FACTORING AGREEMENT

 

STAR FUNDING, INC.

237 W. 37th Street, 5th Floor

NEW YORK, NY 10018

 

October 17, 2012

 

[NAME OF BOLDFACE ENTITY]

1309 Pico Blvd, Suite A

Santa Monica, CA 90405

 

Attention: Nicole Ostoya, Chief Executive Officer

 

THE FOLLOWING IS THE AGREEMENT UNDER WHICH WE ARE TO ACT AS YOUR FACTOR WITH
RESPECT TO ALL ACCOUNTS RECEIVABLE FROM YOUR PRESENT AND FUTURE CUSTOMERS
ARISING FROM THE SALE AND DELIVERY OF MERCHANDISE OR THE RENDITION OF SERVICES
BY YOUR COMPANY.

 

1.          You hereby sell and assign to us, making us absolute owner thereof,
all of your accounts, contract rights, and other obligations to you for the
payment of money, whether now existing or hereafter arising (each a “Receivable”
and collectively the “Receivables”), irrespective of whether arising out of the
sale of goods (the “Goods”) supplied by us, or with respect to which we have
provided financial accommodations to you under, the Supply Agreement dated as of
the date hereof between you and us (as it may be amended, the “Supply
Agreement”), together with all proceeds thereof, all security and guarantees
thereof, and all of your rights to any goods and property represented thereby.
We shall have all the rights of an unpaid seller of any goods, the sale of which
gives rise to each Receivable, including, without limitation, the right of
stoppage in transit, reclamation and replevin. Upon each purchase of a
Receivable from you, you shall execute and deliver to us such further and
confirmatory assignments of the Receivable as we may require, all of which shall
be in form and manner satisfactory to us (including, without limitation, in the
case of Receivables due from the U.S. Government or any department or agency
thereof, such assignments and notices of assignment as may be necessary to
comply with 41 U.S.C. §15, 31 U.S.C. §3727, and the regulations adopted
thereunder (collectively, the “Assignment of Claims Act”)), together with copies
of invoices and all shipping or delivery receipts and such other proof of sale
and delivery or performance as we from time to time may require. You will make
appropriate notations upon your books and ledgers indicating the sale and
assignment of the Receivables to us. All invoices or other statements to
customers evidencing Receivables shall be mailed at your expense whether mailed
by you or at our option by us and shall clearly state in a manner satisfactory
to us that each such Receivable has been assigned to us or our assignees and is
payable to us or our assignees. Without limiting the foregoing, you agree and
acknowledge that (i) we have the right to sell, assign, transfer and/or
re-factor the Receivables to any entity or entities; (ii) we may in connection
with such sale, assignment transfer and/or re-factoring, from time to time,
request that any such entity or entities make advances to us and advance
payments of the purchase price of and/or secured by the Receivables, (iii) we
may purchase insurance against credit losses arising on Receivables (“Credit
Insurance”); (iv) we may assign any or all of our rights under this Agreement or
with respect to any of the Receivables to any issuer of Credit Insurance on
Receivables, and any entity or entities to which we sell, assign, transfer
and/or re-factor Receivables; and (v) we may sell participations in this
Agreement, or in any of your obligations to us hereunder, to any person or
entity.

 

 

 

 

2.          (a)          We shall not assume the credit risk on any Receivable
purchased by us hereunder unless (i) it arises out of a specific sale to a
customer of yours that has been submitted to us for credit approval and has been
approved by us in writing (an “Approved Sale”) or (ii) it arises out of a sale
to a customer of yours with respect to whom we have approved a credit limit (an
“Approved Credit Limit”) in writing, the sale meets all of the terms and
conditions of our approval, the goods are shipped or the services are provided
to the customer during the period specified in our approval, and the resulting
Receivable, when added to all other outstanding Receivables from such customer,
does not exceed the Approved Credit Limit for such customer. Any approval
provided by us hereunder (whether of a particular sale or a credit limit to a
particular customer) must be in writing and shall be limited to the specific
terms and conditions listed therein. In no event shall we have any credit risk
on any Receivable, whether or not approved by us, if the net amount of such
Receivable is less than $250.00.

 

(b)          On Approved Sales and sales under Approved Credit Limits we shall
assume the credit risk, being responsible only for the financial inability of
your customers with respect to Receivables we have purchased (such customers
herein referred to as “Customers”) to pay at maturity, such assumption of credit
risk going into effect upon delivery or performance, and acceptance of the goods
or services by such Customer, without dispute. We shall not be responsible for
any nonpayment of a Receivable because of the assertion of any claim or dispute
by a Customer or the exercise of any counterclaim or offset (whether or not such
claim, dispute, counterclaim or offset relates to the specific Receivable) or
where nonpayment is a consequence of enemy attack, civil commotion, the acts or
restraint of public authorities, acts of God or force majeure, or if any
warranty made by you to us in respect of such Receivable has been breached, or
if you fail to provide us upon our written request, with copies of invoices and
shipping or delivery receipts or such other proof of sale and delivery or
performance as we may from time to time require. We shall have no liability of
any kind for refusing to give or for withdrawing credit approval pursuant to the
terms of this Agreement, or for exercising or refusing to exercise any rights or
remedies we have under this Agreement or otherwise.

 

(c)          We reserve the right to withdraw credit approval of an Approved
Sale at any time before delivery or performance and, in any event, such credit
approval shall be deemed to be withdrawn if full delivery or performance is not
made within 30 days after the delivery or shipment date specified in the terms
of sale submitted to us for approval, or, if no such delivery or shipment date
is specified, within 30 days of the date of such credit approval, or as may be
otherwise stated in such credit approval.

 

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(d)          We reserve the right to reduce or cancel an Approved Credit Limit
for a Customer by giving you written notice to that effect. If we reduce or
cancel the Approved Credit Limit for a Customer (i) such reduction or
cancellation shall take effect immediately and (ii) any Receivables arising out
of sales you make to such customer after receipt of such notice shall be CR
Receivables (as defined below) to the extent that they exceed the Approved
Credit Limit as so reduced or cancelled.

 

(e)          Any purchase of Receivables from you which is not approved in
writing by us as to credit shall be known as a C.R. (Clients Risk) Receivable
(each a “CR Receivable” and collectively the “CR Receivables”). All CR
Receivables are assigned to and purchased by us with full recourse to you and at
your credit risk, but are otherwise subject to the covenants, terms and
conditions provided herein in respect of approved Receivables on which we have
assumed the credit risk. We shall have the right to charge back to your account
the amount of CR Receivables at any time either before or after their maturity
and you agree to pay us upon demand the amount thereof, together with all
expenses including, without limitation, collection charges and other collection
and attorneys’ fees incurred by us up to the date of such payment in attempting
to collect or enforce any such payment and in attempting to collect or enforce
any such Receivable. In addition, if we, at your request, but subject to our
discretion, file a proof of claim in any insolvency proceeding with respect to a
CR Receivable and/or forward such CR Receivable to an attorney or agency for
collection, we shall charge your account, at the time such CR Receivable or
claim is so filed or forwarded, with an amount equal to 15% of the CR
Receivable. In addition, (whether or not such CR Receivable or claim is filed or
submitted at your request) any other charges incurred by us thereafter shall be
charged to your account.

 

(f) Any payments received by us from or for the account of a Customer that is
the account debtor with respect to both CR Receivables and Receivables as to
which we have assumed the credit risk (“Factor Risk Receivables”) shall be
applied, first, to Factor Risk Receivables until all such Receivables have been
paid in full and then to CR Receivables, irrespective of any instructions to the
contrary from the person or entity that made such payment.

 

3.          Any goods rejected or returned by any Customer shall be our property
held by you in trust for us separate and apart from any other goods, and upon
demand shall forthwith be delivered to us or disposed of by you at our direction
and without charge to us. You shall report to us in writing all disputes and
claims made by any Customers, and the return of or offer to return any goods,
and you will promptly settle all such claims and disputes at your expense. As
absolute owner of each Receivable, we may in our sole discretion enforce, effect
any compromise, settle and adjust any Receivable, in our name or yours, without
affecting or limiting your obligation to us under this Agreement, and whether or
not any such Receivable shall have been charged back. We reserve the right at
any time to charge back to your account the full amount of the Receivable
involved in any claim, dispute or return asserted by your Customer, and you
agree to pay us upon demand the full amount thereof. The charge back to your
account of the amount of any Receivable shall not be deemed a reassignment
thereof to you and title thereto, to the proceeds thereof, to all security and
guarantees therefor and to your interest in the goods represented thereby, shall
remain in us. You shall indemnify us for, and hold us harmless against, any
loss, liability, claim or expense of any kind arising from any claims of, or
disputes with any Customer as to terms, price, quality, or otherwise, with
respect to any Receivable, including, without limitation, any claim for a return
of any payments thereunder and any and all expenses and attorney’s (whether
in-house or outside) fees incurred by us in collecting or attempting to collect
any Receivables charged back to you.

 

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4.          If any checks, drafts, notes, acceptances, cash collections or
payments in any form shall be received by you on any Receivable, you will
immediately transmit and deliver them to us or to our assignees in the identical
form received. You agree that we and any such person or entity as we may from
time to time designate, shall have the right to sign and/or endorse your name on
all remittances and all papers, bills of lading, receipts, instruments and
documents relating to Receivables and the transactions between us. We shall have
the right to deposit any checks or other remittances received on any Receivable
regardless of notations or conditions placed thereon by any Customer or
deductions reflected thereby and to charge the amount of any such deductions to
your account.

 

5.          As to each Receivable assigned to us, you hereby warrant that (i) it
is a bona fide existing obligation created by the sale and actual delivery of
goods or the rendition of services to a Customer in the ordinary course of
business and in compliance with such Customer’s purchase order and all
applicable procurement regulations, which you then own free of liens and
encumbrances, and which is then unconditionally owing to you without defense,
offset or counterclaim; and (ii) the Customer has received and will accept the
goods or services, and the invoices therefor, without dispute or claim of any
kind. Nothing contained in the previous sentence shall reduce, affect or limit
in any way your responsibility to assure us (or your civil liability to us in
connection therewith) that each Receivable assigned to us by you will be paid in
the ordinary course of business regardless of your knowledge of any
irregularity, defense, offset or counterclaim in connection with any such
Receivable or our ability to rely on such assurances. You hereby represent and
warrant that you have full right and authority to sell and assign to us and to
grant to us a security interest in the Receivables, that you have not granted a
security interest therein or in any of your inventory to any party other than us
and the holders of the promissory notes listed in Exhibit A hereto (whose
security interest has been subordinated to our security interest therein on
terms and conditions satisfactory to us) and that you will not hereafter grant
any security interest therein or in any of your inventory to anyone other that
us at any time during the term of this Agreement and until the security
interests granted hereunder have been terminated. You further represent and
warrant that your name, place of business, chief executive office and location
of your books and records relating to the Receivables are as indicated on the
first page hereof and you agree to notify us promptly of any change in such or
in your corporate or business structure or your state of organization. You
further represent and warrant that (i) you have identified to us all tradenames,
tradestyles or other assumed or fictitious business names (sometimes referred to
as “DBA” or “doing business as” names) that you use; (ii) you will advise us in
writing if you commence using any other such names in the future; and (iii) upon
our request therefor, you will provide to us evidence of your registration of
all such names in all jurisdictions in which such registration is required by
law. You hereby covenant that you will not change your name or jurisdiction of
organization without giving us at least 30 days prior written notice thereof.

 

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6.          (a) Subject to the other provisions of this Section, you shall pay
us for our services hereunder a factoring commission (the “Initial Factoring
Commission”) equal to the Applicable Percentage of the gross invoice amount of
each Receivable, which commission shall be due and payable by you on the date
such Receivable arises, and shall then be chargeable to your account. Our
Initial Factoring Commission is based upon maximum selling terms of 60 days, and
no more extended terms or additional dating shall be granted by you to any
Customer without our prior written approval. If such approval is given by us,
then for each 30-day period or part thereof of such extended terms or additional
dating our factoring commission with respect to any Receivable covered thereby
shall be increased by an amount equal to .25% of the gross invoice amount of
such receivable, which commission shall be due and payable by you on the date we
approve such extended terms or additional dating and shall be chargeable to your
account. For purposes of this Agreement, the term “Applicable Percentage” shall
mean (i) with respect to the first $5,000,000 in aggregate gross invoice amount
of Receivables purchased by us hereunder during any Contract Year (as defined
below), 1.25%, (ii) with respect to that portion of Receivables purchased by us
hereunder during any Contract Year whose gross invoice amount exceeds $5,000,000
but does not exceed $10,000,000, 1.125%, (iii) with respect to that portion of
Receivables purchased by us hereunder during any Contract Year whose gross
invoice amount exceeds $10,000,000, 1.00%. Notwithstanding anything to the
contrary contained herein, the minimum commission with respect to each
Receivable shall be $5.00.

 

(b)          The factoring commission on Receivables due from a Customer (or any
affiliates or subsidiaries thereof) listed on any schedule issued by us from
time to time which refers to this Agreement and is designated a Special Accounts
Schedule, shall be equal to the rate set forth above, plus an amount equal to
the surcharge set forth on the such Special Accounts Schedule for such Customer.
The surcharge with respect to any Receivable shall be due and payable on the
date on which the factoring commission for such Receivable is due and payable,
and shall be chargeable to your account.

 

(c)          You have represented to us that you will have sufficient factored
sales volume to pay us at least $31,250 in factoring commissions (the "Minimum
Annual Commissions") during each 12-month period commencing on the date hereof
or any anniversary of such date (each, a "Contract Year"). You hereby
acknowledge that we have relied on that representation in deciding to offer to
you the discretionary factoring facility contemplated hereby, and that lower
sales volumes would have a material adverse effect on our projected profit
margins hereunder. Accordingly, in order to induce us to enter into this
Agreement and provide the discretionary factoring facility contemplated hereby,
you hereby agree that, notwithstanding anything to the contrary contained
herein, if the aggregate amount of factoring commissions payable by you under
this Agreement for any calendar month during a Contract Year is less than
one-twelfth of the Minimum Annual Commissions for such Contract Year we may, at
our option, charge the difference to your account with us at the end of such
month (it being understood that we will make subsequent adjustments if necessary
to ensure that you do not pay us with respect to any Contract Year more than the
greater of (a) the total factoring commissions you owe us under this Agreement
for such Contract Year and (b) the Minimum Annual Commissions applicable to such
Contract Year).

 

7.          (a) The purchase price for each Receivable shall be the invoice
amount of the Receivable, less returns (whenever made), selling discounts
(calculated at our option on shortest terms), credits or deductions of any kind
allowed or granted to or taken by the Customer at any time, and our commission
provided for herein. No discount, credit or allowance with respect to any
Receivable shall be granted by you to any Customer, and no return of goods shall
be accepted by you, without our prior written consent. A discount, credit or
allowance may be claimed only by the Customer. All amounts collected on the
Receivables shall be credited to your account adding five (5) business days for
collection and clearance of remittances.

 

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(b)          If you require funds from time to time, we may advance to you, at
our discretion, up to the Applicable Percentage of the net amount of Receivables
purchased by us (other than CR Receivables) and not as yet collected (each such
advance herein called an “Advance” and, collectively, the “Advances”). You shall
pay us interest upon the daily average outstanding principal amount of the
Advances at a rate (the “Interest Rate”) per annum equal to the greater of (i)
the prime rate of JPMorgan Chase Bank, N.A. (the “Bank”), as announced by the
Bank from time to time (the “Prime Rate”), plus 2.00% or (ii) a floor of 5.50%.
The term “Applicable Percentage” as used in this paragraph means 80%. That
portion of Advances which is in excess of the above stated Applicable Percentage
of the Receivables shall bear interest at a per annum rate which is 2.00% in
excess of the Interest Rate. The Prime Rate may not be the lowest or best rate
charged by the Bank. Notwithstanding the foregoing, in no event shall the rate
of interest agreed to by or charged to you hereunder exceed the maximum rate of
interest permitted to be so agreed or charged under the law of the jurisdiction
whose laws are applicable to such rate of interest.

 

(c)          If, on the day on which we purchase any Receivable from you
hereunder, you owe any amount to the Supplier under the Supply Agreement, you
shall be deemed to have requested an Advance from us hereunder in an amount
equal to the lesser of the Applicable Percentage of the net amount of such
Receivable or the amount you then owe to the Supplier.

 

(d)          We shall remit the proceeds of any Advance made by us hereunder
(whether pursuant to your request under Section 6(b) or your deemed request
under Section 6(c)) directly to the Supplier in accordance with its instructions
to the extent of any amount then owed by you to the Supplier (it being
understood and agreed that we may rely on the Supplier’s representation to us of
the amount then owed to it); the excess, if any, of the principal amount of such
Advance over the amount then owed to the Supplier shall be remitted to you in
accordance with the terms of this Agreement.

 

(e)          About twenty (20) days after the end of each month, we will render
to you a statement with respect to the Receivables purchased by us during the
previous month, together with advances and charges made to your account under
this Agreement. In addition to any other amounts chargeable to your account,
your account shall be charged with all expenses and costs from time to time
hereafter incurred by us during the course of periodic examinations of your
books and records, and operations, plus a per diem charge at our then standard
rate per person, per day, for our examiners in the field and office
(collectively, “Exam Costs”) and our expenses consisting of postage on invoices,
bank wire and similar charges; provided, however, that so long as you haven’t
breached, and no default has occurred under, this Agreement, the Supply
Agreement or any other agreement with us or any Obligations to us, you shall not
be responsible for any Exam Costs that exceed $15,000 in the aggregate in any
given Contract Year. Our current standard rate is $850 per person, per day. We
may, at our discretion, charge your account with a fee for all trial balances
and sales summaries we prepare at your request. All statements, reports or
accountings rendered or issued by us to you, including, without limitation, such
trial balances and sales summaries, shall be deemed accepted and be finally
conclusive and binding upon you unless you notify us to the contrary by
registered or certified mail within thirty (30) days after the date such
statement, report or accounting is sent to you.

 

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8.          (a)          As collateral security for any and all of your (and
your subsidiaries’ and affiliates’) indebtedness and obligations to us and to
each of our subsidiaries and affiliates, whether matured or unmatured, absolute
or contingent, now existing or that may hereafter arise (including, without
limitation, your obligations to us hereunder, under the Supply Agreement, under
all guarantees in our favor, under indemnity or reimbursement agreements or by
subrogation), and howsoever acquired by us, whether arising directly between us
or acquired by us by assignment, whether relating to this Agreement or
independent hereof, including, without limitation, all obligations incurred by
you to any other concern factored or financed by us (collectively, the
“Obligations”), you grant to us a security interest in all of your (i) accounts;
(ii) cash and currency; (iii) chattel paper; (iv) registered United States
copyrights, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith (including,
without limitation, registrations, recordings and applications in the United
States Copyright Office), all renewals thereof and all licenses with respect
thereto, (v) deposit accounts; (vi) documents; (vii) equipment; (viii) financial
assets; (ix) fixtures; (x) general intangibles; (xi) goods; (xii) instruments;
(xiii) inventory; (xiv) investment property; (xv) letter-of-credit rights; (xvi)
letters patent of the United States or any other country and all reissues and
extensions thereof, applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, and agreements, whether written or oral, providing for the grant by or
to you of any right to manufacture, use or sell any invention covered by a
letter patent; (xvii) securities accounts and securities entitlements; (xviii)
software; (xix) supporting obligations; (xx) trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, all renewals
thereof, and all agreements, written or oral, providing for the grant by or to
you of any right to use any such name, style, mark, logo or other source or
business identifier; (xxi) other personal property of whatever type and (xxii)
all accessions and all proceeds of any and all of the foregoing (collectively,
the “Collateral”). All terms used in this section that are not defined herein
shall have the respective meanings given to them in the Uniform Commercial Code
in effect from time to time in the State of New York (the “NYUCC”).

 

(b)          All Obligations shall be due and payable on demand, and you hereby
irrevocably authorize and direct us to charge at any time to your account any
Obligations, and to pay any Obligations owing to any of our subsidiaries or
affiliates by so charging your account. You agree to execute financing
statements and any and all other instruments and documents that may now or
hereafter by provided for by the Uniform Commercial Code as adopted in the
relevant jurisdiction or any other law applicable thereto reflecting the
security interests granted to us hereunder (collectively, the “Financing
Statements”). You authorize us to file the Financing Statements without your
signature, signed only by us as a secured party, or unsigned, to perfect the
security interests granted to us hereunder. You shall be liable for, and we may
charge your account with, all costs and expenses of any public record filings
(including, without limitation, any filing or recording taxes), the making of
lien searches, and any attorneys’ (whether in-house or outside) fees and
expenses which may be incurred by us in the negotiation and documentation of
this Agreement and related documents and any amendments thereof, administering
this Agreement and perfecting, protecting, preserving and enforcing all security
interests and rights provided to us hereunder, under any other agreement
relating to the Obligations or by law.

 

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(c)          We shall have, in addition to the rights and remedies provided
herein or in any other documents relating to the Obligations, or by law
(including, but not limited to, levy of attachment, garnishment and the rights
and remedies set forth in the Uniform Commercial Code of the jurisdiction
applicable to the affected Collateral), the rights and remedies of a secured
party under the NYUCC (regardless of whether the NYUCC is the law of the
jurisdiction where the rights and remedies are asserted and regardless of
whether the NYUCC applies to the affected Collateral), and further, we may, with
or without judicial process or the aid and assistance of others, (i) enter on
any premises on which any of the Collateral may be located during normal
business hours (or anytime, after the occurrence and during the continuance of a
default under this Agreement, the Supply Agreement, any of your other agreements
with us, or any Obligations to us) and, without resistance or interference by
you or any of your subsidiaries or affiliates, take possession of the
Collateral, (ii) dispose of any Collateral on any such premises, (iii) require
you and all of your subsidiaries and affiliates to assemble and make available
to us at your expense any Collateral at any place and time designated by us
which is reasonably convenient to both of us, (iv) remove any Collateral from
any such premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice, hearing or
process of law, all of which you hereby waive to the fullest extent permitted by
law, at any place and time or times, sell and deliver any or all Collateral held
by or for us at public or private sale, at any exchange or broker's board or
elsewhere, by one or more contracts, in one or more parcels, for cash, upon
credit or otherwise, at such prices and upon such terms as we deem advisable, in
our sole discretion (subject to any and all mandatory legal requirements). You
acknowledge that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agree that such
private sale shall be deemed to have been made in a commercially reasonable
manner. Neither our compliance with applicable law nor our disclaimer of
warranties relating to the Collateral shall be considered to adversely affect
the commercial reasonableness of any sale. To the extent the rights of notice
cannot be legally waived hereunder, you agree that any requirement of reasonable
notice shall be met if such notice, specifying the place of any public sale or
the time after which any private sale is to be made, is personally served on or
mailed, postage prepaid, to you in accordance with the notice provisions hereof
at least 10 days before the time of sale or other event giving rise to the
requirement of such notice. We may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. We shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. To the extent permitted
by applicable law, any holder of Obligations may be a purchaser at any such
sale. To the extent permitted by applicable law, you hereby waive all of your
rights of redemption with respect to any such sale. Subject to the provisions of
applicable law, we may postpone or cause the postponement of the sale of all or
any portion of the Collateral by announcement at the time and place of such
sale, and such sale may, without further notice, to the extent permitted by law,
be made at the time and place to which the sale was postponed, or we may further
postpone such sale by announcement made at such time and place.

 

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(d)          In addition to the rights and remedies hereunder, we shall have the
right to enter and remain upon your various premises without cost or charge to
us, and use the same, together with your materials, supplies, books and records
for the purpose of collecting and liquidating the Collateral, or for preparing
for sale and conducting the sale of the Collateral, whether by foreclosure,
auction or otherwise. In addition, we may remove Collateral, or any part
thereof, from such premises and/or any records with respect thereto, in order to
effectively collect or liquidate such Collateral.

 

(e)          Failure by us to exercise any right, remedy or option under this
Agreement, any other document relating to the Obligations, or as provided by
law, or any delay by us in exercising the same, shall not operate as a waiver of
any such right, remedy or option. No waiver hereunder shall be effective unless
it is in writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated, which in our case
shall only be granted as provided herein. To the extent permitted by law,
neither we nor any party acting as attorney for us shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact or law
other than their gross negligence or willful misconduct hereunder. Our rights
and remedies under this Agreement shall be cumulative and not exclusive of any
other right or remedy which we may have.

 

(f)          In addition to the rights and remedies hereunder, we may, in
compliance with the NYUCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, accept or retain the Collateral in
satisfaction of the Obligations. Unless and until we shall have provided
specific notices to such effect, however, we shall not be deemed to have
retained any Collateral in satisfaction of any Obligations for any reason.

 

(g)        In the event that the proceeds of any sale, collection or realization
are insufficient to pay all amounts to which we are legally entitled, you shall
be liable for the deficiency, together with interest thereon at the highest rate
permitted by law, together with the costs of collection and the fees, charges
and disbursements of counsel. Any surplus remaining after the full payment and
satisfaction of the Obligations shall be returned to you or to whomsoever a
court of competent jurisdiction shall determine to be entitled thereto.

 

9.          You shall maintain your books, records and accounts in accordance
with sound accounting practice. You agree to furnish us with balance sheets,
statements of profit and loss, interim financial statements and such other
information in such detail and scope as we may require regarding your business
affairs and financial condition as we may from time to time reasonably request,
prepared in accordance with generally accepted accounting principles
consistently applied and prepared internally or compiled, reviewed or certified
by a firm of certified public accountants acceptable to us, as we may require in
our sole discretion. All such statements and information shall fairly present
your financial condition as of the dates, and the results of your operations for
the periods, for which the same are furnished.

 

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10.         This Agreement shall commence on the date hereof and shall continue
for one year from the date hereof and automatically continue from year to year
thereafter; provided that (a) we may terminate this Agreement at any time upon
thirty days’ prior written notice to you by registered or certified mail and (b)
you may terminate this Agreement only at the expiration of the original term
hereof or any renewal term, by giving us written notice of your intention to do
so by registered or certified mail at least sixty days prior to such expiration.
If you or any guarantor, endorser or other person liable on the Obligations
(each a “Guarantor”) becomes insolvent or unable to meet your or its debts as
they mature, or fail, suspend or go out of business (or, in the case of a
Guarantor which is an individual, die) or apply for, consent to, or suffer the
appointment of a receiver, trustee or custodian (or similar person) for you or
any Guarantor or any of your or any Guarantor’s property, make an assignment for
the benefit of creditors, or commence or become the subject of a case or
proceeding under any federal bankruptcy law, or if you shall be in default under
this Agreement, the Supply Agreement or any other agreement with us or any
Obligations to us, or if there is a change (by voluntary transfer, death or
otherwise) in your controlling stockholders or owners then, notwithstanding the
foregoing, we shall have the right to terminate this Agreement at any time
without notice. Our rights and your Obligations arising out of transactions
having their inception prior to the termination date shall not be affected by
any termination or notice thereof. Termination of this Agreement shall not
become effective in respect of the liens and security interests granted to us
hereunder until you have fully paid and discharged any and all of your
Obligations to us, and you shall continue to furnish confirmatory assignments
and schedules of Receivables and all proceeds in respect thereof. From and after
the effective date of termination, all amounts charged or chargeable to your
account hereunder, and all your Obligations to us, shall become immediately due
and payable without further notice or demand. After the giving of any notice of
termination hereunder and until the full liquidation of your account and the
payment in full of all Obligations, you shall not be entitled to receive any
payments from us.

 

11.         Notwithstanding any provision to the contrary contained herein, if a
court of competent jurisdiction should deem any commissions, costs, fees or
charges provided for in this Agreement to be interest and such interest is
deemed by such court to be in excess of the maximum contract rate permitted by
the applicable usury law, neither you nor any guarantor shall be liable to pay
the amount of such interest to the extent that it is in excess of the maximum
interest rate permitted by law, any such excess which may have been received by
us shall be either applied against your then unpaid obligations to us (other
than any such obligations that are deemed to be excessive interest as aforesaid)
or at our option refunded to you, and any portion of any commissions, costs,
fees or charges deemed to be interest by such court shall be automatically
reduced to the maximum interest rate allowed by law.

 

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This Agreement is deemed made in the State of New York and shall be governed,
interpreted and construed in accordance with the laws of the State of New York.
No modification, waiver of discharge of this Agreement shall be binding upon us
unless in writing and signed by us. If at any time we should fail to exercise
any right or remedy hereunder, it shall not constitute a waiver on our part of
exercising the same or any other right or remedy at any subsequent time. If any
taxes are imposed upon, or if we shall be required to withhold or pay any tax or
penalty because of or in connection with any transactions between us under this
Agreement, you agree to indemnify us and hold us harmless in respect thereof.
This Agreement and the Supply Agreement embody our entire agreement as to the
subject matter hereof and supersede all prior agreements (whether oral or
written) as to said subject matter. Trial by jury is hereby waived by each of us
in any action, proceeding or counterclaim brought by either of us against the
other on any matters whatsoever arising out of or in any way connected with this
Agreement or the relationship created hereby, and you hereby consent to the
jurisdiction of the Supreme Court of the State of New York and of any Federal
Court in such State, for a determination of any dispute as to any such matters.
In connection therewith, you hereby waive personal service of any summons,
complaint or other process and agree that service thereof may be made by
registered or certified mail directed to you at your address set forth above or
such other address as shall have previously been communicated to us by
registered or certified mail. Within thirty days after such mailing, you shall
appear or answer to such summons, complaint or other process. Should you fail to
appear or answer within said thirty-day period, you shall be deemed in default
and judgment may be entered by us against you for the amount demanded in any
summons, complaint or other process so served. In the event we shall retain
counsel for the purpose of enforcing the performance, payment or collection of
any of the Obligations, then and in that event you agree to pay the reasonable
fees of our counsel, plus any and all expenses and disbursements incurred in
connection therewith and/or incidental thereto. Our books and records shall be
admissible as prima facie evidence of the status of the account between us. This
Agreement shall be binding upon and inure to the benefit of each of us and our
respective heirs, executors, administrators, successors and assigns; provided,
however, that you may not assign any of your rights, interests or obligations
hereunder without our prior written consent.

 

    Very truly yours,             STAR FUNDING, INC.             By: /s/ Martin
Weingarten       Martin Weingarten       Chief Executive Officer The foregoing
is acknowledged,     accepted and agreed to:    

 

[NAME OF BOLDFACE ENTITY]         By:       Name: Nicole Ostoya     Title: Chief
Executive Officer  

 

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EXHIBIT A

 

TO

 

FACTORING AGREEMENT

 

Instrument  Date   Payee  Principal Amount  10% Senior Secured Promissory Note 
September 7, 2012   Darien Ellul  $100,000  10% Senior Secured Promissory Note 
September 7, 2012   Mark Tompkins  $50,000  10% Senior Secured Promissory Note 
September 25, 2012   Solops LLC  $150,000 

 

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Schedule of Omitted Documents in the Form of

Exhibit 10.1, Including Material Detail in

Which Such Documents Differ From Exhibit 10.1

  

 

 

The following documents do not differ in material detail from the form of
Exhibit 10.1, except with respect to the name of the BOLDFACE entity which
entered into the agreement:

 

1. Factoring Agreement, dated as of October 17, 2012, entered into by and
between Star Funding, Inc. and BOLDFACE Licensing + Branding

 

2. Factoring Agreement, dated as of October 17, 2012, entered into by and
between Star Funding, Inc. and BOLDFACE Group, Inc.

 

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