Exhibit 10.4
 
SECURITIES EXCHANGE AGREEMENT
 
THIS SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated as of March 27,
2014, is entered into by and among Boldface Group, Inc., a Nevada corporation
(the “Company”), and the persons identified as “Holders” on the signature pages
hereto (the “Holders”).
 
WHEREAS, pursuant to a Securities Purchase Agreement dated June 20, 2013, among
the Company and the Holders (the “June 2013 Purchase Agreement”), the Company
issued to the Holders Original Issue Discount Secured Convertible Debentures due
November 1, 2014 (the “June 2013 Debentures”) in the aggregate principal amount
of $1,680,000 and Warrants to purchase up to 24,705,882 shares of Common Stock
(the “June 2013 Warrants”) to the Holders;
 
WHEREAS, pursuant to a Securities Purchase Agreement dated August 29, 2013,
among the Company and the Holders (the “August 2013 Purchase Agreement” and
together with the June 2013 Purchase Agreement, the “Purchase Agreements”), the
Company issued to the Holders Original Issue Discount Secured Convertible
Debentures due March 1, 2015 (the “August 2013 Debentures” and together with the
June 2013 Debentures, the “Debentures”) in the aggregate principal amount of
$616,000 and Warrants to purchase up to 16,470,588 shares of Common Stock (the
“August 2013 Warrants” and collectively with the June 2013 Warrants, the
“Warrants”) to the Holders; and
 
WHEREAS, the Company and the Holders wish to exchange the Debentures and
Warrants for 3,906 shares of the Company’s 8% Series A Convertible Preferred
Stock issued hereunder having the rights, preferences and privileges set forth
in the Certificate of Designation (the “Preferred Stock”).
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Holder hereby agrees as follows:
 
1.             Definitions. Terms used as defined terms herein and not otherwise
defined shall have the meanings provided therefore in the Purchase Agreements,
the Debentures and the Warrants.

“Certificate of Designation” means the Certificate of Designation to be filed
prior to the Closing by the Company with the Secretary of State of Nevada, in
the form of Exhibit A attached hereto.

“Closing Date” means the Trading Day when this Agreement and the Preferred Stock
have been executed and delivered by the applicable parties thereto.

“Disclosure Schedules” means the Disclosure Schedules to this Agreement which
are delivered concurrently herewith.

 
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“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3(b).
 
“Required Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
conversion in full of all shares of Preferred Stock, ignoring any conversion
limitations set forth therein, and assuming that the Conversion Price is at all
times on or after the date of determination 75% of the then Conversion Price on
the Trading Day immediately prior to the date of determination.

“Replacement Debenture” shall have the meaning assigned to such term in Section
2(a).

“Replacement Warrant” shall have the meaning assigned to such term in Section
2(a).

“Retained Debenture” shall have the meaning assigned to such term in Section
2(a).

“Retained Warrant” shall have the meaning assigned to such term in Section 2(a).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“SEC Reports” means all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act for the two years preceding the date hereof.

“Securities” means the Preferred Stock and the Underlying Shares.

“Shareholder Approval” means such approval as may be required by the
shareholders of the Company to (a) approve a reverse stock split and (b) if
necessary, increase the authorized number of shares in order to reserve a
sufficient number of shares of Common Stock for issuance pursuant to the
Transaction Documents.

“Transaction Documents” means this Agreement, the Certificate of Designation and
all “Transaction Documents” as defined in the Purchase Agreements, all schedules
and exhibits thereto and hereto and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
 
“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Preferred Stock.

 
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2.             Agreements and Acknowledgements.  The Company and the Holders
signatory hereto, constituting 51% in interest under the Transaction Documents,
agree as follows:

(a)           Exchange of Debentures and Warrants.  The Company hereby agrees to
issue to each Holder a certificate evidencing the number of shares of Preferred
Stock as set forth on Schedule I hereto in exchange for the cancellation in full
of the Debentures and Warrants held by such Holder; provided, however, that, (i)
if a Holder shall not exchange all of the June 2013 Debentures held by the
Holder pursuant to this Agreement, the principal amount of the June 2013
Debentures to remain outstanding and held by such Holder shall be set forth
beside the name of such Holder on Schedule I hereto (such June 2013 Debentures
to remain outstanding and held by a Holder, a “Retained Debenture”) and (ii) if
a Holder shall not exchange all of the June 2013 Warrants held by the Holder
pursuant to this Agreement, the portion of the June 2013 Warrants to remain
outstanding and held by such Holder shall be set forth beside the name of such
Holder on Schedule I hereto (such June 2013 Warrants to remain outstanding and
held by a Holder, a “Retained Warrant”).  Each Holder acknowledges and agrees
that, upon the issuance and delivery of the Preferred Stock, the Debentures and
Warrants (other than any Retained Debenture and any Retained Warrant) will be
deemed cancelled and of no further force and effect and each Holder will either
deliver to the Company or destroy the original Debentures and Warrants to the
Company.  The Company covenants to promptly issue and deliver (i) to a Holder
which holds a Retained Debenture, a debenture in the form of the June 2013
Debentures with a principal amount equal to the principal amount of the Retained
Debenture set forth on Schedule I (such debenture, a “Replacement Debenture”),
which Replacement Debenture shall be issued by the Company as an exchange
pursuant to the terms of the June 2013 Debentures, including, without
limitation, Section 3(a) therein, and (ii) to a Holder which holds a Retained
Warrant, a warrant in the form of the June 2013 Warrants with a number of
Warrant Shares equal to the number of Warrant Shares set forth on Schedule I
(such warrant, a “Replacement Warrant”), which Replacement Warrant shall be
issued as an exchange pursuant to terms of the June 2013 Warrants, including,
without limitation, Section 4(b) therein.  The terms of the June 2013 Purchase
Agreement shall apply to the Replacement Debenture and the Replacement Warrant.
 
(b)           Payment of Accrued Interest and Dividends.  On the Closing Date,
the Company hereby agrees to pay in cash to each Holder all accrued and unpaid
interest on such Holder’s Debentures, as set forth on Schedule I.  Additionally,
on the Closing Date, the Company agrees to pay in cash to each of the Holders
the initial dividend payment on such Holder’s Preferred Stock pursuant to the
terms of the Certificate of Designation.

(c)           Definition of “Exempt Issuance” in Transaction Documents.  The
Company and the Holders hereby agree that the term “Exempt Issuance” is hereby
amended to include the following clause (e) and (f): “(e) the issuance of the 8%
Original Issue Discount Senior Secured Convertible Debenture Due August 1, 2015
and Common Stock Warrants (along with the underlying shares of Common Stock)
issued and issuable pursuant to the Securities Purchase Agreement, dated March
27, 2014 and the issuance of the Preferred Stock and the shares underlying the
Preferred Stock and (f) securities issued with the written consent of holders of
at least 51% of the shares of Preferred Stock then outstanding.”

 
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(d)           Addition of Definition of “Preferred Stock” and “Underlying
Shares” in Transaction Documents. The Company and Holders hereby agree that, in
the Transaction Documents (as such term is defined in the Purchase Agreements),
the term “Preferred Stock” shall mean the Preferred Stock and “Underlying
Shares” shall be deemed to include the Underlying Shares.

(e)           Definition of “Securities” in Transaction Documents.  The Company
and Holders hereby agree that, in the Transaction Documents (as such term is
defined in the Purchase Agreements), the term “Securities” shall include the
Preferred Stock and Underlying Shares.

(f)           Amendments and Consents.  The parties hereby that any amendment or
consent provisions under the Transaction Documents that require 50.1% in
interest of the Securities shall be deemed to include in such calculation the
shares of Preferred Stock issued hereunder.  Additionally, the Holders signatory
hereto consent to the transactions contemplated under this Agreement and the
Securities Purchase Agreement relating to the purchase of 8% Original Issue
Discount Senior Secured Convertible Debenture Due August 1, 2015 and Common
Stock Warrants entered into concurrently herewith.  Any restrictions,
prohibitions or Negative Covenants set forth in the Transaction Documents,
including but not limited to the negative covenants set forth in Section 7 of
the Debenture, are hereby waived as they relate to the transactions contemplated
under this Agreement and the above-referenced Securities Purchase Agreement and
any amendments or additional advances in connection therewith as may occur from
time to time in the future.

(g)          Termination of Security Interest and Subsidiary Guarantees.  The
Company and the Holders hereby agree that the Security Agreement and Subsidiary
Guarantee, dated as of June 20, 2013, and the Security Agreement and Subsidiary
Guarantee, dated as of August 29, 2013, are hereby terminated and of no further
force or effect.  The Company may file UCC-3s reflecting such termination after
the date hereof.  In the event that any Debentures remain outstanding,
including, without limitation, a Replacement Debenture, such Debentures shall be
unsecured obligations of the Company.

3.             Representations and Warranties.  Except as set forth in the
corresponding section of the disclosure schedules attached hereto, the Company
hereby makes to the Holders the following representations and warranties:
 
(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 3(a).  The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.
 
 
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(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”; and provided, that the changes in the trading price
of the Common Stock shall not, in and of itself, constitute a Material Adverse
Effect) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
 
(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder.  The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its board of directors or its
stockholders in connection therewith.  This Agreement has been duly executed by
the Company and, when delivered in accordance with the terms hereof will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
 
(d)           No Conflicts.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any material agreement,
credit facility, debt or other material instrument (evidencing a Company or
Subsidiary debt or otherwise) or other material understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) conflict with or result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
 
 
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(e)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents.  The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.  The Replacement Debentures and the Replacement Warrants
are duly authorized and, when issued pursuant to this Agreement and the
Transaction Documents, shall be will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents.  Prior to
the date that Shareholder Approval is obtained and deemed effective, the Company
has reserved from its duly authorized capital stock 8,000,000 shares of Common
Stock for issuance of the Underlying Shares.  After Shareholder Approval has
been obtained and deemed effective, the Company will reserve from its duly
authorized capital stock a number of shares of Common Stock for issuance of the
Underlying Shares at least equal to the Required Minimum on the date hereof.
 
(f)            Capitalization.  Except as provided on Schedule 3.1(f), the
capitalization of the Company is as described in the SEC Reports. Schedule
3.1(f) also includes the number of shares of Common Stock owned beneficially,
and of record, by each executive officer and director of the Company as of the
date hereof. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of employee stock options under the Company’s stock option plans,
the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act.  No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents;
provided that the Company is issuing.  Except as set forth on Schedule 3.1(f), a
result of the purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Holders) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Securities.  There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders other than with
respect to the Subordinated Indebtedness, the material terms of which are set
forth on Schedule 3.1(f).
 
 
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(h)           Shell Company. The Company is not subject to Rule 144(i).
 
(i)            Bring Down.  The Company expressly reaffirms that each of the
representations and warranties set forth in the Purchase Agreements (as
supplemented or qualified by the disclosures in any disclosure schedule to
Purchase Agreements), continues to be true, accurate and complete in all
material respects as of the date hereof, and the Company hereby remakes and
incorporates herein by reference each such representation and warranty as though
made on the date of this Agreement and as of the Closing Date (unless as of a
specific date therein), except as set forth in the Disclosure Schedules.
 
(j)            Tacking of Securities.  The Company represents that the holding
period of the Securities tacks to the holding period of the Debentures and
Warrants (solely upon cashless exercise) for Rule 144 purposes and the holding
period of the Replacement Debenture and the Replacement Warrant tacks to the
holding period of the June 2013 Debentures and the June 2013 Warrants (solely
upon a cashless exercise) for Rule 144 purposes.  The Company agrees not to take
a position contrary to this paragraph.  If requested by a Holder, the Company
shall promptly, and in any event within 3 Business Days of such request, provide
a legal opinion of outside counsel opining to the immediate availability of Rule
144 for the resale of the Underlying Shares.
 
(k)           SEC Reports; Financial Statements.  Except as set forth on
Schedule 3.1(k), the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.
 
 
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4.             Representations and Warranties of the Holders.  Each Holder, for
itself and for no other Holder, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein):

(a)            Organization; Authority.  Such Holder is either an individual or
an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporated or formed with full
right, corporate, partnership, limited liability company or similar power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents and
performance by such Holder of the transactions contemplated by the Transaction
Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of such
Holder.  Each Transaction Document to which it is a party has been duly executed
by such Holder, and when delivered by such Holder in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such Holder,
enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
 
(b)            Own Account.  Such Holder understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Holder’s right to sell the
Securities in compliance with applicable federal and state securities
laws).  Such Holder is acquiring the Securities hereunder in the ordinary course
of its business.
 
 
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(c)            Holder Status.  At the time such Holder was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it converts any Preferred Stock it will be either: (i) an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.  Such Holder is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act.

The Company acknowledges and agrees that the representations contained in
Section 4 shall not modify, amend or affect such Holder’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
express representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in
connection with this Agreement or the consummation of the transaction
contemplated hereby.

5.             Transfer Restrictions.

(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 5(b), the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights and
obligations of a Purchaser under this Agreement.

(b)           The Holders agree to the imprinting, so long as is required by
this Section 5, of a legend on any of the Securities in the following form:

NEITHER THIS SECURITY NOR ANY SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

 
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The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.  Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities.

(c)            Certificates evidencing the Underlying Shares shall not contain
any legend (including the legend set forth in Section 5(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Underlying Shares pursuant
to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule
144 or (iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company shall cause its counsel to issue a
legal opinion to the Transfer Agent promptly if required by the Transfer Agent
to effect the removal of the legend hereunder.  If all or any of the Preferred
Stock is converted or a Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Underlying Shares,
or if such Underlying Shares may be sold under Rule 144 or if such legend is not
otherwise required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission) then such Underlying Shares shall be issued free of all
legends.  The Company agrees that following such time as such legend is no
longer required under this Section 5(c), it will, no later than three Trading
Days following the delivery by a Purchaser to the Company or the Transfer Agent
of a certificate representing Underlying Shares, as applicable, issued with a
restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver
or cause to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends, in addition, the
Company shall deliver such Purchaser a copy of such opinion, the instruction
letter to the Transfer Agent, the resolution of the Board of Directors
authorizing the Transaction Documents and any additional supporting
documentation requested by the Purchaser  as may be requested by the Purchaser
in order to deposit Underlying Shares in accounts with its prime broker (or
other brokerage account); provided, however, in the event the restrictive legend
on such certificate is being removed pursuant to Rule 144 or such Underlying
Shares as first being issued without legend in reliance on Rule 144, such
Purchaser shall, at the time of delivery of such certificates to the Company or
Transfer Agent, represent to the Company and Company Counsel that (i) it intends
to sell such Underlying Shares prior to the filing date of the Company’s next
period report and (ii) if such Underlying Shares are not sold by such filing
date and such Underlying Shares are no longer eligible for resale under Rule 144
such Purchaser will deliver such shares to the Transfer Agent or Company to have
the restrictive legend placed back on such certificates representing such
Underlying Shares.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 5.  Certificates for Underlying Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser.

 
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(d)           In addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the
Common Stock on the date such Securities are submitted to the Transfer Agent)
delivered for removal of the restrictive legend and subject to Section 5(c), $10
per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after
such damages have begun to accrue) for each Trading Day after the Legend Removal
Date until the later of (i) such Trading Day that such certificate is delivered
without a legend and (ii) the Trading Day the Company shall have delivered a
copy of the opinion of its counsel and other supporting documentation requested
by the Purchaser (including, without limitation, any instruction letter to the
Company’s transfer agent) as may be requested by the Purchaser in order to
deposit Underlying Shares in accounts with its prime broker (or other brokerage
account).   Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Company’s failure to deliver certificates representing any
Securities as required by the Transaction Documents, and such Purchaser shall
have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

7.             Miscellaneous.

(a)           The respective obligations and agreements of the Holders hereunder
are subject to the following conditions being met: (a) the accuracy in all
material respects of the representations and warranties of the Company contained
herein (except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) and (b) the performance by the Company of all if its obligations,
covenants and agreements required to be performed hereunder.  Except as
expressly set forth above, all of the terms and conditions of the Transaction
Documents shall continue in full force and effect after the execution of this
Agreement and shall not be in any way changed, modified or superseded by the
terms set forth herein.  The Company shall, within 4 Trading Days of the date
hereof, issue a Current Report on Form 8-K with the Commission disclosing the
material terms of the transactions contemplated hereby, and shall attach this
Agreement and the Certificate of Designation as exhibits thereto (the “8-K
Filing”).  From and after the 8-K Filing, the Holder shall not be in possession
of any material, nonpublic information received from the Company, any of its
Subsidiaries or any of their respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing.  The Company will provide all
documentation reasonably requested by the Holders for purposes of qualifying the
Underlying Shares in compliance with Rule 144 to be issued without restriction
and not containing any restrictive legend.  The Company shall consult with the
Holders in issuing any other press releases with respect to the transactions
contemplated hereby.

 
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 (b)          This Agreement may be executed in two or more counterparts and by
facsimile signature or otherwise, and each of such counterparts shall be deemed
an original and all of such counterparts together shall constitute one and the
same agreement.  Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.
 
(c)           The Company has elected to provide all Holders with the same terms
and form of agreement for the convenience of the Company and not because it was
required or requested to do so by the Holders.  The obligations of each Holder
under this Agreement, and any Transaction Document are several and not joint
with the obligations of any other Holder, and no Holder shall be responsible in
any way for the performance or non-performance of the obligations of any other
Holder under this Agreement or any Transaction Document.  Nothing contained
herein or in any Transaction Document, and no action taken by any Holder
pursuant thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Agreement
or the Transaction Documents.  Each Holder shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.  Each Holder has been represented by its own
separate legal counsel in their review and negotiation of this Agreement and the
Transaction Documents.
 
 
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(d)           If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the
parties.  The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
 
(f)           This Agreement shall be governed by and interpreted in accordance
with laws of the State of New York, excluding its choice of law rules.  The
parties hereto hereby waive the right to a jury trial in any litigation
resulting from or related to this Agreement.  The parties hereto consent to
exclusive jurisdiction and venue in the federal courts sitting in the southern
district of New York, unless no federal subject matter jurisdiction exists, in
which case the parties hereto consent to exclusive jurisdiction and venue in the
New York state courts in the borough of Manhattan, New York.  Each party waives
all defenses of lack of personal jurisdiction and forum non conveniens.  Process
may be served on any party hereto in the manner authorized by applicable law or
court rule.
 
***********************
 
 
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IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth
above.

BOLDFACE GROUP, INC.
       
By:
     
     Name:
   
     Title:
 

[signature pages of Holders to follow]
 
 
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SIGNATURE PAGE OF HOLDER TO
SECURITIES EXCHANGE AGREEMENT
AMONG BOLDFACE AND
THE HOLDERS THEREUNDER

Name of Holder: ___________________________________

By: ______________________________________________

Name: ____________________________________________

Title: _____________________________________________

Principal Amount of June 2013 Debentures: $______________________

June 2013 Warrants:_________________________________

Principal Amount of August 2013 Debentures: $______________________

August 2013 Warrants: ______________________________

 
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SCHEDULE I

NAME OF HOLDER
 
SHARES OF PREFERRED STOCK
 
ACCRUED INTEREST
 
DIVIDEND AMOUNT
                                         

 
 
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