct periodic inspections to determine compliance with such government
regulations. The Food and Drug Administration (the "FDA") enforces regulations
regarding the quality of manufacturing ("Good Manufacturing Practices" or "GMP")
through periodic surveillances and audits. Failure to comply with applicable
regulatory requirements may result in fines, suspension of approvals, cessation
of distribution, product recalls and criminal prosecution, any of which would
have a material adverse effect on the Company. Changes in existing regulations,
the interpretation thereof, or adoption of new regulations could impose costly
new procedures for compliance, or prevent the Company from obtaining, or affect
the timing of, additional regulatory approvals.

The Company's proposed method of distributing the Distributed
Fragrances may include shipment by air transportation. The shipment of
fragrances by air is subject to federal regulation and the rules and regulations
promulgated by the Department of Transportation's (the "DOT") Research & Special
Programs Administration. The DOT considers the shipment of alcohol, a component
in fragrances, to be the transportation of hazardous material. Scent 123
obtained a DOT exemption to transport hazardous material by overnight air
transportation. As long as Scent 123 has the DOT exemption, which is in effect
until November 30, 1997, and may thereafter be renewed upon application and
approval thereof, Scent 123 believes that its shipment of products will be in
compliance with current DOT regulations. Scent 123's loss of the DOT exemption
would have a material adverse effect on these business operations. There can be
no assurance that Scent 123 will retain the DOT exemption or that Scent 123 will
be able to comply with any future DOT regulations.

The Company's sale of Distributed Fragrances is intended to utilize
toll-free telephone services. Toll-free telephone service is provided to users
by federally regulated common carrier

<PAGE>

telephone companies. The rates, terms and technical quality of this service are
subject to regulations promulgated by the Federal Communications Commission (the
"FCC") and tariffs published by the telecommunications service provider. Except
for the sending of indecent, harassing or obscene messages or material, the
interstate sale of services or products by users of a toll-free telephone number
is not subject to direct federal regulation under the Communications Act of
1934. Fraudulent telephone messages are subject to criminal penalties under
federal and state laws. The Company does not believe that FCC regulations will
affect the proposed sale of Distributed Fragrances, but such regulations could
affect the price, terms, quality and availability of the toll-free telephone
services and may have a material adverse effect on the Company's sale of
Distributed Fragrances.

Conflict of Interest in Acquisition of Assets of Scent Overnight, Inc.;
No Independent Appraisal of Value. The Company's Scent 123 subsidiary acquired
certain intangible assets from a company controlled by Gerard Semhon, the
Company's Chief Executive Officer and Chairman of the Board. The purchase price
was arbitrarily determined between affiliates and was not determined by an
independent appraisal of the assets. The purchase price was not based upon any
recognized criteria of value and may have exceeded the fair market value of the
assets acquired. See "Certain Transactions."

Dependence on Key Employees. The Company is dependent upon the
experience and abilities of its management, particularly, Gerard Semhon, Chief
Executive Officer and Chairman of the Board, Constantine Bezas, President, and
Michael J. Assante, President of the Private Label Group. While the Company has
entered into employment agreements only with Messrs. Semhon and Assante, the
loss of the services of any of these or other key employees would have a
material adverse effect on the business, operations, and prospects of the
Company. The Company currently has no key-person life insurance on any of these
individuals. See "Business - Management."

Lack of Control by Management. The management of the Company does not
hold a majority of the voting power in the Company. Therefore, the Company's
current management neither has control of any issue subject to a stockholder
vote nor the ability to control the election of the Board of Directors. As a
result, there can be no assurance that the Company's current management will be
retained by the Board of Directors. See "Principal Stockholders."

Immediate Substantial Dilution. The Company's present stockholders
acquired their shares of Common Stock at costs substantially below the
anticipated offering price of the Common Stock to be sold in this Offering.
Therefore, upon the completion of this Offering, investors will incur immediate
and substantial dilution in the per share net tangible book value of their
Common Stock, estimated to be approximately $4.66 per share or approximately 93%
of the public offering price per share (allocating no value to the Redeemable
Warrants). See "Dilution."

<PAGE>

No Dividends and None Anticipated. The Company has neither declared nor
paid any cash dividends on its Common Stock since its incorporation in June
1995, and the Board of Directors does not contemplate the payment of such
dividends in the foreseeable future. Any decisions regarding the payment of
dividends will depend on the Company's earnings, financial position and such
other factors as the Board of Directors deems relevant. In addition, certain
financing agreements and other documents executed in connection with the
acquisition of the Private Label Group prohibit the payment of dividends so long
as certain indebtedness is outstanding. See "Dividend Policy" and "Description
of Securities - Common Stock."

Limitation on Directors' Liabilities under Delaware Law and Broad
Indemnification. Pursuant to Delaware Law and the Company's Certificate of
Incorporation, directors of the Company are not liable for monetary damages for
breach of fiduciary duty, except in connection with the following: (i) a breach
of duty of loyalty, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) dividend payment or
stock repurchases illegal under Delaware law or (iv) any transaction from which
a director has derived an improper personal benefit. In addition, the Company's
By-laws require the Company to indemnify its officers, directors, employees and
agents under certain circumstances, including those under which indemnification
would otherwise be discretionary, and to advance expenses in proceedings in
which they could be indemnified. See "Management - Limitation on Directors' or
Officers' Liabilities and Indemnifications."

Offering Price Arbitrarily Determined. The offering price of the
Securities has been determined by negotiation between the Company and the
Underwriter and is not necessarily related to the Company's assets, earnings,
book value or any other objective standard of value.

Shares Eligible for Future Sale. The Company currently has 2,580,000
shares of Common Stock outstanding that are "restricted securities," as that
term is defined under Rule 144 promulgated under the Securities Act. In general,
under Rule 144, a person who has satisfied a two-year holding period may, under
certain circumstances, sell within any three month period a number of shares of
Common Stock that does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume in such shares
during the four calendar weeks prior to such sale. Rule 144 also permits, under
certain circumstances, the sale of shares without any quantity or other
limitation by a person who is not an affiliate of the Company and who has
satisfied a three-year holding period. All stockholders of the Company have
agreed not to publicly sell shares of the Company's Common Stock for a period of
between six months and two years from the date of this Prospectus without the
prior written consent of the Underwriter. Any substantial sale of restricted
securities under Rule 144 could have a significant adverse effect on the market
price of the Company's securities. See "Shares Eligible for Future Sale."

No Assurance of Public Market; Volatility of Stock Price. Prior to this
Offering there has been no market for any of the Securities. There can be no
assurance that a trading market will develop after this Offering for the
Securities or that, if developed, it will be sustained.

<PAGE>

The stock market has, from time to time, experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
any particular company. Various factors and events, including future
announcements of new products by the Company or its competitors, developments or
disputes concerning, among other things, government regulations in the United
States, and economic and other external factors, as well as fluctuations in the
Company's financial results, could have a significant impact on the market price
of the Securities.

NASDAQ Eligibility and Maintenance Requirements; Possible Delisting of
Securities. The Company has applied for listing of the Securities on NASDAQ. The
Securities and Exchange Commission (the "Commission") has approved rules
imposing listing criteria for securities on NASDAQ, including maintenance
standards. In order to qualify for initial quotation of securities on NASDAQ, a
company, among other things, must have at least $4,000,000 in total assets,
$2,000,000 in stockholders' equity, $1,000,000 in market value of the public
float and minimum bid price of $3.00 per share. To maintain NASDAQ listing, a
company, among other things, must have at least $2,000,000 in assets and
$1,000,000 in capital and surplus and its stock must have a minimum bid price of
$1.00; provided, however, that a company shall not be required to maintain the
$1.00 per share minimum bid price if it maintains a public float of $1,000,000
and $2,000,000 in capital and surplus. If the Company is unable to satisfy the
NASDAQ maintenance criteria for listing, its Securities may be delisted from
NASDAQ. In such event, trading, if any, of the Securities would thereafter be
conducted in the over-the-counter market, the so-called "pink sheets," or the
National Association of Securities Dealers, Inc.'s (the "NASD") "Electronic
Bulletin Board." As a consequence of such delisting, an investor would likely
find it more difficult to dispose of, or to obtain quotations as to, the price
of the Securities.

Penny Stock Regulation. In the event that the Company is unable to
satisfy NASDAQ's maintenance criteria requirements, or its Common Stock falls
below the minimum bid price of $3.00 per share for the initial quotation,
trading of the Securities would be conducted in the "pink sheets" or the NASD's
Electronic Bulletin Board. In the absence of the Common Stock being quoted on
NASDAQ or the Company's having $2,000,000 in stockholders' equity, trading of
the Common Stock would be covered by Rule 15g-9 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), for non-NASDAQ and
non-exchange listed securities. Under such rule, broker-dealers who recommend
such securities to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction prior
to sale. Securities are exempt from this rule if the market price is at least
$5.00 per share.

The Commission has adopted regulations that generally define a "penny
stock" to be an equity security that has a market price of less than $5.00 per
share or an exercise price of less than $5.00 per share subject to certain
exceptions. Such exceptions include equity securities listed on NASDAQ and
equity securities issued by an issuer that has (i) net tangible assets of at
least $2,000,000, if such issuer has been in continuous operation for less than
three years, or

<PAGE>

(ii) net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or (iii) average revenue of at
least $6,000,000 for the preceding three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a risk disclosure schedule explaining the penny
stock market and the risks associated therewith.

If the Securities were to become subject to the regulations applicable
to penny stocks, the market liquidity for the Securities would be severely
affected, limiting the ability of broker-dealers to sell the securities and the
ability of purchasers in this Offering to sell their Securities in the secondary
market. There is no assurance that trading in the Securities will not be subject
to these or other regulations that would adversely affect the market for such
securities.

Potential Adverse Effect of Redemption of Redeemable Warrants. The
Redeemable Warrants offered hereby are redeemable, in whole or in part, at a
price of $.10 per Redeemable Warrant (the "Redemption Price"), commencing one
year after the date of this Prospectus and prior to their expiration on the
fifth anniversary of this Prospectus provided that (i) prior notice of not less
than 30 days is given to the Warrantholders, (ii) the closing bid price of the
Company's Common Stock shall have exceeded $ per share [150% of Exercise Price]
for a period not less than 20 trading days in any 30 day trading period ending
not more than 15 days prior to the date on which the notice of redemption is
given, Warrantholders shall have exercise rights until the close of the business
day preceding the date fixed for redemption. Notice of redemption of the
Redeemable Warrants could force the holders to exercise the Redeemable Warrants
and pay the Exercise Price at a time when it may be disadvantageous for them to
do so, or to sell the Redeemable Warrants at the current market price when they
might otherwise wish to hold them, or to accept the Redemption Price, which may
be substantially less than the market value of the Redeemable Warrants at the
time of redemption. The Redeemable Warrants may not be exercised unless the
registration statement pursuant to the Securities Act, covering the underlying
shares of Common Stock is current and such shares have been qualified for sale,
or there is an exemption from applicable qualification requirements, under the
securities laws of the state of residence of the Warrantholder. Although the
Company does not presently intend to do so, the Company reserves the right to
call the Redeemable Warrants for redemption whether or not a current prospectus
is in effect or such underlying shares are not, or cannot be, registered in the
applicable states. Such restrictions could have the effect of preventing certain
Warrantholders from liquidating their Redeemable Warrants. See "Description of
Securities Warrants."

Current Prospectus and State Blue Sky Registration Required to Exercise
Redeemable Warrants. Warrantholders have the right to exercise the Redeemable
Warrants for the purchase of shares of Common Stock only if a current prospectus
which will permit the purchase and sale of the Common Stock underlying the
Redeemable Warrants is then effective, but there can be no assurance that the
Company will be able to do so. Although the Company intends to seek to qualify
for sale the shares of Common Stock underlying the Redeemable Warrants in those
states in which the Securities are to be offered, no assurance can be given that

<PAGE>

such qualification will occur. In addition, purchasers may buy Redeemable
Warrants in the aftermarket or may move to jurisdictions in which the shares of
Common Stock issuable upon exercise of the Redeemable Warrants are not so
registered or qualified during the period that the Redeemable Warrants are
exercisable. In such event, the Company would be unable to issue shares of
Common Stock to those persons desiring to exercise their Redeemable Warrants
unless and until the shares of Common Stock could be registered or qualified for
sale in the jurisdictions in which such purchasers reside, or an exemption to
such qualification exists or is granted in such jurisdiction. The Redeemable
Warrants may lose or be of no value if a prospectus covering the shares of
Common Stock issuable upon the exercise thereof is not kept current or if such
underlying shares of Common Stock are not, or cannot be, registered in the
applicable states. See "Description of Securities - Redeemable Warrants."

Relationship of Underwriter to Trading. The Underwriter may act as a
broker or dealer with respect to the purchase or sale of the Securities in the
over-the-counter market where they are expected to trade. The Underwriter also
has the right to act as the Company's exclusive agent in connection with any
future solicitation of Warrantholders to exercise their Redeemable Warrants.
Unless granted an exemption by the Commission from Rule 10b-6 under the Exchange
Act, the Underwriter will be prohibited from engaging in any market-making
activity or solicited brokerage activities with regard to the Securities during
the period beginning nine business days prior to the commencement of any such
solicitation and ending on the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right the
Underwriter may have to receive a fee for the exercise of the Redeemable
Warrants following such solicitation. As a result, the Underwriter and
solicitation broker/dealers may be unable to continue to make a market in the
Securities during certain periods while the exercise of Redeemable Warrants is
being solicited. Such a limitation, while in effect, could impair the liquidity
and market price of the Securities.

Underwriter's Warrants and Registration Rights. In connection with this
Offering, the Company has agreed to sell to the Underwriter, for nominal
consideration, the Underwriter's Warrants which entitle the Underwriter to
purchase up to 100,000 shares of Common Stock and/or 100,000 Redeemable
Warrants. The securities issuable upon exercise of the Underwriter's Warrants
are identical to those offered pursuant to this Prospectus. The Underwriter's
Warrants are exercisable at a price of $___ per share and $___ per Redeemable
Warrant [150% of initial public offering price of Common Stock and Redeemable
Warrants] for a period of four years commencing one year from the date of this
Prospectus. The exercise of the Underwriter's Warrants and the Redeemable
Warrants contained in the Underwriter's Warrants may (i) dilute the value of the
shares of Common Stock to be acquired by holders of the Redeemable Warrants,
(ii) adversely affect the Company's ability to obtain equity capital and (iii)
adversely affect the market price of the Common Stock if the Common Stock
issuable upon the exercise of the Underwriter's Warrants and the Redeemable
Warrants contained in the Underwriter's Warrants are sold in the public market.
The Underwriter has been granted certain "piggyback" and demand registration
rights for a period of five years from the date of this Prospectus with respect
to the registration under the Securities Act of the securities directly

<PAGE>

or indirectly issuable upon exercise of the Underwriter's Warrants. The
exercise of such rights could result in substantial expense to the Company.
See "Underwriting."

<PAGE>

DILUTION

At June 30, 1996 the Company had a pro forma net tangible book value
(deficit) of approximately ($2,407,000) or ($.59) per share which includes
adjustments to reflect the transactions post June 30, 1996 as described in Note
4 of the "Notes to Unaudited Pro Forma Financial Statements."

The net tangible book value subsequent to June 30, 1996 which gives
effect to the Common Stock and Redeemable Warrants offered hereby, and the
receipt of the net proceeds therefrom and assuming no value is allocated to the
Redeemable Warrants, the pro forma net tangible book value at June 30, 1996
would have been $1,697,000 or $.34 per share. This represents an immediate
increase in tangible book value of $.93 per share to existing stockholders,
which is due solely to the purchase of Common Stock by investors in this
Offering, and an immediate dilution of $4.66 per share to new investors (based
on an assumed offering price of $5.00 per share of Common Stock and $.10 per
Redeemable Warrant). "Dilution" is the difference between the initial public
offering price and the proforma net tangible book value per share.

The following table illustrates the per share dilution to the new
investors as of June 30, 1996:

Public offering price per share of Common Stock................... $5.00

Deficit net tangible book value per share before the
Offering.................................................($.59)

Increase attributable to new investors................... .93
-----

Net tangible book value per share after the
Offering.......................................................... .34
-----

Dilution to new investors.......................................... $4.66
=====

The following table summarizes the differences between the existing
stockholders and new investors with respect to the number of shares of Common
Stock purchased from the Company, and the total consideration and the average
price per share paid:

<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
Percentage
of Average
Outstanding Percent of Price per
Shares of Shares of Total Total Share of
Common Common Consideration Consideration Common
Stock Stock Paid Paid Stock

Existing
Stockholders 4,058,747 80.2% $2,973,099 37.3% $.73

New
Investors 1,000,000 19.8% 5,000,000 62.7% $5.00
--------- ----- --------- -----

5,058,747 100.0% $7,973,099 100.0%
========= ====== ========= ======

</TABLE>

<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at
June 30, 1996 and such capitalization "As Adjusted" to reflect the issuance and
sale of the Common Stock and Redeemable Warrants offered hereby, the receipt of
the net proceeds of the Offering, approximately $4,100,000, and transactions
subsequent to June 30, 1996 that have a material impact on the financial
statements. See "Notes to Unaudited Pro Forma Financial Statements" and "Use of
Proceeds."

<TABLE>
<S> <C> <C>
Historical As Adjusted (1)(2)
(In thousands) (In thousands)

Current maturities of long term
debt................................ $ 671 $ 181
------- -------

Long-term debt, less current
portion............................. 200 3,565
------- -------

Stockholder's Equity:

Common Stock, $.001 par value,
authorized 10,000,000 shares;
3,310,000 issued and outstanding;
4,842,247 shares issued and
outstanding as adjusted............. 3 5

Additional paid-in capital............ 1,430 7,313

Accumulated
deficit............................. (1,198) (1,577)
-------- --------

235 5,741

Less; stock subscriptions
receivable.......................... (2) (2)
-------- --------

Total Stockholders' Equity
(deficiency)........................ 233 5,739
-------- --------

Total Capitalization...................... $ 1,104 $ 9,485
======== =======

<PAGE>

- ------------------
<FN>
(1) Does not include: (i) 1,000,000 shares of Common Stock issuable upon
exercise of the Redeemable Warrants offered hereby; (ii) 200,000 shares
of Common Stock issuable upon exercise of the Representative's Warrants
and Redeemable Warrants included therein; (iii) 750,000 shares of
Common Stock issuable upon exercise of options available for grant
under the 1996 Option Plan, of which no shares have been granted as of
June 30, 1996; and (iv) 270,000 shares of Common Stock reserved for
issuance pursuant to options and warrants issued in connection with
financing and consulting agreements.

(2) Includes all adjustments described in the "Notes to Unaudited Pro Forma
Financial Statements."

</FN>
</TABLE>

<PAGE>

USE OF PROCEEDS

Assuming the sale of the securities offered hereby (based on an assumed
offering price of $5.00 per share of Common Stock and $.10 per share Redeemable
Warrant), the net proceeds to the Company, after deducting estimated
underwriting discounts and commissions and expenses payable by the Company in
connection with the Offering) are estimated to be approximately $4,240,000
($4,928,500 if the Underwriter's Over-Allotment Option is exercised in full).
The Company expects to use the net proceeds as follows:

<TABLE>
<S> <C> <C>
Percentage of
Purpose Amount Net Proceeds

Repayment of outstanding accrued
expenses and indebtedness(1) $1,067,500 25.2%
Marketing (2) $ 800,000 18.8%
Inventory (3) $1,800,000 42.5%
Equipment (4) $ 450,000 10.6%
Working Capital and General Corporate Purposes $ 122,500 2.9%

Total . . . . . . . . . . . . . $4,240,000 100%

<FN>
(1) Represents (i) the installment of principal and interest (estimated at
$215,000) due, on the earlier of the date on which this Offering is
consummated or January 1, 1997, under purchase money promissory notes
payable to Michael J. Assante and Louis DiVita, respectively, for the
purchase of the companies comprising the Private Label Group. The notes
bear interest at 9% per annum and are due in installments through
October 2000; (ii) principal and interest (estimated at $228,500) due
under a purchase money promissory note given as part of the purchase
price for the assets of Scent Overnight a company of which Gerard
Semhon is a principal shareholder. The note bears interest at 9% per
annum and is due ten days after the date of this Prospectus; (iii) the
payment of interest due on a promissory note assumed by the Company in
connection with the acquisition of Scent Overnight (estimated at
$40,000); (iv) the payment of principal and interest (estimated at
$309,000) due under promissory notes aggregating $300,000 which were
issued in a private placement; The notes are due upon the earlier of
twelve months after the date of issuance or the date on which this
Offering is consummated and bear interest at the rate of 10% per annum;
and (v) approximately $275,000 of accrued expenses, which includes
accrued consulting fees totalling approximately $187,000 as of June 30,
1996, for consulting services rendered by Messrs. Semhon, Bezas, Bell
and Christakos in the amounts of approximately $47,000, $37,000,
$45,000, and $30,000, respectively. See "Certain Transactions" and
"Management."

(2) Represents anticipated costs associated with marketing and selling the
Branded Products and the Distributed Fragrances.

<PAGE>

(3) Includes purchase of inventory for the sale of the Branded Products
and Distributed Fragrances.

(4) Includes purchase of equipment for the Facility.
</FN>
</TABLE>

The foregoing represents the Company's current estimate of the
allocation of the net proceeds of the Offering based upon certain assumptions
relating to the costs associated with the implementation of the Company's
proposed business operations. Future events, including problems, delays,
expenses and complications frequently encountered by companies which seek to
introduce new products to existing or new markets as well as changes in economic
conditions, regulatory or competitive conditions, and the success of the
Company's marketing activities, may make shifts in the allocation of funds
necessary or desirable. There can be no assurance that the Company's estimates
will prove to be accurate or that unforeseen expenses will not be incurred.

The Company believes that the net proceeds of this Offering will
satisfy the Company's capital requirements for at least twelve months. During
this period, the Company's efforts will be directed at developing and
implementing its proposed business operations.

Prior to expenditure, the net proceeds of this Offering will be
invested in principally high grade short-term interest-bearing investments. Any
proceeds received upon exercise of the Over-Allotment Option will be used for
working capital.

<PAGE>

DIVIDEND POLICY

The Company has neither declared nor paid any dividends to its
stockholders since its inception and has no intention of declaring or paying any
dividends to its stockholders in the foreseeable future. The Company intends to
reinvest earnings, if any, in the development and expansion of its business. In
addition, certain financing agreements and other documents executed in
connection with the acquisition of the Private Label Group prohibit the payment
of dividends so long as certain indebtedness is outstanding. See "Certain
Transactions" and "Risk Factors - No Dividends and None Anticipated."

<PAGE>

SUMMARY OF FINANCIAL INFORMATION

AZUREL

Statement of Operation Data: (Dollars in thousands)

Net Sales . . . . . . . . . . $ - $ - $ 8,413 $ 4,964

Cost of goods sold . . . . . - - 6,628 4,018

Net Income (Loss) . . . . . . (277) (733) (1,143) (833)

Balance Sheet Data:

Current Assets . . . . . . . $ 276 $1,198 $ 6,569

Total Assets . . . . . . . . 351 1,393 11,462

Current Liabilities . . . . . 403 961 2,137

Long term debt . . . . . . . 450 200 3,587

Stockholders' Equity
(Deficiency) . . . . . . . (502) 232 5,739

<FN>
(1) See "Notes to Unaudited Pro Forma Financial Statements" for description
of pro forma adjustments.

</FN>
</TABLE>

<PAGE>

PRIVATE LABEL GROUP

<TABLE>
Historical
<S> <C> <C> <C> <C>
Years ended December 31, Six months ended June 30,
1995 1994 1996 1995

Statement of Operations: (Dollars in thousands)

Net Sales . . . . . . . . . . $8,413 $9,745 $4,964 $3,739

Cost of goods sold . . . . . . 6,628 7,650 4,018 2,935

Net Income (Loss). . . . . . . (516) (290) (136) (188)

Number of shares used in
computation . . . . . . . .

Balance Sheet Data:

Current Assets . . . . . . . . $2,598 $2,825

Total Assets . . . . . . . . . 3,157 3,651

Current Liabilities. . . . . . 2,519 2,729

Long term debt . . . . . . . . . . 1,566 1,986

Stockholder's Equity (Deficiency). (927) (1,064)

</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AZUREL

General

Azurel, through its wholly-owned subsidiaries, manufactures,
markets and sells private label cosmetics, fragrances and skincare products.
Prior to the completion of the acquisitions of the subsidiaries, Azurel focused
its operations on negotiating and consummating such acquisitions and developing
and implementing marketing strategies for its Branded Products. The following
discussion relates to Azurel's operations prior to any acquisitions.

The discussion below for Azurel compares the 1996 Interim
Period to the 1995 Interim Period, as such terms are defined below. Because
Azurel was formed approximately one year ago, full year comparisons are not
possible. Considering Azurel's developmental stage, the comparison of Interim
Periods was deemed the most meaningful disclosure available.

Results of Operations

Six months ended June 30, 1996 (the "1996 Interim Period")
compared to the period of June 26, 1995 (inception) to December 31, 1995 (the
"1995 Interim Period")

There were no revenues in both the 1996 and the 1995 Interim
Periods, as Azurel's principal operating activities consisted of (i) performing
due diligence procedures regarding the planned acquisition of the Private Label
Group, (ii) developing various new product lines and (iii) refining the Scent
123 test market and national roll-out planned for the fall of 1997.

Although there were no revenues in the 1996 Interim Period,
Azurel solicited approximately $250,000 in sales orders, which Azurel
anticipates will be filled in the quarter ending December 31, 1996.

General and administrative expenses were $259,637 in the 1995
Interim Period, as compared to $415,651 in the 1996 Interim Period. This
represents an increase of $156,014 or approximately 60%, due partially to
increased consulting and professional fees. Consulting fees increased from
$183,038 in the 1995 Interim Period to $242,462 in the 1996 Interim Period, an
increase of $59,424 or approximately 32%. Consulting fees relate to services
provided to the Company regarding the development of its product lines. Such
expenses increased in the relevant time periods as a result of increased
activity in the development of product and marketing strategies. Professional
fees (including legal fees) increased from $1,750

<PAGE>

in the 1995 Interim Period to $34,546 in the 1996 Interim Period due services in
connection with the Company's expanded activities in the 1996 Interim Period.

Interest expense increased from $17,559 in the 1995 Interim Period to
$317,584 in the 1996 Interim Period. This increase of $300,025 relates to
increased borrowings outstanding for a greater portion of the 1996 Interim
Period as compared to the 1995 Interim Period and to the amortization in the
1996 Interim Period of debt discounts in the aggregate amount of $163,162.
No such amortization existed for the 1995 Interim Period.

Liquidity and Capital Resources

From inception to date, the Azurel's operations have been
funded by a combination of debt and equity financing.

Debt Financing

Azurel borrowed an aggregate amount of $528,750 in the 1995
Interim Period and repaid an aggregate amount of $28,750 of such borrowings in
that period. (The various obligations are more fully described in the notes to
the financial statements). In the 1996 Interim Period, the Company borrowed an
additional aggregate amount of $460,000 from various lenders. Azurel offered
certain holders of outstanding promissory notes the right to convert their debt
into shares of common stock at $2.00 per share. In July and October 1996,
lenders with obligations totaling $667,494 (including principal and interest)
elected to convert such loans into 438,747 shares of Common Stock.

Azurel repaid loans aggregating $310,000 in the 1996 Interim
Period.

Equity Financing

Azurel sold 750,000 shares of Common Stock at $2.00 per share
from February through July 1996. In the 1996 Interim Period, the Company had net
proceeds of $1,097,450 from the sale.

Utilization of Proceeds

Proceeds of the aforementioned financing were utilized to (i)
finance operations from inception to date (approximately $551,000), (ii) advance
funds to the Private Label Group ($680,000), (iii) fund increases to other
assets, furniture and equipment and deferred registration costs ($143,238), (iv)
fund advances to certain stockholders ($184,480), (v) fund deferred finance
costs ($70,208) and (vi) enhance working capital at June 30, 1996 ($236,895).

<PAGE>

Going Concern

Azurel's financial statements have been presented on a basis
that it is a going concern. Due to significant losses incurred in the 1995 and
the 1996 Interim Periods, the accountants report has an explanatory paragraph
stating that the Azurel's continued existence is dependent upon its ability to
become profitable and obtain additional equity and/or debt financing of which no
assurance can be given.

THE PRIVATE LABEL GROUP

General

The Private Label Group develops, manufactures, packages and
sells cosmetics principally to major cosmetic companies for sale by each
customer under the customer's own brand name.

The following discussion and analysis should be read together
with the combined financial statements and notes thereto included herein.

Results of Operations

The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items included in the combined
statements of operations.

<TABLE>
<S> <C> <C> <C> <C>
Six months ended June 30, Year ended December 31,
------------------------- -----------------------
1996 1995 1995 1994
---------- --------- --------- ------

Net sales.................. 100.0% 100.0% 100.0% 100.0%

Cost of Sales.............. 80.9 78.5 78.8 78.5
----- ----- ----- -----

Gross profit............... 19.1 21.5 21.2 21.5

Selling, general and
administrative expenses.. 19.5 24.1 25.0 19.9
----- ----- ----- ----

Operating income........... (.4) (2.6) (3.8) 1.6

Other expense.............. 2.3 2.4 2.3 4.6
---- ---- ---- ----

Net income (loss).......... (2.7)% (5.0)% (6.1)% (3.0)%
====== ====== ====== ======
</TABLE>

<PAGE>

Six months ended June 30, 1996 (the "1996 Interim Period")
compared to the six months ended June 30, 1995 (the "1995 Interim Period")

Net sales for the six months ended June 30, 1996 increased by
$1,225,269, or approximately 33%, from the comparable period of the 1995 Interim
Period. The increase is attributable primarily to an expansion of the Private
Label Group's customer base. In addition, a significant new customer provided
sales of approximately $339,000 in the 1996 Interim Period. Sales to the Private
Label Group's two largest customers in the six months ended June 30, 1996
accounted for 35.1% of net sales, as compared to 33% attributable to these same
two customers in the six months ended June 30, 1995. The largest customer in the
1996 Interim Period accounted for 22.6% of net sales in that period as compared
to 20% in the 1995 Interim Period.

Although the Private Label Group successfully obtained new
customers and increased sales to existing customers in the 1996 Interim Period,
there can be no assurance that the Private Label Group will continue to increase
its sales to such customers or obtain significant new customers in future
periods.

Cost of sales for the 1996 Interim Period were $4,018,000, or
80.9% of net sales, as compared to $2,935,000, or 78.5% of net sales for the
1995 Interim Period. The increase in cost of sales as a percentage of net sales
is primarily attributable to changes in the Private Label Group's customer and
product mix, resulting in increased sales of products with slightly lower gross
profit margins.

Selling, general and administrative expenses for the 1996
Interim Period were $969,000 as compared to $902,000 for the comparable 1995
Interim Period, representing an increase of $67,000, or approximately 7.4%. As a
percentage of net sales, these expenses decreased from 24.1% in the 1995 Interim
Period to 19.5% in the current period. The decrease in this ratio is primarily
attributable to the increase in net sales discussed in the first paragraph
herein, resulting in an increased base to absorb these costs. Officers' salaries
increased by approximately $77,000 in the 1996 Interim Period as compared to the
1995 Interim Period. Commissions increased in the 1996 Interim Period by
approximately $25,000 as compared to the 1995 Interim Period. These increases
were offset somewhat by reduced professional fees in the 1996 Interim Period as
compared to the 1995 Interim Period in the amount of approximately $40,000.

Interest expenses increased from $89,973 in the 1995 Interim
Period to $113,320 in the 1996 Interim Period. This increase is attributable to
higher rates on increased borrowings under the Private Label Group's revolving
credit facility.

The Private Label Group recognized no income tax benefit in
either year as a result of the uncertainty regarding the realization of net
operating loss carryforward benefits.

<PAGE>

1995 Compared to 1994

Net sales for 1995 decreased by $1,331,353, or 13.7%, as
compared to 1994. The decrease is attributable primarily to restrictions imposed
by the Private Label Group's previous asset based lender, which reduced the
availability of inventory and adversely effected the Private Label Group's
ability to supply finished products to its customers. As a result of the Private
Label Group's refinancing its revolving credit facility in 1996 (see Note 8 to
the Private Label Group's financial statements), management believes that the
restrictions imposed under the previous agreement have been significantly
alleviated and product financing will not be a hindrance to order fulfillment in
subsequent periods.

Cost of sales for 1995 decreased by $1,022,263, or 13.4% from
1994. As a percentage of net sales, cost of sales increased from 78.5% in 1994
to 78.8% in 1995. The increase in cost of sales as a percentage of net sales is
attributable primarily to the allocation of the fixed costs associated with the
Private Label Group's manufacturing operations over a smaller revenue base.

Selling, general and administrative expenses for 1995
increased by $168,725, or 8.7%, from 1994. As a percentage of net sales, these
expenses increased from 19.9% in 1994 to 25.0% in 1995, because of the decrease
in sales discussed above. The increase in the dollar amount of these expenses is
attributable primarily to an increase in management personnel, selling and
promotional expenses and professional and consulting fees.

The Private Label Group recognized no income tax benefit in
either year as a result of the uncertainty regarding the realization of net
operating loss carryforward benefits.

Liquidity and Capital Resources

In the 1996 Interim Period, the Private Label Group expended
$528,129 on operating activities. This is attributable to the loss from
operations in such period of $136,424, the payment of accrued litigation
settlement costs in the amount of $257,000, an increase in receivables in the
period amounting to $245,237, as well as a decline in payroll taxes payable,
offset by depreciation charges of $91,866. Cash utilized for the purchase of
equipment was $107,946.

The Private Label Group financed its operating and capital
expenditure requirements through additional borrowings from Azurel in the 1996
Interim Period ($500,000), as well as increased borrowings on its revolving
credit facility, which was renegotiated with a new lender during the 1996
Interim Period. The new credit facility provides for aggregate borrowings up to
$2,000,000, collateralized by substantially all of the Private Label Group's
assets and guaranteed by Azurel. Monthly installments of $10,150 are required
under this agreement and the remaining amount is due in February 1998. See
Azurel's Management's Discussion and Analysis for additional information.

Going Concern

<PAGE>

The Private Label Group's financial statements have been
presented on a basis that it is a going concern. Due to significant losses
incurred in 1995 and 1994, the accountants have an explanatory paragraph stating
that the Private Label Group's continued existence depends upon its ability to
become profitable and obtain additional equity and/or debt financing of which no
assurance can be given. Since the preparation of the financial statements, the
Private Label Group was acquired by Azurel.

<PAGE>

BUSINESS

This discussion contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include those discussed in "Risk Factors."

General

Azurel Ltd. (the "Company" or "Azurel"), directly and through
wholly-owned subsidiaries, manufactures, markets and sells cosmetics, fragrances
and skin care products. The Company operates a manufacturing and filling
facility which sells cosmetics principally to major cosmetic companies for sale
by each customer under the customer's own brand name (commonly known as "private
label" sales). In order to take advantage of the Company's manufacturing
capabilities and product development expertise, the Company currently is
developing cosmetic, skin care and fragrance lines which it intends to market
under brand names created internally or owned by others and licensed to the
Company. In addition, the Company intends to sell well-recognized men's cologne
and women's fragrances directly to the consumer by overnight delivery through
toll-free telephone numbers.

Products and Services

Virtually all of the Company's present business is conducted through
the Private Label Group. The Company's Private Label Group consists of four
subsidiaries acquired in August 1996 from Michael J. Assante ("Assante"). These
subsidiaries operate a cosmetic facility (the "Facility") which manufactures,
fills and packages a broad range of cosmetics. The Facility also includes a
laboratory which develops cosmetic products formulae for customers according to
their specific requirements. The laboratory also develops and maintains a
library of cosmetic product formulae for use by customers who have not developed
their own formulae for a specific product. The laboratory also performs quality
control functions for the Facility and is responsible for assuring compliance
with governmental regulations regarding the manufacture and packaging of
cosmetics including compliance with GMP. See "Certain Transactions" and
"Government Regulation."

The Facility manufactures and fills a wide variety of cosmetics,
including body lotions and powders, lipsticks, mascara, eye shadows, eye liners,
skin care products and hair care products. Depending upon the customer's
requirements, the Company either provides some or all of the raw ingredients and
packaging for the customer's product or uses material provided directly by the
customer. A quantity of raw ingredients and packaging material is maintained in
inventory, but generally such materials are purchased by the Company to fill
specific orders. Presently, the Facility does not manufacture or fill fragrances
which require additional

<PAGE>

machinery nor does the Facility manufacture or fill nail products or liquid
soaps.

Generally, a customer places an order for a quantity of merchandise to
be produced and shipped over a period of time, typically one to three months.
While the raw ingredients and packaging materials to produce an order are
generally readily available, for cash management purposes, the necessary raw
materials and packaging are ordered by the Company for receipt by it in stages
to coincide with the manufacturing/packaging cycle and the customer's delivery
requirements. In this way, the Company minimizes the need to maintain an
inventory of finished goods, and in effect, produces product only against the
order.

Except for nail products, liquid soaps and fragrances, which it does
not manufacture or fill, the Facility does not limit its services to a
particular market niche within the cosmetic industry. It manufactures a wide
variety of high and low priced products sold in department, specialty and
discount stores. The Company believes that this diversity minimizes its exposure
to business cycles and changes in customer preferences over time.

Since the manufacturing operation has been in business for over 49
years, the laboratory maintains a large library of formulae for a wide variety
of products. Moreover, the laboratory continuously develops new formulae based
on the Company's assessment of future product demand, changing consumer
preferences and the availability of new ingredients. The Company believes that
it can quickly and efficiently develop formulations for a customer's product by
using or adapting a formula from its library. When the Company develops a
formula for a customer's product, the Company, and not the customer, owns the
formula; however, since it is the Company's policy not to use the same formula
for different customers, customers generally continue purchasing from the
Company so long as they sell the product, do not change the formula or have
another laboratory replicate the product formula.

In order to take advantage of the Company's manufacturing capabilities
and product development expertise, the Company currently is developing cosmetic,
skin care and fragrance lines which it intends to market under brand names
created internally or owned by others and licensed to the Company ("Branded
Products").

The Company anticipates selling Branded Products in the United States
and internationally. In the United States, the Company expects to sell directly
to retail outlets that sell similar products, such as chain drug stores, mass
merchandisers and discount stores through its own sales personnel. Initially,
the Company's personnel, independent sales representatives or a combination of
the two will sell the Branded Products in the United States. Internationally,
the Company expects to sell to distribution companies having a major presence in
each major market.

The first Branded Product the Company has developed, which it has
recently commenced marketing, is an original unisex fragrance line and related
grooming products under the Sports Extreme USA(TM) trade name. Presently, the
Sports Extreme USA(TM) line consists of a unisex

<PAGE>

fragrance, bath and shower gel ("Clean Up"), muscle and body relaxer ("Soothe")
and face moisturizer containing sunscreen and alphahydroxy fruit acids
("Protect"). The marketing of the Sports Extreme USA(TM) line will feature
"extreme" sports such as mountain climbing, ice climbing, bungee jumping, sky
surfing, in-line skating, snowboarding, snow bicycling and mountain biking. The
fragrance for the Sports Extreme USA(TM) line was developed for the Company by
Firmenich, a major developer of fragrances for the cosmetic industry. The
Company anticipates retail sales of this line to commence in the spring of 1997.

The Company is also in the process of developing cosmetics, fragrances
and related products for sale under the Members Only trade name pursuant to a
license agreement with the owner of the Members Only trade name (the
"Licensor"). The Members Only trade name is a brand name used on men's outer
wear, active wear and a wide variety of other merchandise which has been
successfully marketed on television, radio and print media in the United States.

The license agreement relating to the Members Only trade name grants
the Company the exclusive right in the United States, Canada, Great Britain,
Japan, Korea, Chile, Uruguay, Venezuela and Argentina to manufacture and
distribute fragrances, grooming products and cosmetics under the Members Only
trade name (the "License"). Under certain circumstances, the Company may sell
Members Only cosmetics and fragrances in other countries except China and
Taiwan. The License expires on September 30, 2001, subject to the Company's
right to renew for an additional five year term subject to certain conditions,
including the requirement that the Company achieve certain minimum sales of the
licensed products. Under the License, the Company is to pay a royalty of five
percent of net sales, subject to minimum annual royalties which begin at
$100,000 for the period ending September 30, 1997 (16.5 months) and increase to
$375,000 for the last year of the initial term. The minimum royalty is payable
in installments during the applicable year. The Company's manufacture, sale and
promotion of Members Only fragrances, grooming products and cosmetics is subject
to the prior review and approval of the Licensor as is typical in similar
licenses.

The fragrance for the Company's Members Only line was created for it by
International Flavors and Fragrances, Inc., a major fragrance manufacturer. The
Company anticipates that retail sales of the Members Only line will commence in
the spring of 1997.

While the Company has had discussions with other companies, it has not
entered into any other formal agreements for the development of cosmetic and
fragrance lines under brand names owned by other companies. There can be no
assurance that the Company will market successfully any original cosmetic or
fragrance line, or that the Company will enter into any additional formal
agreements for the development of cosmetic and fragrance lines for other
companies either under brand names created internally or owned by others and
licensed to the Company.

<PAGE>

As a complement to, and in expansion of, its marketing activities
relating to Branded Products, the Company, through its Scent 123 subsidiary,
intends to sell well-recognized men's cologne and women's fragrances directly to
the consumer, initially by overnight delivery. These products are sometimes
referred to as Distributed Fragrances. A customer will be able place an order
for the delivery of a Distributed Fragrance through toll-free telephone numbers.
The Company has secured "1-800-SCENT-123" and "1-888-SCENT-123" as its toll-free
telephone numbers.

The Company has not yet secured any sources of supply for the
Distributed Fragrances. The Company believes it will be able to purchase a
majority of the Distributed Fragrances directly from fragrance manufacturers but
if it cannot do so, it believes other sources of supply are available. The
Company contemplates selling only a limited selection of sizes of the most
popular perfumes and colognes. From a fragrance manufacturer's perspective, the
Company believes that by not selling the full selection of fragrances, sizes and
related grooming products, it will offer a distribution channel complementing,
rather than competing with, the manufacturer's traditional distribution
channels.

The Company plans to use independent order taking, order fulfillment,
warehousing and shipping services for the sale of the Distributed Fragrances.
Although the Company has not yet engaged any such firms, the Company believes
that there are many firms available that can provide these requisite services. A
portion of the assets acquired by the Company in the acquisition of Scent
Overnight included the results of the investigation, pricing and proposals of
such firms. The Company intends to use the results of this research to expedite
the commencement of the sale of the Distributed Fragrances. See "Certain
Transactions."

The Company has engaged, and is working with, a communications and
marketing firm to assist it in concept development and creation of a logotype
and advertising materials. In the future, the Company may add other gift
products to its product offerings and may offer other forms of delivery.

Competition

All aspects of the cosmetic, fragrance and skin care industry are
subject to intense competition throughout the world. In all aspects of its
business, the Company will compete with numerous companies, many of which are
better known in the industry and have established channels of distribution and
substantially all of which have greater financial and other resources than the
Company.

The Company competes against approximately thirty companies in the
United States which manufacture and/or package cosmetic products for
third-parties. To a lesser degree, the Company competes with cosmetic companies
which have their own manufacturing facilities that can produce all, or a part,
of their own products. The Company believes that the primary elements of
competition in the private label manufacture of cosmetics are dependent upon the

<PAGE>

retail price point of the particular product. With respect to high priced
cosmetics and fragrances, the principal methods of competition are quality,
including consistency of the work performed, and reliability of meeting delivery
dates. With respect to low-priced products, the principal method of competition
is price. The Company believes that the Facility has a reputation in the
cosmetic industry as high quality, reliable source of manufacturing and
packaging cosmetics. It is the Company's belief that the availability of its
laboratory gives it a competitive advantage over those firms not having
laboratories to assist customers in the formulation of their products. The
Company also believes that its ability to produce a broad range of products for
sale at varying retail price points is beneficial in attracting and retaining
customers who would prefer all of their products to be produced by the same
manufacturer.

In selling the Branded Products, the Company will compete against
numerous companies some of which are customers of the Private Label Group and
many of which have international reputations and broad distribution channels in
place. To date, the Company has not sold any Branded Products, and the Company
entered into only one formal agreement with a third party regarding the
marketing of cosmetics and fragrances under a brand name owned by such third
party.

One of the primary methods of competition in the sale of Branded
Products is product awareness and consumer acceptance of the competing brands.
Achieving market acceptance may require substantial marketing efforts and
expenditure of significant funds. Since the Company has limited financial
resources, it will not be able to utilize various promotional techniques used by
its competitors. The Company, in order to compete successfully, intends to
market its Branded Products to niche markets such as chain drug stores, discount
stores and mass merchandisers and to develop Branded Products which it believes
will appeal to the customers of these retailers. The Company does not expect to
sell its Branded Products to prestige department stores and specialty retailers
where it believes its limited financial resources will put it at the greatest
competitive disadvantage. There can be no assurance that the Company will
successfully develop or market any Branded Product.

The Company expects to compete successfully in the sale of the
Distributed Fragrances based on the implementation of its marketing concept,
including convenient overnight order fulfillment. However, the Company's method
of selling the Distributed Fragrances is not proprietary in nature and may be
replicated by others. In addition, the Company's possible lack of exclusivity
with suppliers may allow such suppliers or other third parties to engage in the
direct marketing of fragrance brands including, but not limited to, the
fragrance brands offered by the Company. Management knows of other companies
that currently market a fragrance line for direct delivery. In selling the
Distributed Fragrances, the Company also will compete directly with
well-established and widely-used companies in the flower-by-wire business, such
as Florist Transworld Delivery Association, as well as companies in the
gift-by-wire business. The Company's sale of the Distributed Fragrances also
expects to compete indirectly with retail stores and catalogues selling similar
fragrances. There can be no assurance that the Company will be successful in
selling the Distributed Fragrances. See "Risk Factors - Competition."

<PAGE>

Government Regulation

The Company's manufacturing activities and the Facility are subject to
extensive and rigorous governmental regulation relating to the protection of the
environment and the quality of manufacturing. Federal, state and local
regulatory agencies actively enforce these regulations and conduct periodic
inspections to determine compliance with such government regulations. The FDA
enforces regulations regarding GMP through periodic surveillances and audits.
Failure to comply with applicable regulatory requirements may result in fines,
suspension of approvals, cessation of distribution, product recalls and criminal
prosecution, any of which would have a material adverse effect on the Company.
The Company believes that the Private Label Group has obtained all material
approvals, permits and licenses for its manufacturing activities. In the event
that the Company seeks to expand its operations to manufacture and fill
fragrances, the Company would have to obtain new or expanded governmental
permits. However, changes in existing regulations, the interpretation thereof,
or adoption of new regulations could impose costly new procedures for
compliance, or prevent the Company from obtaining, or affect the timing of,
additional regulatory approvals. There can be no assurance that the Private
Label Group, if audited, will be found in compliance with GMP or environmental
regulations. The failure to comply with GMP or environmental regulations would
have a material adverse effect on the Company.

The Company's proposed method of distributing the Distributed
Fragrances may include shipment by air transportation. The shipment of
fragrances by air is subject to federal regulation and the rules and regulations
promulgated by the DOT's Research & Special Programs Administration. The DOT
considers the shipment of alcohol, a component in fragrances, to be the
transportation of hazardous material. Scent 123 obtained a DOT exemption to
transport hazardous material by overnight air transportation. As long as Scent
123 has the DOT exemption, which is in effect until November 30, 1997, and may
thereafter be renewed upon application and approval thereof, Scent 123 believes
that its shipment of products will be in compliance with current DOT
regulations. Scent 123's loss of the DOT exemption would have a material
adverse effect on its business operations. There can be no assurance that Scent
123 will retain the DOT exemption or that Scent 123 will be able to comply with
any future DOT regulations.

The Company's sale of Distributed Fragrances is intended to utilize
toll-free telephone services. Toll-free telephone service is provided to users
by federally regulated common carrier telephone companies. The rates, terms and
technical quality of this service are subject to regulations promulgated by the
FCC and tariffs published by the telecommunications service provider. Except for
the sending of indecent, harassing or obscene messages or material, the
interstate sale of services or products by users of a toll-free telephone number
is not subject to direct federal regulation under the Communications Act of
1934. Fraudulent telephone messages are subject to criminal penalties under
federal and state laws. The Company does not believe that FCC regulations will
affect the proposed sale of Distributed Fragrances, but such regulations could
affect the price, terms, quality and availability of the toll-free telephone
services and may

<PAGE>

have a material adverse effect on the Company.

Various laws and regulations relating to safe working conditions, and
other employment matters, including the Occupational Safety and Health Act, are
also applicable to the Company. The Company believes it is in substantial
compliance with all material federal, state and local laws and regulations
regarding safe working conditions, and other employment matters.

Trademarks

The Company has one United States registered trademark, Scent
Overnight(R), expiring on August 10, 2003, which was acquired in the acquisition
of Scent Overnight. The Company has filed applications for the registration of
trademarks for the "Scent 123" and Sports Extreme USA(TM) names, but no
registrations have yet been issued. See "Business" and "Certain Transactions."

The right to use trademarks and trade names in connection with the sale
of the Branded Products is material to the Company's business. In cases where
the Company is the licensee of the trademark or trade name, the trademark or
trade name will be retained by the licensor. In such cases, the Company may be
subject to material claims of infringement by third-parties and may or may not
be indemnified by the licensor.

The Company will be the owner of brand names developed by it and will
seek to establish protection of names. Notwithstanding such ownership,
third-parties may claim that such names infringe such third party's rights. Such
claims may seek to require the Company to cease use of the names as well as pay
monetary damages. At the time any such claim is brought, the Company may not
have the financial resources to defend against such claim. The cessation of the
use of any brand name used by the Company might have a material adverse effect
on it.

Major Customers

Approximately 21% and 14% of the Company's revenues derived from
manufacturing activities was derived from two major customers for the year ended
December 31, 1995. For the year ended December 31, 1994, approximately 17% and
12% of the Company's revenue was derived from the same two major customers.

Employees

The Company presently employs approximately 258 employees of which 253
are located at the Facility. Of the 253 employees located at the Facility, 43
are employed on a full-time basis and approximately 210 are employed on an
as-needed basis. The Company has regularly employed between 175 and 225
individuals on an as-needed basis for approximately 12 months and anticipates a
continued need for a minimum of 210 employees in order to maintain its

<PAGE>

current level of operations. Of the 253 employees located at the Facility, 224
are manufacturing personnel, 14 are laboratory personnel, three are executive
and administrative personnel and 12 are engaged in sales, marketing and customer
service. Certain employees located at the Facility are covered by a collective
bargaining agreement with Local #300-S, Affiliated with the Production Service
and Sales Distribution Council, Industrial Union Council which expires on
February 28, 1998.

Of the five employees that are not located at the Facility, four are
executive officers that, prior to this Offering, were retained by the Company as
consultants. Prior to this Offering, the Company utilized the services of
independent contractors, on consulting basis, to perform certain functions and
may continue to do so in the future. The Company believes that there is an
available pool of persons and firms who could be hired or retained by the
Company when needed. The Company considers its relationships with both union and
non-union employees to be satisfactory.

Seasonality and Backlog

The cosmetic and fragrance business in general is subject to seasonal
fluctuations, with net sales in the second half of the year substantially higher
than those in the first half as a result of increased demand by retailers in the
United States in anticipation of and during for the back-to-school, Thanksgiving
and Holiday seasons. The Company anticipates that the sales of Branded Products
and Distributed Fragrances will follow the general industry trend.

Although the Company's manufacturing business, as a whole, is not
seasonal, its product mix is subject to seasonal variations. Since the gross
profit margins on various products differ, the backlog and results of operations
in any period are not necessarily indicative of the result for the fiscal year.
At June 30, 1996 the Private Label Group's backlog of orders believed by the
Company to be firm was approximately $3,500,000 and as at June 30, 1995 the
amount of such orders was approximately $3,200,000. The Company expects that
substantially all of the current backlog will be filled during the current
fiscal year. Since the Company's orders for manufacturing and filling are
generally for the delivery of merchandise over a period of time, backlog is
viewed as an important indication of future performance.

Properties

The Company leases 2,400 square feet of space at 509 Madison Avenue,
New York, New York, which is used as its executive offices. The lease expires in
April 2001 and provides for an annual base rent of $74,000, including utilities.
These facilities are adequate for the Company's current needs and substitute
space is readily available.

The Company's manufacturing and packaging plant and laboratory and the
Private Label Group's general and executive offices are located at a leased
155,000 square foot building in Fairlawn, New Jersey. The lease, expiring in
August 2002 provides for annual rent of

<PAGE>

approximately $500,000, including common charges and real estate taxes and is
subject to increase based on increases in the Consumer Price Index. In addition,
the Company is responsible for substantially all repairs to the building. The
Facility is presently operating at less than full capacity and is physically
adequate for the Company's present and foreseeable purposes. The Company expects
to continue to update the manufacturing and packaging equipment at the Facility
with more modern and automated equipment. See "Use of Proceeds."

Legal Proceedings

The Company is not a party to any material legal proceeding, nor is it
aware of any pending or threatened claim of a material nature. The Company
anticipates that it will be subject to claims and suits in the ordinary course
of its business in the future. The Company believes that it will maintain
adequate insurance to cover such anticipated claims.

<PAGE>

MANAGEMENT

Directors, Officers and Significant Employees

The members of the Board of Directors, executive officers of the
Company, significant employees of the Company and their ages and positions with
the Company are as follows:

Name Age Position

Gerard Semhon 60 Chairman of the Board, Chief Executive Officer and
Director

Constantine Bezas 49 President and Director

Joseph Truitt Bell 39 Executive Vice President and Director

Van Christakos 48 Vice President-Operations, Secretary, Treasurer and
Director

Michael J. Assante 58 President, Private Label Group

All of the Company's executive officers and directors intend to devote
their full business time to the affairs of the Company effective on the date of
this Prospectus. Prior to this Offering Messrs. Semhon, Bezas, Bell and
Christakos were retained by the Company as consultants at a consulting fee of
$95,000, $85,000, $75,000 and $55,000, respectively, which fees are inclusive of
expenses incurred by each in the performance of their duties. Directors are
elected to serve until the next meeting of stockholders and until their
successors are duly elected and qualified. Meetings of stockholders of the
Company will be held on an annual basis upon the completion of this Offering.
However, if at any time an annual meeting is not held for the election of
directors, the then current directors will continue to serve until their
successors are elected and qualified. Vacancies and newly created directorships
resulting from any increase in the number of directors may be filled by a
majority vote of Directors then in office. Officers are appointed by, and serve
at the discretion of, the Board of Directors. Non-employee directors will
receive $1,500 for each Board meeting attended in person or by conference
telephone call. See "Use of Proceeds" and "Certain Transactions."

The Board of Directors has not established any committees, however,
upon the completion of this Offering, it intends to establish an Audit Committee
and a Compensation Committee both of which are expected to be comprised of two
independent directors.

The following is a brief summary of the background of each director and
executive officer of the Company:

<PAGE>

Gerard Semhon has served as Chairman of the Board and Chief Executive
Officer of the Company since its inception. Mr. Semhon has over 30 years of
management experience in consumer products. From 1993 to 1995, Mr. Semhon
served as chairman of the board and chief executive officer of Dominion
Associates, Inc. ("Dominion"), a company he helped found. In May 1995, Dominion
ceased operations due to a lack of financial resources. From 1990 to 1993,
Mr. Semhon served as an international consultant for several cosmetic companies,
including Boots Ltd. and Cambridge Development Corp. In 1983, Mr. Semhon
founded Parlux Fragrances, Inc. ("Parlux"), where he was employed until 1990.
Parlux operated as the United States and Canadian distributor of the Giorgio
Armani Women's Fragrance line. From 1981 to 1983 Mr. Semhon served as Helena
Rubinstein, Inc.'s president of North American Operations. In 1976, Mr. Semhon
became president of ITT Corp. Cosmetics Division. From 1972 to 1976, Mr. Semhon
served as Director of International Marketing for Revlon International, Inc.
Mr. Semhon received a bachelor's degree from the American University in Cairo,
Egypt, and a master's degree in business administration in 1960 from New York
University.

Constantine Bezas has served as President and Director of the Company
since its inception. From 1993 to 1995, he served as president of Dominion. From
1991 to 1993, he served as chairman of the board of Bezas, Tore, Jacobson &
Lawrence, Ltd., an advertising firm he co-founded. From 1974 to 1991, Mr. Bezas
was the principal owner/operator of Aspasia, Inc., a chain of specialty jewelry
stores with locations in Connecticut and New York. During this same period Mr.
Bezas also founded Video Cinema, a four store chain of video rental stores, and
Just Delicious, a specialty gourmet food store chain. From 1971 to 1973, Mr.
Bezas was employed by the Aramis Division of Estee Lauder Cosmetics in various
marketing and sales capacities.

Mr. Bezas and his wife filed a petition under Chapter 11 of the Federal
Bankruptcy Act in December 1992. The case was converted to a proceeding under
Chapter 7 of such Act in August 1994 and Mr. Bezas received a discharge from the
proceeding in January 1995.

Joseph Truitt Bell has served as Executive Vice President and Director
of the Company since its inception. From 1992 to 1995, Mr. Bell served as an
independent consultant for several retail establishments. In 1983, Mr. Bell
co-founded Rosenthal-Truitt, Inc., an upscale men's furnishings and accessories
store in Los Angeles, where he worked until October 1992. The company eventually
expanded its business to four stores throughout California and Texas.

Van Christakos served as Secretary, Treasurer and Director of the
Company since its inception. From 1993 to 1995, he was employed at Dominion.
From 1991 to 1993, Mr. Christakos served as president of Hamilton Group, a
marketing and consulting firm he founded. In 1984, Mr. Christakos was employed
at Just Delicious, a specialty gourmet food store chain, where he remained until
1986. From 1982 to 1984, he served as the director of operations for Video
Cinema, a four store video rental chain in the New York Tri-State area. From
1975 to 1991, Mr. Christakos served as Director of Operations for Aspasia, Inc.,
a six store specialty chain of jewelry stores located in Connecticut and New
York. From 1971 to 1974, Mr.

<PAGE>

Christakos was employed as a buyer of women's sportswear for J.W. May's. In
his four years with May's, Mr. Christakos was responsible for the overall
operations of the women's sportswear departments in all eight May's stores.

Michael J. Assante joined the Company in August 1996 as part of the
acquisition of the Private Label Group of which he had been the principal owner
and senior executive for more than 40 years. He presently serves as President of
the Private Label Group.

Executive Compensation

The following sets forth the compensation paid or accrued by the
Company to the Company's Chief Executive Officer and the Company's other
executive officers whose compensation exceeded $100,000 for the year ended
December 31, 1995:

<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Compensation Long-Term Compensation

Awards Payouts
Securities
Other Restricted Underly- LTIP
Name and Annual Stock ing Pay- All Other
Principal Bonus Compen- Award(s) Options/ outs Compen-
Position Year Salary ($) ($) sation ($) ($) SARs (#) ($) sation ($)

Gerard Semhon 1995 0 (1) 0 0 0 0 0 0
Chairman and
Chief Executive
Officer

Michael J. 1995 $250,000 (2) 0 0 0 0 0 0
Assante
President, Private
Label Group

<FN>
(1) Prior to this Offering, Mr. Semhon served as a consultant to the
Company during which time consulting fees totalling approximately
$47,000 were accrued as of June 30, 1996.

(2) Represents Mr. Assante's salary as President of the Private Label
Group prior to its acquisition by the Company.
</FN>
</TABLE>

The Company did not grant any options in the last fiscal year to any of
its executive officers. The Company does not have any long-term incentive plans
for compensating its executive officers.

<PAGE>

Employment Agreements

The Company entered into a three year employment agreement, to become
effective on the date of this Prospectus, with Gerard Semhon, the Company's
Chief Executive Officer and Chairman of the Board, under which Mr. Semhon will
serve as a full-time employee and officer and receive an annual salary of
$95,000. The employment agreement entitles Mr. Semhon to participate in welfare
plans adopted by the Company and to enjoy medical, dental and disability
insurance benefits under policies obtained by the Company for such purposes. To
date, the Company has not instituted any employee welfare plans, nor has the
Company obtained any dental or disability insurance coverage for its employees.
Prior to the effectiveness of the employment agreement, Mr. Semhon served as a
consultant to the Company, receiving compensation of the rate of approximately
$95,000 per annum, plus expenses.

In August 1996, the Company entered into a three year employment
agreement with Michael J. Assante under which he will serve as President of each
of the four companies that comprise the Private Label Group. Mr. Assante will
receive a base annual salary of $195,000 and his employment agreement is
renewable at his option for an additional two year period. Mr. Assante will
receive a bonus equal to 10% of the amount by which the Private Label Group's
annual profit, before interest and taxes but after depreciation and
amortization, exceeds $500,000 for each of the years ending December 31, 1997,
1998, and 1999.

Stock Option Plan

Prior to the effective date of this Prospectus, the Board of Directors
adopted, and stockholders approved, the Company's 1996 Stock Option Plan (the
"1996 Plan"). The 1996 Plan provides for grants to officers and other employees
of the Company, non-employee directors, consultants and advisors and other
persons who may perform significant services on behalf of the Company and will
be administered by the Board of Directors if each member is a "Non-Employee
Director" within the meeting of Rule 16b-3 under the Exchange Act, or a
committee (the "Committee") of two or more directors, each of whom is
a Non-Employee Director. Pursuant to the 1996 Plan, options to acquire an
aggregate of 750,000 shares of Common Stock may be granted subject to adjustment
as provided in the Plan. As of the date of this Prospectus, no options have been
granted pursuant to the 1996 Plan.

The 1996 Plan authorizes the issuance of incentive stock options
("ISOs"), as defined in Section 422A of the Internal Revenue Code of 1986 (the
"Code"), as amended, as well as non-qualified stock options ("NQSOs"). Only
"employees" (within the meaning of Section 3401(c) of the Code) of the Company
shall be eligible for the grant of Incentive Stock Options. The exercise price
of each ISO may not be less than 100% of the fair market value of the Common
Stock at the time of grant, except that in the case of a grant to an employee
who owns 10% or more of the then outstanding stock of the Company or a
subsidiary or parent of the Company (a "10% Stockholder"), the exercise price
shall be at least 110% of the fair market value of the Common Stock on the date
of grant. The exercise price of each NQSO is determined by the

<PAGE>

Committee, but shall not be less than 85% of the fair market value of the Common
Stock on the date of grant. Notwithstanding the foregoing, the exercise price of
any option granted on or after the effective date of the registration of any
class of equity security of the Company pursuant to Section 12 of the Exchange
Act, and prior to six months after the termination of such registration, may be
no less than 100% of the fair market value per share on the date of the grant.
The Committee shall provide, in the terms of each stock option agreement, when
the option subject to such agreement expires and becomes exercisable, but in no
event will an ISO granted under the 1996 Plan be exercisable after the
expiration of ten years from the date it is granted. Options may not be
transferred during the lifetime of an option holder and is only exercisable
during the optionee's lifetime only by the optionee or by his or her guardian or
legal representative. The 1996 Plan shall terminate automatically as of the
close of business on the day preceding the 10th anniversary date of its
adoption, subject to earlier termination.

To the extent Fair Market Value of Common Stock with respect to which
Incentive Stock Options granted hereunder are exercisable for the first time by
an optionee in any calendar year exceeds $100,000, such options granted shall be
treated as NQSO's to the extent required by Section 422 of the Code.

If the outstanding shares of Common Stock are changed by reason of an
adjustment to the capitalization of the Company or as a result of a merger or
consolidation, an appropriate adjustment shall be made by the Committee in the
number and kind of shares as to which options may be granted.

Subject to the provisions of the 1996 Plan, the Board of Directors or
the Committee has the authority to determine the individuals to whom stock
options are to be granted, the number of shares to be covered by each option,
the exercise price, the type of option, the option period, the restrictions, if
any, on the exercise of the option, the terms for payment of the option price
and all other terms and provisions of such options (which need not be
identical). Payments by holders of options, upon exercise of an option, may be
made (as determined by the Committee) in cash or such other form of payment as
may be permitted under the 1996 Plan, including without limitation, by
promissory note or by delivery of shares of Common Stock.

Limitation on Directors' or Officers' Liabilities and Indemnifications

Under Delaware law, and pursuant to the Company's Certificate of
Incorporation, Directors of the Company are not liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty, except for
liability in connection with (i) a breach of duty of loyalty, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) dividend payments or stock repurchased in violation of
Delaware law or (iv) any transaction in which a director has derived an improper
personal benefit.

<PAGE>

In addition, the Company's By-laws include provisions indemnifying its
officers, directors and other persons against expenses, judgments, fines and
amounts paid in settlement in connection with having served as officers,
directors or in other capacities, excluding matters in which such persons shall
be determined not to have acted in good faith, lawfully or in the best interests
of the Company. With respect to matters as to which the Company's officers and
directors and others are determined to be liable for misconduct or negligence in
the performance of their duties, the Company's By-laws provide for
indemnification only to the extent that the Company determines that such person
acted in good faith and in a manner not opposed to the best interests of the
Company.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of the date of this Prospectus,
certain information concerning the shares of Common Stock beneficially owned by
each director and officer of the Company, by all officers and directors of the
Company as a group, and by each stockholder known by the Company to be a
beneficial owner of more than 5% of the outstanding shares of Common Stock.

<TABLE>
<S> <C> <C> <C> <C>
Number of Shares Percentage of
Beneficially Owned (2) Common Stock (2)
Name and Address Before After Before After
of Beneficial Owner (1) Offering Offering Offering Offering (3)

Gerard Semhon (4) 230,600 230,600 5.9% 4.6%

Constantine Bezas 195,634 195,634 5% 3.9%

Joseph Truitt Bell 146,233 146,233 3.8% 2.9%

Van Christakos 110,933 110,933 2.9% 2.2%

Tusany Investment &
Trade S.A.(5) 1,609,355 1,250,000 41% 24.7%

Michael J. Assante 0 0 0 0

Fred Kassner (6) 250,000 0 6.4% 0

Robert E. Lee (7) 225,000 150,000 5.5% 2.8%

All officers and directors
as a group (5 persons) 683,400 683,400 17.6% 13.5%

<FN>
(1) The address of each stockholder listed is c/o Azurel Ltd., 509 Madison
Avenue, New York, New York 10022.

(2) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of Common Stock that an individual or group has a
right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purposes of computing the
percentage ownership of such individual or group, but are not deemed to
be outstanding for the purposes of computing the percentage ownership
of any

<PAGE>

other person shown in the table.

(3) Includes (i) 180,000 shares of Common Stock issued on the date of this
Prospectus in connection with the acquisition of the Private Label Group
and (ii) 1,000,000 shares of Common Stock offered hereby. Does not include
(i) up to 100,000 shares of Common Stock issuable upon exercise of the
Underwriter's Warrants, (ii) up to 100,000 shares of Common Stock issuable
upon exercise of the Redeemable Warrants included in the Underwriter's
Warrants or (iii) 1,000,000 Redeemable Warrants offered hereby. Assumes the
sale of each Selling Securityholder's securities owned by it. See "Certain
Transactions," "Underwriting" and "Concurrent Registration of Securities."

(4) Does not include 107,600 shares of Common Stock owned by Diane Papas, who
is the wife of Gerard Semhon. Mr. Semhon disclaims beneficial ownership
of the shares held by his spouse.

(5) Includes 50,000 Redeemable Warrants being registered pursuant to a Selling
Securityholders' Prospectus included within the Registration Statement of
which this Prospectus forms a part. See "Concurrent Registration of
Securities."

(6) Represents shares of Common Stock being registered pursuant to a Selling
Securityholders' Prospectus included within the Registration Statement of
which this Prospectus forms a part. See "Concurrent Registration of
Securities."

(7) Includes (i) 25,000 shares of Common Stock and 150,000 options to purchase
Common Stock beneficially owned by ETR & Associates, Inc., of which Mr. Lee
is President and (ii) 50,000 shares of Common Stock beneficially owned by
Woodward Partners, of which Mr. Lee is General Partner. See "Certain
Transactions."
</FN>
</TABLE>

<PAGE>

CERTAIN TRANSACTIONS

In June and September 1995, the Company issued an aggregate of
2,175,000 shares of Common Stock to twelve founders of the Company for aggregate
consideration of $2,175.

In June 1995, the Company entered into a consulting agreement with ETR
& Associates, Inc. ("ETR") pursuant to which ETR provides general management
advisory services to the Company ("Consulting Agreement"). ETR is affiliated
with another company, Woodward Partners, which are sometimes referred to as the
"Consulting Group." The Consulting Group advises the Company's Board of
Directors on key policy decisions as requested by the Company. Pursuant to the
Consulting Agreement, in 1995 the Company issued an aggregate of 75,000 shares
of Common Stock to the Consulting Group which have demand and "piggy-back"
registration rights.

In 1995 and 1996, the Company issued 100,000 shares of Common Stock to
Metco Investors, LLC ("Metco") for consulting services rendered to the Company
which have demand and "piggy-back" registration rights.

In July 1995, the Company, as an accommodation maker for Messrs. Semhon
and Bezas, issued a promissory note of $28,750 to ETR. The proceeds of this loan
were paid to Messrs. Semhon and Bezas. The note plus accrued interest was repaid
by the Company in September and October 1995, and the repayment was treated as
an advance to stockholders. As additional consideration for this loan, ETR was
granted an option to purchase 150,000 shares of Common Stock at $1.00 per share,
which expires in July 2000.

In September 1995, the Company issued a promissory note of $50,000 to
Bola Business Ltd. ("Bola"). The note accrued interest at 10% per annum and was
secured by an aggregate of 200,000 shares of Common Stock owned by Messrs.
Semhon and Bezas, officers and directors of the Company. The proceeds of this
loan were utilized for working capital. As additional consideration for
the loan, the Company issued Bola 25,000 shares of Common Stock and granted Bola
the option to purchase 50,000 shares of Common Stock at $1.00 per share, which
expires in September 2002. The note and accrued interest were repaid in April
1996.

In October 1995, the Company issued a promissory note of $200,000 to
Tusany Investment and Trade, S.A., a founder and principal stockholder of the
Company ("Tusany"), which accrued interest at 10% per annum. The proceeds of
this loan were advanced to the Private Label Group as part of the Company's
obligation in connection with the acquisition of the Private Label Group. In
July 1996, Tusany converted the principal plus accrued interest due under the
note into 106,972 shares of Common Stock as part of a private placement
completed by the Company in July 1996 ("July 1996 Private Placement"). See
"Principal Stockholders."

<PAGE>

In December 1995, the Company completed a $250,000 private placement of
units, each unit consisting of (i) the Company's 18 month 12% promissory note in
the original principal amount of $50,000 and (ii) 25,000 shares of the Company's
Common Stock to eleven unaffiliated, accredited investors (the "1995 Private
Placement"). The Company received net proceeds of $210,000 (after deducting
expenses of $7,500 and commissions of $32,500 to the Underwriter for acting as
placement agent), which were used for working capital and to repay indebtedness.

In January 1996, the Company issued a promissory note of $50,000 to a
principal of the Underwriter. The note and accrued interest, at 8% per annum,
was repaid in April and May 1996. The Company used the proceeds of this loan as
security for its non-recourse guarantee under an agreement ("Finova Agreement")
with the Private Label Group's lender, Finova Capital Corporation ("Finova").

In January 1996, the Company issued a promissory note of $160,000 to
Metco. The note accrued interest at 10% per annum and was due, as to $100,000,
in February 1996, and, as to the remaining principal plus accrued interest, in
March 1996. In consideration for this loan, the Company issued Metco 25,000
shares of Common Stock and an option to purchase 50,000 shares of Common Stock
at $1.25 per share, which expires in January 1999. Additionally, the Company
issued 25,000 shares of Common Stock to Metco as a penalty for the Company's
late repayment of a portion of the loan. The note was repaid in February and May
1996. The Company used $10,000 of the proceeds of this loan for working capital
and $150,000 as security for its non-recourse guarantee under the
Finova Agreement.

In February 1996, the Company completed a $250,000 private placement of
units, each unit consisting of (i) the Company's two month 12% promissory note
in the original principal amount of $50,000, and (ii) 25,000 shares of the
Company's Common Stock to three accredited investors, including Tusany
("February 1996 Private Placement"). The Company received net proceeds of
$210,000 (after deducting expenses of $7,500 and commissions of $32,500 to the
Underwriter for acting as placement agent). As part of the Company's obligation
in connection with the acquisition of the Private Label Group, the net proceeds
of the February 1996 Private Placement were advanced to the Private Label Group
to pay a portion of a jury award rendered in a legal proceeding against the
Private Label Group.

In connection with the 1995 and February 1996 Private Placement, Gerard
Semhon, the Company's Chief Executive Officer and Chairman of the Board, agreed
to indemnify the Company against any claims that may be asserted against the
Company by creditors of Dominion Associates, Inc. ("Dominion"), a company that
ceased operations in May 1995. Gerard Semhon, the Chief Executive Officer and a
Director of the Company, and Constantine Bezas, the President and a Director of
the Company, served as executive officers of Dominion.

In February 1996, the Company issued 10,000 shares of Common Stock for
legal services rendered to the Company.

<PAGE>

In July 1996, the Company completed the July 1996 Private Placement of
978,747 shares of Common Stock at $2.00 per share to seven accredited investors,
including Metco, Tusany and Michalaur International, a founder of the Company.
The Company received $1,314,950 of net proceeds (after deducting expenses of
$11,050 and commissions of $174,000 to the Underwriter for acting as the
placement agent). As part of the July 1996 Private Placement, certain
noteholders of the Company, including holders of notes issued in the 1995 and
February 1996 Private Placements converted an aggregate of $457,494 principal
amount and interest into Common Stock. The Company used the net proceeds of the
July 1996 Private Placement (i) to repay noteholders that did not convert their
indebtedness, (ii) to repay other indebtedness, (iii) for the purchase price of
and other fees related to the Private Label Group acquisition and (iv) for
working capital.

In July 1996, the Company entered into a brokerage and consulting
agreement with V.A.N. Marketing Ltd. ("VAN"). Under the agreement, VAN is
entitled to a finder's fee of 2 1/2 percent of the purchase price of the Private
Label Group, 5,000 shares of the Company's Common Stock and options to purchase
20,000 shares of the Company's Common Stock at $ $4.80 per share, expiring in
July 1999. The finder's fee is payable as follows: $22,500 of the cash fee was
paid upon closing of the acquisition and the remaining balance is due one year
thereafter. Additionally, VAN will receive a monthly consulting fee of $3,000
for each of the first 12 months following the closing of the acquisition and
$5,000 for each of the next 12 months.

On August 22, 1996, the Company purchased all of the issued and
outstanding capital stock of the four companies that comprise the Private Label
Group from Assante. The purchase price was $2,782,500, of which $125,000 was
paid in cash at the closing, $1,675,000 (which bears interest at 9% per annum)
was paid by the delivery of the Company's promissory note (the "Assante Note"),
and $850,000 will be paid promptly after the date of this Prospectus by the
issuance of Common Stock of the Company valued at the public offering price.
$150,000 of principal of the Assante Note plus interest, will be paid at the
earlier of January 1, 1997 or upon the date of this Offering and the balance
will be paid in approximately nine equal installments commencing 90 days after
the first payment and each six months thereafter. The Assante Note may be
prepaid without penalty at any time and is secured by a pledge of the purchased
stock. One half of the stock will be released from the pledge when one half of
the Assante Note is paid and the balance of the stock thereafter will be
released pro rata upon payments of the Assante Note. In addition to the purchase
price, the Company is obligated to pay Louis DiVita ("DiVita"), a former
shareholder of companies comprising the Private Label Group, an amount equal to
5% of the consideration Assante receives on the sale of the Private Label Group
stock. Therefore, at the closing, the Company paid DiVita $6,250, in cash,
issued a promissory note to DiVita in the original principal amount of $83,750
(the "DiVita Note") and upon completion of this Offering is to issue DiVita such
number of shares of the Company's Common Stock as is valued at $42,500. The
terms of the DiVita Note are substantially identical to the terms of the Assante
Note. $7,500 of principal of the DiVita Note, plus interest, will be paid at the
earlier of January 1, 1997, or upon the closing of the Offering. In addition,
upon

<PAGE>

completion of this Offering, the Company is to issue Private Label Group's
counsel such number of shares of the Company's Common Stock as is valued at
$7,500 as payment for legal services rendered to the Private Label Group in
connection with the acquisition. See "Use of Proceeds."

As part of the redemption of the stock of the companies which comprise
the Private Label Group from DiVita (i) the companies owe the balance of the
redemption price ($390,830 as of June 30, 1996) which is payable in monthly
installments of $5,551.02 (inclusive of interest at 6% per annum) through
September 2003 and (ii) DiVita serves as a consultant to the Private Label Group
pursuant to a consulting agreement dated August 17, 1993. Mr. Divita provides
services relating to the computer system of the Private Label Group. The
agreement provides for a monthly consulting fee through August 2003.

In connection with the acquisition of the Private Label Group, in
February 1996 the Company (i) secured a line of credit with Finova to replace
the Private Label Group's previous line of credit, (ii) pledged a $250,000
certificate of deposit as security for its non-recourse guarantee under the
Finova Agreement, and (iii) paid $250,000 of a jury award of approximately
$260,000 rendered in a legal proceeding against the Private Label Group. The
Finova Agreement prohibits the payment of dividends so long as certain
indebtedness is outstanding.

As a condition, and on the closing, of the acquisition of the Private
Label Group, the Company entered into an employment agreement with Assante under
which he serves as President of each of the Private Label Group companies.
Assante receives a base annual salary of $195,000. Assante will receive a bonus
equal to 10% of the amount by which the Private Label Group's annual profit,
before interest and taxes but after depreciation and amortization, exceeds
$500,000 for each of the years ending December 31, 1997, 1998, and 1999. The
employment agreement is for three years and is renewable at his option for an
additional two year period. See "Management - Employment Agreements."

Mr. Assante is the sole officer, director and shareholder of The
Contemporary Cosmetic Group, Inc. ("Contemporary"), a company that leases space
at the Facility from the Company. Mr. Assante is also the sole officer, director
and shareholder of Rubigo Cosmetics, Inc. ("Rubigo"). Both contemporary and
Rubigo are customers of The Private Label Group. Transactions between the
Company and Contemporary and Rubigo are on terms no less favorable than
transactions involving unaffiliated third parties.

In October 1996, the Company acquired all of the assets of Scent
Overnight, a company of which Gerard Semhon, the Company's Chief Executive
Officer and Chairman of the Board, is a majority stockholder for (i) $225,000
and (ii) the assumption of certain indebtedness totalling approximately
$210,000. The $225,000 plus interest at 9% per annum is due upon the
consummation of this Offering and is evidenced by the Company's promissory note
("Scent Note"). The assumed obligation is due to Liam Development Ltd. ("Liam")
pursuant to a promissory note made by Scent Overnight ("Liam Note"). In October
1995, the Company granted the right to convert the principal due under the Liam
Note into shares of the Company's

<PAGE>

Common Stock at $1.00 per share. Liam converted the principal due under the Liam
Note in October 1996. The Company intends to apply $268,500 of the proceeds of
this Offering to repay the Scent Note and the accrued interest due under the
Liam Note. Scent Overnight was formed by Mr. Semhon to engage in the Distributed
Fragrances business, however, in July 1994, it suspended its operations due to
lack of capital. Prior to the suspension of operations, Scent Overnight had
conducted research into the availability of the resources necessary for the
proposed business, such as locating order taking, order fulfillment, delivery
and advertising services and sources of supply and developed a plan for the
operation of the business. This information was among the assets acquired by the
Company in the acquisition. See "Use of Proceeds" and "Business - Trademarks."

Between June 1995 and June 1996, the Company advanced an aggregate of
$184,480 to Messrs. Semhon and Bezas, officers and directors of the Company. Of
the $184,480, $48,130 is jointly and severally owed by Messrs. Semhon and Bezas,
$120,750 is owed by Mr. Semhon and $15,750 is owed by Mr. Bezas. The advances do
not bear interest and will be repaid immediately following the Offering.

In October 1996, the Company completed a $300,000 private placement of
12 units, each unit consisting of (i) the Company's 12 month 10% promissory note
(each a "Bridge Note") and (ii) a warrant to purchase up to 25,000 shares of
Common Stock (each a "Bridge Warrant") ("October 1996 Private Placement"). The
Company intends to repay the Bridge Notes out of the proceeds of this Offering.
The terms and conditions of the Bridge Warrants automatically convert to the
terms and conditions of the Redeemable Warrants offered in this Offering. The
Company received net proceeds of $270,000, after deducting commissions of
$30,000 to the Underwriter for acting as placement agent. The net proceeds of
the October 1996 Private Placement were used for expenses related to the
Offering and working capital. Three affiliated, and four unaffiliated,
accredited investors participated in the October 1996 Private Placement. See
"Selling Securityholders," "Description of Securities - Redeemable Warrants" and
"Use of Proceeds."

<PAGE>

DESCRIPTION OF SECURITIES

The following summary description of the Securities is qualified in its
entirety by reference to the Company's Certificate of Incorporation, as amended,
and its By-laws, copies of which have been filed as Exhibits to the Registration
Statement of which this Prospectus is a part.

Common Stock

The Company's authorized capital consists of 10,000,000 shares of
Common Stock, $.001 par value per share. Holders of shares are entitled to one
vote per share of Common Stock on all matters submitted to a vote of
stockholders of the Company and to receive dividends when declared by the Board
of Directors from funds legally available therefor. Upon the liquidation,
dissolution or winding up of the Company, holders of shares of Common Stock are
entitled to share ratably in any assets available for distribution to
stockholders after payment of all obligations of the Company and after provision
has been made with respect to each class of stock, if any, having preference
over the Common Stock. Holders of shares of Common Stock do not have cumulative
voting rights or preemptive, subscription or conversion rights. See "Risk
Factors - Dividend Policy."

Redeemable Warrants

Each Redeemable Warrant entitles its holder to purchase one share of
Common Stock at an exercise price of _________ per share [120% of the initial
public offering price] (the "Exercise Price"). The Redeemable Warrants are
exercisable commencing one year from the date of this Prospectus and expire five
years after the date of this Prospectus.

The Redeemable Warrants will be issued pursuant to a warrant agreement
(the "Redeemable Warrant Agreement") among the Company, the Underwriter and the
warrant agent (the "Warrant Agent"), and will be evidenced by warrant
certificates in registered form.

The Exercise Price of the Redeemable Warrants and the number and kind
of shares of Common Stock or other securities and property issuable upon
exercise of the Redeemable Warrants are subject to adjustment in certain
circumstances, including stock splits, dividends, or subdivisions, combinations
or recapitalizations of the Common Stock. Additionally, an adjustment will be
made upon the sale of all or substantially all of the assets of the Company in
order to enable Warrantholders to purchase the kind and number of shares of
stock or other securities or property (including cash) receivable in such event
by a holder or the number of shares of Common Stock that might otherwise have
been purchased upon exercise of the Redeemable Warrant.

The Redeemable Warrants do not confer upon the holder any voting or
any other rights of a stockholder of the Company. Upon notice to the
Warrantholders, the Company has the

<PAGE>

right to reduce the exercise price or extend the expiration date of the
Redeemable Warrants.

Redeemable Warrants may be exercised upon surrender of the Redeemable
Warrant certificate evidencing those Redeemable Warrants on or prior to the
respective expiration date (or earlier redemption date) of the Redeemable
Warrants at the offices of the Warrant Agent, with the form of "Election to
Purchase" on the reverse side of the warrant certificate completed and executed
as indicated accompanied by payment of the full exercise price (by certified
check payable to the order of the warrant agent) for the number of Redeemable
Warrants being exercised.

No Redeemable Warrant will be exercisable unless at the time of
exercise the Company has filed with the Commission a current prospectus covering
the issuance of shares of Common Stock issuable upon exercise of the Redeemable
Warrant and the issuance of shares has been registered or qualified or is deemed
to be exempt from registration or qualification under the securities laws of the
state of residence of the Warrantholder. The Company has undertaken to use its
best efforts to maintain a current prospectus relating to the issuance of shares
of Common Stock upon the exercise of the Redeemable Warrant Agreement. While it
is the Company's intention to maintain a current prospectus, there can be no
assurance that it will be able to do so. See "Risk Factors - Current
Prospectus and State Blue Sky Registration Required to Exercise Redeemable
Warrants."

No fractional shares will be issued upon exercise of the Redeemable
Warrants. However, the Company will pay to that Warrantholder, in lieu of the
issuance of any fractional share which would otherwise be issuable, an amount in
cash based on the market value of the Common Stock on the last trading day prior
to the exercise date.

The Redeemable Warrants are redeemable by the Company at a price of
$.10 per Redeemable Warrant, commencing one year after the date of this
Prospectus and prior to their expiration, on 30 days prior written notice to the
registered holders of the Redeemable Warrants, provided the average closing bid
price per share of the Common Stock (if the Common Stock is then traded on a
national securities exchange or NASDAQ) for a period not less than 20 trading
days in any 30 day trading period, ending not more than 15 days prior to the
date of any redemption notice, exceeds at least 150% of the then Exercise Price.
The Redeemable Warrants shall be exercisable until the close of the business day
preceding the date fixed for redemption.
See "Underwriting."

Underwriter's Warrants

See "Underwriting" for a description of the material terms of the
Underwriter's Warrants to be issued by the Company to the Underwriter upon
completion of the Offering.

<PAGE>

Reports to Stockholders

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and to make available such other
periodic reports as the Company may determine to be appropriate or as may be
required by law.

Application for Listing

The Company has applied for listing of the Common Stock and Redeemable
Warrants on NASDAQ under the symbols "AZUR" and "AZURW," respectively. No
assurance can be given that such applications will be approved or that a trading
market for the Securities will develop.

Transfer Agent and Redeemable Warrant Agent

The Company has appointed North American Transfer Co. as Transfer Agent
and Registrar for its Common Stock and Warrant Agent for its Redeemable
Warrants.

SHARES ELIGIBLE FOR FUTURE SALE

Upon sale of the Securities, the Company will have outstanding
5,058,747 shares of Common Stock and 1,000,000 Redeemable Warrants (5,208,747
shares of Common Stock, and 1,450,000 Redeemable Warrants if the Underwriter's
Over-Allotment Option is exercised in full). The Securities to be sold in this
Offering (assuming no exercise of the Underwriter's Over-Allotment Option) and
the 1,478,747 shares of Common Stock and 300,000 Redeemable Warrants registered
concurrently with this Prospectus being offered pursuant to the Selling
Securityholder Prospectus included in the Registration Statement of which this
Prospectus forms a part, will be freely tradable subject to "lock-up" agreements
described below without restriction under the Securities Act, except for any
shares purchased by an "affiliate" of the Company (in general, a person who has
a control relationship with the Company), which shares will be subject to the
resale limitations of Rule 144 adopted under the Securities Act ("Rule 144").
The remaining 2,580,000 shares are deemed to be "restricted securities," as that
term is defined under Rule 144, in that such shares were issued and sold by the
Company in private transactions not involving a public offering and are not
currently part of an effective registration. Except for the "lock-up" agreements
described below, such shares are eligible for sale under Rule 144, or will
become so eligible at various times through October, 1998. In addition, the
Company has granted the Underwriter demand and piggyback registration rights
with respect to the securities issuable upon exercise of the Underwriter's
Warrants. No prediction can be made as to the effect, if any, that sales of
shares of Common Stock or even the availability of such shares for sale will
have on the market prices prevailing from time to time. If the holders of the
shares eligible for registration so choose they could require the Company to
register all of said shares at any time.

<PAGE>

In general, under Rule 144, subject to the satisfaction of certain
other conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class, or if the Common Stock is quoted on NASDAQ or a stock exchange, the
average weekly trading volume during the four calendar weeks preceding the sale.
A person who presently is not and who has not been an affiliate of the Company
for at least three months immediately preceding the sale and who has
beneficially owned the shares of Common Stock for at least three years is
entitled to sell such shares under Rule 144 without regard to any of the volume
limitations described above.

All of the Company's current stockholders have agreed not to sell or
otherwise dispose of their shares of Common Stock (the "Lock-Up") for a period
ranging from six months to two years following completion of the Offering
without the prior written consent of the Underwriter. Following expiration of
the Lock-Up, 2,580,000 shares of Common Stock outstanding prior to the Offering
will be available for immediate resale pursuant to Rule 144, subject to
compliance with affiliates of the Company with the volume limitations of Rule
144. Affiliates of the Company currently own an aggregate of 2,041,000 shares
Common Stock. See "Underwriting."

Prior to this Offering, no market for the Securities existed. The
effect, if any, of public sales of the restricted shares of Common Stock or the
availability of such shares for future sale on prevailing market prices cannot
be predicted. Nevertheless, the possibility that substantial amounts of
restricted shares may be resold in the public market may adversely affect
prevailing market prices for the shares and could impair the Company's ability
to raise capital through the sale of its equity securities.

<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement") between the Company and the
Underwriter, the Underwriter has agreed to purchase from the Company, on a "firm
commitment" basis, all of the Securities.

The Underwriter has advised the Company that it proposes initially to
offer the Securities to the public at the initial public offering price set
forth on the cover page of this Prospectus and to certain dealers at such
prices, less concessions not in excess of $___ per share of Common Stock and
$___ per Redeemable Warrant.

The Company has granted the Underwriter an option, exercisable during
the 30 calendar day period after the closing of the Offering, to purchase from
the Company at the initial public offering price less underwriting discounts and
the non-accountable expense allowance, up to an aggregate of 150,000 shares of
Common Stock and/or 150,000 Redeemable Warrants for the sole purpose of covering
over allotments, if any.

The Company has agreed to pay the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of the Offering, none of which has been
paid to date. Further, the Company has agreed to reimburse the Underwriter for
certain accountable expenses relating to the Offering.

All of the Company's current stockholders have agreed not to sell or
otherwise dispose of any of their shares of Common Stock or shares of Common
Stock issuable upon conversion or exercise of securities convertible into Common
Stock for a period ranging from six months to two years from the date of this
Prospectus without the prior written consent of the Underwriter. Notwithstanding
these lock-up agreements, such persons may make intra-family transfers. An
appropriate restrictive legend will be marked on the face of certificates
representing all such shares of Common Stock and Redeemable Warrants. See
"Principal Stockholders."

The Company has agreed, if requested by the Underwriter at any time
within three years after the date of closing of the Offering, to nominate and
use its best efforts to elect a designee of the Underwriter as a director of the
Company or, at the Underwriter's option, as a non-voting advisor to the
Company's Board of Directors. Such designee may be an officer, director,
partner, employee, affiliate of or consultant to the Underwriter. The person to
be designated by the Underwriter has not been identified to date.

The Company has also agreed to retain the Underwriter, pursuant to a
financial advisory and investment banking agreement (the "Advisory Agreement"),
as the Company's financial consultant at a monthly rate of $2,000 for 24 months
commencing on the date of this Prospectus, all of which is payable at the
closing of the Offering. Pursuant to the Advisory Agreement, the

<PAGE>

Underwriter will render certain financial advisory and investment banking
services to the Company, including advice as to the Company's financial public
relations, internal operations, corporate finance matters and other related
matters.

In connection with this Offering, the Company has agreed to sell to the
Underwriter, for nominal consideration, warrants to purchase from the Company
100,000 shares of Common Stock and/or 100,000 Redeemable Warrants (the
"Underwriter's Warrants"). The shares of Common Stock and Redeemable Warrants
contained in the Underwriter's Warrants will be identical to the Securities
being offered hereby. The Underwriter's Warrants contain anti-dilution
provisions identical to the Redeemable Warrants that provide for adjustment of
the exercise price upon the occurrence of certain events. The Underwriter's
Warrants grant the holder certain registration rights applicable to the
securities issuable upon exercise of the Underwriter's Warrants.

During the term of the Underwriter's Warrants, the holders of the
Underwriter's Warrants are given the opportunity to profit from a rise in the
market price of the Securities. To the extent that the Underwriter's Warrants
are exercised, dilution of the interests of the Company's then stockholders will
occur. Furthermore, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holder of the
Underwriter's Warrants can be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than to those provided in the Underwriter's
Warrants.

The Underwriting Agreement provides for reciprocal indemnification
between the Company and the Underwriter against certain liabilities in
connection with the Registration Statement of which this Prospectus constitutes
a part, including liabilities under the Securities Act. To the extent this
section may purport to provide exculpation from possible liabilities arising
under the federal securities laws, the Company has been advised that it is the
opinion of the Commission that such indemnification is against public policy and
is therefore unenforceable.

In addition, the Underwriting Agreement provides that for a period of
two years from the date of the Offering, the Company will not issue any shares
of Common Stock or Preferred Stock, or securities convertible into or
exercisable for Common Stock or Preferred Stock, without the prior written
consent of the Underwriter. However, the Company may issue securities (A) upon
(i) the exercise of any warrants or options outstanding as of the completion of
this Offering, and (ii) the exercise of the Underwriter's Warrants, (B) pursuant
to the Company's 1996 Plan, or (C) in connection with any merger or acquisition
of another entity by the Company.

The foregoing is a summary of the principal terms of the Underwriting
Agreement, the Underwriter's Warrants, and the Advisory Agreement and does not
purport to be complete. Reference is made to the copies of the Underwriting
Agreement, the Underwriter's Warrant Agreement and the Advisory Agreement that
are filed as exhibits to the Registration Statement

<PAGE>

of which this Prospectus constitutes a part.

Prior to the Offering, there has been no public market for the
Securities offered hereby. Consequently, the initial public offering price of
the Securities and the exercise price and other terms of the Redeemable Warrants
have been determined by the Company and the Underwriter and are not necessarily
related to the Company's asset value, earnings, book value or other such
criteria of value. Factors considered in determining the initial public offering
price of the Securities and the exercise price of the Redeemable Warrants
include primarily the prospects for the industry in which the Company operates,
the Company's management, the general condition of the securities markets and
the demand for securities in similar industries.

<PAGE>

CONCURRENT REGISTRATION OF SECURITIES

Concurrently with this Offering, 1,478,747 shares of Common Stock (the
"Selling Securityholders' Shares"), 300,000 Warrants (the "Selling
Securityholders' Warrants") and 300,000 shares underlying the Selling
Securityholders' Warrants have been registered by the Company under the
Securities Act on behalf of certain of its securityholders (the "Selling
Securityholders"), pursuant to a Selling Securityholders' Prospectus included
within the Registration Statement of which this Prospectus forms a part. The
Selling Securityholders' Shares, the Selling Securityholders Warrants, and the
shares underlying the Selling Securityholders Warrants are not part of this
underwritten offering. All of the Selling Securityholders have agreed not to
sell or otherwise dispose of the Selling Securityholders' Shares and/or the
Selling Securityholders' Warrants for a period ranging from three months to two
years following completion of the Offering without the prior written consent of
the Underwriter. The Company will not receive any of the proceeds from the sale
of the Selling Securityholders' Shares, the Selling Securityholders' Warrants,
or the shares underlying the Selling Securityholders' Warrants, but will receive
proceeds from the exercise of the Selling Securityholders' Warrants.

LEGAL MATTERS

The validity of the Securities offered hereby and certain other legal
matters will be passed upon for the Company by Gersten, Savage, Kaplowitz &
Curtin, LLP, New York, N.Y. Certain legal matters will be passed upon for the
Underwriter by Snow Becker Kraus P.C., New York, N.Y. Gersten, Savage, Kaplowitz
& Curtin, LLP has acted as counsel to the Underwriter in other transactions, and
may so act in the future.

EXPERTS

The audited financial statements for the years ended December 31, 1994,
and 1995, included in the Prospectus have been audited by Feldman Radin & Co.,
P.C., independent certified public accountants, to the extent and for the
periods set forth in their report appearing elsewhere herein, and are included
in reliance upon such report and upon the authority of said firm as experts in
accounting and auditing. The information for the interim periods ended June 30,
1995 and 1996 is unaudited but in the opinion of management, includes all
adjustments considered necessary for the fair presentation of the results. All
adjustments made in the interim financial statements are of a normal recurring
nature. The unaudited results for the six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the entire fiscal year.

<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on
Form SB-2 in accordance with the provisions of the Securities Act, with respect
to the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits thereto.
For further information, reference is made to the Registration Statement and to
the exhibit filed therewith. Statements herein contained concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. The Registration Statement and the exhibits may be
inspected without charge at the offices of the Commission and, upon payment to
the Commission of prescribed fees and rates, copies of all or any part thereof
may be obtained from the Commission's principal office at the Public Reference
Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549.

Except for material contracts or portions thereof accorded confidential
treatment, all registration statements are available for public inspection,
during business hours, at the principal office of the Commission in Washington,
D.C. Electronic registration statements made through the Electronic Data
Gathering, Analysis, and Retrieval System are publicly available through the
Commission's Website (http://www.sec.gov).

INDEPENDENT AUDITOR'S REPORT

To the Shareholders and Board of Directors
Private Label Cosmetics, Inc. and affiliates

We have audited the accompanying combined balance sheet of Private Label
Cosmetics, Inc. and affiliates as of December 31, 1995 and the related combined
statements of operations, changes in stockholders deficit and cash flows for
the years ended December 31, 1995 and 1994. These financial statements are the
responsibility of the Private Label Group's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Private Label
Cosmetics, Inc. and affiliates as of December 31, 1995 and the results of its
combined operations and its combined cash flows for the years ended December 31,
1995 and 1994 in conformity with generally accepted accounting principles.

The accompanying combined financial statements have been prepared assuming
that Private Label Cosmetics, Inc. and affiliates will continue as a going
concern. As discussed in Note 3 to the combined financial statements, the
Private Label Group incurred significant net losses for the years ended
December 31, 1995 and 1994 which raises substantial doubt about its ability to
continue as a going concern. Management s plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments relating to the recoverability and classification of reported asset
amounts or the amounts and classification of liabilities that might result from
the outcome of this uncertainty.

FELDMAN RADIN & CO., P.C.
Certified Public Accountants

October 10, 1996
New York, New York

<PAGE>

<TABLE>
<CAPTION>
PRIVATE LABEL COSMETICS, INC. AND AFFILIATES
COMBINED BALANCE SHEETS

<S> <C> <C>
June 30, December 31,
1996 1995
(Unaudited)
ASSETS

CURRENT ASSETS:
Accounts receivable, net of allowance for doubtful
account of $15,000 and $15,000, respectively $ 1,373,157 $ 1,127,920
Inventories 1,102,645 1,108,696
Prepaid insurance and taxes 33,652 33,452
Due from related parties 315,606 327,512
TOTAL CURRENT ASSETS 2,825,060 2,597,580

MACHINERY AND EQUIPMENT 537,457 521,375

RESTRICTED CASH 250,000 -

OTHER ASSETS 38,303 38,303

$ 3,650,820 $ 3,157,258

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Cash overdraft $ 65,107 $ 30,711
Accounts payable 1,006,944 958,255
Accrued expenses 304,347 297,533
Accrued payroll taxes and penalties 335,843 420,045
Accrued lawsuit settlement - 257,000
Customer advances 155,142 113,628
Advances by Azurel Ltd. 680,000 180,000
Current portion of long-term debt 169,989 168,786
Current portion of capital lease obligations 11,243 92,651
TOTAL CURRENT LIABILITIES 2,728,615 2,518,609

LONG-TERM LIABILITIES:
Long-term debt 1,963,335 1,462,574
Capital lease obligations 22,464 103,245
TOTAL LONG-TERM LIABILITIES 1,985,799 1,565,819
STOCKHOLDERS' DEFICIT:
Common stock 59,223 59,223
Accumulated deficit (367,067) (230,643)
Treasury stock (755,750) (755,750)
TOTAL STOCKHOLDERS' DEFICIT (1,063,594) (927,170)

$ 3,650,820 $ 3,157,258
</TABLE>

See notes to combined financial statements.
<PAGE>

PRIVATE LABEL COSMETICS, INC. AND AFFILIATES
COMBINED STATEMENTS OF OPERATIONS

<S> <C> <C> <C> <C>
Six Months Ended
June 30, Year Ended December 31,
1996 1995 1995 1994
(Unaudited)

NET SALES $ 4,964,430 $ 3,739,161 $ 8,413,225 $ 9,744,578

COST OF GOODS SOLD 4,018,303 2,934,956 6,627,898 7,650,161

GROSS PROFIT 946,127 804,205 1,785,327 2,094,417

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 969,231 902,252 2,103,320 1,934,595

INCOME (LOSS) FROM OPERATIONS (23,104) (98,047) (317,993) 159,822

OTHER EXPENSES
Lawsuit settlement - - - (257,000)
Interest expense (113,320) (89,973) (197,663) (192,607)

(113,320) (89,973) (197,663) (449,607)

NET (LOSS) $ (136,424) $ (188,020) $ (515,656) $ (289,785)

</TABLE>

See notes to combined financial statements.

<PAGE>

PRIVATE LABEL COSMETICS, INC. AND AFFILIATES

COMBINED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

<S> <C> <C> <C> <C> <C> <C> <C> <C>
International
Private Label Fashion P.L.C. Cosmetics
Cosmetics, Inc. Laboratories, Inc. Specialties, Inc Group, Inc.
Shares Amount Shares Amount Shares Amount Shares Amount
Balance - December 31, 1993 50 $ 46,623 49 $ 10,100 500 $500 500 $2,000

Net loss - - - - - - - -

Balance - December 31, 1994 50 46,623 49 10,100 500 500 500 2,000

Net loss - - - - - - - -

Balance - December 31, 1995 50 46,623 49 10,100 500 500 500 2,000
Net loss, six months ended
June 30, 1996 (unaudited) - - - - - - - -

Balance - June 30, 1996 (unaudited) 50 $ 46,623 49 $ 10,100 500 $500 500 2,000

Shares authorized, no par value 2,500 1,000 2,500 1,000

</TABLE>

<TABLE>

<S> <C> <C> <C> <C>
Retained Retained
Total Earnings Total
Common (Accumulated Treasury Stockholders
Stock Deficit) Stock (Deficit)
Balance - December 31, 1993 $59,223 $ 574,798 $ (755,750) $ (121,729)

Net loss - (289,785) - (289,785)

Balance - December 31, 1994 59,223 285,013 (755,750) (411,514)

Net loss - (515,656) - (515,656)

Balance - December 31, 1995 59,223 (230,643) (755,750) (927,170)

Net loss, six months ended
June 30, 1996 (unaudited) - (136,424) - (136,424)

Balance - June 30, 1996 (unaudited) $ 59,223 $ (367,067) $ (755,750) $(1,063,594)

</TABLE>

See notes to combined financial statements.

<PAGE>

<TABLE>
<CAPTION>
PRIVATE LABEL COSMETICS, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS

<S> <C> <C> <C> <C>
Six Months Ended
June 30, Year Ended December 31,
1996 1995 1995 1994
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (136,424) $ (188,020) $ (515,656) $ (289,785)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation 91,866 88,011 160,677 161,975

Changes in assets and liabilities:
(Increase) decrease in accounts receivable (245,237) 90,822 232,042 229,573
(Increase) decrease in inventories 6,051 (186,212) (212,552) 242,021
(Increase) decrease in prepaid insurance and taxes (200) 1,834 2,085 (2,258)
(Increase) decrease in other assets - 675 (7,670) 22
Increase (decrease) in accounts payable 48,689 (12,151) 76,779 (227,795)
Increase (decrease) in accrued expenses 6,814 70,571 110,939 35,390
Increase (decrease) in accrued payroll taxes (84,202) 187,378 384,696 (15,354)
Increase (decrease) in accrued lawsuit settlements (257,000) - - 257,000
Increase (decrease) in customer advances 41,514 (32,469) (9,254) (217,264)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (528,129) 20,439 222,086 173,525

CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (107,946) (27,430) (28,129) (119,728)

NET CASH USED IN INVESTING ACTIVITIES (107,946) (27,430) (28,129) (119,728)

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (250,000) (29,300) - -
Payment of long-term debt (1,259,703) (50,000) (340,284) (195,394)
Proceeds from long-term debt 1,793,242 87,972 - 240,000
Payment of capital lease obligations (193,766) (54,014) (81,823) (59,233)
Decrease in due from related parties 11,906 37,954 64,411 17,846
Proceeds from advances by Azurel Ltd. 500,000 - 180,000 -

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 601,679 (7,388) (177,696) 3,219

NET INCREASE (DECREASE) IN CASH (34,396) (14,379) 16,261 57,016

CASH OVERDRAFT AT BEGINNING OF PERIOD (30,711) (46,972) (46,972) (103,988)

CASH OVERDRAFT AT END OF PERIOD $ (65,107) $ (61,351) $ (30,711)$ (46,972)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 113,320 $ 89,973 $ 207,789 $ 198,375
Taxes $ - $ - $ 1,679 $ 8,198
Noncash activity:
Purchase of machinery through capital lease
obligations $ - $ 64,000 $ 64,000 $ -

</TABLE>

See notes to combined financial statements

<PAGE>

PRIVATE LABEL COSMETICS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS

The combined financial statements and the related footnotes for the six
months ended June 30, 1996 and 1995 are unaudited. In the opinion of
management, these financial statements include all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of
the financial statements. The results of operations for the six months
ended June 30, 1996 are not necessarily indicative of results that may be
expected for the full year.

1. BUSINESS

Private Label Cosmetics, Inc. and affiliates (the "Private Label Group")
are located in Fairlawn, New Jersey and manufacture cosmetics for sale to
major cosmetic companies. In August 1996, Azurel Ltd. (the "Company")
purchased all of the issued and outstanding capital stock of the Private
Label Group for a purchase price of $2,782,500 of which $131,250 in cash
was paid at closing, $1,758,750 was paid by the delivery of the Company's
promissory notes (which bear interest at the rate of 9% per annum) and
$892,500 will be paid promptly after the closing of the initial public
offering by the issuance of common stock valued at the public offering
price. In addition, upon completion of the closing of the initial public
offering, the Company is to issue to Private Label Group's counsel such
number of shares of common stock as is valued at $7,500.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Combination - The combined financial statements include
the accounts of Private Label Cosmetics, Inc., P.L.C. Specialties,
Inc., Fashion Laboratories, Inc. and International Cosmetic Group,
Inc. The accompanying financial statements of the Private Label
Group are combined as all entities are under common control. Material
intercompany accounts and transactions are eliminated in the
combination.

b. Accounting estimates - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make significant estimates and assumptions that effect
the reporting amount of assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimates.

c. Inventories - Inventories are recorded at the lower of cost or market.
Cost was determined using the average cost method.

d. Property and equipment - Property and equipment is stated at cost and
is depreciated using the straight line method over their estimated
useful lives. Capitalized leases are stated at cost and are
depreciated using the straight line method over the lower of the life
of the lease or its estimated useful life.

<PAGE>

e. Income taxes - The Private Label Group accounts for income taxes
under the provisions of Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes ("SFAS No. 109"). SFAS No.109
requires the recognition of deferred tax assets and liabilities for
both the expected impact of differences between the financial
statement and tax basis of assets and liabilities, and for the
expected future tax benefit to be derived from tax loss and tax
credit carryforwards. SFAS No. 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets.

f. Fair value of financial instruments - The carrying amounts reported in
the balance sheet for cash, trade receivables, accounts payable and
accrued expenses approximate fair value based on the short-term
maturity of these instruments.

3. BASIS OF PRESENTATION

The Private Label Group's financial statements have been presented on a
basis that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. The Private Label Group intends to seek additional equity capital
through an initial public offering to adequately fund operations, working
capital needs and growth plans.

The Private Label Group had incurred significant net losses for the years
ended December 31, 1995 and 1994 which raises substantial doubt about its
ability to continue as a going concern. Accordingly, continued existence is
dependent upon the Private Label Group's ability to become profitable and
to obtain additional equity capital, neither of which can be assured.

4. INVENTORIES

Inventories consist of the following:

December 31,
1995

Raw Materials $ 362,500

Work In Process 642,422

Finished Goods 103,774

$1,108,696

<PAGE>

5. TRANSACTIONS WITH RELATED PARTIES

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Receipts from allocated
general and
Due from Trade accounts Consulting fee administrative expenses
affiliates receivable Sales to affiliates Year Ended Year Ended
December 31, December 31, Year Ended December 31, December 31, December 31, (c)

1995 (a) 1995 1995 1994 1995 1995 1994

D & A $ 2,833 $ - $ - $ - $ 10,000 $ - $ -
Advertising
Corp.

The
Contemporary
Cosmetic
Group, Inc. (b) 324,679 146,678 355,000 288,000 - 200,000 102,000

Rubigo
Cosmetics, Inc. - 22,562 166,000 441,000 - - -

$ 327,512 $ 169,240 $ 521,000 $ 729,000 $ 10,000 $ 200,000 $102,000

<FN>

(a) These amounts are due on demand and are non-interest bearing.

(b) The most recent unaudited financial statement at May 31, 1995 states a
negative net worth of $223,226 for The Contemporary Cosmetic Group,
Inc.

</FN>
</TABLE>

6. MACHINERY AND EQUIPMENT

Machinery and equipment consist of the following at December 31, 1995:

<TABLE>
<S> <C> <C>
Estimated
useful lives

Machinery and equipment held under
capital lease obligations 5-7 $ 351,927

Machinery and equipment 5-7 2,057,563

Leasehold improvements 15 211,498
2,620,988

Less accumulated depreciation 2,099,613

$ 521,375

</TABLE>

<PAGE>

7. ACCRUED PAYROLL TAXES AND PENALTIES

At December 31, 1995, the Private Label Group owed $420,045 in accrued
payroll taxes and penalties for the period September 30, 1995 through
December 31, 1995.

8. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995:

Note payable to bank, bears interest at the rate of
prime plus 1 1/4% per annum, monthly payments consist of
principal and interest are approximately $20,429
through July 1997, collateralized by machinery and
equipment. $358,333

Revolving bank loan, bears interest at the rate of
prime plus 1 1/4%, matures in March 1996, interest
payable monthly, collateralized by accounts
receivable, inventory and machinery. 850,620

Note payable to former majority stockholder,
bears interest at the rate of 6% per annum.
Monthly payments consisting of principal
and interest are approximately $5,551 through
August 2003. 422,407

1,631,360
Less current portion 168,786

$1,462,574
</TABLE>

In February 1996, the Private Label Group repaid the note payable to bank
and the revolving bank loan and entered into a two year loan agreement with
Finova Financial Corporation ("Finova"). Pursuant to the agreement, the
line of credit is $2,000,000, bears interest at the rate of prime plus 3%
per annum, is secured by the Private Label Group's accounts receivable,
inventory and equipment and is guaranteed by the Private Label Group's sole
stockholder and the Company. Monthly installments of $10,150 are due on the
last day of each month with the remaining balance due in February 1998.
Additionally, the Company on behalf of the Private Label Group deposited
$250,000 with Finova as collateral for the agreement. The financial
statements reflect the terms of the Finova agreement.

<PAGE>

Long-term debt maturities based on the Finova debt for the next five years
are as follows:
<TABLE>
<S> <C>

1996 $168,786

1997 167,746

1998 1,024,283

1999 51,788

2000 54,983

</TABLE>

9. CAPITAL LEASE OBLIGATIONS

The Private Label Group leases machinery and equipment under non-cancelable
lease agreements which expire at various times through December 1998.
<TABLE>
<S> <C>

Principal portion of capital lease payments $195,896

Less: current portion 92,651

$103,245

The future minimum principal payments under capital leases are as follows:

1996 $92,651

1997 70,082

1998 33,163

</TABLE>

10. ADVANCES BY AZUREL LTD.

In October 1995, the Company advanced the Private Label Group $180,000 for
working capital. In February 1996, the Company advanced the Private Label
Group $250,000 for a lawsuit settlement and $250,000 as security for a loan
(see Notes 8 and 14).

11. INCOME TAXES

The Private Label Group accounts for income taxes under Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
No. 109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for the
expected future tax benefit to be derived from tax loss and tax credit
carryforwards. SFAS No. 109 additionally requires the establishment of a
valuation allowance to reflect

<PAGE>

the likelihood of realization of deferred tax assets. At December 31,
1995, the Private Label Group had net deferred tax assets of $620,000.
The Private Label Group has recorded a valuation allowance for the full
amount of the net deferred tax assets.

The following table illustrates the source and status of the Private Label
Group's major deferred tax assets and (liabilities):

Net operating loss carryforwar $495,000

Litigation accruals 90,000

Inventory allowance 35,000

Valuation allowance (620,000)

Net deferred tax asset recorded $ -

</TABLE>

The provision for income taxes differs from the amount computed applying
the statutory federal income tax rate to income before income taxes as
follows:

December 31,
1995 1994
Income tax benefit computed at statutory rate $(180,000) $(101,000)

Tax benefit not recognized 180,000 101,000

Provision for income taxes (benefit) $ - $ -

</TABLE>

The Private Label Group has net operating loss carryforwards for tax
purposes totaling $1,413,000 at December 31, 1995 expiring in the years
2008 to 2010. Substantially all of the carryforwards are subject to
limitations on annual utilization because there are equity structure shifts
or owner shifts involving 5% stockholders (as these terms are defined in
Section 382 of the Internal Revenue Code), which have resulted in a more
than 50% change in ownership. The annual limitation is based on the value
of the Private Label Group as of the date of the ownership change
multiplied by the applicable Federal Long Term Tax Exempt Bond Rate.

<PAGE>

12. COMMITMENTS AND CONTINGENCIES

a. The Private Label Group leases office and warehouse space under a
non-cancelable operating lease. Rent expense under this lease was
approximately $482,000 and $470,000 for the years ended December 31,
1995 and 1994, respectively. The lease expires in August 2002. Minimum
rental commitments for the next five years are as follows:

1996 $ 453,000

1997 466,000

1998 480,000

1999 493,000

2000 506,000
</TABLE>

b. The Private Label Group is paying a monthly consulting fee of $11,117
to a former stockholder through August 2003.

c. The Private Label Group does not have insurance coverage for product
withdrawal / recall.

13. SIGNIFICANT CUSTOMERS

Approximately 21% and 14% of the Private Label Group's revenue was derived
from two major customers for the year ended December 31, 1995. For the year
ended December 31, 1994, approximately 17% and 12% of the Private Label
Group's revenue was derived from the same two major customers.

14. ACCRUED LAWSUIT SETTLEMENT

A jury verdict against the Private Label Group was entered on December 22,
1995 in the net amount of $223,095, together with prejudgment interest and
costs of suit. Judgment subsequently entered on such verdict in the amount
of $257,000 including costs and interest, was satisfied on behalf of the
Private Label Group in full in February 1996 with an advance by the Company
of $250,000. The judgment of $257,000 was accrued at December 31, 1995.

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Azurel Ltd.

We have audited the accompanying balance sheet of Azurel Ltd. as of
December 31, 1995 and the related statements of operations, changes in
stockholders deficit and cash flows from June 26, 1995 (inception) through
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Azurel Ltd. as of December
31, 1995 and the results of its operations and its cash flows from June 26, 1995
(inception) through December 31, 1995 in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that
Azurel Ltd. will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has incurred significant net losses which
raises substantial doubt about its ability to continue as a going concern.
Management s plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments relating to the
recoverability and classification of reported asset amounts or the amounts and
classification of liabilities that might result from the outcome of this
uncertainty.

FELDMAN RADIN & CO., P.C.
Certified Public Accountants

October 10, 1996
New York, New York

<PAGE>

AZUREL LTD.
BALANCE SHEET

<S> <C> <C>
June 30, December 31,
1996 1995
(Unaudited)
ASSETS

CURRENT ASSETS:
Cash $ 317,126 $ 3,581
Due from stockholders 184,480 92,380
Due from the Private Label Group 680,000 180,000
Prepaid royalties 15,909 -
TOTAL CURRENT ASSETS 1,197,515 275,961

FURNITURE AND EQUIPMENT 31,582 -

DEFERRED FINANCING COSTS 41,250 70,208

DEFERRED REGISTRATION COSTS 85,047 4,000

OTHER ASSETS 37,715 490

$ 1,393,109 $ 350,659

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accrued expenses $ 289,399 $ 143,130
Current portion of long-term debt 671,221 259,975
TOTAL CURRENT LIABILITIES 960,620 403,105

LONG-TERM DEBT 200,000 449,875

STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, par value $.001 per share,
10,000,000 shares authorized 3,310 2,450
Additional paid-in capital 1,467,185 -
Accumulated deficit (1,235,831) (502,596)
234,664 (500,146)
Less stock subscriptions receivable (2,175) (2,175)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 232,489 (502,321)

$ 1,393,109 $ 350,659

</TABLE>

See notes to financial statements.

<PAGE>

AZUREL LTD.
STATEMENTS OF OPERATIONS

<S> <C> <C>
Six months June 26, 1995
Ended (Inception) to
June 30, December 31,
1996 1995
(Unaudited)

REVENUES $ - $ -

GENERAL AND ADMINISTRATIVE EXPENSES 415,651 259,637

(LOSS) BEFORE INTEREST EXPENSE (415,651) 259,637)

INTEREST EXPENSE 317,584 17,559

NET (LOSS) $ (733,235) $ (277,196)

</TABLE>

See notes to financial statements.

<PAGE>

<TABLE>
<CAPTION>
AZUREL LTD.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<S> <C> <C> <C> <C> <C> <C>
Total
Common Stock Additional Stock Stockholders'
Number of Paid-in Accumulated Subscriptions Equity
Shares Amount Capital Deficit Receivable (Deficit)

Balance - June 26, 1995 (Inception)........ - $ - $ - $ - $ - $ -

Issuance of common stock 2,175,000 2,175 - - (2,175) -
Stock issued in connection with
bridge financing 125,000 125 - - - 125
Stock issued for services 125,000 125 - - - 125
Stock issued in connection with a loan 25,000 25 - - - 25
Distribution - - - (225,400) - (225,400)
Net (loss) - - - (277,196) - (277,196)

Balance - December 31, 1995................ 2,450,000 2,450 - (502,596) (2,175) (502,321)

Stock issued in connection with
bridge financing 125,000 125 124,875 - - 125,000
Sale of common stock 625,000 625 1,096,825 - - 1,097,450
Stock issued for services 60,000 60 119,940 - - 120,000
Stock issued in connection with a loan 50,000 50 88,045 - - 88,095
Stock options issued for services - - 37,500 - - 37,500
Net (loss), six months ended
June 30, 1996 (unaudited) - - - (733,235) - (733,235)

Balance - June 30, 1996 (unaudited)........ 3,310,000 $ 3,310 $ 1,467,185 $ (1,235,831) $ (2,175) $ 232,489

</TABLE>

See notes to financial statements.

<PAGE>

<TABLE>
<CAPTION>
AZUREL LTD.
STATEMENTS OF CASH FLOWS

<S> <C> <C>
Six months June 26, 1995
Ended (Inception) to
June 30, December 31,
1996 1995
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (733,235) $ (277,196)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation 198 -
Amortization of discount 163,162 -
Stock options issued for services 37,500 -

Changes in assets and liabilities:
Increase in prepaid royalties (15,909) -
Increase in accrued expenses 146,269 127,730

NET CASH USED IN OPERATING ACTIVITIES (402,015) (149,466)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment (20,476) -
Increase in other assets (37,225) (490)

NET CASH USED IN INVESTING ACTIVITIES (57,701) (490)

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due from stockholders (92,100) (92,380)
Increase in due from the Private Label Group (500,000) (180,000)
(Increase) decrease in deferred financing costs 28,958 (70,208)
Increase in deferred registration costs (81,047) (4,000)
Proceeds from long-term debt 460,000 528,750
Payment of long-term debt (310,000) (28,750)
Issuance of common stock 1,267,450 125

NET CASH PROVIDED BY FINANCING ACTIVITIES 773,261 153,537

NET INCREASE IN CASH 313,545 3,581

CASH AT BEGINNING OF PERIOD 3,581 -

CASH AT END OF PERIOD $ 317,126 $ 3,581

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 6,520 $ -
Taxes $ - $ -
Non cash activities:
Issuance of common stock through long-term debt $ 163,095 $ 125
Issuance of common stock through stock subscriptions
receivable $ - $ 2,175
Distribution through assumption of long term-debt $ - $ 225,400
Purchase of equipment through capital lease
obligations $ 11,304 $ -

</TABLE>

See notes to financial statements.

<PAGE>

AZUREL LTD.
NOTES TO FINANCIAL STATEMENTS

The financial statements and footnotes for the six months ended June 30,
1996 are unaudited. In the opinion of management, these financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial statements.
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of results that may be expected for the full year.

1. BUSINESS

Azurel Ltd. (the Company ) was incorporated in Delaware on June 26, 1995.
The Company acquired a cosmetic manufacturing plant, Private Label
Cosmetics, Inc. and affiliates (the Private Label Group ) in August 1996.
In July 1996, the Company formed a subsidiary, Scent 123, Inc. (Scent
123"). In October 1996, Scent 123 acquired the assets of Scent Overnight,
Inc. ( Scent ) an overnight delivery service of men s cologne and women's
fragrances. The Company will also market and develop original cosmetic
and fragrance lines.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

a. Accounting estimates - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make significant estimates and assumptions that effect
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.

b. Furniture and equipment - Furniture and equipment are stated at cost
and depreciated using the straight-line method over the estimated
useful lives of the assets.

c. Deferred registration costs - Deferred registration costs will be
charged against additional paid-in capital upon the successful
completion of the Company's proposed public offering. In the event the
offering is not completed, such costs will be charged to expense.

d. Deferred financing costs - Deferred financing costs will be charged to
interest expense over the term of the respective loans.

e. Fair value of financial instruments - The carrying amounts reported in
the balance sheet for cash, receivables, and accrued expenses
approximate fair value based on the short-term maturity of these
instruments.

<PAGE>

f. Income taxes - The Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109). SFAS No. 109 requires
the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and
tax basis of assets and liabilities, and for the expected future tax
benefit to be derived from tax loss and tax credit carryforwards.
SFAS No. 109 additionally requires the establishment of a valuation
allowance to reflect the likelihood of realization of deferred tax
assets.

g. Stock based compensation - The Company accounts for stock transactions
in accordance with APB Opinion No. 25, Accounting For Stock Issued To
Employees. In accordance with Statement of Financial Accounting
Standards No.123, Accounting For Stock-Based Compensation, the
Company intends to adopt the pro forma disclosure requirements of
Statement No. 123 in fiscal 1997.

3. BASIS OF PRESENTATION

The Company's financial statements have been presented on a basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
intends to seek additional equity capital through an initial public
offering to adequately fund operations, working capital needs and growth
plans.

The Company had incurred significant net losses from June 26, 1995
(inception) through December 31, 1995 which raises substantial doubt about
its ability to continue as a going concern. Accordingly, continued
existence is dependent upon the Company's ability to become profitable and
to obtain additional equity capital, neither of which can be assured.

4. DUE FROM STOCKHOLDERS

As of December 31, 1995, the Company is owed $92,380 from stockholders
representing short term non-interest bearing advances.

5. DUE FROM THE PRIVATE LABEL GROUP

<PAGE>

6. LONG-TERM DEBT

The following is a summary of long-term debt:

December 31,
1995

Notes payable to bridge lenders, bearing interest at
12%, payable through June 1997 (a) $249,875

Note payable, bearing interest at 10%, due in June
1996, secured by a pledge of 200,000 shares of common
stock (a) 49,975

Note payable, bearing interest at 8%, due at the
earlier of a public offering or December 31, 1996 210,000

Note payable, bearing interest at 10%, due October
1997 200,000

709,850

Less current portion 259,975

$449,875

<FN>

(a) In accordance with Accounting Principles Board Opinion No. 14 the price
paid for the note payable and bridge financing has been allocated between
the equity and debt securities included in such units based upon their
relative estimated fair values. The difference between the face amount
and the allocated value of the debt has been recorded as a discount on the
notes payable. Such discount, totaling $150 at December 31, 1995, is
being amortized as additional interest expense over the terms of the notes.
In April and July 1996, the notes were repaid from the proceeds of the
sale of the Company's common stock ( common stock ) or converted into
common stock. At that time, the remaining unamortized discount was
immediately charged to expense.
</FN>
</TABLE>

<PAGE>

7. PRIVATE PLACEMENTS AND OTHER FINANCING

a. In July 1995, the Company issued a promissory note in the principal
amount of $28,750 bearing interest at the rate of 10% per annum. The
loan was repaid in September and October 1995. Additionally, the
Company granted the lender the option to purchase 150,000 shares of
common stock at $1.00 per share which expires in five years.

b. In September through December 1995, the Company obtained bridge loans
totaling $250,000. The promissory notes bear interest at the rate of
12% per annum and are payable at the earlier of (i) 18 months from
the date of issuance or (ii) upon the receipt by the Company of gross
proceeds of a minimum of $1,000,000 through any public or private
offering. Additionally, as consideration for the bridge loans, the
Company issued an aggregate of 125,000 shares of common stock to the
lenders. These shares were valued at $125. In July 1996, the notes
were repaid or converted into common stock.

c. In September 1995, the Company issued a promissory note in the
principal amount of $50,000 bearing interest at the rate of 10% per
annum and secured by an aggregate of 200,000 shares of common stock
owned by two officers/directors of the Company. As additional
consideration for the loan, the Company issued 25,000 shares of common
stock valued at $25 and granted the lender the option to purchase
50,000 shares of common stock at $1.00 per share, which expires in
September 2002. The note and accrued interest were repaid in April
1996.

d. In September 1995, the Company was negotiating the purchase of Scent
and assumed a promissory note from Scent in the principal amount of
$210,000 plus accrued interest of $15,400 which was recorded as a
stockholder distribution. The note bears interest at the rate of 8%
per annum and is due at the earlier of December 31, 1996 or upon the
closing of the Company's initial public offering. In October 1996, the
lender converted the principal due under the note into 210,000 shares
of common stock.

e. In October 1995, the Company issued a promissory note in the principal
amount of $200,000. The note bears interest at the rate of 10% per
annum and is due in October 1997. In July 1996, the lender converted
the principal plus accrued interest due under the note into 106,972
shares of common stock.

f. In January 1996, the Company issued a promissory note in the principal
amount of $16,000 bearing interest at the rate of 10% per annum and
due, as to $100,000, in February 1996, and, as to, the remaining
principal plus accrued interest, in March 1996. In consideration for
this loan, the Company issued the lender 25,000 shares of common stock
valued at $38,095 and an option to purchase 50,000 shares of

<PAGE>

common stock at $1.25 per share which was valued at $37,500 and
expires in January 1999. Additionally, the Company issued 25,000
shares of common stock to the lender valued at $50,000 as a penalty
for the Company's late repayment of a portion of the loan. The note
was repaid in February and May 1996.

g. In January 1996, the Company issued a demand promissory note to an
individual in the principal amount of $50,000 bearing interest at the
rate of 8% per annum. The note was repaid in April and May 1996.

h. In February 1996, the Company obtained bridge loans totaling $250,000.
The promissory notes bear interest at the rate of 12% per annum and
are payable at the earlier of (i) two months from the date of
issuance, or (ii) upon the receipt by the Company of gross proceeds
of a minimum of $1,000,000 through any public or private offering.
Additionally, as consideration for the bridge loans, the Company
issued an aggregate of 125,000 shares of common stock to the lenders.
These shares were valued at $125,000. In April and July 1996, the
notes were repaid or converted into common stock.

i. In July 1996, the Company completed a private placement of 978,747
shares of common stock at $2.00 per share. The Company issued 750,000
shares of common stock at $2.00 per share and converted various notes
into 228,747 shares of common stock at $2.00 per share.

j. In August through October 1996, the Company completed a $300,000
private placement of 12 units, each consisting of (i) the Company's
10% promissory note due at the earlier of 12 months or at the closing
of the Company s initial public offering and (ii) a warrant to
purchase up to 25,000 shares of common stock.

8. STOCKHOLDERS' DEFICIT

a. The Company is authorized to issue an aggregate of 10,000,000 shares
of common stock, $.001 par value per share.

b. In July and September 1995, the Company issued 2,175,000 shares of
common stock to the founders of the Company.

c. In July 1995, the Company granted a financial consultant the option to
purchase 150,000 shares of common stock at an exercise price of $1.00
per share, which expires in July 2000.

d. In September 1995, the Company issued 25,000 shares of common stock in
consideration for a $50,000 loan. The shares were valued at $25.
Additionally, the Company granted the lender the option to purchase
50,000 shares of common stock for an exercise price of $1.00 per
share, which expires in September 2002.

<PAGE>

e. In September 1995 through December 1995, the Company issued an
aggregate of 125,000 shares of common stock to eleven bridge lenders
which shares were valued at $125.

f. In September 1995, the Company issued 125,000 shares of common stock
for consulting services which were valued at $125.

g. In January 1996, the Company, in consideration for a $160,000 loan,
issued the lender 25,000 shares of common stock valued at $38,095 and
an option to purchase 50,000 shares of common stock at $1.25 per
share, which was valued at $37,500 and expires in January 1999.
Additionally, the Company issued 25,000 shares of common stock valued
at $50,000 to the lender as a penalty for the Company's late repayment
of a portion of the loan.

h. In February 1996, the Company issued an aggregate of 125,000 shares of
common stock to three bridge lenders which were valued at $125,000.

i. In February and March 1996, the Company issued 60,000 shares of common
stock for professional services which was valued at $120,000.

j. In February through July 1996, the Company issued 750,000 shares of
common stock at $2.00 per share in a private placement.

k. In July 1996, the Company granted a consultant the option to purchase
20,000 shares of common stock at an exercise price of $4.80 per share,
which expire in July 1999. Additionally, the Company issued 5,000
shares of common stock to the consultant for services rendered.

l. In July 1996, the Company converted various notes into 228,747 shares
of common stock at $2.00 per share.

m. In October 1996, the lender of a $210,000 note converted the principal
of the note into 210,000 shares of common stock.

n. In August through October 1996, the Company granted lenders of a
$300,000 private placement warrants to purchase up to 300,000 shares
of common stock at $4.80 per share.

<PAGE>

9. INCOME TAXES

The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ( SFAS No. 109").
SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for the
expected future tax benefit to be derived from tax loss and tax credit
carryforwards. SFAS No. 109 additionally requires the establishment of a
valuation allowance to reflect the likelihood of realization of deferred
tax assets. At December 31, 1995, the Company had net deferred tax assets
of $100,000. The Company has recorded a valuation allowance for the full
amount of the net deferred tax assets.

The following table illustrates the source and status of the Company's
major deferred tax assets and (liabilities):

Net operating loss carryforward $ 100,000

Valuation allowance (100,000)

Net deferred tax asset recorded $ -

The provision for income taxes differs from the amount computed applying
the statutory federal income tax rate to income before income taxes as
follows:

December 31,
1995

Income tax computed at statutory rate $100,000

Tax benefit not recognized (100,000)

Provision for income taxes (benefit) $ -

The Company has net operating loss carryforwards for tax purposes totaling
$272,000 at December 31, 1995 expiring in the year 2010. Substantially all
of the carryforwards are subject to limitations on annual utilization
because there are "equity structure shifts" or "owner shifts" involving
5% stockholders (as these terms are defined in Section 382 of the Internal
Revenue Code), which have resulted in a more than 50% change in
ownership.

10. COMMITMENTS

a. In June 1995, the Company entered into a consulting agreement where
the consultant is to receive shares of the Company's common stock over
a 12 month period.

<PAGE>

b. In February 1996, the Company entered into a guarantee agreement with
Finova Financial Corporation ("Finova") for a $2,000,000 line of
credit for Private Label. Additionally, the Company, on behalf of
Private Label, deposited $250,000 with Finova as security for its
guarantee.

c. In February 1996, the Company advanced Private Label $250,000 to pay a
portion of a jury award rendered in a legal proceeding.

d. The Company had a month to month lease for office space through April
1996. In April 1996, the Company signed a non-cancelable lease for new
office space which expires in April 2001 and requires annual minimum
lease payments of $74,511 plus rent escalations.

e. In May 1996, the Company entered into a license agreement with the
owner of the "Members Only" trademark. The agreement grants the
Company the exclusive right to manufacture and distribute cosmetics
and other items under the "Members Only" mark. The agreement expires
in September 2001, with the Company's option to renew the license
agreement for an additional five year term. Under this agreement,
the Company is to required to pay minimum royalties of $1,225,000
through September 2001.

f. In August 1996, the Company purchased all of the issued and
outstanding capital stock of the Private Label Group for a purchase
price of $2,782,500 of which $131,250 in cash was paid at closing,
$1,758,750 was paid by the delivery of the Company's promissory notes
(which bear interest at the rate of 9% per annum) and $892,500 will
be paid promptly after the closing of the initial public offering by
the issuance of common stock valued at the public offering price.
In addition, upon completion of the closing of the initial public
offering, the Company is to issue to Private Label Group's counsel
such number of shares of common stock as is valued at $7,500.

g. In July 1996, the Company entered into a three year employment
agreement with the sole stockholder ( Stockholder ) of Private Label
which becomes effective upon the closing of the stock purchase and
sale agreement between Private Label and the Company. The Stockholder
will receive a base annual salary of $195,000 with the Stockholder's
option to renew the agreement for an additional two years.
Additionally, the Stockholder will receive a bonus equal to 10% of
Private Label's net profits in excess of $500,000 for the years
ending December 31, 1997 through December 31, 1999.

<PAGE>

h. In July 1996, the Company entered into a brokerage and consulting
agreement with V.A.N. Marketing Ltd. ("VAN"). Under the agreement,
VAN will receive a finder's fee of two and one half percent of the
purchase price of the Private Label Group, 5,000 shares of the
Company's common stock and 20,000 stock options at an exercise price
of $4.80 per share, which expire in July 1999. The finder's fee is
payable as follows: $22,500 upon signing of the contract and the
remaining balance due one year later. Additionally, VAN will
receive for the two years commencing at the close of the contract a
monthly consulting fee of $3,000 for the first twelve months and
$5,000 for the remaining twelve months.

i. In October 1996, the Company acquired all of the assets of Scent
Overnight for (i) a $225,000 promissory note bearing interest at the
rate of 9% per annum and due upon the closing of the Company's initial
public offering, and (ii) the assumption of a promissory note of
$210,000 plus accrued interest of $15,400 (see Note 7 d.).

<PAGE>

<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET (UNAUDITED)

<S> <C> <C> <C> <C> <C> <C>
June 30, 1996
Azurel Private Label Combined Dr Cr As adjusted
ASSETS (Historical)

Cash $ 317,126 $ - $ 317,126 c 216,640 a 237,626 $ 3,543,812
l 4,185,047 b 24,355
j 270,000 d 203,750
m 186,770
n 792,500
Accounts receivable - 1,373,157 1,373,157 1,373,157
Due from stockholders
and related parties 184,480 315,606 500,086 500,086
Due from the Private Label Group 680,000 - 680,000 e 680,000 -
Inventories - 1,102,645 1,102,645 1,102,645
Prepaid expenses 15,909 33,652 49,561 49,561
Total current assets 1,197,515 2,825,060 4,022,575 6,569,261

Property and equipment 31,582 537,457 569,039 569,039

Restricted cash - 250,000 250,000 250,000

Deferred costs 126,297 - 126,297 j 30,000 a 27,917 -
b 13,333
l 85,047
n 30,000
Goodwill - - - d 4,029,654 4,029,654

Other assets 37,715 38,303 76,018 d 31,497 44,521

$ 1,393,109 $ 3,650,820 $ 5,043,929 $ 11,462,475

LIABILITIES AND
STOCKHOLDERS' EQUITY

Cash overdraft $ - $ 65,107 $ 65,107 $ 65,107
Accounts payable - 1,006,944 1,006,944 1,006,944
Accrued expenses 289,399 640,190 929,589 a 29,746 d 47,063 717,146
b 13,964
m 186,770
n 29,026
Customer advances - 155,142 155,142 155,142
Advances by Azurel Ltd. - 680,000 680,000 e 680,000 -
Current portion of long-term debt 671,221 169,989 841,210 a 449,917 k 225,000 181,293
f 210,000 j 300,000
n 525,000
Current portion of capital lease
obligations - 11,243 11,243 11,243
Total current liabilities 960,620 2,728,615 3,689,235 2,136,875

Long-term debt 200,000 1,963,335 2,163,335 b 200,000 d 1,758,750 3,564,585
n 157,500
Capital lease obligations - 22,464 22,464 22,464
200,000 1,985,799 2,185,799 3,587,049

Stockholders' equity (deficit) 232,489 (1,063,594) (831,105) k 225,000 a 214,120 5,738,551
n 110,974 b 176,276
c 216,640
d 1,988,594
f 210,000
l 4,100,000

$ 1,393,109 $ 3,650,820 $ 5,043,929 $ 11,549,238 $ 11,549,238 $ 11,462,475
=========== =========== =========== ============ ============ ============
</TABLE>

<PAGE>

PRO FORMA FINANCIAL STATEMENTS

The following pro forma financial statements at June 30, 1996 and for the six
months ended of the Company and Private Label are based on historical
financial data of the aforementioned companies, and giving effect to the
acquisition of Private Label as if the acquisition had occurred on January 1,
1996 for the pro forma statement of operations and as of June 30, 1996 for the
pro forma balance sheet. These pro forma financial statements are not
necessarily indicative of the results that will be achieved for future periods.
These pro forma financial statements should be read in conjunction with the
Company's financial statements and the financial statements of Private Label
and included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
Pro forma Statement of Operations (Unaudited)

<S> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1996
Azurel Private Label Combined Adjustments As adjusted
Dr Cr
(Historical)

Net Sales $ - $ 4,964,430 $ 4,964,430 $ 4,964,430

Cost of Sales - 4,018,303 4,018,303 4,018,303

Gross Profit - 946,127 946,127 946,127

Selling, General and
Administrative Expenses 415,651 969,231 1,384,882 1,384,882

Amortization expense - - - g 100,742 100,742

Income (Loss) From
Operation (415,651) (23,104) (438,755) (539,497)

Other Expenses:

Interest Expense 317,584 113,320 430,904 h 79,144 i 216,728 293,320

317,584 113,320 430,904 293,320

Net (Loss) $ (733,235) $ (136,424) $ (869,659) $ (832,817)

</TABLE>

<PAGE>

PRO FORMA FINANCIAL STATEMENTS

The following pro forma financial statements for the year ended
December 31, 1995 of the Company and Private Label are based
on historical financial data of the aforementioned companies, as if
the acquisition of Private Label had occurred at the beginning of
the fiscal year ended December 31, 1995 for the statement of
operations. These pro forma financial statements are not necessarily
indicative of the results that will be achieved for future periods.
These pro forma financial statements and the notes thereto should
be read in conjunction with the Company's financial statements and
the financial statements of Private Label included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
Pro forma Statement of Operations (Unaudited)

<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1995
Azurel Private Label Combined Adjustments As adjusted
Dr Cr
(Historical)

Net Sales $ - $ 8,413,225 $ 8,413,225 $ 8,413,225

Cost of Sales - 6,627,898 6,627,898 6,627,898

Gross Profit - 1,785,327 1,785,327 1,785,327

Selling, General and
Administrative Expenses 259,637 2,103,320 2,362,957 2,362,957

Amortization expense - - - g 201,483 201,483

Income (Loss) From
Operation (259,637) (317,993) (577,630) (779,113)

Other Expenses:

Interest Expense 17,559 197,663 215,222 h 158,288 i 9,249 364,261

17,559 197,663 215,222 364,261

Net (Loss) $ (277,196) $ (515,656) $ (792,852) $ (1,143,374)

</TABLE>

<PAGE>

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(1) The unaudited pro forma balance sheet at June 30, 1996 and statement of
operations for the six months ended June 30, 1996 and year ended
December 31, 1995 presents pro forma results of operations of the Company
and the Private Label Group as if the acquisition of the Private Label
Group had occurred at the beginning of the period. It should not be
considered indicative of the results that would have been achieved had the
acquisition actually occurred on such date.

(2) The acquisition of the Private Label Group has been accounted for under the
purchase method of accounting. The excess of the purchase price over net
assets acquired has been allocated to goodwill and amortized over 20 years.

(3) The acquisition of Scent has been accounted for as a distribution from
stockholders' equity.

(4) The following adjustments to the pro forma financial statements described
in (a) through (k) below reflect transactions post June 30, 1996 that have
a material impact on the financial statements:

(a) The payment of bridge loans plus interest totaling $237,626 and the
conversion of the remaining bridges plus interest totaling $243,550
to common stock, less commissions of $24,355.

(b) The conversion of a note plus interest of $213,964 to common stock for
$2.00 per share.

(d) Purchase of the Private Label Group for (i) $131,250 payable in cash,
(ii) issuance of the Company's 9% note in the principal amount for
$1,758,750, payable in nine installments of principal and interest,
(iii) payment of finders fee totaling $79,563 payable in cash of
$22,500 and the remaining balance due within one year of $47,063 plus
the issuance of 5,000 shares of common stock at $2.00 per share and
(iv) the issuance of 180,000 shares of common stock at $5.00 per share
totaling $900,000.

(e) Elimination of advances from the Company to the Private Label Group.

(f) The conversion of a $210,000 note to common stock at $1.00 per share.

(g) The amortization of goodwill arising from the acquisition of the
Private Label Group over 20 years.

<PAGE>

(h) To record the interest on notes totaling $1,758,750 from the Private
Label Group acquisition at 9% per annum.

(i) Elimination of interest expense on long term debt due to payment or
conversion of notes.

(j) Proceeds of $300,000 from financing net of commissions and fees of
$30,000.

(k) Purchase of Scent with a $225,000 promissory note bearing interest
at 9%.

(5) The following adjustments to the pro forma financial statements described
in (l) through (n) below reflect gross proceeds and applications of the
net proceeds of the Offering:

(l) The receipt of the gross proceeds of the Offering, $5,000,000, less
estimated costs of the Offering, including the Underwriters' discounts
and commissions and the Representative's non-accountable expense
allowance, $900,000.

(m) Payment of consulting fees $186,770 from the proceeds of the offering.

(n) Payment of the following notes and interest: (i) first installment of
$157,500 on notes from the Private Label Group acquisition plus
interest (ii) principal and interest due under promissory note of
$225,000 (iii) principal and interest due under promissory notes of
$300,000 (iv) interest due under note assumption of $210,000 (see (f)
above).

<PAGE>

No underwriter, dealer, salesman or
other person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus, and,
if given or made, such information
or representation must not be relied
upon as having been authorized by the
Company or the Underwriter. This
Prospectus does not constitute an AZUREL LTD.
offer or solicitation to any person 1,000,000 Shares of Common Stock and
in any jurisdiction where such offer 1,000,000 Redeemable Common Stock
or solicitation would be unlawful. Purchase Warrants
Neither delivery of this Prospectus
nor any sale hereunder shall, under
any circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
hereof.

TABLE OF CONTENTS
Page
Prospectus Summary.....................
Risk Factors...........................
Dilution...............................
Capitalization.........................
Use of Proceeds........................
Dividend Policy........................
Summary of Financial
Information...........................
Management's Discussion and
Analysis of Financial
Condition and Results
of Operations......................... PROSPECTUS
Business................................
Management..............................
Principal Stockholders..................
Certain Transactions....................
Description of Securities...............
Underwriting............................
Concurrent Registration of
Securities.............................
Legal Matters...........................
Experts.................................
Additional Information.................. __________ , 1996
Financial Statements....................

Until _______, 1996 (25 days after the
date of this Prospectus), all dealers
effecting transactions in the Company's
securities, whether or not participating
in this distribution, may be required to
deliver a Prospectus. This is in addition
to the obligation of dealers to deliver a
Prospectus with respect to their unsold
allotments or subscriptions.

<PAGE>

[Alternate Page for Selling Securityholder Prospectus]

SUBJECT TO COMPLETION, DATED _________, 1996

PROSPECTUS

AZUREL LTD.
1,478,747 Shares of Common Stock, $.0001 par value
300,000 Redeemable Common Stock Purchase Warrants

This prospectus relates to 1,478,747 shares (the "Selling
Securityholders' Shares") of Common Stock, $.0001 par value per share (the
"Common Stock") of Azurel Ltd. (the "Company"), which are being offered for sale
by certain selling securityholders (the "Selling Shareholders"). This prospectus
also relates to 300,000 Redeemable Warrants (the "Selling Securityholders'
Warrants") and the 300,000 shares of Common Stock issuable upon exercise thereof
which are being offered for sale by certain Selling Warrantholders (the "Selling
Warrantholders"); the Selling Shareholders and Selling Warrantholders are
referred to collectively as the "Selling Securityholders." Each Redeemable
Warrant entitles the holder to purchase one share of Common Stock at $___ per
share for a period of _____ years commencing ____ years from the date of this
Prospectus. (The Selling Shareholders' Shares and Selling Warrantholders
Warrants are collectively referred to as the Securityholders' Securities). The
Selling Shareholders may not sell or otherwise dispose of any of the Selling
Securityholders' Shares for a period of between six (6) months and twenty-four
(24) months after the Effective Date without the prior written consent of the
Underwriter. The Selling Shareholders may not sell or otherwise dispose of any
such Securityholders' Shares. The Selling Warrantholders may not sell or
otherwise dispose of any of the Selling Securityholders' Warrants for a period
of between three (3) months and twenty-four (24) months after the Effective Date
without the prior written consent of the Underwriter. See "Selling
Securityholders and Plan of Distribution."

The Company will not receive any of the proceeds from the sales of the
Selling Securityholders' Securities by the Selling Securityholders. The Company
is paying the expenses incurred in connection with the registration for sale of
the Selling Securityholders' Securities. The Selling Securityholders' Securities
may be offered from time to time by the Selling Securityholders, their pledges
and/or their donees (who will be identified in a prospectus supplement as
appropriate), through ordinary brokerage transactions in the over-the-counter
market, in negotiated transactions or otherwise, at market prices prevailing at
the time of sale at negotiated prices.

The Selling Securityholders, their pledges and/or their donees, may be
deemed to be "Underwriters" as defined in the Securities Act of 1933, as amended
(the "Securities Act"). If any broker-dealers are used by the Selling
Securityholders, their pledgees and/or their donees, any commissions paid to
broker-dealers and, if broker-dealers purchase any Selling Securityholders'
Securities as principals, any profits received by such broker-dealers on the
resale of the Selling Securityholders' Securities may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
profits realized by the Selling Securityholders, their pledgees and/or their
donees, may be deemed to be underwriting commissions. All costs, expenses and
fees in connection with the registration of the Selling Securityholders'
Securities will be borne by the Company except for any commission paid to

<PAGE>

broker-dealers.

The Selling Securityholders' Securities offered by the Prospectus may
be sold from time to time by the Selling Securityholders, their pledgees and/or
their donees. No underwriting arrangements have been entered into by the Selling
Securityholders. The distribution of the Selling Securityholders' Securities by
the Selling Securityholders, their pledgees and/or their donees, may be effected
in one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders, their pledgees and/or their donees, in connections with sales
of the Selling Securityholders' Securities.

On the date of this Prospectus, a registration statement under the
Securities Act with respect to an underwritten public offering of 1,000,000
shares of Common Stock and 1,000,000 Redeemable Warrants (without giving effect
to the Underwriters' over-allotment option to purchase an additional 150,000
shares of Common Stock and/or 150,000 Redeemable Warrants (the "Over-Allotment
Option") was declared effective by the Securities and Exchange Commission. In
connection with the Offering of the Common stock and Redeemable Warrants, the
Company granted the Underwriter warrants to purchase 100,000 shares of Common
Stock and/or 100,000 Redeemable Warrants (the "Underwriter's Warrant").

--------------------------

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OR RISK.
SEE "RISK FACTORS" AND "DILUTION" COMMENCING ON PAGES 11 AND 21, RESPECTIVELY,
OF THIS PROSPECTUS.

--------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSIONER ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

[Alternate Page for Selling Securityholder Prospectus]

THE OFFERING

Securities Offered (1) 1,478,747 shares of Common Stock and 300,000
Redeemable Warrants

Common Stock Outstanding Before 3,878,747
the Offering(2)

Common Stock Outstanding After the 5,058,747
Offering(2)(3)

Redeemable Warrants Outstanding 1,300,000
After the Offering(4)

Terms of the Redeemable Warrants Each Redeemable Warrant is exercisable from
one year of the date of this Prospectus to
five years of the date of this Prospectus
and entitles the holder thereof to purchase
one share of Common Stock at an exercise
price of $___, [120% of the initial public
offering price per share of Common Stock]
subject to adjustment in certain
circumstances (the "Exercise Price"). The
Redeemable Warrants are redeemable by the
Company, at any time commencing one year
after the date of this Prospectus, at a
price of $.10 per Redeemable Warrant,
provided that the closing bid price of the
Common Stock on NASDAQ exceeds 150% of the
Exercise Price for a period not less than 20
trading days in any 30 trading day period
ending not more than 15 days prior to the
day on which the Company gives notice of
redemption. See "Description of
Securities-Redeemable Warrants."

Use of Proceeds The Company intends to use the net proceeds
of this Offering for repayment of
indebtedness incurred in connection with
acquisitions and bridge financings,
marketing, to purchase inventory, to pay
accrued expenses and for working capital.

<PAGE>

Risk Factors The Securities involve a __________ , 1996
and immediate substantial dilution and should
not be purchased by investors who cannot
afford to lose their entire investment.
Prospective investors should consider
carefully the factors set forth under
"Risk Factors" and "Dilution."

Proposed NASDAQ Common Stock - AZUR
Symbols (5) Redeemable Warrants - AZURW

(1) Does not include (i) 1,000,000 shares of Common Stock, and (ii)
1,000,000 shares of Common stock issuable upon exercise of Redeemable
Warrants being offered by the Company.

(2) Does not include (i) up to 750,000 shares of Common Stock reserved for
issuance pursuant to stock options which may be granted pursuant to the
Company's 1996 Stock Option Plan, (ii) 270,000 shares of Common Stock
reserved for issuance pursuant to options and warrants issued in
connection with financing and consulting agreements or (iii) 300,000
shares of Common Stock reserved for issuance pursuant to Redeemable
Warrants being offered hereby. See "Management - Stock Option Plan" and
"Certain Transactions."

(3) Does not include (i) up to an additional 150,000 shares of Common Stock
and 150,000 Redeemable Warrants issuable upon exercise of the
Underwriter's Over-Allotment Option; (ii) 150,000 shares of Common
Stock issuable upon exercise of the Redeemable Warrants included in the
Underwriter's Over-Allotment Option; (iii) 1,000,000 shares of Common
Stock reserved for issuance upon the exercise of the Redeemable
Warrants offered by the Company; (iv) up to 100,000 shares of Common
Stock issuable upon exercise of the Underwriter's Warrants or (v) up to
100,000 shares of Common Stock issuable upon exercise of the Redeemable
Warrants included in the Underwriter's Warrants. Includes (i) 1,000,000
shares of Common Stock offered by the Company and (ii) 180,000 shares
of Common Stock issuable upon the closing of this Offering in
connection with the acquisition of the companies comprising the Private
Label Group. See "Description of Securities," "Underwriting,"
"Concurrent Registration of Securities" and "Certain Transactions."

(4) Does not include (i) 150,000 Redeemable Warrants issuable upon exercise
of the Underwriter's Over-Allotment Option or (ii) 100,000 Redeemable
Warrants issuable upon exercise of the Underwriter's Warrants. Includes
1,000,000 Redeemable Warrants offered by the Company. See
"Underwriting."

(5) The proposed trading symbols do not imply that an active trading market
will develop for the Common Stock or Redeemable Warrants upon the
completion of this Offering.

<PAGE>

[Alternate Page for Selling Securityholder Prospectus]

SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION

The Company has issued an aggregate of 1,478,747 shares of Common Stock
to the Selling Securityholders and 300,000 Redeemable Warrants that are being
offered pursuant to this Prospectus. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources." The Selling Securityholders have advised the Company that sales of
the shares of Common Stock and Redeemable Warrants may be effected form
time-to-time by themselves, their pledgees and/or their donees, in transactions
(which may include block transactions) in the over-the-counter market, in
negotiated transactions, through the writing of options on the Common Stock and
Redeemable Warrants, or a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, or at
negotiated prices. The Selling Securityholders, their pledgees and/or their
donees, may effect such transactions by selling Common Stock and Redeemable
Warrants directly to purchasers or through broker-dealers that may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholder and/or the
purchasers of shares of Common Stock for whom such broker-dealers may act as
agents or to whom they sell as principals, or both.

The Selling Securityholders, their pledgees and/or their donees, any
broker-dealers that act in connection with the sale of the shares of Common
Stock and Redeemable Warrants as principals may be deemed to be "Underwriters"
within the meaning of Section 2(11) of the Securities Act and any commissions
received by them and any profit on the resale of the shares of Common Stock and
Redeemable Warrants as principals might be deemed to be underwriting discounts
and commissions under the Securities Act. The Selling Securityholders'
Securities being registered on behalf of the Selling Securityholders are
restricted securities while held by the Selling Securityholders and the resale
of such securities by the Selling Securityholders is subject to prospectus
delivery and other requirements of the Act. The Selling Securityholders, their
pledgees and/or their donees, may agree to indemnify any agent, dealer or
broker-dealer who participates in transactions involving sale of the shares of
Common Stock and Redeemable Warrants against certain liabilities, including
liabilities arising under the Securities Act. The Company will not receive any
proceed from the sales of the Selling Securityholders' Shares by the Selling
Securityholders. Sales of the Selling Securityholders' Securities by the Selling
Securityholders, or even the potential of such sales, would likely have an
adverse effect on the market price of the Company's Securities.

At the time a particular offer of the securities is made by or on
behalf of the Selling Securityholders, to the extent required, a prospectus
supplement will be distributed which will set forth the number of shares being
offered and the terms of the Offering, including the name or names of any
Underwriters, dealers or agents, the purchase price paid by any Underwriters for
shares purchased from the selling stockholders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public.

Under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the regulations thereto, any person engaged in distribution of
Company securities offered by this

<PAGE>

prospectus may not simultaneously engage in market-making activities with
respect to Company securities during the applicable "cooling off" period prior
to the commencement of such distribution. In addition, and without limiting the
foregoing, the Selling Securityholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including without
limitation, Rules 10b-6 and 10b-7, in connection with transactions in the
shares, which provisions may limit the timing of purchases and sales of the
Company's securities by the Selling Securityholders.

The following table sets forth certain information with respect to
persons for whom the Company is registering the Selling Securityholders' Shares
for resale to the public. The Company will not receive any of the proceeds from
the sale of the Selling Securityholders' Securities. Beneficial ownership of the
Selling Securityholders' Securities by such Selling Securityholders after the
Offering will depend on the number of Selling Securityholders' Securities sold
by each Selling Securityholder. The securities held by the Selling
Securityholders are restricted securities while held by such Selling
Securityholders and the resale of such securities by the Selling Securityholders
is subject to prospectus delivery and other requirements of the Act. The Selling
Securityholders' Securities offered by the Selling Securityholders are not being
underwritten by the Underwriter.

<PAGE>

[Alternate Page for Selling Securityholder Prospectus]

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Beneficial Beneficial
Ownership Ownership
Prior to Selling After Selling
Securityholder's Amount Securityholder's
Offering Being Registered Offering
------------------------------- ------------------------- ------------------------
Redeem- Redeem-
Redeemable able able
Securityholder Shares Warrants (1) Shares Warrants (1) Shares Warrants (1)
- -------------- ------ -------- ------ -------- ------ --------
Margaret Amarante 0 50,000 0 50,000 0 0
Vahik Babaian 50,000 0 50,000 0 0 0
David Edward Blockstein 12,500 0 12,500 0 0 0
Bola Business Ltd. 25,000 50,000 25,000 0 0 50,000
Richard J. Brown 12,500 0 12,500 0 0 0
Larry Bucsek 25,000 0 25,000 0 0 0
Anthony Cirillo IRA 7,500 0 7,500 0 0 0
Anthony Cirillo 5,000 0 5,000 0 0 0
David's Art, Inc. 25,000 0 25,000 0 0 0
Drew Dellinger 26,220 0 26,220 0 0 0
ETR & Associates, Inc. 25,000 150,000 25,000 0 0 150,000
Derek Ferguson 25,000 0 25,000 0 0 0
Jeffrey P. & Jacalyn K. Flack 25,000 0 25,000 0 0 0
Mark Frankel 25,000 0 25,000 0 0 0
Steven M. Frankel 25,000 0 25,000 0 0 0
Shelby Goldring 10,358 0 10,358 0 0 0
Ronald I. Harris 10,358 0 10,358 0 0 0
Angela James 0 50,000 0 50,000 0 0
Fred Kassner 250,000 0 250,000 0 0 0
William Kennedy 62,500 0 62,500 0 0 0
Leona Financial Ventures, Inc. 25,000 0 25,000 0 0 0
Bruce Levenbrook 10,358 0 10,358 0 0 0
Leventhal, Paget LLC 25,000 0 25,000 0 0 0
Ronald S. Mack IRA 10,321 0 10,321 0 0 0
Metco Investors LLC 150,000 75,000 150,000 25,000 0 50,000
Michalaur International 18,750 50,000 0 50,000 18,7500 0
Robert Molfetta 0 25,000 0 25,000 0 0
Robert E. Murello 0 50,000 0 50,000 0 0
Betty Presley 26,216 0 26,216 0 0 0
Wayne Robbins 26,220 0 26,220 0 0 0
Robert J. Roehrich 25,000 0 25,000 0 0 0
Alan J. Rubin 25,000 0 25,000 0 0 0
David E. Ruggieri 50,000 0 50,000 0 0 0

<PAGE>

Robert J. Stein 12,500 0 12,500 0 0 0
Tusany Investment &
Trade S.A. 1,559,355 50,000 309,355 50,000 1,250,000 0
Woodward Partners 50,000 0 50,000 0 0 0
Wolfe Financial Group, Inc. DIP 73,750 0 73,750 0 0 0
Louis D. Zachau 13,091 0 13,091 0 0 0

- ------------
<FN>
(1) Represent Redeemable Warrants acquired by the Selling Securityholders
in exchange for warrants containing substantially identical terms
pursuant to an exchange exempt from registration under Section 3(a)(9) of
the Securities Act.
</FN>
</TABLE>

II-16

<PAGE>

[Alternate Page for Selling Securityholder Prospectus]

LEGAL MATTERS

EXPERTS

ADDITIONAL INFORMATION

<PAGE>

No underwriter, dealer, salesman or
other person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus, and,
if given or made, such information or
representation must not be relied upon
as having been authorized by the
Company or the Underwriter. This AZUREL LTD.
Prospectus does not constitute an 1,478,747 Shares of Common Stock and
offer or solicitation to any person 300,000 Redeemable Common Stock
in any jurisdiction where such offer Purchase Warrants
or solicitation would be unlawful.
Neither delivery of this Prospectus
nor any sale hereunder shall, under
any circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
hereof.

TABLE OF CONTENTS
Page
Prospectus Summary.....................
Risk Factors...........................
Dilution...............................
Capitalization.........................
Use of Proceeds........................
Dividend Policy........................
Summary of Financial
Information...........................
Management's Discussion and
Analysis of Financial
Condition and Results
of Operations........................ PROSPECTUS
Business...............................
Management.............................
Principal Stockholders.................
Certain Transactions...................
Description of Securities..............
Underwriting...........................
Concurrent Registration of
Securities............................
Legal Matters..........................
Experts................................ _____________ , 1996
Additional Information.................
Financial Statements...................

Until _____, 1996, (25 days after
the date of this Prospectus, all dealers
effecting transactions in the Company's
securities, whether or not participating
in this distribution, may be required to
deliver a Prospectus. This is in
addition to the obligation of dealers
to deliver a Prospectus with respect to
their unsold allotments or subscriptions.

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law, among other
things, and subject to certain conditions, authorizes the Company to indemnify
its officers and directors against certain liabilities and expenses incurred by
such persons in connection with claims made by reason of their being such an
officer or director. The Certificate of Incorporation and By-Laws of the Company
provide for indemnification of its officers and directors to the full extent
authorized by law.

Reference is made to the Underwriting Agreement, the proposed form of
which is filed as Exhibit 1.1, pursuant to which the Underwriter agrees to
indemnify the directors and certain officers of the Registrant and certain other
persons against certain civil liabilities.

Item 25. Other Expenses of Issuance and Distribution

The following is a statement of the estimated expenses to be paid by
the Company, after payment of commissions and expenses to the Underwriter, in
connection with the issuance and distribution of the securities being
registered:

SEC Registration Fee...................................................$7,500*
NASD Filing Fee.........................................................3,000*
NASDAQ Filing Fee......................................................10,000*
Printing and Engraving Expenses........................................50,000*
Legal Fees and Expenses (other than blue sky).........................120,000*
Accounting Fees and Expenses..........................................110,000*
Blue Sky Fees and Expenses.............................................35,000*
Transfer Agent and Registrar Fees and Expenses..........................4,500*
Miscellaneous..........................................................10,000*
TOTAL.......................................................$350,000*
*Estimated

Item 26. Recent Sales of Unregistered Securities

During the past three years, the Company has issued securities to a
limited number of persons, without registering the securities under the
Securities Act. There were no underwriting discounts or commissions paid in
connection with the issuance of any of said securities, except as noted.

In reliance upon Section 4(2) of the Securities Act, which provides an
exemption for a

II-1

<PAGE>

transaction not involving a public offering, in June and September 1995, the
Company issued an aggregate of 2,175,000 shares of Common Stock to the twelve
founders of the Company: Gerard Semhon, Constantine Bezas, Joseph Truitt Bell,
Van Christakos, Diane Papas, Tusany Investment & Trade, S.A., Edward Pedersen,
Kenneth Lee, James G. Cooley, Michalaur International, Valerie A. Profitt and
Leslie Bines.

The Company issued an aggregate of 75,000 shares of Common Stock to the
Consulting Group in 1995 in exchange for consulting services. The issuance was
made in reliance upon Section 4(2) of the Securities Act, which provides an
exemption for a transaction not involving a public offering.

In 1995 and 1996, the Company issued 100,000 shares of Common Stock to
Metco in exchange for consulting services. The issuance was made in reliance
upon Section 4(2) of the Securities Act, which provides an exemption for a
transaction not involving a public offering.

In July 1995, the Company granted ETR an option to purchase 150,000
shares of Common stock at $1.00 per share, which expires in July 2000, as
additional consideration for a loan. The issuance was made in reliance upon
Section 4(2) of the Securities Act, which provides an exemption for a
transaction not involving a public offering.

In September 1995, the Company issued Bola 25,000 shares of Common
Stock and granted Bola the option to purchase 50,000 shares of Common Stock at
$1.00 per share, which expires in September 2002, as additional consideration
for a loan. The issuance was made in reliance upon Section 4(2) of the
Securities Act, which provides an exemption for a transaction not involving a
public offering.

In December 1995, the Company completed a $250,000 private placement of
units in reliance upon Rule 506 of Regulation D of the Securities Act, which
provides an exemption for a transaction not involving a public offering. Each
unit consisted of (i) the Company's 18 month 12% promissory note in the original
principal amount of $50,000, and (ii) 25,000 shares of Common Stock. The Company
received $210,000 of net proceeds after deducting expenses of $7,500 and
commissions of $32,500 to the Underwriter for acting as placement agent. In
connection with this private placement, the Company issued the securities
described in the following table to 11 unaffiliated investors, each an
"accredited investor" within the meaning of Regulation D of the Securities Act:

<TABLE>
<S> <C> <C>
Dollar Amount of Number of
Name Note Purchased Shares Issued

Drew Dellinger $25,000 12,500
Wayne Robbins $25,000 12,500
Betty Presley $25,000 12,500
William Kennedy $25,000 12,500

II-2

<PAGE>

Louis D. Zachau $12,500 6,250
Larry Bucsek $50,000 25,000
Ronald I. Harris $10,000 5,000
Shelby Goldring $10,000 5,000
Bruce Levenbrook $10,000 5,000
Wolf Financial Group Inc., DIP $47,500 23,750
Ronald S. Mack - IRA $10,000 5,000
</TABLE>

In February 1996, the Company completed a $250,000 private placement of
units in reliance upon Rule 506 of Regulation D of the Securities Act, which
provides an exemption for a transaction not involving a public offering. Each
unit consisted of (i) the Company's 18 month 12% promissory note in the original
principal amount of $50,000, and (ii) 25,000 shares of Common Stock. The Company
received $210,000 of net proceeds (after deducting expenses of $7,500 and
commissions of $32,500 to the Underwriter for acting as the placement agent. In
connection with this private placement, the Company issued the securities
described in the following table to two affiliated and one unaffiliated
investors, each an "accredited investor" within the meaning of Regulation D of
the Securities Act:

<TABLE>
<S> <C> <C>
Dollar Amount Number of
of Note Shares
Name Purchased Issued

Wolf Financial Group Inc., DIP $100,000 50,000
Bola Business Ltd. $ 50,000 25,000
Tusany Investment & Trade, S.A. $100,000 50,000
</TABLE>

In February 1996, the Company issued 10,000 shares of Common Stock in
exchange for legal services rendered to the Company. The issuance was made in
reliance upon Section 4(2) of the Securities Act, which provides exemptions for
transactions not involving a public offering.

In March 1996, the Company issued Metco 25,000 shares of Common Stock
and an option to purchase 50,000 shares of Common Stock at $1.25 per share,
which expires in January 1999, in consideration for a loan. In March 1996, the
Company issued an additional 25,000 shares of Common Stock to Metco as a penalty
for the Company's late payment of a portion of this loan. These issuances were
made in reliance upon Section 4(2) of the Securities Act, which provides an
exemption for a transaction not involving a public offering.

In July 1996, the Company completed a private placement of 978,747
shares of Common Stock at $2.00 per share in reliance upon Rule 506 of
Regulation D of the Securities Act, which provides an exemption for a
transaction not involving a public offering. The Company received $1,314,950 of
net proceeds after deducting expenses of $11,050 and commissions of $174,000 to
the Underwriter for acting as placement agent. As part of this private
placement, certain

II-3

<PAGE>

noteholders of the Company converted $457,494 principal amount and interest into
Common Stock. In connection with this private placement, the Company issued the
securities described in the following table to 24 unaffiliated and one
affiliated investor, each an "accredited investor" within the meaning of
Regulation D of the Securities Act:

<TABLE>
<S> <C> <C>
Number
of Shares
Name Purchase Price of Common Stock

Alan J. Rubin $50,000 25,000
Vahik Babaian $100,000 50,000
William M. Kennedy $100,000 50,000
David's Art, Inc. d/b/a Art Connection $50,000 25,000
Derek C. Ferguson $50,000 25,000
Mark Frankel $50,000 25,000
Steven M. Frankel $50,000 25,000
Levanthal, Paget LLC $50,000 25,000
Fred Kassner $500,000 250,000
David E. Ruggieri $100,000 50,000
Jeffrey P. & Jacalyn K. Flack $50,000 25,000
David Edward Blockstein $25,000 12,500
Robert J. Roehrich $50,000 25,000
Richard J. Brown $25,000 12,500
Robert J. Stein $25,000 12,500
Anthony and Maya Cirillo $25,000 12,500
Tusany Investment & Trade, S.A. $518,710 259,355
Drew Dellinger $27,440 13,720
Wayne Robbins $27,440 13,720
Betty Presley $27,432 13,716
Louis Zachau $13,682 6,841
Ronald Harris $10,716 5,358
Shelby Goldring $10,716 5,358
Bruce Levenbrook $10,716 5,358
Ronald Mack-IRA $10,642 5,321
</TABLE>

In October 1996, the Company completed a $300,000 private placement of
units in reliance upon Rule 506 of Regulation D of the Securities Act, which
provides an exemption for a transaction not involving a public offering. Each
unit consisted of (i) the Company's 12 month 10% promissory note in the original
principal amount of $25,000, and (ii) a warrant to purchase up to 25,000 shares
of Common Stock. The Company received net proceeds of $270,000 after deducting
commissions of $30,000 to the Underwriter for acting as placement agent. In
connection with this private placement, the Company issued the securities
described

II-4

<PAGE>

in the following table to three affiliated and four unaffiliated investors, each
an "accredited investor" within the meaning of Regulation D of the Securities
Act:

<TABLE>
<S> <C> <C>
Dollar Amount Number of
Name of Note Purchased Warrants Issued

Michalaur International $50,000 50,000
Robert E. Murello $50,000 50,000
Margaret Amarante $50,000 50,000
Angela James $50,000 50,000
Metco Investors LLC $25,000 25,000
Robert Molfetta $25,000 25,000
Tusany Investment & Trade,
S.A. $50,000 50,000
</TABLE>

Item 27. List of Exhibits

Exhibit Number Description of Exhibit

1.1* Form of Underwriting Agreement

1.2* Form of Financial Advisory and Investment Banking Agreement.

3.1 Certificate of Incorporation of the Registrant.

3.2 By-Laws of the Registrant.

4.1* Specimen Common Stock Certificate.

4.2* Specimen Redeemable Common Stock Purchase Warrant.

4.3* Form of Public Warrant Agreement.

4.4* Form of Warrant Agreement between the Registrant and Network
1, including Form of Underwriter's Warrant Certificate.

5.1 Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP.

10.1 Employment Agreement between the Registrant and Gerard
Semhon dated October 28, 1996.

10.2 Employment Agreement between the Registrant and Michael J.
Assante dated August 22, 1996.

II-5

<PAGE>

10.3* Lease for 509 Madison Avenue, New York, New York 10022 dated
April 29, 1996.

10.4* Lease for 20-10 Maple Avenue, Fair Lawn, New Jersey dated
April 11, 1991.

10.5* License Agreement between the Registrant and Europe Craft
Imports, Inc. dated May 15, 1996.

10.6 Stock Purchase and Sale Agreement dated July 17, 1996 by and
among Michael J. Assante, Azurel Ltd., Private Label
Cosmetics, Inc., P.L.C. Specialties, Inc., International
Cosmetic Group, Inc. and Fashion Laboratories, Inc.

10.7 Agreement by and between Scent Overnight, Inc. and Scent 123,
Inc. dated September 9, 1996.

10.8* Registrant's 1996 Stock Option Plan.

21.1* Subsidiaries of the Registrant.

23.1 Consent of Independent Certified Public Accountants for the
Registrant.

23.2* Consent of Gersten, Savage, Kaplowitz & Curtin, LLP counsel
for Registrant (included in Exhibit 5.1).

24.1 Power of Attorney (Included with signature page).

* To be filed by amendment.

Item 28. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a) of the Securities
Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material changes to such information in the registration statement:

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

The undersigned Registrant hereby undertakes to provide to the underwriter at
the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to any charter provision, by-law contract
arrangements statute, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

For purposes of determining any liability under the Securities Act, treat the
information omitted from the from of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or
497(h), under the Securities Act as part of this registration statement as of
the time the Commission declared it effective.

For purposes of determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement at that time as the initial bona fide offering of those
securities.

II-7

<PAGE>

SIGNATURES

In accordance with the requirements to the Securities Act of 1933, the
Registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and has authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York on ____________, 1996.

AZUREL LTD.

By:/s/ Gerard Semhon
Gerard Semhon, Chief Executive
Officer and Chairman of the Board
(Principal Executive Officer,
Principal Financial and Accounting
Officer)

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Gerard Semhon, Chief Executive Officer,
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, and
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same and all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date

/s/ Gerard Semhon Chief Executive Officer and _______, 1996
Gerard Semhon Chairman of the Board (Principal
Executive Officer, Principal
Financial and Accounting Officer)

/s/ Constantine Bezas President and Director _______, 1996
Constantine Bezas

/s/ Joseph Truitt Bell Executive Vice President and Director _______, 1996
Joseph Truitt Bell

/s/ Van Christakos Secretary, Treasurer and Director _______, 1996
Van Christakos

CERTIFICATE OF INCORPORATION
OF
Azurel Ltd.

FIRST: The name of the Corporation is Azurel Ltd.
SECOND: Its registered office is to be located at Chemical Bank Plaza, Suite
1600, 1201 N. Market St., Wilmington, DE 19801, County of New Castle. The
registered agent is American Incorporators Ltd. whose address is the same as
above.
THIRD: The nature of the business and purpose of the corporation is to engage
in any lawful act or activity for which corporations may be organized under the
Delaware General Corporation Laws.
FOURTH: The amount of total authorized capital stock of the corporation is one
thousand five hundred (1,500). All such shares are to be without par value and
are to be of one class.
FIFTH: The name and mailing address of the incorporator is as follows

Jennifer C. Plescia
Chemical Bank Plaza, Suite 1600
1201 N. Market Street
Wilmington, DE 19801

SIXTH: The powers of the undersigned incorporator will terminate upon filing
of the certificate of incorporation. The name and mailing address of the
person(s) who will serve as initial director(s) until the first annual meeting
of stockholders or until a successor(s) is elected and qualified are:

Gerard Semhon
c/o Sam & Joe
160 5th Avenue, Suite 604
New York, NY 10010

SEVENTH: Each person who serves or who has served as a director shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability or a director: (i) for any breach of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payment of dividend or unlawful stock purchase or
redemption as such liability is imposed under Section 174 of the General
Corporation Laws of Delaware; or (iv) for any transaction from which the
director derived an improper personal benefit.

I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do
certify that the facts stated herein are true, and I have accordingly hereunto
set my hand.

/s/ Jennifer C. Plescia
INCORPORATOR

<PAGE>

CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
AZUREL LTD.

Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, the undersigned officer of Azurel Ltd., a Delaware corporation (the
Corporation"), does hereby certify as follows:

FIRST: The Certificate of Incorporation of the Corporation was filed in
the office of the Secretary of State of Delaware on June 26, 1995.

SECOND: The Certificate of Incorporation of the Corporation is amended
by the following resolution adopted by the Board of Directors and the
shareholders of the Corporation:

RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by restating in its entirety Article FOURTH as follows:

FOURTH: The total number of shares of all classes of capital stock
which the corporation is authorized to issue shall consist of 10,000,000
shares of Common Stock, par value $0.001 per share.

THIRD: The amendment of the Certificate of Incorporation was authorized
by the consent of the directors in accordance with Section 141 of the General
Corporation Law of the State of Delaware and by the consent of the shareholders
pursuant to Section 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the undersigned President of the Corporation has
signed this Certificate as of the 13th day of September, 1995, and hereby
affirms that this is his true act and deed and that the statements contained
herein are true under penalties of perjury.

/s/ Constantine Bezas, President
Constantine Bezas, President

BY-LAWS
OF
AZUREL LTD.

ARTICLE I - OFFICES

The office of the Corporation shall be located in the City and State designated
in the Articles of Incorporation. The Corporation may also maintain offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.

ARTICLE II - MEETING OF SHAREHOLDERS

Section 1 - Annual Meetings:

The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.

Section 2 - Special Meetings:

Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten per cent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise required
under the provisions of the Business Corporation Act.

Section 3 - Place of Meetings:

All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.

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Section 4 - Notice of Meetings:

(a) Except as otherwise provided by Statute, written notice of each meeting of
shareholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their shares
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to the address designated in such request.

(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.

Section 5 - Quorum:

(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and

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<PAGE>

sufficient to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting shall have
no effect on the existence of a quorum, after a quorum has been established at
such meeting.

(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.

Section 6 - Voting:

(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.

(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.

(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.

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<PAGE>

(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.

ARTICLE III - BOARD OF DIRECTORS

Section 1 - Number, Election and Term of Office:

(a) The number of the directors of the Corporation shall be four (4),
unless and until otherwise determined by vote of a majority of the entire Board
of Directors. The number of Directors shall not be less than three, unless all
of the outstanding shares are owned beneficially and of record by less than
three shareholders, in which event the number of directors shall not be less
than the number of shareholders permitted by statute.

(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.

(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.

Section 2 - Duties and Powers:

The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.

Section 3 - Annual and Regular Meetings; Notice:

(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.

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<PAGE>

(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.

(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.

Section 4 - Special Meetings; Notice:

(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.

(b) Except as otherwise required by statute, notice of special meeting shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice, except as required by Section 8 of this Article III, need not specify
the purpose of the meeting.

(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.

Section 5 - Chairman:

At all meetings of the Board of Directors the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.

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<PAGE>

Section 6 - Quorum and Adjournments:

(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.

(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.

Section 7 - Manner of Acting:

(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.

(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.

Section 8 - Vacancies:

Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.

Section 9 - Resignation:

Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.

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<PAGE>

Section 10 - Removal:

Any director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
shareholders called for that purpose, and may be removed for caused by action of
the Board.

Section 11 - Salary:

No stated salary shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.

Section 12 - Contracts:

(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any
director be liable in any way by reason of the fact that any one or more of
the directors of this Corporation is or are interested in, or is a director
or officer, or are directors or officers of such other Corporation,
provided that such facts are disclosed or made known to the Board of
Directors.

(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact
of such interest be disclosed or made known to the Board of Directors, and
provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such director)
of a majority of a quorum, notwithstanding the presence of any such director at
the meeting at which such action is taken. Such director or directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not

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<PAGE>

be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.

Section 13 - Committees:

The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.

ARTICLE IV - OFFICERS

Section 1 - Number, Qualifications, Election
and Term of Office:

(a) The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board of
Directors may be, but is not required to be, a director of the Corporation. Any
two or more offices may be held by the same person.

(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.

(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.

Section 2 - Resignation:

Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.

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<PAGE>

Section 3 - Removal:

Any officer may be removed, either with or without cause, and a successor
elected by a majority of the Board of Directors at any time.

Section 4 - Vacancies:

A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.

Section 5 - Duties of Officers:

Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these By-laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.

Section 6 - Sureties and Bonds:

In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.

Section 7 - Shares of Other Corporations:

Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.

ARTICLE V - SHARES OF STOCK

Section 1 - Certificate of Stock:

(a) The certificates representing shares of the Corporation shall be in such
form as shall

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<PAGE>

be adopted by the Board of Directors, and shall be numbered and registered in
the order issued. They shall bear the holder's name and the number of shares,
and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, and shall bear the corporate seal.

(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.

(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.

Section 2 - Lost or Destroyed Certificates:

The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper so to do.

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<PAGE>

Section 3 - Transfers of Shares:

(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.

(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.

Section 4 - Record Date:

In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of
shareholders of record entitled to notice of or to vote at any meeting of
shareholders has been made as provided for herein, such determination shall
apply to any adjournment thereof, unless the directors fix a new record date
for the adjourned meeting.

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ARTICLE VI - DIVIDENDS

Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.

ARTICLE VII - FISCAL YEAR

The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.

ARTICLE VIII - CORPORATE SEAL

The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.

ARTICLE IX - AMENDMENTS

Section 1 - By Shareholders:

All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.

Section 2 - By Directors:

The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change
the quorum for meetings of shareholders or of the Board of Directors, or to
change any provisions of the by-laws with respect to the removal of directors
or the filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors, the by-law so adopted, amended or repealed, together with a
concise statement of the changes made.

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ARTICLE X - INDEMNITY

(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he
served as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein that such officer,
director of employee is liable for negligence or misconduct in the performance
of his duties.

(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.

(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except that in any case where there
is no disinterested majority of the Board available, the amount shall be fixed
by arbitration pursuant to then existing rules of the American Arbitration
Association.

The undersigned Incorporator certifies that he as adopted the
foregoing by-laws as the first by-laws of the Corporation.

Dated: __________________________

_____________________________________
Incorporator

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EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated October 28, 1996, by and between Azurel
Ltd., a Delaware corporation (the "Company"), and GERARD SEMHON, an individual
residing at 414 East 52nd Street, New York, NY 10022 (the "Executive").

W I T N E S S E T H

WHEREAS, the Company desires to secure the unique experience, ability
and services of the Executive upon the terms and conditions hereinafter set
forth and to prevent any other competitive business from securing his services
other than as herein set forth; and

WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions hereinafter set forth.

NOW, THEREFORE, the parties mutually agree as follows:

Section 1. Employment. The Company hereby employs Executive and the
Executive hereby accepts such employment, as the Chairman of the Board of
Directors and Chief Executive Officer of the Company, subject to the terms and
conditions set forth in this Agreement.

Section 2. Duties. The Executive shall serve as the Chairman of the
Board of Directors and Chief Executive Officer of the Company and shall properly
perform such duties as may be assigned to him from time to time by the Board of
Directors of the Company. If requested by the Company, the Executive shall
render services to subsidiaries and affiliates of the Company ("Affiliates"),
serve as an officer of the Company or any Affiliate, and serve on the Board of
Directors of the Company on any Affiliates or any committee thereof without
additional compensation. During the Term, as defined below, the Executive shall
devote substantially all of his business time to the performance of his duties
hereunder unless otherwise authorized by the Board of Directors. Executive
agrees, at the Company's request and expense, to be examined by a physician in
order for the Company to obtain key man life insurance on Executive's life, and
Executive's consents to Company obtaining such life insurance.

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<PAGE>

Section 3. Term of Employment. The term of the Executive's employment
shall be for a period of thirty-six (36) months commencing on the effective date
of the initial public offering of the Company's securities (the "Term"), subject
to earlier termination as set forth herein. The Term of this Agreement shall be
automatically extended for additional one (1) year renewals, unless either party
notifies to other in writing at least ninety (90) days prior to the expiration
of the then existing Term of its intention not to extend the Term. If the Term
has not commenced by March 30, 1997, either party may cancel this Agreement,
without liability to the other, on written notice to the other party.

Section 4. Compensation of Executive.

4.1. Salary. Company shall pay to Executive the annual
compensation of $95,000 for his services hereunder, less such deductions as
shall be required to be withheld by applicable law and regulations. All salaries
payable to Executive shall be paid at such regular weekly, biweekly or
semi-monthly time or times as the Company makes payment of its regular payroll
in the regular course of business.

4.2 Discretionary Bonus. During the Term and in addition to
the annual salary set forth in Section 4.1 above, the Executive shall be
entitled to such bonus and/or additional compensation as the Board of Directors
of the Company may determine from time to time in its sole discretion, payable
in cash, stock options and/or in capital stock of the Company.

4.3 Automobile Allowance. Executive shall receive an
automobile allowance for use of an automobile to be provided by Executive, of
$800.00 per month plus reimbursement for automobile liability, casualty, etc.
insurance, in the actual amount thereof, not to exceed $1,500 per annum. Such
payment shall be in lieu of any payment for the cost of acquiring and insuring
such automobile and the maintenance and repair thereof.

4.4 Expenses. During the Term, the Company shall reimburse the
Executive for all reasonable and

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<PAGE>

necessary travel and entertainment expenses and other bona fide expenses
incurred by the Executive on behalf of the Company, in performance of the
Executive's duties hereunder.

4.5 Benefits. The Executive shall be permitted during the Term
to participate in any medical, dental, hospitalization or disability insurance
plans, health plans, health programs, pension plans, bonus plans or similar
benefits that may be available to other executives of the Company to the extent
the Executive is eligible under the terms of such plans or programs and in
accordance with the terms of such plans on programs. The Company, at its
expense, shall provide executive with a life insurance policy on his life (term
or group) with a minimum death benefit of $500,000, payable to the beneficiary
designated by Executive.

4.6 Acceleration of Compensation. In the event that either (i)
a tender offer for shares of the Company's Common Stock is made, which tender is
not approved by the Company's Board of Directors and a majority of the Company's
outstanding stock is tendered thereunder, or (ii) a Board of Directors, not
recommended by management is impaneled, then and in either of those events, two
times the then unpaid balance of the entire compensation required to be paid
pursuant to this Agreement through the end of the Term (but in no event less
than the compensation for twelve months), shall be immediately due and payable
to the Executive.

5. Vacations. The Executive shall be entitled to a vacation
of three weeks per year, during which period his salary shall be paid in full.
The Executive shall take his vacation at such time or times as the Executive and
the Company shall determine is mutually convenient.

6. Disability of the Executive. If the Executive is
incapacitated or disabled by accident, sickness or otherwise (including, without
limitation, as a result of abuse of alcohol or other drugs or controlled
substances) so as to render the Executive mentally or physically incapable of
performing the services required to be performed under this Agreement for a
period of one hundred twenty (120) consecutive days or longer or for any one
hundred eighty (180) days in any period of three hundred sixty (360) consecutive
days (a "Disability"), the Company may, at that

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<PAGE>

time or any time thereafter, at its option, terminate the employment of the
Executive under this Agreement immediately upon giving the Executive notice to
that effect. In the event of the Disability of the Executive, the Executive
shall receive severance compensation equal to the Base Salary for the greater
of(a) the remainder of the Term of this Agreement and (b) the twelve (12) month
period commencing on the Termination Date (as defined below).

Section 7 Termination.

7.1. Termination for Cause. The Company may terminate the
employment of the Executive and all of the Company's obligations under this
Agreement at any time for Cause (as hereinafter defined) by giving the Executive
notice of such termination, with reasonable specificity of the details thereof.
"Cause" shall mean (i) the Executive's misconduct as could reasonably be
expected to have a material adverse effect on the business and affairs of the
Company, (ii) the Executive's disregard of lawful instructions of the Company's
Board of Directors consistent with the Executive's position relating to the
business of the Company or neglect of duties or failure to act, which, in each
case, could reasonably be expected to have a material adverse effect on the
business and affairs of the Company, (iii) the commission by the Executive of an
act constituting common law fraud, or a felony, or criminal act against the
Company or any Affiliate or any of the assets of any of them, (iv) conviction of
a crime involving moral turpitude or (v) the Executive's material breach of any
of the agreements contained herein. A termination pursuant to Section 7.1(i),
(ii) or (v) shall take effect thirty (30) days after the giving of the notice
contemplated hereby unless the Executive shall, during such thirty (30) day
period, remedy to the satisfaction of the Board of Directors of the Company the
misconduct, disregard or breach specified in such notice; provided, however,
that such termination shall take effect immediately upon the giving of such
notice if the Board of Directors of the Company shall, in its sole discretion,
have determined that such misconduct, disregard or breach is not remediable
(which determination shall be stated in such notice). A termination pursuant to
Section 7.1(iii) or (iv) shall take effect immediately upon the giving of the
notice contemplated hereby.

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<PAGE>

7.2 Termination without Cause. The Company may terminate the
employment of the Executive and all of the Company's obligations under this
Agreement (except as hereinafter provided) at any time during the Term without
Cause (hereinafter, "Not for Cause") by giving the Executive written notice of
such termination, to be effective fifteen (15) days following the giving of such
written notice.

7.3. Termination for Good Reason; Resignation. The Executive
may (i) resign or (ii) terminate his employment and all of his obligations under
this Agreement at any time during the Term for Good Reason (as hereinafter
defined) by giving the Company notice of such termination, with reasonable
specificity of the details thereof, to be effective thirty (30) days following
the giving of such written notice. Good Reason shall mean the occurrence of any
of the following events or conditions:

(i)(A) the assignment to the Executive of any duties materially
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 of this Agreement, of (B) any
other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, other than an insubstantial and
inadvertent action which is remedied by the Company promptly after receipt of
notice thereof given by the Executive; or (ii) any failure by the Company to
comply with the provisions of Section 4 or 5 of this Agreement, other than an
insubstantial and inadvertent failure which is remedied by the Company promptly
after receipt of notice thereof given by the Executive, or (iii) the Company's
requiring the Executive to be based at any office or location outside a fifty
(50) mile radius from 509 Madison Avenue, New York, New York, except for travel
reasonably required in the performance of the Executive's responsibilities; or
(iv) any purported termination by the Company of the Executive's employment
otherwise than as permitted by this Agreement, it being understood that any such
purported termination shall not be effective for any purpose of this Agreement.

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<PAGE>

For purposes of this subsection, any good faith determination
of Good Reason made by the Executive shall be conclusive.

For convenience of reference, the date upon which any
termination of the employment of the Executive pursuant to Sections 6 or 7
shall be effective shall be hereinafter referred to as the "Termination Date."

8. Effect of Termination of Employment.

(a) Upon the termination of the Executive's employment for
Cause, neither the Executive nor the Executive's beneficiaries or estate shall
have any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive (i) the unpaid
portion of the Base Salary provided for in Section 4.1, computed on a pro rata
basis to the Termination Date (the "Unpaid Salary Amount") and (ii)
reimbursement for any expenses for which the Executive shall not have
theretofore been reimbursed, as provided in Section 4.5 (the "Expense
Reimbursement Amount").

(b) Upon the termination of the Executive's employment by the
Company Not for Cause or by the Executive for Good Reason, neither the Executive
nor the Executive's beneficiaries or estate shall have any further rights under
this Agreement or any claims against the Company arising out of this Agreement,
except the right to receive (i) the Unpaid Salary Amount, (ii) the Expense
Reimbursement Amount and (ii) severance compensation equal to the Base Salary
for the remainder of the Term (but in no event less than twelve months), without
giving effect to any automatic renewal of the Term.

(c) In the event the Executive resigns from the employment by
the Company prior to the end of the Term other than for Good Reason, neither the
Executive nor the Executive's beneficiaries or estate shall have any further
rights under this Agreement or claims against the Company arising out of this
Agreement except the right to receive (i) the Unpaid Salary Amount, (ii) the
Expense Reimbursement Amount.

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<PAGE>

Notwithstanding the preceding provisions of this Section 8, in
the event the payments to be received by the Executive would constitute an
"excess parachute payment" under the Internal Revenue Code of 1986, and
applicable regulations as then in effect, then such payments shall be reduced
accordingly so as not to constitute an "excess parachute payment."

Section 9. Disclosure of Confidential Information. The Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited to
its customer list, products, formulate, know-how, and business and marketing
plans ("Confidential Information"). The Executive acknowledges that such
information is of great value to the Company, is the sole property of the
Company, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Company herein, the Executive
will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any Confidential Information acquired by the
Executive during the course of his employment. The provisions of this Section 9
shall survive the Executive's employment hereunder.

Section 10. Covenant Not To Compete.

(a) The Executive recognizes that the services to be performed
by him hereunder are special, unique and extraordinary. The parties confirm that
it is reasonably necessary for the protection of Company that the Executive
agree, and accordingly, the Executive does hereby agree, that he shall not,
directly or indirectly, at any time during the Term and the "Restricted Period"
(as defined below except on behalf of the Company):

(i) except as provided in Subsections (d)
below, be engaged in the manufacture, sale, distribution or
marketing of cosmetics or fragrances (the "Industry") or
provide technical assistance, advice or counseling regarding
the Industry in the United States or any other country in
which the Company or any Affiliate is engaged in the conduct
of business (including licensing others to engage in the
Industry using brand names

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<PAGE>

owned by, or licensed to the Company), either on his own
behalf or as an officer, director, stockholder, partner,
consultant, associate, employee, owner, agent, creditor,
independent contractor, or co-venturer of any third party; or

(ii) employ or engage, or cause or authorize,
directly or indirectly, to be employed or engaged, for or on
behalf of himself or any third party, any employee or agent
of Company or any Affiliate,

(b) The Executive hereby agrees that he will not, directly
or indirectly, for or on behalf of himself or any third party, at any time
during the term of the Agreement and during the Restricted Period solicit any
customers of the Company or any Affiliate with regard to any activity prohibited
by section 10(a).

(c) If any of the restrictions contained in this Section 10
shall be deemed to be unenforceable by reason of the extent, duration or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form this
Section shall then be enforceable in the manner contemplated hereby.

(d) This Section 10 shall not be construed to prevent
Executive from owning, directly or indirectly, in the aggregate, an amount not
exceeding three percent (3%) of the issued and outstanding voting securities of
any class of stock of any company whose voting capital stock is traded on a
national securities exchange or on the over-the-counter market other than
securities of the Company.

(e) The term "Restricted Period," as used in this Section 10,
shall mean the period of the Executive's actual employment hereunder plus:) in
the event the Executive resigns without Good Reason or the Executive is
terminated for Cause, the twelve (12) months after the Termination Date.

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<PAGE>

(f) The provisions of this Section 10 shall survive the end
of the Restricted Period as provided in Section 10(e) hereof.

Section 11. Miscellaneous.

11.1 Injunctive Relief. The Executive acknowledges that the
services to be rendered under the provisions of this Agreement are of a special,
unique and extraordinary character and that it would be difficult or impossible
to replace such services. Accordingly, the Executive agrees that any breach or
threatened breach by him of Sections 9 or 10 of this Agreement shall entitle the
Company, in addition to all other legal remedies available to it, to apply to
any court of competent jurisdiction to seek to enjoin such breach or threatened
breach without the need to prove irreparable injury on the inadequacy of legal
remedies and without bond. The parties understand and intend that each
restriction agreed to by Executive hereinafter shall be construed as separable
and divisible from every other restriction, that the unenforceability of any
restriction shall not limit the enforceability, in whole or in part, of any
other restriction, and that one or more or all of such restrictions may be
enforced in whole or in part as the circumstances warrant. In the event that any
restriction in this Agreement is more restrictive than permitted by law in the
jurisdiction in which Company seeks enforcement thereof, such restriction shall
be limited to the extent permitted by law.

11.2 Assignment. Neither the Executive nor the Company may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other. The Company may assign this Agreement
to a successor by consolidations on merger or to an entity or person acquiring
all or substantially all of the assets and business of the Company as a going
concern.

11.3 Entire Agreement. This Agreement constitutes and embodies
the full and complete understanding and agreement of the parties with respect to
the Executive's employment by the Company, supersedes all prior understandings
and agreements, whether oral or written, between the Executive and the Company,
and shall not be amended, modified or changed except by an instrument in

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<PAGE>

writing executed by the party to be charged. The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate
any other provision of this Agreement. No waiver by either party of any
provision or condition to be performed shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.

11.4 Binding Effect. This Agreement shall inure to the benefit
of, be binding upon and enforceable against, the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.

11.5 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.

11.6 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or by
private overnight mail service (e.g. Federal Express) to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day
after sending.

11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the federal and
state courts located in the State of New York, County of New York.

11.8 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute on of the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.

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<PAGE>

AZUREL LTD.

By: /s/ Constantine Bezas
Name: CONSTANTINE BEZAS
Title: PRESIDENT

/s/ Gerard Sehmon
GERARD SEHMON

- 11 -

EMPLOYMENT AGREEMENT

AGREEMENT dated as of August 22, 1996 by and between Private Label
Cosmetics, Inc., a New Jersey corporation, with its principal place of
business located at 20-10 Maple Avenue, Fairlawn, New Jersey 07410 ("Employer")
and Michael J. Assante, a New Jersey resident residing at 10 Surrey Lane,
Mahwah, New Jersey 07430 ("Employee").

WHEREAS, the Employer desires to retain the services of the Employee,
and the Employee desires to enter into the employ of the Employer.

NOW, THEREFORE, the parties agree as follows:

1. Employment: The Employer herewith employs the Employee, effective
the date hereof, as its President/CEO, and the Employee hereby accepts such
employment.

2. Term: The term of employment is for three years commencing as of
the date above set forth, automatically renewable for one additional two year
term unless Employee notifies Employer to the contrary prior to the expiration
of the original term, unless sooner terminated as hereinafter provided.

3. Scope of Employment: Employee will devote substantially all of
his time to promote the interests and business of the Employer. Employee's
Duties shall include responsibility for the day to day operations of the
Employer.

4. Compensation:

a. Base Salary: In consideration of the employment as aforesaid
and the covenants hereinafter contained, the Employer agrees to pay Employee a
base salary at the rate of one hundred ninety-five thousand dollars ($195,000)
per year.

b. Welfare Plan(s): Employee shall be entitled to participate
in any employee welfare plan(s) qualified or not under the Internal Revenue Code
presently existing or to be formed.

c. Health and Life Insurance: Employee shall be entitled,
subject to availability, to medical and dental insurance benefits (full family
coverage) provided by Employer, plus continuation of the present term life
insurance policy subject to insurability of employee at standard rates in the
amount of $1.1 million with a beneficiary to be named by the Employee, and for
which Employer shall pay all premiums. The additional present $900,000 life
insurance policy on the life of Employee shall remain or become a "key man"
life insurance policy and Employee shall execute such documentation as may be
necessary to designate Employer as the beneficiary thereof.

- 1 -

<PAGE>

d. Disability: Employer shall obtain, subject to availability,
Disability Insurance providing benefits to Employee which commence on the 91st
day following the disability. Said insurance shall provide Employee with
disability income to the maximum insurable amount but in no event greater than
Employee's annual salary under this agreement. In the event the Employee is
disabled, as defined in the Disability Policy maintained for the Employee which
disability continues for more than 90 days, Employee shall be entitled to
receive payments as defined in the Disability Policy which payments shall
constitute Employee's full compensation.

e. Vacations: Employee shall be entitled to paid vacation
during each fiscal year of the agreement in accordance with the practices of
the Employer, and in no event less than three (3) weeks.

f. Automobile Allowances: Employee shall be entitled to an
automobile allowance in the amount of $1,000.00 per month, payable monthly in
advance plus reimbursement of the actual cost of automobile insurance having
reasonable levels of coverage.

g. Business-Related Expenses: Employer shall promptly reimburse
Employee for all business-related expenses reasonably incurred by Employee
pursuant to guidelines established by Employer and supported by appropriate
documentation.

h. Bonus: Employee shall receive an annual bonus for each of
calendar years 1997, 1998 and 1999 only, equal to 10% of the Company's net
profits in excess of $500,000 per year (before deducting interest and taxes, but
after deducting depreciation and amortization) based on the Company's audited
financial statements for each said calendar year and payable within thirty (30)
days of the completion of the audit for each said calendar year.

5. Non-Competition: For a period of one year after the termination of
Employee's employment, unless such termination by Employer is in violation of
this agreement, the Employee will not directly or indirectly solicit nor sell
to any person or entity which is or has been a customer of the Employer within
twelve months preceding such termination.

6. Confidential Information: Employee agrees that during and for five
(5) years subsequent to his employment he will not disclose any information,
including without limitation, cost lists, trade secrets and processes, obtained
by him while in the employ of the company and relating to the Company to any
person not employed by the Company. Specifically included in the company's
confidential information is its list of customers and customer contacts with
each customer.

7. Remedies: Employee acknowledges that the covenants and agreements
which he has made in sections 5 and 6 of this Agreement are reasonable and are
required for the reasonable protection of the Employer and its relationship to
its customers, employees and agents. Employee agrees that the breach of any
covenant or agreement contained in section 5 and 6 may result in irreparable
injury to the Employer and its business for which there may be

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<PAGE>

no adequate remedy at law, and that, in addition to all other remedies provided
by law or in equity with respect to the breach of any provision of this
Agreement, the Employer will be entitled to prosecute proceedings at law or in
equity to enforce the specific performance by Employee of his obligations under
Section 5 and 6 and to enjoin him from engaging in any activity in violation
thereof. The Employee agrees that any action to enjoin the breach or threatened
breach by the Employee of his obligations contained in Sections 5 and 6 shall
not require the Employer to post a bond or other undertaking as a condition of
the granting of such injunctive relief.

8. Termination of Employment:

a. Termination: Employee's employment under this Agreement may
be terminated by the Employer prior to the expiration of the term specified in
Section 2 hereof in the event that (i) the Employee shall die, (ii) the Employee
is unable to perform his customary and usual duties on a full time basis, (iii)
there exists "Just Cause," (iv) Employee's disability in excess of six months
shall be deemed at the Company's election "Just Cause". Such "Just Cause" must
be clearly and fully stated by notice in writing provided to Employee within
five (5) days of such termination. In all other respects the obligations imposed
upon the Employee by this Agreement shall continue in full force and effect. For
the purpose of this Agreement, "Just Cause" shall mean proven dishonesty, a
material breach of this Agreement or substantial non-performance of duties not
related to illness.

b. Compensation Payable Upon Termination: In the event of
termination of Employee's employment, other than pursuant to sections 2. or
8.a. hereof or voluntarily by Employee, the Employee or his estate shall
receive the current salary and all benefits to the expiration date of the
employment agreement as may be extended hereunder. In the event termination
is pursuant to sections 2. or 8.a. hereof or voluntarily by Employee, the
Employee will be entitled to receive his unpaid salary as of the date of such
termination.

c. Resignation: The termination of this Agreement for any
reason whatsoever automatically terminates membership as a member of the
Company's Board of Directors.

9. Miscellaneous:

a. Notices: All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when received, if personally delivered or
mailed, certified or registered mail, postage prepaid, addressed to the Employer
or Employee at the addresses for each first above written, or such other
address as may be designated by notice in accordance with the provisions of
this subparagraph.

b. Entire Agreement: This instrument contains the entire
agreement of the parties with respect to this subject matter, and suppressed
and replaces any prior

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<PAGE>

agreement or understanding, and no amendment, modification or waiver of any
provision hereof shall be valid unless it is in writing and signed by the
Employer and Employee.

c. Section and Other Headings: The sections and other headings
contained in this agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

d. Severability: If any section, paragraph, term or provision
of this Agreement shall be held or determined to be unenforceable, the balance
of this Agreement shall nevertheless continue in full force and effect by
such holdings and determination. In addition, in any such event, the parties
agree that it is their intention and agreement that any such section, paragraph,
term or provision which is held or determined to be unenforceable, as written,
shall nonetheless be in force and binding to the fullest extent permitted by law
as though such section, paragraph, term or provision had been written in such a
manner to such an extent as to be enforceable under the circumstances.

10. Governing Law: This Agreement shall be construed and performance
hereof shall be determined in accordance with the laws of the State of New
Jersey.

11. Arbitration: All disputes, controversies or differences, claims
or counterclaims which may arise between the parties out of or in relation to,
or in connection with this Agreement or the interpretation of this Agreement,
or from breach thereof, shall be finally settled by arbitration in New Jersey,
pursuant to the rules then obtaining of the American Arbitration Association,
by which each party hereof is bound and the decision or award of the
arbitrators shall be final and conclusive and shall be enforceable in any
court of competent jurisdiction.

IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement as of the day and year first above written.

/s/ Michael J. Assante
Michael J. Assante

PRIVATE LABEL COSMETICS, INC.

By: /s/ Michael J. Assante
Its

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TRADEMARK LICENSE
AND TECHNICAL ASSISTANCE
AGREEMENT

AGREEMENT, dated as of May 15,1996, by and among EUROPE CRAFT IMPORTS
INC., a New Jersey corporation, having its principal office at 475 Fifth Avenue,
New York, New York 10017 ("Licensor"), and AZUREL, LTD. ("Licensee"), a Delaware
corporation, having its principal office at 509 Madison Avenue, Suite 804, New
York, New York 10022.

W I T N E S S E T H:

WHEREAS, Licensor is the owner of, and holds the exclusive right to use
the trademark "MEMBERS ONLY' (the "Trademark") and possesses technical expertise
in the styling, manufacturing, distribution, packaging, merchandising and
promotion of products utilizing the Trademark;

WHEREAS, Licensee has requested Licensor to grant Licensee the right to
use the Trademark and to provide technical assistance all in connection with the
manufacture, distribution and sale of certain fragrance-related products, and
Licensor is willing to grant such right and provide such assistance to Licensee
on the terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the mutual covenants and
undertakings hereinafter set forth, it is agreed;

1. LICENSE AND GRANT

(a) Licensor hereby grants to Licensee an exclusive (except as
specifically set forth hereinafter) and non-assignable right and license in the
United States of America and its

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<PAGE>

territories and possessions and all countries throughout the world, excluding
China and Taiwan (the "Territory") to use the Trademark in connection with the
manufacture, distribution and sale by or for Licensee within the territory of
only the following products produced from or containing fragrances, designs,
styling and packaging approved by Licensor (the "Products"):

Fragrances, cologne, perfume, after-shave lotion, deodorant, shaving
cream, skin-care lotions and creams, cosmetics and related toiletry articles
covered by Intl. Class 3 as defined by the US Patent and Trademark Office.

(b) Licensee shall have the right to use the Trademark solely
for the Products. The Products shall be of high quality and designed, styled,
packaged, manufactured, promoted, advertised, marketed and sold as a coordinated
line or collection of fragrance and toiletry articles and according to the
highest standards of the fragrance and cosmetics industry consistent with the
high prestige of the Trademark. Licensee shall not use the Trademark in any
combination or form in connection with any other products or in Licensee's trade
or corporate names except as specifically provided for herein.

(c) Licensee shall use the Trademark only in connection with
the Products produced from and containing fragrances, designs, styling and
packaging approved by Licensor. The particular fragrances, articles and other
Products manufactured, packaged, distributed or promoted using the Trademark
shall not be sold or distributed by Licensee under any name, label, trademark,
designation, or symbol other than the Trademark during

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<PAGE>

the term of this Agreement. Licensee shall nevertheless have the right to use
its corporate name "Azurel" on Products and on the packaging (which, for
purposes of this Agreement shall include bags, tags and labels) for the Products
in a type size appropriate for identification and not for display, provided that
if such name appears on such packaging with the Trademark, the packaging shall
contain such language as may be acceptable to Licensor to indicate the use of
the Trademark by Licensee is pursuant to the license herein granted. Subject to
the prior approval of Licensor, which will not be unreasonably withheld, and
subject to such conditions as Licensor may reasonably require in connection
therewith, Licensee may utilize descriptive trademarks it may own on the
packaging for, and in connection with the sale of, the Products. Licensee shall
also affix or cause to be affixed to the Products such ingredient, chemical
content, warnings, limitations or instructions as to use or health hazards, and
other labels and disclosure, as are required by law or governmental regulations.
Licensee must use the Trademark on all Products marketing pursuant to this
Agreement and the size, style and placement of the Trademark on all packaging
shall be subject to the approval of Licensor.

(d) The license herein granted shall not be deemed to confer
on Licensee any property rights in the name "MEMBERS ONLY", the Trademark, or
the good will now or hereafter attached thereto. Licensee shall only use the
Trademark as provided in this Agreement. Licensee acknowledges that as between
Licensor and Licensee, except for the rights expressly granted to Licensee

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<PAGE>

herein, Licensor is the holder of all right, title and interest in and to the
Trademark. Licensee will not, at any time, contest Licensor's rights in the
Trademark or otherwise knowingly or intentionally do or permit to be done any
act or thing to impair or which will tend to impair the rights of Licensor in
the Trademark. Licensee recognizes the value of the goodwill associated with the
Trademark and acknowledges that the Trademark has acquired a secondary meaning
in the mind of the public. Licensor retains the right to use, and to grant
licenses to other persons to use, the Trademark in connection with products and
services other than the Products, within or without the Territory, and in
connection with Products outside the Territory.

(e) Licensee shall not have the right to enter into any
sublicenses of the license granted hereunder.

(f) Licensor represents and warrants that (i) it is the sole
and exclusive owner of the Trademark, (ii) the Trademark is registered in the
United States Patent office and foreign patent offices designated on Schedule 1
hereto for the types of products indicated on such Schedule 1, (iii) it knows of
no opposition or interferences, proceedings or adverse claims with respect to
any of such registrations, (iv) it has full and exclusive right and authority to
grant the license herein to Licensee and (v) the grant of the license pursuant
to this Agreement does not in any way constitute an infringement of any other
trademark. Licensor shall file all applications and documents necessary to
maintain its exclusive ownership of the Trademark for use on the Products during
the term of this Agreement and all renewal terms (1) within the

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<PAGE>

United States and within the foreign countries for which Licensor maintains a
registration designated on Schedule 1 on the date hereof and (2) within
additional foreign countries on a case by case basis upon Licensee's written
request accompanied by a business plan of Licensee for distribution of the
Products within such particular foreign country, demonstrating Licensee's
establishment of an infrastructure for distribution of the Products in such
foreign country and certifying that Licensee will commence sales in such foreign
country within thirty (30) days of such request (such 30 day commitment
conditioned on Licensor having authorized such sales pursuant to the next
succeeding sentence hereof). Licensee shall not commence sale of the Products in
any foreign country where Licensor does not then have a registered Trademark
unless authorized by Licensor, which authorization shall not be unreasonably
withheld from and after the time Licensor has filed an application for Trademark
registration in such foreign country. Following a request by Licensee in
compliance with this Section 1 (f), Licensor shall as promptly as practicable,
but in any event, within thirty (30) days after such request, file an
application for registration of the Trademark in a particular additional foreign
country, and Licensor shall utilize its best efforts to obtain registration of
the Trademark in such particular additional foreign country, but Licensor does
not warrant or guarantee that such registration can be effected or as to the
time required for such registration. Such thirty (30) day period may be extended
where foreign law requires obtaining governmental certifications and similar
documents. All applications,

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<PAGE>

registrations and renewals of the Trademark for the Products shall be in the
name of Licensor.

(g) All copyrights on all packaging, labels, logos,
advertisements, brochures, and promotional material containing the Trademark and
used in connection with the Products shall belong to Licensor and all
applications and registrations thereof shall be filed in the name of Licensor.
Licensor may in its sole discretion apply for copyright registration of such
materials.

(h) All trademarks, copyrights, patents, "trade dress", design
patents, and other proprietary rights relating to any design element, shape, or
style on all packaging, bottling, labels and logos used in connection with the
Products and containing the Trademark shall belong to Licensor and all
applications and registrations thereof shall be filed in the name of Licensor.
Licensor may in its sole discretion apply for registration of proprietary rights
in such materials. Notwithstanding the foregoing, Licensee shall retain
ownership of its corporate and tradename "Azurel" as well as descriptive
trademarks owned by it and utilized pursuant to Section 1(c) above.

2. TECHNICAL ASSISTANCE

Licensor shall, without any separate compensation and at such
times and locations as it may determine, (a) advise and consult with Licensee
concerning the selection of fragrances to be used in the manufacture of the
Products, the selection of packaging, styling and particular articles or
products included in the line marketed by Licensee, and modifications to the
Products and the line and (b) generally consult with Licensee concerning the

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<PAGE>

design, styling, packaging, merchandising and promotion of the Products.

3. TERM

(a) The initial term of this Agreement shall commence May 15,
1996 and terminate on September 20, 2001 (the "Initial Term"), unless sooner
terminated pursuant to any provision hereof. The sixteen and one-half (16 1/2)
month period ending on September 30, 1997 shall be deemed the First Contract
Period, and each succeeding twelve (12) month period of the Initial and/or
Renewal Term (as hereinafter defined), if any, of this Agreement, shall
likewise be deemed a Contract Period.

(b) Licensee shall have the right to renew this Agreement, as
long as it is not in default of the terms of this Agreement, for one (1)
additional five (5) year period (such period hereinafter referred to as the
"Renewal Term") expiring September 30, 2006, upon notice given six (6) months
prior to the expiration of the Initial Term; provided however, that Licensee's
right to renew this Agreement for the Renewal Term shall be further conditioned
on Licensee having achieved the following minimum annual Net Sales (as defined
herein) of the Products for each Contract Period during the Initial Term:

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<PAGE>

First Contract Period $ 2,000,000
Second Contract Period $ 3,000,000
Third Contract Period $ 5,500,000
Fourth Contract Period $ 6,500,000
Fifth Contract Period $ 7,500,000

4. MANUFACTURE AND QUALITY CONTROL

The nature and quality of the Products shall be subject to the
approval of Licensor and in connection therewith:

(a) Licensee shall furnish to Licensor for each Contract
Period of the Initial Term and any Renewal Term of this Agreement, proposed
fragrances, designs and packaging (including colors) for each item of the
Products Licensee proposes to manufacture, sell and distribute. Licensee may not
use any designs, packaging, samples, materials and fragrances (including colors)
unless Licensor has given its prior written consent to such use.

(b) The contents, materials, workmanship, packaging and
styling of the Products manufactured and sold by or for Licensee hereunder shall
be at all times of the highest quality consistent with the high reputation
associated with the Trademark.

(c) The Products sold by or for by Licensee hereunder shall be
manufactured only by Licensee and/or quality manufacturers selected by Licensee.
Licensee, and not Licensor, shall be solely responsible for the manufacture and
production of Licensee's requirements of the Products and components for the
production thereof and for the marketing, sale and delivery of the Products.
Licensor shall not be liable or otherwise responsible for defective merchandise,
defaults in, delay, reduction or failure

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<PAGE>

of delivery or cancellation or shipments, whether or not Licensee utilizes
Licensor and/or Licensor's resources or sources of supply for Licensee's
requirements of the Products or components for the production thereof.

(d) Before selling, marketing or distributing any of the
Products, Licensee shall deliver to Licensor for its inspection and approval,
free of charge, one sample of each article of the Products and each form of
packaging to be utilized in connection therewith in all sizes and varieties.
During the course of manufacture, upon Licensor's request, Licensee shall submit
to Licensor, free of charge, production samples of the Products produced
hereunder and associated packaging. Licensor may disapprove of any samples and
packaging submitted by Licensee whichin the Licensor's reasonable opinion do not
conform to the quality standards and specifications established by Licensor
or which are reasonably deemed by Licensor not to be consistent with the
high quality and reputation associated with the Trademark. Licensor shall not
unreasonably disapprove of any samples or packaging. In the event Licensor
disapproves of any samples or packaging, Licensee shall not manufacture, market,
advertise, promote, distribute or sell any of the Products so rejected until
Licensee makes such modification in the manufacturing process, formulae of
chemicals, compounds or fragrances, methods of manufacture and materials,
components or packaging used, as Licensor shall reasonably and specifically
request. Licensor may disapprove of any sample or packaging required to be
delivered to it hereunder upon notice received by Licensee within ten days after
receipt by

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<PAGE>

Licensor of any such sample required to be delivered hereunder and if Licensee
does not receive notice of approval or disapproval within such period, such
sample shall be deemed approved.

(e) Licensee and its manufacturers and subcontractors shall
fully adhere to all designs, specifications and packaging for the Products as
furnished or approved by Licensor. No material departure or variation shall be
permitted from such designs or specifications without first submitting such
variations or departures to Licensor for its approval as provided in paragraph
4(a). As provided in paragraph 1(d), Licensee shall not use any of the designs
furnished or approved by Licensor except for inclusion in the Products sold
under the Trademark.

(f) All the Products shall be manufactured, packaged, labeled,
distributed, marketed, advertised and sold in accordance with all applicable
governmental regulations in the Territory.

(g) Licensee will be responsible, at its own cost and expense,
for all sample making and the production, manufacture and packaging of the
Products.

(h) Notwithstanding any provision of this Agreement and any
participation of Licensor in approval of, or consulting with respect to, the
design, styling, packaging, manufacture, quality, samples, or advertising or
promotion of the Products, the Licensee shall be exclusively responsible for all
product liability and quality control relating to the manufacture, sale
packaging, advertising, promotion, quality, distribution and use of the

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<PAGE>

Products and shall indemnify Licensor for any liabilities relating thereto
pursuant to Section 14 of this Agreement.

(i) Regulatory Clearance; Compliance with Law. Licensee at its
own expense shall have the sole responsibility for regulatory clearance and
approval by the US Food and Drug Administration ("FDA") and any other federal,
state, local and foreign governmental authority, trade association or industry
self-regulating organization relating to the manufacture, sale or use of the
Products by Licensee and its subcontractors, manufacturers, wholesalers,
distributors and retailers. During the term of this Agreement, Licensee shall
obtain and maintain in full force and effect and at its own expense all
necessary FDA and other federal, state, local and foreign governmental licenses,
permits, clearances, registrations and authorizations and all necessary trade
association or industry self-regulatory organization registrations and shall
maintain compliance in all material respects with the terms and conditions
thereof and applicable law and regulation, relating to Licensee's and its
subcontractors, manufacturers, wholesalers, distributors and retailers'
activities in the manufacture, sale, production or quality and environmental
control of Products. Licensee hereby assumes all products liability, health,
safety and environmental risks arising out of the manufacture and sale of the
Products and shall carry out all testing, safety, environmental and quality
control programs for the Products as are required by law and good manufacturing
practice and industry standards.

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<PAGE>

(j) Quality Control Standards

(1) Licensee represents, warrants and agrees that the Products
will be commercially acceptable in all respects, will be of marketable quality
suitable for fragrance and cosmetic applications, will be manufactured in
accordance with all applicable governmental rules and regulations, and will meet
first quality industry specifications with respect to composition and freedom
from impurities.

(2) To assure compliance with the provisions of Section 4 of
this Agreement, Licensee shall, throughout the term of this Agreement, as its
own expense, implement and maintain a quality control program including regular
testing of Product samples. At Licensor's request, Licensee shall provide
Licensor with access to copies of the quality control program then in force and
the results of testing and reporting thereunder. At Licensor's request, Licensee
shall, without charge, furnish Licensor with reasonable quantities of samples of
the Licensed Product for any additional testing which Licensor may wish to
conduct, at Licensor's expense.

(3) Licensee shall permit Licensor's designated
representatives to inspect Licensee's (and its subcontractors, manufacturers,
wholesalers, distributors and retailers) facilities for the production, storage
and distribution of Products, to review its production record and to interview
its personnel to determine compliance with Sections 4. Licensee shall fully
cooperate with Licensor and cause its personnel and its subcontractors,

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<PAGE>

manufacturers, wholesalers, distributors, and retailers to fully cooperate with
Licensor to implement this Section 4(j).

5. TRADEMARK PROTECTION

(a) In the event that the Licensee learns of or suspects any
actual or threatened infringement or imitation of the Trademark or of any
unauthorized use of the Trademark or use of a trademark similar to the
Trademark, Licensee shall promptly notify Licensor. If, in Licensor's reasonable
opinion, such activity constitutes an infringement of the rights granted to
Licensee or an infringement of the Trademark, Licensor shall have the exclusive
right to take appropriate action to stop such infringement with respect to the
Products. If Licensor does take such action, it shall have the right, at its
expense, to join Licensee as a necessary party in such action if Licensor in its
reasonable discretion deems this advisable for the protection of the Trademark.
In addition, Licensor shall permit Licensee (at Licensee's expense) to join such
action as an additional plaintiff. Licensor and Licensee shall cooperate fully
with the prosecution of any such action brought by Licensor. In furtherance of
this Section 5(a), Licensee shall not make any demands or claims on the
allegedly infringing party or institute any lawsuit, unless specific approval
has been granted by Licensor.

(b) Licensee shall use and display the Trademark only in such
form and manner as approved by Licensor (including without limitation, use of
the Trademark as a logo, or in plain or stylized type or in such script,
written, signature or pictorial form only as approved by Licensor), and
Licensee will cause to

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<PAGE>

appear on all Products and all packaging, advertising and promotional
material used in connection therewith such legends, markings and notices as
Licensor reasonably may request. Licensee shall not use any packaging,
advertising and promotional material in connection with the Products without
Licensor's prior written approval, which approval shall not be unreasonably
withheld. If Licensee does not receive notice of disapproval within ten (10)
days after receipt by Licensor of such packaging, advertising and promotional
materials, it shall be deemed approved.

(c) Any advertising and promotional materials relating to the
Products or the Trademark shall be subject to the prior approval of Licensor as
provided in paragraph 8 (c) hereof.

(d) Licensee shall comply with all practices and governmental
regulations in force in the Territory in order to safeguard the rights of
Licensor or the Trademark, including without limitation the proper indication of
the registration of the Trademark. Licensee shall only use the Trademark in
accordance with all applicable legal requirements in force in the Territory.

(e) Except to the extent provided in paragraph 1(c), Licensee
shall not use any other name or mark in conjunction with the Trademark in any
advertising, publicity, promotional materials, labeling, wrapping, packaging, or
printed matter of any kind in connection with the Products. Licensee shall use
reasonable efforts to prevent the unauthorized use of the Trademark and any
imitations thereof.

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<PAGE>

(f) All sales by or for Licensee of the Products shall be
deemed to have been made by Licensee for the benefit of Licensor and all use of
the Trademark by Licensee and all goodwill thereunder shall inure to the benefit
of Licensor. Licensee will not knowingly or intentionally at any time do or
permit to be done any act or thing to impair or which will tend to impair the
Trademark and the rights of Licensor in and to the Trademark, its registration
or renewal thereof, or which will detract from the value or prestige of the
Trademark.

(g) Licensee shall cause to appear on all Products and on all
materials in connection with which the Trademark is used, such legends,
markings, indications and notices in order to give notice of any trademark,
trade name, copyright or other rights therein or pertaining thereto.

(h) Licensee shall not challenge Licensor's right to, or the
validity of the Trademark, or any application by Licensor for registration or
renewal thereof during the term of this Agreement.

(i) Licensee shall, at Licensor' request, execute any
documents reasonably required by Licensor to confirm its ownership of all rights
in and to the Trademark in the Territory and the respective rights of the
parties pursuant to this Agreement. Licensee shall, at Licensor's expense,
cooperate with Licensor in connection with the filing and prosecution of
applications by Licensor to register or renew the Trademark in the Territory and
the maintenance of such registration.

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<PAGE>

6. PERCENTAGE ROYALTY

(a) In consideration of the license and rights granted
herein, Licensee shall pay to Licensor a royalty of five percent (5%) of the
amount of Licensee's net sales (as hereinafter defined) of the Products
manufactured and sold hereunder during each Contract Period this Agreement is
in effect. As used herein the term "Percentage Royalty" shall refer to the
aggregate of such royalty payments.

(b) As a guaranteed non-refundable minimum royalty by Licensee
to Licensor which shall be credited against the Percentage Royalty due for each
Contract Period under this Agreement, Licensee shall pay to Licensor the
applicable annual minimum royalty ("Minimum Royalty") set forth below for each
Contract Period of the Initial Term and any Renewal Term of this Agreement:

Total
Minimum
Amount
Period Payable Installment payments

First Contract Period $ 100,000 $25,000 upon execution of this Agreement
(16.5 months with the balance paid in four equal installments
commencing 5/15/96) of $18,750 payable November 15, 1996,
January 1, 1997, April 1, 1997 and July 1, 1997.

Second Contract Period $ 150,000 $37,500 for each calendar quarter of the Second
(12 months commencing 10/1/97) Contract Period

Third Contract Period $ 275,000 $68,750 for each calendar quarter of the Third
(12 months commencing 10/1/98) Contract Period

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<PAGE>

Fourth Contract Period $ 325,000 $81,250 for each calendar quarter of the
(12 months commencing 10/1/99) Fourth Contract Period

Fifth Contract Period $ 375,000 $93,750 for each calendar quarter of the Fifth
(12 months commencing Contract Period
10/1/2000)

Each Contract Period of the 5% of the One-fourth of the annual minimum for each
Renewal Term product of calendar quarter of the Contract Period of the
110% of Renewal Term
actual Net
Sales for
prior Contract
Period.

</TABLE>

By way of example, suppose actual Net Sales for the Fifth Contract
Period of the Initial Term was $8,000,000 and Licensee renewed the license for
the Renewal Term. The minimum amount payable for the First Contract Period of
the Renewal Term will be 5% x (110% x $8,000,000) which yields $440,000. If
actual Net Sales for such First Contract Period of the Renewal Term were
$9,000,000, the minimum amount payable for the Second Contract Period of the
Renewal Term will be 5% x (110% x $9,000,000) which yields $495,000.

Except as indicated above in connection with the payment upon execution
of this Agreement and the payment due November 15, 1996, each installment of
Minimum Royalty payment shall be made on the first day of each quarter.

(c) All payments to Licensor including, without limitation,
Percentage Royalty and Minimum Royalty payments, shall be timely paid in the
full amount and without any deduction or offset therefrom, in New York City or
such other place as Licensor may specify, in U.S. Dollars. Any payment delayed
for a period in

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<PAGE>

excess of twenty (20) days shall bear interest from the date the payment was
due at two (2%) percent higher than prime rate of interest charged by Chemical
Bank in New York City to its most creditworthy corporate borrowers on such due
date.

(d) The term "Net Sales" shall mean the gross sales price for
all sales, shipments, or transfers of the Products manufactured and sold
hereunder by or for Licensee or any affiliated or related company as reflected
by actual invoice (exclusive of sales tax and/or separately stated shipping,
freight or transportation charges) less actual customary trade discounts (except
cash discounts) and returns in the normal course of trade. No other deduction
shall be made by Licensee. Sales shall be deemed to have been made when invoiced
by Licensee or when the Products should have been shipped to the purchaser,
whichever shall first occur. Sales or transfers to any party affiliated with
Licensee shall be deemed to have been made at the fair market price paid by bona
fide third party purchasers.

(e) Licensee shall pay the Percentage Royalty pursuant to
paragraph 6(a) to Licensor quarter-annually, within thirty (30) days following
each calendar quarter based on Net Sales for such calendar quarter (such
quarterly period is referred to herein as a "Payment Period"). Such payment
shall be an amount equal to the differences between (i) the greater of (A) the
aggregate amount of Percentage Royalty earned through any such Payment Period or
(B) the aggregate Minimum Royalty payment payable through such Payment Period
less (ii) all payments for Minimum Royalty or Percentage Royalty made to
Licensor prior to the date of

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<PAGE>

payment. Net Sales, Minimum Royalty and Percentage Royalty payments in one
Contract Period shall not be credited to Licensee or used to reduce any Net
Sales requirement or Percentage Royalty or Minimum Royalty payments obligation
in any other Contract Period. Each payment shall be accompanied by a true and
accurate statement setting forth the Net Sales of the Products during the
preceding Payment Period, certified either by Licensee's chief financial
officer or other principal executive officer of Licensee, which statement shall
include information as to the number, description and types of Products sold
and to discounts and returns actually credited; such statement shall be
furnished whether or not Products are actually sold during the applicable
Payment Period.

7. BOOKS AND RECORDS

(a) Licensee shall keep and maintain in the regular course of
its business, in accordance with generally accepted accounting principles,
complete and accurate books and records covering all transactions relating to
the license granted herein including the amount of Net Sales of the Products
manufactured and sold hereunder, the amount of Percentage Royalty payable
hereunder by Licensee and the manner in which such royalty was computed.
Licensee shall preserve and keep available all such books and records for at
least three (3) years after the year to which they relate.

(b) Licensor agrees and acknowledges that all books, records,
correspondence, customer lists and date of Licensee pertaining to transactions
relating to the license granted herein are the exclusive property of Licensee.
Licensor acknowledges that

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<PAGE>

customer lists compiled by Licensee for the Products constitute trade secrets
and are the exclusive property of Licensee and that at no time during the
Initial Term or Renewal Term(s), if any, or upon termination of the license,
shall Licensor utilize said customer lists for any purpose except to verify
and confirm the amount of Net Sales of the Products, the royalties due Licensor,
or in connection with collection of any amount due hereunder or the enforcement
of any other rights hereunder.

(c) Licensor, subject to the provisions of paragraph 7(b)
hereof, shall have the right during the term of this Agreement and for three (3)
years thereafter, at its cost and expense and during regular business hours, to
inspect and copy and make extracts from said books and records and to designate
an authorized representative, including without limitation, a firm of Certified
Public Accountants to audit Licensee's books and records and to conduct such
further investigation as Licensor shall deem necessary to verify Licensee's
performance of all of its obligations hereunder including, without limitation,
payments of Percentage Royalty.

(d) If, as a result of any examination of Licensee's books and
records, it appears that Licensee's royalty payments were less than the amount
which should have been paid, Licensee shall promptly pay the amount of
discrepancy or shortage, which shall bear interest from the date such royalty
payments were due at two percent (2%) higher than the prime rate of interest
charged by Chemical Bank in New York City to its most creditworthy corporate
borrowers as of such due date, and if the amount of such

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<PAGE>

discrepancy or shortage shall be an amount equal to at least three percent (3%)
of the Percentage Royalty payable during the period in question, Licensee shall
also reimburse Licensor for the cost of such examination.

8. SALE AND PROMOTION

(a) Licensee shall not sell, distribute or export the Products
outside the Territory. Licensee shall promptly turn over to Licensor all orders
or inquiries relating to the sale or delivery of the Products outside the
Territory.

(b) Licensee shall use its diligent and continuous best
efforts to promote and develop the sale of the Products and to exploit the
rights granted hereunder in the Territory. Licensee's primary area of
responsibility shall be the manufacture, design, styling, packaging, marketing,
promotion and sale of the Products in fine department and better specialty
stores as a coordinated line or collection of fragrance and toiletry articles
with a common styling and packaging. Licensee shall not utilize any other method
of distribution without Licensor's written consent in each instance. Licensee
shall exercise all reasonable efforts within the limits allowed by the laws and
governmental regulations in effect in the Territory to insure that its
merchandising and sale of the Products shall conform to policies and methods
suitable for goods of high quality sold under a prestigious label of worldwide
repute.

(c) Prior to any use or appearance in any media, Licensee
shall submit to Licensor for its inspection and approval, free of charge,
specimens of all advertising, public relations and

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<PAGE>

promotional material for the Products (including without limitation, photos,
films, videos, artwork, graphics and web site information). Licensee shall
furnish to Licensor, free of charge, specimens of all advertising, public
relations and promotional material relating to the Products promptly following
its use or appearance. Licensor shall have the right to approve the identity,
appearance, likeness, signature, and all photos, film and video or other
identification of any personality, models, or celebrities endorsing the
Products. Licensee shall be solely and exclusively responsible, at its own
expense, for securing all releases and consents in favor of Licensor and
Licensee in connection with any such endorsements and for any payments to such
individuals, which releases and consents shall be supplied to Licensor in
advance in connection with the foregoing approval of endorsements.
Licensor shall not unreasonably disapprove of any such materials. Licensor may
disapprove of any materials required to be delivered to it hereunder upon notice
received by Licensee within ten (10) days after receipt by Licensor of such
materials required to be delivered hereunder and if Licensee does not receive
notice of approval or disapproval within such period, such materials shall be
deemed approved. During the First Contract Period, Licensee shall expend for
promotion and advertising of the Products in the Territory an amount equal to
not less than one percent (1%) of its Net Sales of the Products for co-op
advertising or media advertising directed to consumers. Commencing in the
Contract Period following the First Contract Period, Licensee shall pay to
Licensor quarter-annually, within thirty (30) days following each calendar
quarter, one percent (1%)

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of Licensee's Net Sales of the Products, which shall be contributed to a joint
advertising fund established by Licensor to be utilized for advertising of
products marketed under the Trademark.

(d) Licensee shall not engage in excessive or indiscriminate
disposal of any of the Products as closeouts or offprice sales. In any event,
Licensee shall not sell any of the Products as closeouts or off-price sales
prior to expiration of sixty (60) days after the date Licensee discontinued
manufacturing the Product in question. All closeouts and off-price sales shall
be subject to the payment of Percentage Royalty. Closeouts and off-price sales
shall mean sales of any of the Products at discounts of thirty-three (33%)
percent or more from Licensee's regular price for the Product in question.
Licensee shall not ship, sell, or authorize for sale or distribution any
Products known to be damaged, defective, seconds or irregulars.

9. TERMINATION

(a) If Licensee shall fail to make any payment due hereunder
and if such default shall continue uncured for a period of thirty (30) business
days after written notice thereof to Licensee, Licensor shall have the right to
terminate this Agreement forthwith. If either party shall otherwise fail to
perform any of the terms, conditions, agreements or covenants in this Agreement
and such default shall continue uncured for a period of thirty (30) days after
written notice thereof to the party in default, the non-defaulting party shall
have the right to terminate this Agreement forthwith.

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(b) (i) Either party may by written notice terminate this
Agreement immediately without incurring thereby any liability to the other,
except as hereinafter set forth, in the event the other party shall: (A) be
dissolved, be adjudicated, insolvent or bankrupt or cease operations, be unable
to admit in writing its ability to pay its debts as they mature or make a
general assignment for the benefit of, or enter into any composition or
arrangement with, creditors, or file for relief under any insolvency law (except
that the Licensee may not terminate this Agreement hereunder if Licensor is
subject to any proceeding described in this paragraph 9(b) (i) (A) unless
Licensor is adjudicated a bankrupt); (B) apply for, or consent (by admission of
material allegations of a petition or otherwise) to the appointment of a
receiver, trustee or liquidator of all or a substantial part of its assets or
affairs, or authorize such application or consent, or permit any proceedings
seeking such appointment to be commenced against it (whether voluntary or
involuntary) which continues undismissed for a period of sixty (60) days; (C) be
the subject of any other proceeding not defined above whereby any of the
property or assets of Licensee are or may be distributed among its creditors (or
any group of them).

(ii) Licensor may terminate this Agreement without liability
if Licensee undergoes any substantial change in their ownership or control. Any
transfer of control to a principal stockholder or principal officer of Licensee
or to an entity controlled by any of them or Licensee (hereinafter referred to
as "Related Party") shall not be deemed a change of status, ownership

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<PAGE>

or control of a party for purposes of this paragraph 9(b) (ii). If Licensee's
Net Sales with respect to any Contract Period after the First Contract Period
are less than $3,000,000 for such Contract Period, then Licensor may terminate
this Agreement as provided for hereafter. Termination under this paragraph 9(b)
(ii) shall be upon thirty (30) days prior notice to be given not later than
forty-five (45) days after Licensor's receipt of the final payment and statement
of Net Sales for a Contract Period required under paragraph 6(e) of this
Agreement.

(c) In the event Licensor's ownership and right to the
existing U.S. Trademark registration for use in connection with or on the
Products expire or are terminated through no act or failure to act on the part
of Licensor, this Agreement shall terminate as of the date of such
expiration or termination, without either party incurring any liability thereby.

(d) On the expiration or sooner termination of this
Agreement:

(1) The rights and license granted to Licensee
herein shall forthwith terminate and automatically revert to Licensor.

(2) All Percentage Royalties on sales of the
Products to the date of expiration or termination shall become immediately
due and payable, and Licensee shall remain liable to Licensor for royalties on
sales of the Products thereafter.

(3) Except as provided in paragraph 9(e) (providing
a six (6) month period to sell remaining inventory), Licensee and its
receivers, trustees, agents, administrators,

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<PAGE>

successors and assigns shall discontinue all use of the Trademark and
shall deliver to Licensor, free of charge, all labels, packaging and other
materials in its possession bearing the Trademark.

(4) Licensor may, in its sole discretion, enter into such arrangements
as it deems desirable, with any other party, for the manufacture, promotion and
sale of the Products in the Territory thereafter.

(e) Licensee shall deliver as soon as practicable to Licensor,
following expiration or termination of this Agreement, a statement indicating
the number and description of Products on hand. Following such expiration or
termination, Licensee may manufacture no additional Products, but may continue,
on a non-exclusive basis, to distribute and sell its remaining inventory for a
period not to exceed six (6) months following such termination or expiration,
subject to payment of applicable royalties thereto, all of which shall be paid
within thirty (30) days after completion of such six month selling period.
Licensor shall have the right to conduct a physical inventory in order to
ascertain or verify such inventory and/or statement. In the event Licensee
refuses to permit Licensor to conduct such physical inventory, then Licensee
shall forfeit their right hereunder to dispose of such inventory. In addition to
such forfeiture, Licensor shall have recourse to all other legal remedies
available to it.

(f) The termination or expiration of this Agreement shall not
relieve Licensee of any obligation or claim for damages due to Licensor arising
or accrued prior to or as of the date of

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<PAGE>

such termination or expiration, including but not limited to a claim for the
balance of Minimum Royalties, pro-rated to the date of termination.

10. INSURANCE

Licensee, at its own expense, shall procure or cause to be procured,
from a responsible insurance carrier acceptable to Licensor, and maintain in
full force and effect at all times, a products liability insurance policy with
coverages reasonably acceptable to Licensor with respect to the Products
manufactured and sold hereunder with a limit of liability of not less than Three
Million ($3,000,000) Dollars. Licensor and Licensee shall be named as covered
parties and named insureds, as their interests shall appear, and such insurance
policy shall provide for at least ten (10) days' prior written notice to
Licensor of any cancellation or modification. Licensee shall deliver to
Licensor, promptly upon issuance, a full and complete copy of said insurance
policy and shall, from time to time upon request, promptly furnish to Licensor
evidence that said insurance policy is in full force and effect. Licensee shall
also use its best efforts, but without incurring any additional material costs,
to name any endorsers of the Products whose names are furnished to Licensee by
Licensor in writing as additional covered parties under such policy.

11. GOVERNING LAW

This Agreement shall be deemed to have been entered into in the State
of New York, and shall be construed and interpreted in accordance with the laws
of the State applicable to agreements made and to be performed in the State of
New York,

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<PAGE>

except that any and all disputes, controversies and claims arising out of or
relating to the ownership, registration or application for registration of
the Trademark shall be determined under the United States federal trademark law.
The parties hereto hereby confer jurisdiction upon and consent to the personal
jurisdiction of the courts of the State of New York and the United States
Federal courts in said State in connection with any matter, dispute or claim
arising under this Agreement and Licensee agrees that any action against
Licensor must be brought only in such courts.

12. SUSPENSION

If Licensee suspends or discontinues its regular business operations
with regard to the Products for any reason whatsoever, Licensor shall have the
right to terminate this Agreement forthwith by giving thirty (30) days' prior
notice to Licensee unless prior to such thirty days, Licensee resumes its
regular business operations with regard to the Products without further
suspension or discontinuance (in the case of force majeure, such thirty (30)
prior notice period shall be extended to sixty (60) days.)

13. COMPLETE AGREEMENT

This Agreement constitutes the entire Agreement between the parties
relating to the subject matter hereof and supersedes all prior agreements and
undertakings whether oral or written, between the parties hereto. This Agreement
may be amended only by a writing executed by the parties. No finders' fees or
other compensation is payable by Licensee in connection with the execution of
this Agreement.

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<PAGE>

14. INDEMNIFICATION

(a) Licensee hereby indemnifies Licensor and its parent,
subsidiary and affiliated Corporations and its and their successors, assigns,
officers, directors, shareholders, employees and affiliates (collectively,
"Licensor Indemnified Parties") and undertakes to defend the Licensor
Indemnified Parties and save and hold the Licensor Indemnified Parties harmless
of and from any and all liability, claims, causes of action, suits, damage and
expenses (including reasonable attorneys' fees and expenses) for which any
Licensor Indemnified Party may become liable or may incur or be compelled to pay
as a result of any action, proceeding or claim against it, for or by reason of
any actions, whether of omission or commission, that may be committed or
suffered by Licensee or any of its subcontractors, manufacturers, distributors,
wholesalers, retailers, representatives, servants, agents or employees in
connection with Licensee's performance or breach of this Agreement, (including,
without limitation, based upon Licensee's and its subcontractors, manufacturers,
distributors, wholesalers, retailers, representatives, servants, agents and
employees activities in the research, development, manufacture, sale,
advertisement, promotion, production, distribution, or quality control of the
Products; products' liability, environmental liability and health and safety
risks relating to the Products; alleged defects in the design, material,
workmanship, manufacture, and content of the Products and impurities contained
therein; claims of copyright or patent infringement with respect to any
advertising, promotional and marketing material relating to the

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<PAGE>

Products or to the manufacturing, packaging, bottling, styling or design of the
Products; claims of any endorsers, models, celebrities or other individuals
utilized in connection with any advertising, promotion or marketing of the
Products; and claims of subcontractors, manufacturers, distributors,
wholesalers, retailers and representatives and agents of Licensee), but shall
not include any portion of any claim, suit, loss or damage, based upon trademark
infringement or unfair competition covered by paragraph 14 (b) hereof. Licensor
shall give Licensee prompt notice of any such suits or claims. In connection
with such indemnification and without limiting the foregoing, Licensee shall
have the right and obligation to control and assume the defense of such claim
with counsel selected by it and in such event Licensor shall, at Licensee's
expense, cooperate with Licensor in such defense. In the event that Licensee
fails to undertake and maintain the defense of any such claims or suits,
Licensor may at its election, defend against any such suit or claim with
counsel selected by it, all at Licensee's expense. In no event will Licensor
or Licensee settle any claims or suits without the other party's approval,
which shall not be unreasonably withheld or delayed.

(b) Licensor does hereby indemnify Licensee and its parent,
subsidiary and affiliated corporations, and its and their successors, assigns,
officers, directors, shareholders, employees and affiliates (collectively,
"Licensee Indemnified Parties") and undertakes to defend the Licensee
Indemnified Parties against and hold the Licensee Indemnified Parties harmless
from and against any claims, suits, losses and damages for trademark
infringement or

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<PAGE>

unfair competition arising solely out of any authorized use of the Trademark
for the Products by Licensee in accordance with the terms and provisions of this
Agreement, which indemnification shall include the costs and expenses of
defending against the same, including reasonable attorneys' fees (provided
however, that Licensor shall not have such indemnification obligation with
respect to merchandising, sale or distribution of the Products by Licensee in
any particular foreign country prior to Licensor having been issued an effective
registration of the Trademark in such country). Licensee shall give Licensor
prompt notice of any such suits or claims. In connection with such
indemnification and without limiting the foregoing, Licensor shall have the
right and obligation to control and assume the defense of such claim, with
counsel selected by it and in such event Licensee shall, at Licensor's expense,
cooperate with Licensor in such defense. In the event that Licensor fails to
undertake and maintain the defense of any such claims or suits, Licensee may at
its election, defend against any such suit or claim with counsel selected by it,
at Licensor's expense. In no event will Licensor or Licensee settle any claims
or suits without the other party's prior written approval, which shall not be
unreasonably withheld or delayed.

(c) The indemnifications above shall be contingent upon the
indemnified party giving the indemnifying party prompt notice of any action,
proceeding or claim as to which it expects indemnification.

(d) Indemnification hereunder shall be in addition to, and not
in lieu of, any remedy either party may have for breach

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<PAGE>

of this Agreement, and the indemnifications provided herein shall survive the
termination or expiration of this Agreement for any reason.

15. ASSIGNMENT
Licensor has granted the license hereunder in reliance upon Licensee's
experience in the manufacture and distribution of the Products and Licensee's
ability to maintain the standards of style and quality required hereunder.
Licensee acknowledges that this Agreement is a contract for the personal
services and skills of Licensee, involving a relationship of trust and
Licensor's confidence in Licensee's willingness and ability to maintain such
style and quality standards and to protect the Trademark's reputation. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, except that this Agreement may not be
assigned by Licensee, nor may Licensee grant any sublicense. In the event that
Licensor shall approve in writing any assignment of this Agreement (which it may
refuse to do in its sole discretion), such assignee shall agree in writing to be
bound by the terms and conditions of this Agreement and any such assignment
shall not relieve Licensee of any liability hereunder. Any assignment not in
conformity with this Paragraph 15, whether voluntary or by operation of law,
shall be void and of no force or effect and upon any such attempted assignment,
Licensor shall have the right to immediately terminate this Agreement.

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<PAGE>

16. NOTICES
All notices, approvals, requests or consents permitted or required under
this Agreement shall be in writing and sent by certified or overnight mail with
return receipt requested or delivered by telegram or personally, to the parties
at their respective addresses set forth above. Notices to Licensor as well as
deliveries of all material or articles to be approved, including but not limited
to, samples, design, advertising, tags and labels shall be directed to the
attention of the President of Licensor and notices to Licensee shall be directed
to the attention of the President of Licensee. By a notice hereunder either
party may change the address hereunder or the person to whom any notice or
delivery shall be directed.

17. REMEDIES AND WAIVERS
The failure of either party to claim or assert a right under this Agreement
will not be deemed a waiver thereof unless a time limit is provided in this
Agreement for the exercise of such rights. Any waiver, whether express or
implied of any provision of this Agreement shall not constitute a continuing
waiver of such or any other provision on the Agreement. All remedies specified
herein or otherwise available shall be cumulative and in addition to any and
every other remedy provided herein or now or hereinafter available.

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<PAGE>

18. NO AGENCY RELATION; PROVISIONS FOR BENEFIT OF PARTIES

(a) Nothing herein contained shall create or be deemed to create any
agency, partnership or joint venture between the parties thereto, and Licensee
shall have no power or authority to obligate or bind Licensor in any manner
whatsoever.

Licensee shall bear all of its own expenses incurred in connection with
its activities in the research, development, manufacture, sale, production or
quality control of Products, its use of the Trademarks, its administration,
management, ownership, operation or control of manufacturing and production
facilities relating to the Products, including the payment of all applicable
taxes (national, state, local and foreign). Licensor shall pay all of its own
taxes on royalty payments received by it under Section 6, but shall not be
responsible for any portion of Licensee's taxes on sales or income from the
Licensed Products.

(b) The provisions and covenants set forth in this Agreement are made
solely for the benefit of the parties to this Agreement and not for the benefit
of any other person, and no other person (other than the Licensor Indemnified
Parties and the Licensee Indemnified Parties with respect to their rights to
indemnification) shall have any right to enforce these provisions and covenants
against any party to this Agreement.

19. COUNTERPARTS; FURTHER ASSURANCES

(a) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same document

(b) Each of the parties shall execute and deliver or cause to be
executed and delivered to the other and shall do or make or cause to be done
or made, from time to time, all instruments, consents, assignments, documents,
actions and things which may be necessary or advisable to consummate and make
effective the transactions contemplated by, or to carry out the terms of,
this Agreement, including, without limitation, to secure, maintain, and enforce
applications and registrations for the Trademarks for use on the Products.

20. SEVERABILITY
The invalidity or unenforceability of any provision of this
Agreement shall not effect the other provisions or parts hereof and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision or parts thereof were omitted.

21. CORPORATE AUTHORITY, ETC.

(a) Licensor hereby represents and warrants that: Licensor is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey and qualified to do business and in good
standing in the State of New York, with full corporate power and authority to
enter into, and be bound by the terms and conditions of, this Agreement. This
Agreement and the other transactions contemplated thereby have been duly
authorized by Licensor and it has obtained and there exists, all necessary Board
of Directors and other corporate action with respect thereto, and no further
corporate action is necessary to authorize this Agreement and the other
transactions contemplated thereby. This Agreement has been duly executed and
delivered and

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<PAGE>

constitutes a valid and binding obligation legally enforceable against Licensor
in accordance with its terms. The execution and delivery of this Agreement by
Licensor and the performance of its obligations hereunder are not in violation
of, and do not conflict with or constitute a default under, any of the terms
and provisions of Licensor's Certificate of Incorporation or By-laws or any
agreement, indenture or instrument to which it is bound, or any law, regulation,
order, decree, judgment or award to which it is subject.

(b) Licensee hereby represents and warrants that: Licensee is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and qualified to do business and in good standing
in the State of New York with full corporate power and authority to enter into
and be bound by the terms and conditions of, this Agreement. This Agreement and
the other transactions contemplated thereby have been duly authorized by
Licensee and it has obtained and there exists, all necessary Board of Directors
and other corporate action with respect thereto, and no further corporate action
is necessary to authorize this Agreement and the other transactions contemplated
thereby. This Agreement has been duly executed and delivered and constitutes a
valid and binding obligation legally enforceable against Licensee in accordance
with its terms. The execution and delivery of this Agreement by Licensee and the
performance of its obligations hereunder are not in violation of, and do not
conflict with or constitute a default under, any of the terms and provisions of
Licensees' Articles of Incorporation or By-laws or any

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<PAGE>

agreement, indenture or instrument to which it is bound, or any law,
regulations, order, decree, judgment or award to which it is subject.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

EUROPE CRAFT IMPORTS INC.

By: /s/ Charles S. Ramat, President
Charles S. Ramat, President
and Chief Executive Officer

AZUREL, LTD.

By /s/ Gerard Semhon
Gerard Semhon, Chairman
and Chief Executive Officer

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<PAGE>

STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )

On the 20th day of May, 1996, before me personally came CHARLES S. RAMAT,
to me known, who being duly sworn, did depose and say that he resides at 1185
Park Avenue, NYC 10128; that he is the President and Chief Executive Officer of
Europe Craft Imports, Inc., the corporation described in, and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation and that he signed his name
thereto by like order.

Sworn to before me this 20th day

of May, 1996

/s/ Wanda Alers
Notary Public

STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )

On the ____ day of May, 1996, before me personally came Gerard Semhon to me
known, who being duly sworn, did depose and say that he resides at 414 E.52nd
St., NYC 10022; that he is the Chairman and Chief Executive Officer of Azurel,
Ltd., the corporation described in, and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation and that he signed his name thereto by like
order.

Sworn to before me this 17 day
of May, 1996.

/s/ Yasmin Ali
Notary Public

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<PAGE>

SCHEDULE 1
"MEMBERS ONLY" TRADEMARK REGISTRATIONS
IN RELATING TO CLASS 3 PRODUCTS
AS OF FEBRUARY 7, 1996

1. US Registration #1,408,149 (Registered 9/9/86, Exp. 9/9/2006) for: men's
toiletry articles, namely cologne, after-shave lotion and deodorant, in
Class 3 (copy attached)

2. Argentina Reg. #1,204,005 (Reg. 5/9/86) Renewal Pending (Class 3)

3. Canada Reg. #321,276 (Reg. 12/5/86, Exp. 12/5/2001) (Class 3)

4. Chile Reg. #442,900 (Reg. 4/5/95, Exp. 4/5/2005) (Class 3)

5. Great Britain Reg. #B1,228,646 (Reg. 10/22/84, Exp. 10/22/2005) (Class 3)

6. Japan Reg. #1,939,438 (Reg. 3/27/87, Exp. 3/27/97) (Jap C1.21 = Toiletries)

7. Japan Reg. #2,693,252 (Reg. 8/31/94, Exp. 8/31/2004) (Jap C1.4 = Perfumes)

8. Korea Reg. #92,834 (Reg. 7/11/83, Exp. 7/11/2003) (Kor C1. 12 = Perfumes)

9. Uruguay Reg. #210,270 (Reg. 7/9/87, Exp. 7/9/97) (Class 3)

10. Venezuela Reg. #146,404 (Reg. 4/8/92, Exp. 4/8/2007) (Ven C1.6 =
Toiletries)

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<PAGE>

Int. Cls.:3, 18 and 25
Prior U.S. Cls.: 3,39 and 51 Reg. No. 1,408,149
United States Patent and Trademark Office Registered Sep. 9, 1986

TRADEMARK
PRINCIPAL REGISTER

MEMBERS ONLY

EUROPE CRAFT IMPORTS INC. (NEW JERSEY CORPORATION)
390 FIFTH AVENUE
NEW YORK, NY 10018

FOR: MEN'S TOILETRY ARTICLES, NAMELY, COLOGNE, AFTER-SHAVE LOTION AND
DEODORANT, IN CLASS 3 (U.S. CL.51)
FIRST USE 8-0-1985; IN COMMERCE 8-0-1985.
FOR: HANDBAGS, IN CLASS 18 (U.S. CL.3)
FIRST USE 9-0-1985; IN COMMERCE 9-0-1985.
FOR: RAINWEAR, TENNIS WEAR, NAMELY, KNITTED VESTS, SWEATERS, SHORTS, KNIT
SHIRTS, KNITTED/FLEECE AND WOVEN COORDINATED JACKETS AND TOPS, KNITTED/FLEECE
WARM-UP SUITS, T-SHIRTS; SWIMSUITS; BOYS' AND GIRLS' ACTIVEWEAR/SPORTSWEAR,
NAMELY, KNIT AND WOVEN JACKETS, SHIRTS, CASUAL PANTS AND SWEATSUITS; BOYS' AND
GIRLS' OUTERWEAR, NAMELY, JACKETS, IN CLASS 25 (U.S. CL. 39).
FIRST USE 7-10-1981; IN COMMERCE 7-10-1981.
OWNER OF U.S. REG. NOS. 1,086,489, 1,262,496 AND OTHERS.

SER. NO. 580,863, FILED 2-3-1986.

FRED MANDIR, EXAMINING ATTORNEY

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STOCK PURCHASE AND SALE AGREEMENT

by and among

MICHAEL J. ASSANTE as SELLER

and

AZUREL LTD. as PURCHASER

and

PRIVATE LABEL COSMETICS, INC.,
P.L.C. SPECIALTIES, INC.,
INTERNATIONAL COSMETIC GROUP, INC. and
FASHION LABORATORIES, INC.

for all of the issued and outstanding shares of capital stock of

PRIVATE LABEL COSMETICS, INC.,
P.L.C. SPECIALTIES, INC.,
INTERNATIONAL COSMETIC GROUP, INC. and
FASHION LABORATORIES, INC.

July 17, 1996

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<PAGE>

STOCK PURCHASE AND SALE AGREEMENT

STOCK PURCHASE AND SALE AGREEMENT (the "Agreement") dated July 17, 1996,
by and among:

MICHAEL J. ASSANTE (the "Seller"), an individual residing at 10 Surrey
Lane, Mahwah, New Jersey 07430;

and

AZUREL LTD. (the "Purchaser"), a corporation incorporated under the
laws of the state of Delaware, with its principal place of business at 509
Madison Avenue, Suite 804, New York, New York 10022;

and

PRIVATE LABEL COSMETICS, INC. ("Private Label"), a corporation with its
principal place of business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New
Jersey 07410;

and

PLC SPECIALTIES, INC. ("P.L.C."), a corporation with its principal place
of business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New Jersey 07410;

and

INTERNATIONAL COSMETIC GROUP, INC. ("International"), a corporation
with its principal place of business at 20-10 Maple Avenue, P.O. Box 235,
Fairlawn, New Jersey 07410;

and

FASHION LABORATORIES, INC. ("Fashion Labs"), a corporation with its
principal place of business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn,
New Jersey 07410.

WITNESSETH

WHEREAS, Private Label is a corporation duly incorporated and in good
standing under the laws of the state of New Jersey, with its principal place of
business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New Jersey 07410;

WHEREAS, P.L.C. is a corporation duly incorporated and in good standing
under the laws of the state of New Jersey, with its principal place of business
at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New Jersey 07410;

- 2 -

<PAGE>

WHEREAS, International is a corporation duly incorporated and in good
standing under the laws of the state of New Jersey, with its principal place of
business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New Jersey 07410;

WHEREAS, Fashion Labs is a corporation duly incorporated and in good
standing under the laws of the state of Delaware, with its principal place of
business at 20-10 Maple Avenue, P.O. Box 235, Fairlawn, New Jersey 07410 (As
used herein, the term the "Company" refers to each of Private Label, P.L.C.,
International and Fashion Labs, individually and all four companies
collectively.)

WHEREAS, Seller owns 49.7 shares of the capital stock of Private Label
(the "Private Label Shares"); 49.7 shares of the capital stock of P.L.C. (the
"P.L.C. Shares"); 500 shares of the capital stock of International (the
"International Shares"); and 500 shares of the capital stock of Fashion Labs
(the "Fashion Labs Shares"); (the Private Label Shares, P.L.C. Shares,
International Shares and the Fashion Labs Shares are collectively referred to
herein as the "Company Shares");

WHEREAS, the Company Shares constitute all of the issued and outstanding
capital stock of the Company;

WHEREAS, Seller desires to sell and Purchaser desires to purchase at the
Closing (as hereinafter defined) the Company Shares on the terms and conditions
set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and of the agreements
set forth below, the parties hereto agree to the following:

I. PURCHASE AND SALE

A. Shares to be Purchased and Sold. At the Closing and upon the terms
and subject to the conditions of this Agreement, and upon the representations,
warranties and covenants herein made, Seller agrees to sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser agrees to purchase from Seller,
the Company Shares, for the Purchase Price (as hereinafter defined), free and
clear of all liens, pledges, security interests, options, claims, charges and
encumbrances of any kind whatsoever, together with all rights now and hereafter
attaching thereto.

B. Purchase Price.

1. Payments. Upon the terms and subject to the conditions set forth
in this Agreement, upon the representations, warranties and covenants made
herein, and in exchange for the Company Shares, Purchaser hereby agrees to:

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<PAGE>

(i) pay and deliver to Seller at the Closing, by certified
or bank check or wire transfer, One Hundred Twenty-Five
Thousand Dollars ($125,000) (the "Initial Payment");

(ii) issue and deliver to Seller at the Closing a promissory
note (the "Note") in the original principal amount of
One Million Six Hundred Seventy-Five Thousand Dollars
($1,675,000), bearing interest at the rate of nine
percent (9%) per annum, payable in nine installments
with the first installment of $150,000, plus accrued but
unpaid interest, to be paid on the date, if any, that a
public offering of Purchaser's common stock is
consummated (the "IPO"), or January 1, 1997, whichever
is earlier, the second installment of $209,375, plus
accrued but unpaid interest, to be paid three months
thereafter, the third installment of $209,375, plus
accrued but unpaid interest, to be paid six months after
the second installments and each of the fourth through
ninth installments of $184,375, each, plus accrued but
unpaid interest, to be paid six months after the prior
installment, subject to adjustment as hereinafter
provided, substantially in the form set forth in
Exhibit I-B-1(ii);

(iii) issue and deliver to Seller such number of shares of the
Purchaser's common stock (the "IPO Shares") which, in the
aggregate, are valued at Eight Hundred Fifty Thousand
Dollars ($850,000), and are to be issued if and when a
public offering of the Purchaser's common stock is
consummated, and are to be valued at the proposed public
offering price of the Company's common stock and subject
to a registration rights agreement and lock-up agreement
on terms similar to those executed by members of the
Company's management;

(iv) pay and deliver to Louis DiVita ("DiVita") at the
Closing, on behalf of Seller, Six Thousand Two Hundred
Fifty Dollars ($6,250)(the "DiVita Payment"); and

(v) issue and deliver to DiVita at the Closing, on behalf
of Seller, a promissory note (the "DiVita Note") in the
original principal amount of Eighty-Three Thousand Seven
Hundred Fifty Dollars ($83,750), plus accrued but unpaid
interest, payable in nine installments of principal and
interest, in the same proportion and on the same schedule
as the Note, subject to adjustment, substantially in the
form set forth in Exhibit I-B-1(v).

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<PAGE>

(vi) issue and deliver to DiVita such number of shares of the
Purchaser's common stock (the "DiVita IPO Shares") which
in the aggregate, are valued at Forty-Two Thousand Five
Hundred Dollars ($42,500), and are to be issued if and
when a public offering of the Purchaser's common stock
is consummated, and are to be valued at the proposed
public offering price, of the Company's common stock and
subject to a registration rights agreement and lock-up
agreement on terms similar to those executed by
members of the Company's management.

The Initial Payment, Note, IPO Shares, DiVita Payment,
the DiVita Note and the DiVita IPO Shares collectively comprise the purchase
price (the "Purchase Price").

2. Adjustment. The final determination of the amounts paid or payable
by the Company (the "Reduction Amount") in respect of any cost or expense,
incurred subsequent to the Closing arising from or in connection with any matter
relating to compliance with ISRA (as hereinafter defined) and the Environmental
Remediation (as hereinafter defined), shall be made upon completion of the
Environmental Remediation (the "Completion Date"). Within twenty (20) business
days following the Completion Date, the original principal amount of the Note
shall be reduced by an amount equal to ninety-five percent (95%) of the
Reduction Amount (the "Note Reduction"), and the original principal amount of
the DiVita Note shall be reduced by an amount equal to five percent (5%) of the
Reduction Amount (the "DiVita Note Reduction"); provided however, that the
aggregate amount of the Note Reduction and the DiVita Note Reduction shall not
exceed Four Hundred Thousand Dollars ($400,000).

C. Delivery of Shares and Payment.

1. At the Closing:

(i) Seller shall cause the Company to cancel the outstanding
certificates representing the Company Shares and to issue
and register in the name of Purchaser, or its
designee(s), and deliver such new certificates
(the "Certificates") representing all of the Company
Shares to the Purchaser. The transfer of the Company
Shares shall be duly acknowledged by the Board of
Directors of the Company and registered in the records
of the Company;

(ii) Purchaser shall deliver the Certificates, together with
stock powers in blank duly endorsed for transfer, to
Gersten, Savage, Kaplowitz & Curtin, LLP, as escrow agent
(the "Escrow Agent"), which shall deliver the
Certificates in accordance with the escrow agreement to
be executed and delivered by the parties and the Escrow
Agent at the Closing (the "Escrow Agreement"), which
shall be substantially in the form set forth in
Exhibit I-C-1(ii);

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(iii) Purchaser shall pay the Initial Payment and the
DiVita Payment to Seller and shall deliver the Note and
the DiVita Note to Seller;

(iv) Purchaser shall contribute One Hundred Fifty Thousand
Dollars ($150,000) to the working capital of the Company;

D. Closing. The closing of the purchase and sale of the Company Shares
(the "Closing") will take place at the offices of the Escrow Agent, at 575
Lexington Avenue, 27th Floor, New York, New York, 10022, on or before August 30,
1996 (the "Closing Date").

II. REPRESENTATIONS AND WARRANTIES

A. Representations and Warranties of Seller and the Company. Seller and
each entity comprising the Company hereby jointly and severally represent and
warrant to Purchaser as follows, and acknowledge and confirm that Purchaser is
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Purchaser or on its behalf, which shall be true as of the
Closing and shall survive the Closing:

1. Organization, Standing and Power. Each entity comprising the
Company is a corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation, has all requisite
corporate power and authority to own and operate its respective properties and
to carry on business as now being conducted or as conducted in the past and is
qualified to do business and is in good standing as a foreign corporation in
each state or other jurisdiction in which the nature of its respective
properties, assets or conduct of its respective business requires such
qualification. Exhibit II-A-1 sets forth the date and jurisdiction of the
incorporation, stockholders, and officers and directors of each entity
comprising the Company and the states or other jurisdictions in which each
entity comprising the Company is qualified to conduct business. The Company has
no subsidiaries.

2. Authorization. Seller and each entity comprising the Company each
have the requisite power and authority to enter into this Agreement and to
consummate the transaction contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transaction contemplated hereby has
been or will be duly authorized by all necessary action on the part of Seller
and each entity comprising the Company. This Agreement has been duly executed
and delivered by Seller and the Company, and constitutes a legal, valid and
binding obligation of Seller and each entity comprising the Company, enforceable
against Seller and each entity comprising the Company in accordance with its
terms subject as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally. None of the entities comprising the Company is the subject of,
nor the debtor in, any pending, potential or threatened bankruptcy proceeding,
voluntary or involuntary, or any similar proceeding, claim or action which could
result in such an event. No consent, approval, order or authorization of, or
registration, declaration or filing with any

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governmental authority or any other party is required to be made or obtained by
Seller or any entity comprising the Company in order to execute this Agreement
or fulfill the obligations provided for hereby.

3. Compliance With Laws. Each entity comprising the Company has all
permits, licenses and authorizations required by any applicable government
authority or agency for the conduct of its respective business. Each entity
comprising the Company has complied with the applicable laws, rules and
regulations of each jurisdiction, regulatory bodies and any industry,
governmental or trade organization required by law in which it conducts its
respective business. Exhibit II-A-3(a) lists each of such registrations,
permits, licenses, consents, approvals, memberships, authorizations and
qualifications. All employees of each entity comprising the Company who are
required to be licensed by any governmental authority or regulatory authority
are duly licensed. Except as set forth on Exhibit II-A-3(b), each entity
comprising the Company and each employee and independent contractor employed by
or affiliated with each entity comprising the Company are in compliance in all
respects with all laws, regulations, ordinances, orders and decrees of any
authority applicable to the conduct of business of each entity comprising the
Company and ownership and use of the properties of each entity comprising the
Company. Except as set forth on Exhibit II-A-3(c), none of the entities
comprising the Company has in the past been, nor is presently subject to any
restriction on the conduct of its business imposed by any governmental or
regulatory authority as a result of actions or failure to act, nor is any entity
comprising the Company aware of any pending investigation or order against it or
any of its respective employees, nor any circumstances which may give rise to
any order or orders which could result in a formal or informal investigation
which could have an adverse affect on it or its ability to conduct its
respective present or proposed business.

4. Capital Structure and Ownership of the Company Shares.

(a) The authorized capital stock of Private Label consists of
2,500 shares of common stock, no par value per share, of which 49.7 shares are
issued and outstanding and owned by Seller (the "Private Label Shares"). At the
Closing, the Private Label Shares shall constitute the only shares of Private
Label's capital stock that are issued and outstanding and, other than Seller,
there shall be no other individual owning any of Private Label's capital stock.
Seller has good and marketable title to the Private Label Shares, free and clear
of all liens, pledges, encumbrances or claims of rights of ownership whatsoever.
None of the Private Label Shares are subject to any proxy, shareholders'
agreement or voting trust agreement. No person has any preemptive rights or
options or warrants to purchase any capital stock of Private Label. The Private
Label Shares have been duly authorized and validly issued and are fully paid and
nonassessable, and no personal liability will attach to the Purchaser solely by
reason of being a holder of the Private Label Shares.

(b) The authorized capital stock of P.L.C. consists of 2,500
shares of common stock, no par value per share, of which 49.7 shares are issued
and outstanding and owned by Seller (the "P.L.C. Shares"). At the Closing, the
P.L.C. Shares shall constitute the only shares

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<PAGE>

of P.L.C.'s capital stock that are issued and outstanding and, other than
Seller, there shall be no other individual owning any of P.L.C.'s capital stock.
Seller has good and marketable title to the P.L.C. Shares, free and clear of all
liens, pledges, encumbrances or claims of rights of ownership whatsoever. None
of the P.L.C. Shares are subject to any proxy, shareholders' agreement or voting
trust agreement. No person has any preemptive rights or options or warrants to
purchase any capital stock of P.L.C. The P.L.C. Shares have been duly authorized
and validly issued and are fully paid and nonassessable, and no personal
liability will attach to the Purchaser solely by reason of being a holder of
the P.L.C. Shares.

(c) The authorized capital stock of International consists of
1,000 shares of common stock, no par value per share, of which 500 shares are
issued and outstanding and owned by Seller (the "International Shares"). At the
Closing, the International Shares shall constitute the only shares of
International's capital stock that are issued and outstanding and, other than
Seller, there shall be no other individual owning any of International's capital
stock. Seller has good and marketable title to the International Shares, free
and clear of all liens, pledges, encumbrances or claims of rights of ownership
whatsoever. None of the International Shares are subject to any proxy,
shareholders' agreement or voting trust agreement. No person has any preemptive
rights or options or warrants to purchase any capital stock of International.
The International Shares have been duly authorized and validly issued and are
fully paid and nonassessable, and no personal liability will attach to the
Purchaser solely by reason of being a holder of the International Shares.

(d) The authorized capital stock of Fashion Labs consists of
1,000 shares of common stock, no par value per share, of which 500 shares are
issued and outstanding and owned by Seller (the "Fashion Labs Shares"). At the
Closing, the Fashion Labs Shares shall constitute the only share of Fashion
Labs' capital stock that are issued and outstanding and, other than Seller,
there shall be no other individual owning any of Fashion Labs' capital stock.
Seller has good and marketable title to the Fashion Labs Shares, free and clear
of all liens, pledges, encumbrances or claims of rights of ownership whatsoever.
None of the Fashion Labs Shares are subject to any proxy, shareholders'
agreement or voting trust agreement. No person has any preemptive rights or
options or warrants to purchase any capital stock of Fashion Labs. The Fashion
Labs Shares have been duly authorized and validly issued and are fully paid and
nonassessable, and no personal liability will attach to the Purchaser solely by
reason of being a holder of the Fashion Labs Shares.

5. Conflict with Authority, Bylaws, etc. Neither the execution,
delivery, and performance of this Agreement nor the consummation of the
transaction contemplated hereby in the manner herein provided will:

(a) contravene any provision of the Certificate of Incorporation, as
amended, or the Bylaws, as amended, as the case may be, of any entity
comprising the Company;

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<PAGE>

(b) result in a breach or violation of, conflict with, constitute a
default under, result in (or create in any party the right to cause) the
acceleration of any performance or any increase in any payments pursuant to,or
otherwise impair, or result in the loss, revocation, suspension, forfeiture or
limitation of any rights or privileges of any entity comprising the Company
under any material agreement, contract, insurance policy, indenture, mortgage,
lease, license, permit, right or authorization, impair the right or privilege
of any entity comprising the Company to conduct its respective business, or
subject any material property or asset of any entity comprising the Company to
any indenture, mortgage, contract, commitment, or agreement, other than this
Agreement, to which any entity comprising the Company is a party or by which the
Company or its respective assets are bound;

(c) violate any provision of law, statute, ordinance, judgment,
decree, rule, regulation, order, permit, or license of any court, governmental
authority applicable to any entity comprising the Company or its respective
assets or business; or

(d) result in the creation of any liens, charges, mortgages,
encumbrances, upon any of the assets of any entity comprising the Company.

6. Financial Statements. All of the notes, accounts or other
receivables of each entity comprising the Company are properly reflected on the
books and records of each such entity and are in their entirety valid accounts
receivable arising from bona fide transactions in the ordinary course of
business. Each entity comprising the Company has and maintains books and records
which accurately and validly reflect its respective transactions, and such
transactions are recorded therein and reflected thereon in conformity with
generally accepted accounting principles consistently applied ("GAAP"). Seller
has furnished to Purchaser the tentative audited annual financial statements,
including the related schedules and notes of entities comprising the Company for
the preceding two fiscal years and unaudited financial statements for the period
through March 31, 1996 (the "Financial Statements"), which are attached hereto
as Exhibit II-A-6. The Financial Statements are correct and complete and were
prepared in accordance with GAAP and provide a true and accurate representation
of the present and historical financial condition of each entity comprising the
Company for the periods presented. Except as disclosed on Exhibits hereto, none
of the entities comprising the Company has any liabilities or obligations of any
nature to any shareholders, employees or independent contractors affiliated with
any entity comprising the Company that are not reflected or reserved against in
the Financial Statements. The accounts receivable reflected on Financial
Statements and ledgers are or shall be bona fide accounts receivable created in
the ordinary course of business and have been collected or are fully
collectible, except as reserved for in the Financial Statements. The inventory
reflected on Financial Statements and ledgers are or shall be purchased and used
in the ordinary course of business in such quantities as reasonable for its
intended use, except as reserved for in the Financial Statements.

7. Absence of Undisclosed Liabilities. The liabilities of each
entity comprising the Company as of the date hereof are set forth in detail on
Exhibit II-A-7. None of the entities comprising the Company, at the time of
this Agreement, has nor has had any

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<PAGE>

other liabilities or obligations of any kind, character or description not
reflected on Exhibit II-A-7 or in the Financial Statements, whether accrued,
absolute, contingent or otherwise.

8. Absence of Adverse Change. Since February 16, 1996 there has been
no material adverse change in the business, the financial condition, assets,
inventories, liabilities, regulatory compliance, licenses, permits, or
operations of each entity comprising the Company, other than changes in the
ordinary course of business. For the purposes of this Agreement, "material
adverse change" shall mean, any single fact or circumstance or series of related
facts or circumstances which may cause a material change in the value of any
entity comprising the Company, or its respective ability to conduct business in
the future in a manner consistent with the prior conduct of its business.

9. Taxes and Tax Returns. Each entity comprising the Company has
filed on a timely basis, either within the original filing period or any
applicable extension period relating thereto, all returns and reports of all
taxes including without limitation federal and state tax returns, local tax
returns, withholding tax returns, declarations of estimated tax and tax reports,
or any other tax which may be required to be filed with respect to it. All
information provided in such returns, filings, notices, reports and accounts is
accurate, true and complete in all material respects. All taxes required to be
paid by each entity comprising the Company that are or were due and payable or
accrued prior to the date hereof (without regard to whether such taxes have been
assessed) have been paid. Adequate provisions in accordance with generally
accepted accounting principles appropriately and consistently applied to each
entity comprising the Company have been made in the Financial Statements, for
the payment of all taxes for which any entity comprising the Company may be
liable for the periods covered thereby that were not yet due and payable as of
the dates thereof, regardless of whether the liability for such taxes is
disputed. Except as set forth on Exhibit II-A-9(a), each entity comprising any
entity comprising the Company has in all material respects satisfied for all
periods through the date hereof all applicable federal, state, municipal,
foreign and local withholding tax requirements (including without limitation,
income, social security and employment tax withholding for all types of
compensation). There is no unpaid interest, penalty or addition to tax due or
claimed to be due from, or any unpaid tax deficiency, determination, or
assessment outstanding against any entity comprising the Company for which the
Company is liable, or for which any basis is known to Seller or any entity
comprising the Company. Except as set forth on Exhibit II-A-9(b), there are no
tax liens upon, pending against, or threatened against any entity comprising the
Company, or its respective assets. None of the entities comprising the Company
has been advised of any taxing authority of the assessment of any deficiency or
the imposition of any deficiency or the imposition of any assessment relating to
such entity.

10. Legal Proceedings. Except as identified in Exhibit II-A-10(a),
there are no legal, administrative or other proceedings or governmental
investigations pending or threatened, which, alone or in the aggregate, would
result in money damages payable by any entity comprising the Company or which
might otherwise materially adversely affect its respective condition (financial
or otherwise), business, operations, prospects or properties. None of the

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<PAGE>

entities comprising the Company is a party to any agreement or instrument or
subject to any judgment, order, regulation, code or ordinance of any court or
governmental body or authority, domestic or foreign, which adversely affects,
or might reasonably be expected to adversely affect, its respective business,
operations, prospects, properties or condition (financial or otherwise). None
of the entities comprising Company has initiated any legal proceedings or any
other kind of action against any individual, employee, shareholder, director or
any other third party except as fully described in Exhibit II-A-10(b). Copies
of all examination reports, audits, reviews or correspondence with respect to
entities comprising the Company prepared by any authority have been provided to
Purchaser, and no deficiency or violation was found by such authorities except
as described in the respective examination reports.

11. Employment Agreements and Contracts. Exhibit II-A-11(a) is a
complete and correct list of all directors, officers, employees, independent
contractors and persons employed or engaged by each entity comprising the
Company or deriving any benefits from any entity comprising the Company,
including therein the title, salary, description of benefits and other
compensation (including any loans by any entity comprising the Company).
Except as set forth on Exhibit II-A-11(b), there are no employment, severance,
termination or compensation agreements, arrangements or understandings of any
entity comprising the Company, as the case may be, with any present or former
stockholder, director, officer, employee, independent contractor, consultant or
group of employees. Except as set forth on Exhibit II-A-11(c) all employees are
terminable at will without expense or liability to any entity comprising the
Company. Except as set forth on Exhibit II-A-11(d), None of the entities
comprising the Company maintains or has maintained any employee benefit plans
or any related trust agreements, annuity contracts, insurance contracts or other
funding instruments subject to compliance with the requirements of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), or any other applicable
laws, rules and regulations, or
otherwise.

12. Insurance. Each entity comprising the Company maintains adequate
insurance in such amounts and against such risks as are reasonable for the
conduct of its respective business, in the aggregate amounts and the amounts per
individual and/or per occurrence set forth on Exhibit II-A-12. Neither Seller
nor any entity comprising the Company is aware of any termination, or threat of
termination, or other circumstances which would cause the failure to renew any
such policies. All premiums payable under such insurance policies have been duly
paid and each such insurance policy is in full force and effect at the full
amount of the stated coverage. Exhibit II-A-12 sets forth each insurance policy
owned by each entity comprising the Company under which each such entity or any
director, officer or shareholder thereof is a beneficiary, the name of the
insurer with which such policy is or was carried, the annual premium payable
thereunder, the liabilities and risks covered thereunder, the amount of the
coverage (including the amount of any deductible) and the period of coverage.
There are no claims pending or threatened under any of said policies or disputes
with underwriters thereof.

13. Tangible Property. Exhibit II-A-13 sets forth all of the premises
of and offices maintained by each entity comprising the Company, including their
locations, machinery, equipment, office fixtures, furniture, computers and
office supplies currently located at the

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premises of and offices maintained by each entity comprising the Company. Each
entity comprising the Company has good and marketable title to the tangible
(real and personal) assets and properties reflected in Exhibit II-A-13, in each
case, free and clear of all mortgages, liens, security interests, pledges,
charges and encumbrances of any nature whatsoever. All of the assets owned,
leased or used by each entity comprising the Company as reflected in Exhibit
II-A-13, are in good condition and repair (other than equipment, and in the
case of equipment, is in good operating condition and in the aggregate is
adequate to carry on the respective business of each entity comprising the
Company), conform in all material respects to all applicable laws, including
without limitation, laws relating to the environment and to pollution control,
building and zoning laws, statutes, ordinances or regulations and no violation
of any such laws, statutes, ordinances or regulations exists in respect of such
assets or properties.

14. Intangible Property. Exhibit II-A-14 sets forth all patents,
patent applications, trademarks and service marks (whether registered or
unregistered), trade names, brand names, copyrights and franchises owned or used
by the Company, all applications for any of the foregoing, and all permits,
grants and licenses or other rights running to or from any entity comprising the
Company relating to any of the foregoing. Except as set forth in
Exhibit II-A-14, identified entity comprising the Company is the sole and
exclusive owner or licensee of all rights set forth in Exhibit II-A-14, and
except as set forth therein and as otherwise provided by law, such rights are
free and clear of any attachments, liens or encumbrances. Exhibit II-A-14 also
contains a brief description of each trade secret, right or other intellectual
property right material to the operations of each entity comprising the Company.
There are no outstanding or unresolved charges against Seller or any entity
comprising the Company relating to any claim of infringement of any invention,
patent, trademark, service mark, trade name, brand name, trade right or
intellectual property right or copyright of any other person, and neither Seller
nor any entity comprising the Company (i) has been notified of any claim of any
other person relating to any of the properties listed in Exhibit II-A-14 or to
any process or confidential information of any entity comprising the Company, or
(ii) knows of any basis for any such charge or claim.

15. Environmental Matters.

(a) Except as set forth in Exhibit II-A-15(a), each entity
comprising the Company has obtained all permits, licenses and other
authorizations (collectively, the "Licenses") which are required in connection
with each such entity's respective business under all applicable Environm Laws
(as hereinafter defined) and regulations relating to pollution or protection of
the environment, including Environmental Laws and regulations relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.

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(b) Except as set forth in Exhibit II-A-15(b), each entity
comprising the Company is in compliance with all terms and conditions of the
Licenses and is in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedul and
timetables contained in the Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice (written or verbal) or
demand letter issued, entered, promulgated or approved thereunder.

(c) Except as set forth in Exhibit II-A-15(c), none of the
entities comprising the Company has received any written or verbal notice of,
any past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which would interfere with o prevent
compliance or continued compliance with any Environmental Laws or any
regulations, code, order, decree, judgment, injunction, notice (written or
verbal) or demand letter issued, entered, promulgated or approved thereunder, or
which would give rise to any common law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the manufacture, processing, storage,
distribution, use, treatment, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste, by
any entity comprising the Company.

(d) Except as set forth in Exhibit II-A-15(d), there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation, or proceeding pending or
threatened against any entity comprising the Company, in conne with the conduct
of business of any entity comprising the Company relating in any way to any
Environmental Laws or regulation, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.

(e) For purposes of this Agreement, "Environmental Laws" means
collectively, all federal, state and local environmental laws, common law,
statutes, rules and regulations, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Sec. 9061 et esq.), as amended, the Hazardous Materials Transportation Act (49
U.S.C. Sec 1801 et seq.), as amended, the Resource Conservation and Recovery Act
(42 U.S.C. Sec. 6901 et seq.), as amended, the Federal Water Pollution Control
Act (33 U.S.C. Sec 1251 et seq.), as amended, the Safe Drinking Water Act
(42 U.S.C. Sec 300f et seq.), as amended, the Clean Air Act (42 U.S.C. Sec. 7401
et seq.), as amended, the Toxic Substances Control Act (15 U.S.C. Sec 2601 et
seq.), as amended, the Industrial Site Recovery Act, P.L. 1993 c.139, amending
and renaming the Environmental Cleanup Responsibility Act (N.J.S.A. 13:1K-6
et seq.) ("ISRA"), the Spill Compensation and Control Act (N.J.S.A. 58:10-23.11
et seq., the Federal Emergency Planning and Community Right-to-Know Act (42
U.S.C. Sec. 11001 et seq.), as amended, any so-called "superfund" or
"super-lien" law and such statutes and ordinances as may be enacted by state
and local governments with jurisdiction over any real property now or ever owned
or leased by any entity comprising the Company or any real property upon
which any entity comprising the Company now conducts or has ever conducted its
respective business and any permits, licenses, authorizations, variances,
consents, approvals, directives or requirements of, and any agreements

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with, any governments, departments, commissions, boards, courts, authorities,
agencies, officials and officers applicable to such real property or the use
thereof and regulating, relating to, or imposing liability or standards of
conduct concerning any pollutant, contaminant, chemical, or industrial, toxic
or hazardous substance or waste.

(f) Except as set forth in Exhibit II-A-15(f), (i) At present
there do not exist, and at no time since the Company acquired any premises
owned, leased or used by any entity comprising the Company (the"Subject
Premises") have there existed "Environmental Defects," (defined as a condition
or conditions which would require remediation under any of the Environmental
Laws); (ii) Seller has no knowledge that such Environmental Defects existed
prior to its purchase or occupation of the Subject Premises; (iii) there are no,
and have never been, underground tanks located on the Subject Premises; (iv)
Seller has at all times during its ownership or occupation of the Subject
Premises disposed of all wastes, hazardous or otherwise, generated by the use of
the Subject Premises in accordance; (v) Seller has not received any letter or
other communication, written or oral, from any local, state or federal
regulatory agency, relating to the existence of Environmental Defects at the
Subject Premises; (vi) the Subject Premises and all operations conducted thereon
are in compliance with all Environmental Laws; and (vii) there are no "Hazardous
Substances or Hazardous Waste" on, under or about the Subject Premises. For
purposes hereof, "Hazardous Substances or Hazardous Waste" are defined as any
pollutant, contaminant, chemical or industrial or toxic substance, or waste,
petroleum products, asbestos, urea formaldehyde, radon, polychlorinated
biphenyls, flammable explosives, nuclear radioactive fuel or waste, or any other
substance, waste, material, substance, pollutant or contaminant that may cause
damage to human health or the environment, safety or real property and/or any
substance for which the generation, manufacture, storage, treatment, or release
is prohibited or regulated under any Environmental Law.

(g) Except as set forth in Exhibit II-A-15(g). There are no
existing storage tanks (both above and below ground) located at the subject
Premises. All of the tanks identified on Exhibit II-A-15(g) have been
registered to the extent required by applicable state and federal statutes
rules and regulations as evidenced by the registration set forth on Exhibit
II-A-15(g).

16. Warranty Claims. There are no pending or threatened claims
against any entity comprising the Company with respect to the operations of
any entity comprising the Company or any work performed by any entity
comprising the Company for any customer, including, but not limited to, any
services rendered under any warranties, whether express or implied, by the
customers of any entity comprising the Company, nor does there exist any basis
therefor.

17. Product Liability Claims. There are no pending or threatened
product liability claims by customers of any entity comprising the Company with
respect to the business or operations of the Company, any products now or
previously manufactured and/or sold by any entity comprising the Company, nor
does there exist any basis therefor.

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18. Customer Complaints. There are no claims or complaints against
any entity comprising the Company initiated, pending or threatened by any
customer with respect to the conduct of business of any entity comprising the
Company.

19. Contracts. All material contracts, agreements, assignments,
licenses, commitments, loan or credit agreements, guarantees, leases, subleases,
assignment and assumption of leases, mortgages, indentures and letters of
credit, whether written or oral, to which any entity comprising the Company is a
party or by which any of its assets are or could be bound or affected
(hereinafter individually, a "Contract" and collectively, the "Contracts") are
valid and in full force and effect and are set forth in Exhibit II-A-19. There
are no existing defaults by any entity comprising the Company by any other party
under such Contracts and no event, act or omission has occurred which (with or
without notice, lapse of time or the happening or occurrence of any other event)
would result in a default thereunder by any entity comprising the Company. No
other party to any such Contract has asserted, verbally or in writing, the
right, to renegotiate the terms or conditions of any Contract. None of the
Contracts is in excess of the normal, ordinary and usual requirements of the
respective business of any entity comprising the Company or at any excessive
terms or prices, and, except as set forth on Exhibit II-A-19, no loss of a
Contract could reasonably be expected to create a material loss or material
adverse change in the business, operations or financial condition of any entity
comprising the Company. True and complete copies of all contracts listed on
Exhibit II-A-19, have heretofore been furnished to Purchaser.

20. Special Payments. There have been no special payments, other than
payments made in the ordinary course of business, made by or to Seller, any
entity comprising the Company, any member of the Board of Directors of any
entity comprising the Company, or any customer or supplier, or employee of any
customer or supplier, nor have there been any loans provided by or to Seller,
any entity comprising the Company, any member of the Board of Directors of any
entity comprising the Company, or any customer or supplier, or employee of any
customer or supplier, to any affiliate thereof, nor does any entity comprising
the Company have any business transactions with any of these persons other than
in their respective roles. Except as set forth on Exhibit II-A-20, no
stockholder nor any officer, director or employee of any entity comprising the
Company, nor any relative of any such stockholder, officer, director or
employee, is a party to or has an interest, directly or indirectly, in any
contract or commitment which relates to or affects the respective business of
any entity comprising the Company or by which any of its respective assets is or
may be bound.

21. Powers of Attorney. Except as specified in Exhibit II-A-21,
there are no powers of attorney, limited powers of attorney, proxies or
discretionary accounts in place which entitle any employee, independent
contractor or the third party to deal with any account of any entity comprising
the Company or which would bind any entity comprising the Company in any other
way.

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22. Operation Since Balance Sheet Date. Since the Balance Sheet
Date, as defined in Section IV-A-11, except as set forth in Exhibit II-A-22,
each entity comprising the Company:

(a) has operated its business substantially as it was
operated prior to that date and only in the ordinary course;

(b) has not created or otherwise become liable with respect to
any indebtedness or declared or made any dividend or distribution on the capital
stock of any entity comprising the Company;

(c) has maintained or kept current its books, accounts,
records, registrations, filings and payrolls in the usual, regular and
ordinary course of business, consistent with standard practice and in
accordance with all regulatory and statutory provisions;

(d) has not made any capital expenditure, commitment or
investment other than in the ordinary course of business; and

(e) has not lost any customer which accounted for five percent
(5%) or more of the business of any entity comprising the Company.

23. Illegal Transactions. Except as set forth in Exhibit II-A-23,
none of the entities comprising the Company has been involved in any
transactions which violate any applicable local, state, federal or industry
laws or regulations or has a material adverse affect on the ability of any of
the entities the Company to conduct its respective business in the future.

24. Disclosure. Neither this Agreement nor any document or written
information furnished to Purchaser by Seller or any of its respective agents,
employees, affiliates or representatives pursuant to this Agreement or in
connection with the transaction contemplated herein, contains any untrue
statement of a material fact or omits to state a fact necessary to make the
statements contained herein or therein not misleading.

25. Documents Furnished. Before the Closing, Seller will have
delivered to Purchaser all documents which are set forth in Exhibit II-A-25,
in each case certified by the Board of Directors of each entity comprising the
Company to be complete and accurate in all respects including but not
limited to:

(a) insurance policies in force under which each entity
comprising the Company is insured;

(b) all permits and licenses held by each entity comprising
the Company or by any of the Directors of any entity comprising the Company
with respect to the business of each entity comprising the Company;

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(c) all audits, reviews and correspondence referring to
management's accounting policies and practices between each entity comprising
the Company and its respective independent accountants;

(d) all compensation and employment agreements and any other
material agreement between each entity comprising the Company and any present
or former employee, independent contractor, head hunter or any other third
party;

(e) all minute books and stock transfer records of each entity
comprising the Company.

26. Minute and Stock Transfer Books. The minute books of each entity
comprising the Company are correct (including signatures), complete and current
in all respects and accurately reflect the corporate actions of the Board of
Directors and the shareholders of each entity comprising the Company. The stock
transfer books of each entity comprising the Company are correct (including
signatures), complete and current.

27. Labor Relations.

(a) Except as set forth on Exhibit II-A-27(a), no employees of
any entity comprising the Company are covered by any collective bargaining
agreement. The operation of the business of each entity comprising the Company
does not contravene any collective bargaining agreement to which any entity
comprising the Company is a party. None of the entities comprising the Company
is engaging in, or has engaged in, any unfair labor practice; there are no
complaints against any entity comprising the Company pending before the
National Labor Relations Board or any similar state or local labor agency by
or on behalf of any employee of any entity comprising the Company. There are
no representation questions, arbitration proceedings, labor strikes, slow-downs
or stoppages, or other labor troubles pending or threatened with respect to
the employees of any entity comprising the Company. Except as set forth on
Exhibit II-A-27(a), there are no grievances asserted which might have a material
adverse effect upon the respective business, operations or financial condition
of any entity comprising the Company, nor is there pending any arbitration
proceeding arising out of or under any labor agreement or arrangement. True and
complete copies of all agreements listed on Exhibit II-A-27(a) have heretofore
been furnished to Purchaser.

(b) Each entity comprising the Company has complied in all
material respects with applicable laws (including, without limitation, ERISA),
rules and regulations relating to employment matters including without
limitation those relating to wages, hours, discrimination, pay of social
security and similar taxes. There are no charges or complaints filed against
any entity comprising the Company which are pending before the Equal Employment
Opportunity Commission, or any similar state agency.

(c) Each entity comprising the Company has made all union and
employee benefit payments as scheduled to be paid and has properly withheld
income taxes and

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payroll taxes and remitted them to appropriate government agencies through the
first quarter of 1996.

28. Employee Benefit Plans. Except as set forth in Exhibit II-A-28,
none of the entities comprising the Company has any employee benefit plan in
place. Each employee benefit plan listed on Exhibit II-A-28 and any related
trust agreements, annuity contracts, insurance contracts or other funding
instruments are currently, and have been in the past, in compliance with the
requirements of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable laws, rules and regulations, as to the form,
operation and administration of such plans. All reports, notices and
applications relating thereto required by any government agency have been
timely filed. All contributions required to be made on or before the date of
this Agreement to each employee benefit plan under the terms of such plan,
ERISA, the Code or other applicable law have been timely made. Seller has
delivered to Purchaser the most recent actuarial valuation reports with respect
to the qualified defined pension plans sponsored by any entity comprising the
Company (if any).

29. Bank Accounts. Exhibit II-A-29 sets forth the names and
locations of all banks, depositories and other financial institutions in which
any entity comprising the Company has an account or safe deposit box and the
names of all persons authorized to draw thereon or to have access thereto.

B. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows, and acknowledges and confirms
that Seller is relying upon such representations and warranties in connection
with the execution, delivery and performance of this Agreement, notwithstanding
any investigation made by Seller or on its behalf:

1. Organization, Standing and Power. Purchaser represents and
warrants that it is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware.

2. Authorization. Purchaser represents and warrants that it has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transaction contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly executed and delivered by Purchaser and constitutes
a legal, valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally.
Purchaser is not the subject of, or the debtor in, any pending, potential or
threatened bankruptcy proceeding, voluntary or involuntary, or any similar
proceeding, claim or action which could result in such an event. No consent,
approval, order or authorization of, or registration, declaration or filing with
any authority or any third party is required to be made or obtained by Purchaser
in order to execute this Agreement or fulfill the obligations provided for
hereby.

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3. Conflict with Authority, Bylaws, etc. Neither the execution,
delivery, and performance of this Agreement nor the consummation of the
transactions contemplated hereby in the manner herein provided will:

(a) contravene any provision of the Certificate of Incorporation,
as amended, or the Bylaws, as amended, as the case may be, of the Purchaser;

(b) result in a breach or violation of, conflict with, constitute
a default under, result in (or create in any party the right to cause) the
acceleration of any performance or any increase in any payments pursuant to,
or otherwise impair, or result in the loss, revocation, suspension, or
forfeiture of any rights or privileges of the Purchaser under any agreement,
contract, indenture, mortgage, lease, license, permit or authorization, or
subject any property or asset of the Purchaser to any indenture, mortgage,
contract, commitment, or agreement, other than this Agreement, to which the
Purchaser is a party or by which the Purchaser, or its assets are bound, which
would have a material adverse effect on the business or operations of the
Purchaser;

(c) violate any provision of law, statute, ordinance, judgment,
decree, rule, regulation, order, permit, or license of any court, governmental
authority or arbitrator applicable or relating to the Purchaser or its
respective assets or business, which would have a material adverse effect on the
business or operations of the Purchaser; or

(d) result in the creation of any liens, charges, mortgages,
encumbrances, upon any of the assets of the Purchaser pursuant to the
provisions of any of the foregoing, which would have a material adverse effect
on the business or operations of the Purchaser.

III. COVENANTS

A. Access to Records and Properties of the Company.

1. Between the date of this Agreement and the Closing, Seller and
the Company shall give to Purchaser and its agents and representatives,
including but not limited to its accountants, attorneys and consultants, such
access to the premises, books and records of the Company, and to cause the
officers and employees of the Company to furnish such financial and operating
data and other information with respect to the Company, as Purchaser shall from
time to time reasonably request in a manner so as not to interfere with the
ordinary course of business of the Company.

2. In the event the sale and purchase contemplated herein shall
not be consummated, Seller, the Company and Purchaser shall treat as
confidential all documents, materials and other information which they shall
have obtained regarding Seller, the Company or Purchaser during the course of
the negotiations leading to the transaction contemplated hereby, the
investigation of the Company or Purchaser, and the preparation of this
Agreement,

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<PAGE>

and shall return all copies of non-public documents and materials which have
been furnished in connection therewith. However, nothing contained herein shall
prohibit Seller, the Company or Purchaser from:

(a) using such documents, materials and other information in
connection with any action or proceeding brought or any claim asserted by
Seller, the Company or Purchaser in respect of any breach of any representation,
warranty or covenant made pursuant to this Agreement; or

(b) supplying or filing such documents, materials or other
information (i) to federal, state or local government, agency or authority to
the extent required in connection with the obtaining of any other consent,
waiver, amendment, modification, approval, authorization, permit or license
which may be necessary to effectuate this Agreement and to consummate the
transactions contemplated hereby or (ii) to the extent required under legal
process by subpoena or other court order.

B. Operation of the Company Prior to Closing. From the date hereof until
Closing, except as otherwise expressly contemplated by this Agreement or to the
extent that Purchaser shall otherwise expressly consent in writing, the Company
shall conduct its business as presently operated and solely in the ordinary
course, and, consistent with such operation, the Company:

1. shall not effect any amendment to the Company's Certificate or
Articles of Incorporation or Bylaws;

2. shall not change the Company's corporate name or permit the use
thereof by any other person;

3. except for matters expressly permitted under this Agreement,
shall not pay or agree to pay to any employee, officer, or director of the
Company, compensation that is in excess of the current compensation level of
such employee, officer, or director, except for annual increases in the
ordinary course of business consistent with prior practices and consistent with
bonus and commission policies in effect on the date of this Agreement;

4. shall not merge or consolidate the Company with any other
corporation, association, partnership, joint venture or other entity or allow
it to acquire or agree to acquire any corporation, association, partnership,
joint venture, or other entity;

5. shall not sell, transfer, or otherwise dispose of any assets of
the Company, except in the ordinary course of business consistent with prior
practices;

6. shall not create, incur, assume, or guarantee any indebtedness
for money borrowed except in the ordinary course of business, or create or
suffer to exist any mortgage, lien, or other encumbrance on any of its
properties or assets, real or personal, except those in existence on the date
hereof;

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<PAGE>

7. shall not make any capital expenditure, or series of related
capital expenditures, in excess of $50,000 not previously approved by Purchaser;

8. shall not declare or pay any dividends on or make any
distributions of any kind with respect to any of its capital stock;

9. shall maintain the facilities, assets, and properties of the
Company in good operating repair, order, and condition, reasonable wear and
tear excepted, and to notify Purchaser immediately upon any loss of, damage to,
or destruction of any of the assets of the Company;

10. shall maintain in full force and effect with respect to the
assets, employees and business of the Company, all present insurance coverage
of the types and in the amounts as are in effect as of the date of this
Agreement and to apply the proceeds received under any such insurance policy
or as a result of any loss or destruction of or damage to any assets of the
Company to the repair or replacement of such assets;

11. shall use its best efforts to preserve the present employees,
reputation and business organization of the Company, and the relationship of
the Company with its customers and others having business dealings with it;

12. shall not permit the issuance of any additional shares of the
capital stock of the Company or take any action affecting the capitalization
of the Company;

13. shall refrain from taking any action, and not suffer to exist
any event or occurrence, which would render any representation and warranty
contained herein inaccurate in all material respects at any time between the
date hereof and the Closing, including as of the Closing, and to promptly advise
Purchaser of any breach of any representation and warranty, covenant, condition
or obligation of Seller hereunder;

14. shall comply with and not be in default or violation under any
law, regulation, decree or order applicable to the business, operations or
assets of the Company; and

15. shall not enter into any contract or arrangement which obligates
the Company to expend more than $50,000, except in the ordinary course of
business.

C. Fulfillment of Remedial Action Workplan Following the Closing. If in
connection with Seller obtaining ISRA Compliance (as described in Section IV-A-2
hereof) with respect to the transactions contemplated by this Agreement, Seller
and the Company receive the required approval of a completed remedial action
workplan relating to any required remedial action (the "Environmental
Remediation"), Seller shall take all necessary action to complete and satisfy
all conditions of such remedial action workplan or before August 1, 1996. All
fees and expenses incurred and paid by the Company in connection with complying
with ISRA and completing the

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<PAGE>

Environmental Remediation shall be included in the calculation of the
Reduction Amount described in Section I-B-2 hereof.

D. Consents and Notices. Promptly after the date hereof, Seller, the
Company and Purchaser shall use their best efforts to obtain all consents,
waivers, approvals and authorizations which may be necessary to effectuate this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof, or to continue in effect and to assure that the Company
shall continue to be entitled to all of the benefits of the Contracts and access
to the bank accounts of the Company, and shall give all notices to third parties
required to be given by the Company in contemplation and as a result of the
transactions contemplated by this Agreement. Seller and the Company shall
promptly advise the Purchaser of any difficulties encountered by the Company in
obtaining any such consents, waivers, approvals and authorizations.

E. Competing Transactions. Seller, the Company and Purchaser shall not
take any action, directly or indirectly, to cause, promote, negotiate or
authorize any transaction competing or interfering with the transaction
contemplated by this Agreement, including without limitation any merger,
consolidation or reorganization, acquisition or disposition of assets of the
Company, except in the ordinary course of business.

F. Best Efforts to Satisfy Conditions. Seller, the Company and Purchaser
shall use their best efforts to cause the obligations contained in Section IV to
be satisfied to the extent that the satisfaction of such conditions is in the
control of such entity; however, the foregoing shall not constitute a limitation
upon the covenants and obligations of the parties hereto otherwise set forth in
this Agreement.

G. Restriction on Transfer. From the date hereof until Closing, Seller
and the Company shall not without the written consent of Purchaser sell, assign,
pledge, donate, transfer or otherwise dispose of the Company Shares or permit
any shares of the capital stock of the Company to be sold, assigned, pledged,
donated, transferred or otherwise disposed of or enter into any agreement in
which the Seller or the Company agree to take such action.

H. Public Disclosure. No press release or public disclosure, either
written or oral, of this Agreement or the transaction contemplated hereby shall
be made by any party except with the prior written consent of the other, or
except as may be required by applicable law.

I. Seller's Guaranty. Purchaser and the Company shall, with the
assistance of Seller, at the consummation of the IPO have Seller released from
his obligations under a certain guaranty in favor of Finova Capital Corporation.
Pending said release, the Company shall enter into no additional corporate
loan agreements, without the prior written consent of Seller.

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<PAGE>

IV. CONDITIONS TO CLOSING

A. Conditions to Purchaser's Obligations. The commitment of Purchaser
to perform its obligations under this Agreement are subject to the satisfaction
of the following conditions and covenants on or before the Closing, unless
waived in writing by Purchaser:

1. Representations and Warranties. The representations and
warranties made by Seller and the Company in this Agreement and in all
agreements and instruments executed hereto and in connection with the closing
of all transactions hereunder shall be true and correct at and as of the Closing
(except as affected by the transaction contemplated herein) with the same force
and effect as though such representations and warranties had been made at and as
of such date.

2. ISRA Compliance.

(a) Seller and/or the Company shall have received from the
New Jersey Department of Environmental Protection and Energy or its successor
("DEPE"), on or before the Closing Date, either: (i) a nonapplicability
letter; (ii) a de minimis quantity exemption; (iii) a no-action letter or an
unconditional approval of Seller's negative declaration; or (iv) approval of
Seller's completed remedial action workplan; for which Seller shall promptly
apply pursuant to ISRA and the regulations promulgated thereunder.

(b) In no event shall Seller's and/or the Company's negative
declaration, remedial action workplan or any required remediation under ISRA
involve or permit any engineering or institutional controls, at, under or
about the subject Premises or any part thereof including without limitation
capping, a notice of contamination recorded on the record, any use or access
restrictions or the posting of signs. Any soil remediation shall be to
residential standards.

(c) Receipt by the Seller and/or the Company of ISRA approval
pursuant to a clean-up deferral, a remediation already in progress waiver, an
underground storage tank waiver or a minimal environmental concern
determination shall not satisfy Seller's and/or the Company's obligation to
obtain ISRA approval under this Agreement.

(d) To enable the Purchaser the monitor the Seller's and/or
the Company's compliance with ISRA, the Seller and/or the Company shall
promptly provide the Purchaser with a copy of all notices, correspondence,
submissions, reports, sampling results, negative declarations an remedial
action workplans which it intends to submit or receives from the DEPE
or any other relevant party including, but not limited to its consultants and
engineers, related to the Seller's and/or the Company's compliance with ISRA
prior to submission.

(e) Seller and/or the Company shall notify Purchaser in
advance of all meetings scheduled between Seller, Seller's representatives, or
representatives of the Company

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and the DEPE or any other governmental agency, and Purchaser and Purchaser's
representatives shall have the right, but not the obligation, to attend and
participate in all such meetings.

3. Other Agreements

(i) Employment Agreement. Purchaser shall enter into a
three (3) year employment agreement with Seller pursuant to which Seller will
act as president of the Company for a period of three (3) years following the
Closing for an annual salary of One Hundred Ninety Five Thousand Dollars
($195,000) with a two (2) year renewal at the option of Seller which agreement
shall provide for annual bonuses payable to Seller and equal to 10% of
the Company's net profits in excess of $500,000 per year (before deducting
interest and taxes, but after deducting depreciation and amortization) based on
the Company's audited financial statements, for each of calendar year 1997, 1998
and 1999 and payable within thirty days of the completion of the audit for each
said calendar year. The Company shall employ Denise Assante for a period of
three (3) years following the Closing, at an annual salary of Fifty-five
Thousand Dollars ($55,000), plus a monthly car allowance of $650 and
reimbursement of reasonable automobile insurance expenses. Said arrangement may
be extended for an additional two (2) years at the option of Denise Assante and
shall be terminable for death, inability to perform, just cause or disability as
such terms are used in the employment agreement with Purchaser provided for
above.

(ii) Escrow Agreement. Seller and Purchaser shall enter
into the Escrow Agreement described in Section I-C-1(ii), regarding the terms
and conditions of the release of the Company Shares to Purchaser.

4. Opinion of Company's Counsel. Purchaser shall have received
from James A. Russo, Esq., counsel to the Company an opinion dated as of the
Closing, in form and substance satisfactory to Purchaser, to the effect that,
among other things, the following statements are true as of the Closing:

(a) Each entity comprising the Company is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, has all requisite corporate power and authority to own and
operate its properties and to carry on business as now being conducted or as
conducted in the past and is qualified to do business and is in good standing as
a foreign corporation in each state or other jurisdiction in which the nature of
its properties, assets or conduct of its business requires such qualification.

(b) Seller and the Company have the requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly author by
all necessary action on the part of Seller and the Company. This Agreement has
been duly executed and delivered by Seller and the Company, and constitutes a
legal, valid and binding obligation of Seller and the Company, enforceable
against Seller and the Company in accordance with its terms subject as to
enforcement of remedies, to applicable

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bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.

(c) After due inquiry and to the best of counsel's knowledge,
the Company has all permits, licenses and authorizations required by any
applicable government authority or agency for the conduct of its business and
the Company has complied with the applicable laws, rules and regulations of each
jurisdiction, regulatory bodies and any industry, governmental or trade
organization required by law in which it conducts its business.

(d) There is no action, lawsuit, claim, proceeding, or
investigation pending or threatened against, by or affecting Seller or the
Company which if decided adversely against Seller or the Company would have a
material adverse affect upon the business or financial condition of the Company
or which would prohibit consummation of this Agreement. To the knowledge of such
counsel, neither Seller nor the Company is in default with respect to any order,
writ, injunction, or decree of any court or of any federal, sate, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting or relating to the Company.

In giving such opinion, such counsel may rely, as to matters of
fact, upon certificates of public officials and officers of the Company and, as
to matters of law, upon the opinions of other counsel satisfactory to him,
provided that such counsel shall state that they believe that th are justified
in relying upon such certificates and opinions and deliver copies thereof to
Purchaser prior to the Closing Date.

5. Officer's Certificate. Purchaser shall have received from the
Seller and the Company on or prior to the Closing, a certificate dated as of
the Closing Date (i) evidencing compliance with Section III hereof, and (ii)
certifying that the representations and warranties contained in Section II
hereof are true and correct in all respects.

6. Performance of Obligations. Seller and the Company shall have
performed all obligations, covenants and agreements to be performed by them
under this Agreement on or prior to the Closing.

7. Approvals and Consents. All approvals and consents necessary
for the transactions contemplated by this Agreement, including but not limited
to approval by the entities discussed in Section III hereof, shall have been
obtained and evidence thereof shall be satisfactory to Purchaser.

8. Outstanding Obligations. Except as set forth in Exhibit IV-A-8,
as of the Closing Date, the outstanding obligations of the Company shall be
currently paid. These obligations include, but shall not be limited to, rent,
indebtedness for money borrowed and utilities. At Purchaser's request, Seller
and the Company shall produce written evidence that the Company has satisfied
such obligations.

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9. Resignations. Seller and the Company shall cause those members
of the Board of Directors and executive officers of the Company other than
Seller, so requested by Purchaser to resign at or prior to the Closing.

10. Instruments and Documents. All instruments and documents
delivered in connection with the transaction contemplated hereby and relating
thereto shall be reasonably satisfactory in form and substance to Purchaser
and its counsel and consistent with this Agreement.

11. Financial Statements and No Change In Financial Condition.
Seller shall have delivered to Purchaser the balance sheets of the Company as
of the last day of the month immediately preceding the Closing, and the
related statements of income and retained earnings and of cash flows for the
period beginning on January 1, 1996, and ending on the date of such balance
sheet, (together with related notes and schedules), certified by the Company
and the chief financial officer of the Company (the "Balance Sheet Date").
Such financial statements shall be prepared in a manner consistent with the
manner in which the Financial Statements shall have been prepared. Neither
the business, operations or financial condition of the Company as of the
Closing Date shall have changed in a materially adverse manner from that
reflected in the financial statements as of the Balance Sheet Date.

12. Competing Transactions. There shall not have been made, or
publicly proposed to be made, by any person (other than Purchaser, its officers,
directors and affiliates) a transaction competing or interfering with the
transaction contemplated hereby, including without limitation any competing
merger, consolidation or reorganization (whether for cash, securities or other
property), acquisition of assets, tender offer or exchange offer.

13. Completion of Due Diligence. The results of Purchaser's
financial, business, legal and environmental review of the Company, its
financial condition, regulatory status, prospects, and due diligence materials
or disclosure documentation and information reasonably requested by Purchaser
regarding, but not limited to, those items outlined on the exhibits comprising
a part of this Agreement, shall have been completed satisfactorily to Purchaser,
in its sole discretion.

If the conditions to Closing are not met by the Closing Date, Purchaser, in its
sole discretion, may rescind the Agreement, proceed with the Closing of the
Agreement, or allow an additional period of time for Seller and/or the Company
to remedy the conditions before proceeding with either of the above options. In
the event that Purchaser decides to rescind the Agreement, the Company hereby
agrees to repay previous advances made by Purchaser to the Company in the
aggregate amount of $680,000, by issuing a promissory note in the original
principal amount of $680,000 in favor of Purchaser, bearing interest at the rate
of 8 3/4% per annum, payable in six (6) equal quarterly installments.

B. Conditions to Seller's and the Company's Obligations. The commitment
of Seller and the Company to perform their respective obligations under this
Agreement are subject to

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the satisfaction of the following conditions and covenants on or before the
Closing, unless waived in writing by Sellers:

1. Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true and correct at
and as of the Closing with the same force and effect as though such
representations and warranties had been made at and as of such date.

2. Performance of Obligations. Purchaser shall have performed
all obligations, covenants and agreements to be performed by it under this
Agreement on or prior to the Closing.

3. Approvals and Consents. All approvals and consents necessary
for the transaction contemplated by this Agreement, including, but not limited,
to approval by the entities discussed in Section III-C hereof, shall have been
obtained and evidence thereof shall be satisfactory to Seller.

4. Instruments and Documents. All instruments and documents
delivered in connection with the transactions contemplated hereby and relating
thereto shall be reasonably satisfactory in form and substance to Sellers and
their counsel and consistent with this Agreement.

V. INDEMNIFICATION

A. Indemnification by Seller and the Company. Seller and the Company
jointly and severally hereby agree to indemnify and hold harmless Purchaser and
the Company against all losses, liabilities, costs, damages and expenses
(including reasonable attorney's fees) incurred by Purchaser resulting from,
arising out of or connected with:

1. all undisclosed liabilities of the Company of any nature,
whether accrued, absolute, contingent or otherwise, existing at Closing;

2. any damage or deficiency resulting from any material breach
of the representations and warranties of Seller or the Company contained in this
Agreement or any instrument furnished to Purchaser hereunder, any material
misrepresentation or omission, material breach of warranty, material
nonfulfillment of any agreement on the part of Seller or the Company under this
Agreement or from any misrepresentation in or omission from any certificate,
document or other instrument furnished or to be furnished to Purchaser
hereunder;

3. the material nonfulfillment of any agreement or covenant made
by Seller or the Company in this Agreement or in any instrument furnished by
Seller or the Company to Purchaser hereunder or in connection with the Closing.

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4. all actions, suits, proceedings, demands, assessments,
judgments, costs, (including reasonable attorney's fees) and expenses incident
to any of the foregoing.

Seller and the Company agree, jointly and severally, to reimburse
Purchaser for any amounts as to which the indemnity relates, from time to time,
on demand.

B. Claims.

1. If it shall be determined in accordance with this Section V
that the Seller and/or the Company is required to indemnify the Purchaser for
any claim, judgment and expenses (including attorneys' fees) relating to any
litigation by a court of competent jurisdiction or as a result of a settlement
approved by the Purchaser, the amount of such indemnification shall be paid by
the Seller and the Company, jointly and severally, from time to time, on
demand, for any amounts as to which the indemnity relates.

2. In the event of a determination of the amount of any
indemnification pursuant to this Section V, the Purchaser shall give the
Seller and/or the Company written notice of the existence of any claim by the
under this Agreement and shall give written notice of the amount of loss or
damage relating to any such claim within sixty (60) days after the Purchaser
has actual notice thereof in the case of any claim made by a third party of
which the Purchaser has no reason to know. The Purchaser shall give the Seller
and/or the Company notice before settling any claim for which the Purchaser
expects to be reimbursed by the Seller and/or the Company in whole or in part,
and the Seller and/or the Company shall have the right to participate in the
defense of any such claim at their own expense.

VI. GENERAL PROVISIONS

A. Entire Agreement. This Agreement, and any agreements specifically
referred to herein, constitute the entire agreement among the parties hereto and
supersede all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.

B. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each representation and warranty in this
Agreement and in the Exhibits and certificates delivered pursuant to this
Agreement and each agreement or covenant in this Agreement which does not by
its own terms expire on or prior to the Closing, shall survive the Closing
without limitation as to time.

C. Descriptive Headings. Descriptive headings used in this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.

- 28 -

<PAGE>

D. Notices. All notices or other communications which are required or
permitted hereunder, shall be in writing and shall be sufficient if delivered
or mailed by registered or certified mail, postage prepaid, or by overnight
courier, or faxed (but then confirmed by mailing of the original by registered
or certified mail, or overnight courier) at the following addresses or as the
appropriate party may advise each other hereto in writing:

To the Purchaser:

AZUREL LTD.
509 Madison Avenue, Suite 804
New York, New York 10022

Attention: Constantine Bezas, President

With a copy to:

GERSTEN, SAVAGE, KAPLOWITZ & CURTIN, LLP
575 Lexington Avenue, 27th Floor
New York, New York 10022

Attention: Wesley C. Fredericks, Jr., Esq.

To the Seller:

Michael J. Assante
10 Surrey Lane
Mabwah, New Jersey 07430

With a copy to:

James A. Russo, Esq.
45 Essex Street
Hackensack, New Jersey 07601

To the Company:

Private Label Cosmetics, Inc.
20-10 Maple Avenue
P.O. Box 335
Fairlawn, New Jersey 07410

- 29 -

<PAGE>

With a copy to:

James A. Russo, Esq.
45 Essex Street
Hackensack, New Jersey 07611

E. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

F. Binding Nature: Assignment. This Agreement is binding upon, and
inures to the benefit of the parties hereto and their respective heirs,
successors and assigns, only. There are no third party beneficiaries to this
Agreement. This Agreement may not be assigned by Seller and the Company
on the one hand, or Purchaser, on the other hand, without the prior written
consent of Purchaser or Seller and the Company, respectively.

G. Exhibits and Documentation. All Exhibits annexed hereto and all
documentation referred to herein, are incorporated in and made a part of this
Agreement as if set forth herein. Any matter disclosed on any documentation
herein or Exhibit hereto shall be deemed also to have been disclose on any
other applicable documentation referred to herein and/or Exhibit hereto, as the
case may be.

H. Expenses. Seller, the Company and Purchaser shall each be responsible
for their respective expenses in connection with the transaction contemplated
hereby, including but not limited to attorneys fees, except that Purchaser shall
pay the attorneys fees of Seller as follows: up to $25,000 in cash and such
number of Shares of Purchaser's common stock which in the aggregate are valued
at Seven Thousand Five Hundred Dollars ($7,500) if and when a public offering of
the Purchaser's common stock is consummated, and which are to be valued at the
proposed public offering price of the Company's common stock and subject to a
registration rights agreement and lock-up agreement on terms similar to those
executed by members of the Company's management.

I. Waivers and Amendments. Any waiver of any term or condition of this
Agreement, or any amendment or supplementation of this Agreement, shall be
effective only if in writing. A waiver of any breach or failure to enforce any
of the terms or conditions of this Agreement shall not in any way affect, limit
or waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of this Agreement.

J. Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.

- 30 -

<PAGE>

K. Governing Law. This Agreement shall be governed by, and construed
in accordance with the laws of the State of New York.

L. Brokerage Fees. Seller and the Company represent and warrant to
Purchaser that they have no obligation or liability to any broker or finder by
reason of the transactions which are the subject of this Agreement. Seller
agrees to indemnify Purchaser against and to hold Purchaser harmless from, at
all times from and after the date hereof all claims for brokerage fees,
commissions, or other finders fees or commissions of any person with respect to
this Agreement and the transaction contemplated hereby to the extent such
services were purportedly rendered by or on behalf of Seller or the Company.
Purchaser represents and warrants to Sellers that, other than with respect to
the fees of V.A.N. Marketing Ltd., it has no obligation or liability to any
broker or finder by reason of the transactions which are the subject of this
Agreement. Purchaser agrees to indemnify Seller against and to hold Seller
harmless from, at all times from and after the date hereof, all claims for
brokerage fees, commissions, or other finders' fees or commissions of any person
with respect to this Agreement and the transaction contemplated hereby to the
extent such services were purportedly rendered to or on behalf of Purchaser.

- 31 -

<PAGE>

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.

AZUREL LTD.

By: /s/ Gerard Semhon
Name: Gerard Semhon
Title: Chairman / CEO

MICHAEL J. ASSANTE

/s/ Michael J. Assante

PRIVATE LABEL COSMETICS, INC.

By: /s/ Michael J. Assante
Name: Michael J. Assante
Title: President

P.L.C. SPECIALTIES CORP.

By: /s/ Michael J. Assante
Name: Michael J. Assante
Title: President

INTERNATIONAL COSMETIC GROUP, INC.

By: /s/ Michael J. Assante
Name: Michael J. Assante
Title: President

FASHION LABORATORIES, INC.

By: /s/ Michael J. Assante
Name: Michael J. Assante
Title: President
<PAGE>

EXHIBITS

I-B-1(ii) The Note

I-B-1(v) The DiVita Note

I-C-1(ii) Escrow Agreement

II-A-1 Incorporation and Authorizations to Do Business
II-A-3(a) Licenses, Approvals, Registration, etc.
II-A-3(b) Non-Compliance
II-A-3(c) Investigations
II-A-6 Financial Statements
II-A-7 Assets and Liabilities
II-A-9(a) Tax Non-Compliance
II-A-9(b) Tax Liens
II-A-10(a) Legal Proceedings Against Company
II-A-10(b) Company Initiated Legal Proceedings
II-A-11(a) Employees, Consultants, etc.
II-A-11(b) Employment Agreements
II-A-11(c) Employee Information
II-A-11(d) Employee Benefit Plans
II-A-12 Insurance
II-A-13 Tangible Property
II-A-14 Intangible Property
II-A-15(a) Licenses
II-A-15(b) Non Compliance with Licenses
II-A-15(c) Environmental - Notices
II-A-15(d) Environmental - Actions
II-A-15(f) Environmental Defects
II-A-15(g) Storage Tanks
II-A-19 Contracts
II-A-20 Special Payments
II-A-21 Powers of Attorney
II-A-22 Operation since Balance Sheet Date
II-A-23 Illegal Transaction
II-A-25 Documents
II-A-27(a) Collective Bargaining Agreements/Labor Grievances
II-A-28 Employee Benefit Plans
II-A-29 Bank Accounts
IV-A-8 Outstanding Obligations

AGREEMENT dated September 9, 1996 by and between Scent Overnight, Inc.
a Delaware corporation, with offices at 414 E 52nd Street, New York, New York
10022 ("Seller"), and Scent 123, Inc., a Delaware corporation, with offices at
509 Madison Avenue, New York, New York ("Purchaser").

P R E A M B L E

A. Seller was formed to develop and operate a business of selling
fragrances for overnight delivery ("Business"). In connection with the Business,
Seller developed a plan and mode of operations, which included information
relating to sources of supply of fragrances, overnight delivery services, order
taking facilities and order fulfillment services.

B. Seller ceased active operations in or about June, 1994.

C. Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller: the following property which is referred to herein as the
"Assets": (i) all of the information, techniques, data, projections and other
information relating to, and which may be used or useful in the operation of the
Business; (ii) the 800 telephone number, 800-Scent123; (iii) Seller's right,
title and interest in and to the trademark "Scent Overnight"; and (iv) all other
personal property, tangible or intangible, owned by Seller and used or useful in
the operation of the Business.

NOW, THEREFORE, in consideration of the mutual premises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1. Sale of Assets. Seller agrees to sell the Assets to Purchaser
and Purchaser agrees to purchase same from Seller, subject to and upon the terms
and conditions hereinafter set forth.

2. Purchase Price. The purchase price shall be the sum of the
following:

(a) $225,000 by the execution and delivery of a promissory
note in the form attached as Exhibit A upon "Closing" (as hereinafter defined).

<PAGE>

(b) The assumption by Purchaser of Seller's obligations under
a certain promissory note dated October 14, 1994 payable to the order of U.S.
Milestone Corp. ("Creditor") in the original principal amount of $210,000 and
having a balance due of approximately such amount ("Assumed Debt") and as
modified by subsequent agreements.

3. Bill of Sale. On the Closing, Seller agrees to execute and
deliver to Purchaser a bill of sale and other documents and instruments of
assignment in form satisfactory to Purchaser's counsel conveying and delivering
the Assets to Purchaser free from any liens or encumbrances.

4. Warranties and Representations of Seller. Seller hereby
warrants and represents that:

(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with full power and authority
to conduct its business as now conducted and to own and operate its assets,
properties and business.

(b) All corporate action necessary to authorize the execution
and delivery of this Agreement and the consummation of the transaction herein
contemplated has been, or prior to Closing will be, duly and validly taken by
Seller. Seller will, on the Closing, provide Purchaser with (i) a certificate by
a responsible officer of Seller to the foregoing effect, and (ii) a copy of such
shareholders' written consent. Seller has the full power and authority to
execute this Agreement and to consummate and perform the transactions
contemplated hereunder.

(c) Seller is the owner of, and has good and marketable title
to, the Assets, which on the Closing Date shall be free and clear of any
security interest or any other liens, encumbrances or restrictions.

(d) Seller is not a party to any executory contracts or
service agreements.

(e) Seller has paid all Social Security, withholding, sales,
unemployment insurance, income, business use, franchise and other taxes which
are owed to the city,

<PAGE>

county, state and federal governments to date, and there are no tax liens
against Seller.

(f) The execution and delivery of this Agreement by Seller and
the performance by it of its obligations hereunder will not, as of the Closing
Date, violate any governmental statute, law, rule, regulation, nor result in any
breach of any terms or conditions or constitute a default (immediately or after
the giving of notice or the passage of time or both) under any indenture,
agreement or lease affecting any of the Assets. This Agreement is a valid
obligation of Seller and is binding upon it, its successors or assigns, and no
approval or consent is required in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereunder.

(g) There are no actions, suits, judgments, liens,
proceedings, or violations existing, pending or threatened against or affecting
Seller or Assets before any federal, state, municipal or other court or
administrative or governmental agency or instrumentality nor is Seller or any of
its officers or directors aware of any facts which to its or their knowledge
might result in any such action, suit or proceeding. Seller is not in default
with respect to any order or decree of any court or of any governmental agency
or instrumentality.

(h) Purchaser is not assuming any liability or obligation of
any nature of Seller whether absolute, accrued, contingent or otherwise, and
whether due or to become due, except for the Assumed Debt, and Purchaser shall
not be subject to any such liabilities or obligations.

(i) Seller owns no inventory or tangible personal property
use or useful in the operation of the Business.

(j) No representation or warranty by Seller in this Agreement
or in any writing attached hereto, contains or will contain any untrue statement
of material or fact or omits or will omit to state any material fact (of which
the Seller or any of its directors or stockholders has knowledge or notice)
required to make the statements herein or therein contained not misleading.

<PAGE>

5. Covenants of Seller. Seller covenants and agrees with
Purchaser as follows:

(a) The bill of sale and instruments of assignment to be
delivered at the Closing will contain the usual warranties and affidavit of
title, transferring all of the Assets to Purchaser free and clear of all liens
and encumbrances except as permitted by the terms of this agreement.

(b) Between the date hereof and the Closing Date, Seller shall
not enter into any contracts materially affecting its business or the Premises
without first obtaining Purchaser's written consent.

6. Warranties and Representation of Purchaser.

(a) Purchaser is a corporation duly organized and existing
under the laws of the state of its incorporation.

(b) This Agreement and all transactions contemplated hereunder
shall have been as of the Closing Date duly and properly approved by the board
of the directors of Purchaser at a meeting called and duly held and no other or
additional corporate action of any kind shall be required to authorize this
Agreement or such transactions or to make this Agreement the valid and binding
obligation of Purchaser enforceable in accordance with its terms.

7. Bulk Sales Law Requirements. The parties acknowledge that
this transaction is not subject to the Bulk Sales Law of the State of New York
(Uniform Commercial Code, Article 6) in view of the fact that no inventory,
merchandise or stock in trade of Seller is being conveyed hereunder.

8. Indemnification. Seller agrees to indemnify Purchaser in
respect of:

(i) Any and all damages (including special and consequential)
loss, and reasonable costs and expenses resulting from any misrepresentation,
breach or inaccuracy of the warranties and representations set forth herein, or
the nonfulfillment of any obligation on the part of Seller to be performed under
this Agreement.

<PAGE>

(ii) any claims of creditors of Seller, including taxing and
other governmental authorities, but excluding the Creditor, that may be asserted
against Purchaser or the Assets.

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and reasonable legal and other expenses incident
to any of the foregoing.

As promptly as shall be feasible, and in any event within a reasonable
time after acquiring knowledge of any claim, demand, obligation or liability
against which Seller has indemnified and held Purchaser harmless, Purchaser
shall give to Seller written notice thereof. Seller shall then have the duty, at
its own expense, to defend and to contest any claim, demand, obligation or
liability against which it has indemnified and held Purchaser harmless. In the
event that Seller, after written notice thereof from Purchaser, fails to take
timely action to defend the same, Purchaser shall have the right to defend the
same by counsel of its own choosing, but at the cost and expense of Seller.
Purchaser shall have the right to settle or compromise any claim, demand or
litigation against it if it shall have given written notice thereof to Seller
and Seller shall have failed to take timely action to defend the same, and the
costs of any such settlement or compromise shall be borne by Seller.

The foregoing indemnification shall survive the Closing.

9. Conditions Precedent to Purchaser's Obligations. Each and every
obligation of Purchaser to be performed on Closing shall be subject to the
satisfaction, prior to or concurrently with the performance of such obligation,
of the following conditions unless waived, in writing, by Purchaser in its sole
discretion.

(a) The representations and warranties made by Seller in this
Agreement shall be true in every respect on and as of the Closing Date, with the
same force and effect as though they had been made or given on and as of such
date, and Seller shall deliver to Purchaser a certificate signed by the
President of Seller, dated the Closing Date to such effect.

(b) The Assets shall not have been materially and adversely
affected as of the Closing Date in any way.

<PAGE>

(c) Seller shall have performed and complied with all
obligations under this Agreement which are to be performed or complied with by
it prior to or on the Closing.

(d) No creditor of Seller shall have (i) commenced any action
or proceeding to restrain or enjoin the closing of the transaction pursuant to
this Agreement or the transfer of the Assets to Purchaser, or to impose
transferee liability upon Purchaser; nor (ii) shall any insolvency proceeding
affecting Seller or any of the Assets be pending.

(e) All actions and proceedings to be taken in connection with
the transactions contemplated by this Agreement, and all instruments and
documents incident thereto, shall be satisfactory in form and substance to
Purchaser.

(f) Seller shall have executed and delivered the Bill of Sale
and other documents of conveyance.

(g) The Creditor shall have entered into an agreement, in form
and substance satisfactory to Purchaser, modifying the payment terms of the
Assumed Debt.

10. Conditions Precedent to Seller's Obligations. Each and every
obligation of Seller to be performed on the Closing or thereafter shall be
subject to the satisfaction, prior to or concurrently with the performance of
such obligation, of the following conditions unless waived, in writing, by
Seller in its sole discretion.

(a) The representations and warranties made by Purchaser in
this Agreement shall be true on and as of the closing, with the same force and
effect as though they had been made or given on and as of the closing.

(b) Purchaser shall have performed and complied with all its
obligations under this Agreement which are to be performed or complied with by
it prior to or on the closing or thereafter, as the case may be.

11. Survival of Representations and Warranties. All
representations and warranties made by the parties to this Agreement shall
remain operative and in full force and effect,

<PAGE>

regardless of any investigations made on behalf of any party, and shall survive
the Closing.

12. Broker. Seller and Purchaser warrant and agree that they
have not engaged any broker or any other person who would be entitled to any
brokerage fee or commission in respect of the execution of this Agreement and/or
the consummation of the transactions contemplated hereby.

13. Closing. Subject to the fulfillment of the conditions set
forth herein, the Closing of this transaction shall take place at the offices
of Purchaser on September 30, 1996. The consummation of the transactions herein
contemplated is referred to herein as the "Closing" and the date upon which
the Closing occurs is referred herein to as the "Closing Date". If the
Closing does not occur on or before December 31, 1996, either party may
terminate this agreement on ten days' prior written notice to the other.

14. Purchaser's Additional Remedy. In the event of a breach of this
Agreement by Seller, Purchaser shall, in addition to and not in limitation of,
any and all other remedies which Purchaser may have at law or in equity, be
entitled to specific performance. In furtherance thereof, Purchaser shall be
entitled to a preliminary injunction prohibiting and restraining Seller from
transferring the Restaurant to any other party.

15. Notices. All notices demands or other communications and the
mailing of all copies provided for herein shall be deemed to have been properly
given only if in writing and mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed to Seller or Purchaser at the
address set forth above or to such other address as any party may designate by
written notice given to the other parties in the aforesaid manner.

16. Covenants of the Parties. The parties shall, prior to or after the
closing, at the request of any one of them, execute and deliver such other
instruments and do and perform such other reasonable acts and things as may, in
the opinion of counsel, be necessary or desirable for effecting complete
consummation of this Agreement and the transactions herein contemplated.

<PAGE>

17. General Provisions. This Agreement constitutes the entire agreement
among the parties. It cannot be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any such change is
sought. This Agreement shall inure to the benefit of and shall bind the
respective parties hereto. Captions and headings of the various sections of this
Agreement are for convenience only and carry no legal effect and shall in no way
affect the interpretation or construction of the sections of this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

Scent Overnight, Inc. Scent 123, Inc.

By: /s/Gerard Semhon By: /s/Constantine Bezas

<PAGE>

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE
UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY THAT
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.

SCENT 123, INC.
9% Promissory Note

$225,000

SCENT 123, INC., a Delaware Corporation (the "Company"), for value
received, hereby promises to pay to the order of Scent Overnight Inc. (the
"Holder"), on the earlier of December 31, 1998, or upon receipt by the Company
of gross proceeds of at least $1,000,000 pursuant to any public or private debt
or equity financing of any securities of Azurel Ltd., the parent of the Company
(the "Offering"), the principal sum of Two Hundred Twenty Five Thousand
($225,000) Dollars (or such lesser principal amount as may then be outstanding),
together with unpaid interest (computed on the basis of a 360-day year of twelve
30-day months) (i) on the unpaid balance at the rate of 9% pr annum from the
date hereof and (ii) to the extent legally enforceable, on any overdue
installment of interest at the rate of 12% per annum until the principal hereof
and interest thereon shall have been paid. The principal amount of the Note may
be prepaid by the Company, in whole or in part, without premium or penalty, at
any time. Upon any prepayment of this Note, all accrued but unpaid interest on
the principal amount being prepaid shall be paid to the holder on the date of
prepayment. All payments hereunder shall be applied first to interest then to
principal.

If the Company shall fail to make a payment of principal or interest
when due; or shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, be adjudicated insolvent or bankrupt, suffer an order
for relief under any federal bankruptcy law, petition or apply to any tribunal
for the appointment of a custodian, receiver or any trustee for the Company or
any substantial part of his assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of

<PAGE>

any jurisdiction, whether now or hereafter in affect; or if there shall
have been filed any such petition or application, or any such proceeding shall
have been commenced against the Company, which remains undismissed for a period
of thirty (30) days or more, or if the Company, by any act or omission shall
indicate consent to, approve of or acquiescence in any such petition,
application or proceeding or the appointment of, a custodian, receiver or any
trustee for all of any substantial part of its properties, or if the Company
shall suffer such custodianship, receivership, or trusteeship to continue
undischarged for a period of thirty (30) days or more, or the Company violates
any term or provision of this Note and same remains uncured for a period of 15
days after notice thereof, then and in any such event (each such event, an
"Event of Default"), the outstanding principal amount of this Note, together
with all accrued and unpaid interest thereon, shall be and become immediately
due and payable.

Payments of principal, premium, if any, and interest are to be made in
lawful money of the United States of America at the principal office of the
Company.

1. Restrictions on Transfer.

The Holder acknowledges that he has been advised by the Company that
this Note has not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), that the Note is being issued, on the basis of the
statutory exemption provided by Section 4 (2) of the Securities Act relating to
transactions by an issuer not involving any public offering, and that the
Company's reliance upon this statutory exemption is based in part upon the
representations made by the Holder in the Holder's Subscription Agreement. The
Holder acknowledges that he has been informed by the Company of, or is otherwise
familiar with, the nature of the limitations imposed by the Securities Act and
the rules and regulations thereunder on the transfer of securities. In
particular, the Holder agrees that no sale, assignment, hypothecation or
transfer of this Note shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment, hypothecation or
transfer, unless (i) the sale, assignment, hypothecation or transfer of the Note
is registered under the Securities Act, and the Company has no obligation or
intention to so register the Note except as provided in the Subscription
Agreement executed in connection herewith, or (ii) the Note is sold, assigned,
hypothecated or transferred in accordance with all the requirements and

<PAGE>

limitations of Rule 144 under the Securities Act, or such sale, assignment, or
transfer is otherwise exempt from registration under the Securities Act.

2. Covenants of Company.

The Company covenants and agrees that, so long as
this Note shall be outstanding, it will:

(i) Promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or
upon its income and profits, or upon any of its property, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the Company shall
not be required to pay and discharge any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be contested in good faith by
appropriate proceedings, and the Company shall set aside on its books adequate
reserves with respect to any such tax, assessment, charge, levy or claim so
contested.

(ii) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises and comply with all laws applicable to the Company as its counsel
may advise;

(iii) At all times maintain, preserve, protect and
keep its property used and useful in the conduct of its business in good repair,
working order and conditions, and from time to time make all needful and proper
repairs, renewals, replacements, betterments and improvements thereto, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times;

(iv) Keep adequately insured by financially sound
insurers, all property of a character usually insured by similar corporations
and carry such other insurance as is usually carried by similar corporations;
and
(v) At all times keep true and correct books,
records and accounts.

3. Miscellaneous.

<PAGE>

3.1 All the covenants and agreements made by the Company
in this Note shall bind its successors an assigns.

3.2 No recourse shall be had for the payment of the
principal, interest or premium, if any, on this Note or for any claim based
hereon or otherwise in any manner in respect hereof, against any incorporator,
stockholder, officer or director, past, present or future, of the Company or of
any predecessor corporation, whether by virtue of any constitutional provision
or statute or rule of law, or by the enforcement of any assessment or penalty or
in any other manner, all such liability being expressly waived and released by
the acceptance hereof and as part of the consideration for the issue hereof.

3.3 No course of dealing between the Company and the holder
hereof shall operate as a waiver of any right of any holder hereof, and no delay
on the part of the Holder in exercising any right hereunder shall so operate.
Any such waiver must be in writing and signed by the Holder and the Company.

3.4 This Note may be amended only by a written instrument
executed by the Company and the holder hereof. Any amendment shall be endorsed
upon this Note, and all future holders shall be bound thereby.

3.5 All communications provided for herein shall be sent,
except as may be otherwise specifically provided, by registered or certified
mail: if to the holder of this Note, to the address shown on the books of the
Company; and if to the Company, to: c/o Azurel, Ltd., 509 Madison Avenue, New
York, New York 10010, Attention: President, or to such other address as the
Company may advise the holder of this Note in writing. Notices shall be deemed
given when mailed.

3.6 All agreements between the Company and the Holder
expressly are limited so that in no event whatsoever shall the amount paid or
agreed to be paid by the Company to the Holder hereunder exceed the higher
lawful contractual rate of interest permissible under the law which a court of
competent jurisdiction by a final order which is not appealed or is
nonappealable, determines is applicable to this Note. If fulfillment of any
provision of this Note at the time performance of such provision becomes due
involves exceeding such highest lawful contractual rate, then such obligation
shall be reduced to such highest lawful contractual rate. If by any circumstance
the Holder shall ever receive as interest an amount which exceeds such highest
lawful

<PAGE>

contractual rate, any amount which may be deemed excessive interest shall
be applied as payment of the principal of the indebtedness evidenced hereby and
not as payment of interest. The terms and provisions of this paragraph shall
control all other terms and provisions contained in this Note.

3.7 The provisions of this Note shall in all respects be
construed according to, and the rights and liabilities of the parties hereto
shall in all respects be governed by, the laws of the State of New York. This
Note shall be deemed a contract made under the laws of the State of New York and
the validity of this Note and all rights and liabilities hereunder shall be
determined under the laws of said State.

3.8 In the event that this Note is placed in the hands of an
attorney for collection, or in the event that any action be instituted on this
Note, or any action is taken with respect to a default hereunder, the holder
hereof shall be entitled to the payment by the Company and any other party
liable for the obligations of the Company hereunder of all expenses in
connection therewith, including, without limitation, reasonable attorney fees.

3.9 The headings of the Sections of this Note are inserted for
convenience only and shall not be deemed to constitute a part of this Note.

IN WITNESS THEREOF, SCENT 123, INC., has caused this Note to
be executed in its corporate name by its President, and its seal to be affixed
hereto.

Dated: , 1996
SCENT 123, INC.

By: ______________________
Constantine Bezas
President

(seal)

- -------------------------------------------
Secretary

CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

We consent to the use in this Registration Statement on Form SB-2 of our reports
dated October 10, 1996, relating to the financial statements of Azurel Ltd. and
Private Label Cosmetics, Inc. And Affiliates for the periods indicated in those
reports and to references to our firm under the caption "EXPERTS" in the
accompanying Prospectus.

/s/ Feldman Radin & Co., P.C.
Feldman Radin & Co., P.C.
Certified Public Accountants

October , 1996
New York, New York