SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(“Agreement”) is made and entered into as of December 21, 2012, by and among BOLDFACE Group, Inc., a Nevada
corporation (the “Borrower”), each subsidiary of the Borrower listed on the signature pages hereof (together
with the Borrower, each a “Grantor”), the secured parties listed on the signature pages hereof and Gottbetter
& Partners, LLP, in its capacity as collateral agent (in such capacity, the “Collateral Agent”) for
the Holders (as defined below).


 


WITNESSETH:


 


WHEREAS, pursuant
to that certain Securities Purchase Agreement, dated as of December 21, 2012 (as may be amended, restated, supplemented, or otherwise
modified from time to time, including all schedules thereto, collectively, the “Securities Purchase Agreement”),
by and among the Borrower and each secured party listed on the Schedule of Purchasers attached thereto (each, a “Purchaser”,
and collectively, the “Purchasers”), the Borrower has agreed to sell, and each of the Purchasers has agreed to purchase,
severally and not jointly, the Units;


 


WHEREAS, each
Grantor other than the Borrower is a direct or indirect wholly-owned Subsidiary of the Borrower and will receive direct and substantial
benefits from the purchase by each of the Secured Parties of the Units;


 


WHEREAS, pursuant
to the Guaranty, each Subsidiary has guaranteed all of the obligations of the Borrower under the Transaction Documents; and


 


WHEREAS, it
is a condition precedent to the Purchasers purchasing the Units that the Borrower and each other Grantor have granted a security
interest in and to the Collateral (as defined in this Agreement) to the Collateral Agent for the benefit of the Holders to secure
all of the Borrower’s obligations under the Securities Purchase Agreement, the Notes and Warrants, underlying the Units,
issued pursuant thereto and the other Transaction Documents (as defined in the Purchase Agreement, and as the same may be amended,
restated, replaced or otherwise modified from time to time in accordance with the terms thereof, the “Transaction Documents”),
on the terms and conditions set forth in this Agreement.


 


NOW, THEREFORE,
for and in consideration of the Securities Purchase Agreement and the Units, the other premises and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties covenant and agree
as follows:


 


1.        Definitions.
Capitalized terms used herein without definition shall have the meanings ascribed to them in the Securities Purchase Agreement.
In addition to the words and terms defined elsewhere in this Agreement, the following words and terms shall have the following
meanings, unless the context otherwise clearly requires:


 



    	 



    	 



    

 


“Accounts”
shall have the meaning given to that term in the Code and shall include without limitation all rights of each Grantor, whenever
acquired, to payment for goods sold or leased or for services rendered, whether or not earned by performance.


 


“Chattel Paper”
shall have the meaning given to that term in the Code and shall include without limitation all writings owned by each Grantor,
whenever acquired, which evidence both a monetary obligation and a security interest in or a lease of specific goods.


 


“Code”
shall mean the Uniform Commercial Code as in effect on the date of this Agreement and as amended from time to time, of the state
or states having jurisdiction with respect to all or any portion of the Collateral from time to time.


 


“Collateral”
shall mean (i) all tangible and intangible assets of each Grantor, including, without limitation, collectively the Accounts, Chattel
Paper, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Instruments, Intellectual Property, Inventory and
Investment Property of each Grantor, and (ii) Proceeds of each of them.


 


“Deposit Accounts”
shall have the meaning given to that term in the Code and shall include a demand, time, savings, passbook or similar account maintained
with a bank, savings bank, savings and loan association, credit union, trust company or other organization that is engaged in the
business of banking.


 


“Documents”
shall have the meaning given to that term in the Code and shall include without limitation all warehouse receipts (as defined by
the Code) and other documents of title (as defined by the Code) owned by each Grantor, whenever acquired.


 


“Equipment”
shall have the meaning given to that term in the Code and shall include without limitation all goods owned by each Grantor, whenever
acquired and wherever located, used or brought for use primarily in the business or for the benefit of each Grantor, and not included
in Inventory of each Grantor, together with all attachments, accessories and parts used or intended to be used with any of those
goods or Fixtures, whether now or in the future installed therein or thereon or affixed thereto, as well as all substitutes and
replacements thereof in whole or in part.


 


“Event of Default”
shall mean (i) any of the Events of Default described in the Notes or (ii) any default by a Grantor in the performance of its obligations
under this Agreement.


 


“Fixtures”
shall have the meaning given to that term in the Code, and shall include without limitation leasehold improvements.


 


“General Intangibles”
shall have the meaning given to that term in the Code and shall include, without limitation, all leases under which each Grantor,
now or in the future leases and or obtains a right to occupy or use real or personal property, or both, all of the other contract
rights of each Grantor, whenever acquired, and customer lists, choses in action, claims (including claims for indemnification),
books, records, patents, copyrights, trademarks, blueprints, drawings, designs and plans, trade secrets, methods, processes, contracts,
licenses, license agreements, formulae, tax and any other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies, and computer information, software, records and data, and oil, gas, or other minerals before extraction
now owned or acquired after the date of this Agreement by each Grantor.


 



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“Holder”
means each Purchaser and any person to whom a Purchaser assigns all or any portion of a Note in accordance with the terms thereof.


 


“Instruments”
shall have the meaning given to that term in the Code and shall include, without limitation, all negotiable instruments (as defined
in the Code), all certificated securities (as defined in the Code) and all other writings which evidence a right to the payment
of money now or after the date of this Agreement owned by each Grantor.


 


“Inventory”
shall have the meaning given to that term in the Code and shall include without limitation all goods owned by each Grantor, whenever
acquired and wherever located, held for sale or lease or furnished or to be furnished under contracts of service, and all raw materials,
work in process and materials owned by each Grantor, and used or consumed in each Grantor’s business, whenever acquired and
wherever located.


 


“Investment Property,”
“Securities Intermediary” and “Commodities Intermediary” each shall have the meaning set forth in the Code.


 


“Lien”
has the meaning specified therefor in the Securities Purchase Agreement.


 


“Loan Documents”
shall mean collectively, this Agreement, the Notes, the Warrants, the Securities Purchase Agreement, the Registration Rights Agreement,
the Security Agreement, the Guaranty and all other agreements, documents and instruments executed and delivered in connection therewith,
as each may be amended, supplemented or modified from time to time.


 


“Permitted Liens”
has the meaning specified therefor in the Securities Purchase Agreement.


 


“Proceeds”
shall have the meaning given to that term in the Code and shall include without limitation whatever is received when Collateral
or Proceeds are sold, exchanged, collected or otherwise disposed of, whether cash or non-cash, and includes without limitation
proceeds of insurance payable by reason of loss of or damage to Collateral.


 


Capitalized terms not
otherwise defined in this Agreement or the Securities Purchase Agreement shall have the meanings attributed to such terms in the
Code.


 


		2.	Security Interest.



 


(a)         As
security for the full and timely payment of the Notes in accordance with the terms of the Securities Purchase Agreement and the
performance of the obligations of the Company under the Securities Purchase Agreement, the Notes and the other Transaction Documents,
each Grantor agrees that the Holders shall have, and each Grantor hereby grants and conveys to and creates in favor of the Holders,
a security interest under the Code in and to its Collateral, whether now owned or existing or hereafter acquired or arising and
regardless of where located. The security interest granted to the Holders in this Agreement shall be a senior security interest,
prior and superior to the rights of all third parties existing on or arising after the date of this Agreement, subject to the Permitted
Liens.


 



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(b)         All
of the Equipment, Inventory and Goods owned by each Grantor is located in the states as specified on Schedule I attached
hereto (except to the extent any such Equipment, Inventory or Goods is in transit or located at such Grantor’s job site in
the ordinary course of business). Except as disclosed on Schedule I, no material Collateral is in the possession of any
bailee, warehousemen, processor or consignee. Schedule I discloses such Borrower name as of the date hereof as it appears
in official filings in the state or province, as applicable, of its incorporation, formation or organization, the type of entity
of Borrower (including corporation, partnership, limited partnership or limited liability company), the organizational identification
number issued by Borrower’s state of incorporation, formation or organization (or a statement that no such number has been
issued), and the chief place of business, chief executive officer and the office where Borrower keeps its books and records. Each
Grantor has only one state or province, as applicable, of incorporation, formation or organization. Each Grantor does not do business
and have not done business during the past five (5) years under any trade name or fictitious business name except as disclosed
on Schedule I attached hereto.


 


3.         Provisions
Applicable to the Collateral. The parties agree that the following provisions shall be applicable to the Collateral:


 


(a)         Each
Grantor covenants and agrees that at all times during the term of this Agreement it shall keep accurate and complete books and
records concerning the Collateral that is now owned by the Grantor.


 


(b)         The
Holders or their representatives shall have the right, upon reasonable prior written notice to a Grantor and during the regular
business hours of the Grantor, to examine and inspect the Collateral and to review the books and records of the Grantor concerning
the Collateral that is now owned or acquired after the date of this Agreement by the Grantor and to copy the same and make excerpts
therefrom; provided, however, that from and after the occurrence of an Event of Default, the rights of inspection and entry shall
be subject to the requirements of the Code.


 


(c)         Each
Grantor shall at all times during the term of this Agreement keep the Equipment, Inventory and Fixtures that are now owned by each
Grantor in the states set forth on Schedule I or, upon written notice to the Collateral Agent, at such other locations for
which the Holders have filed financing statements, and in no other states without ten (10) days’ prior written notice to
the Holders, except that each Grantor shall have the right until one or more Events of Default shall occur to sell, move or otherwise
dispose of Inventory and other Collateral in the ordinary course of business.


 


(d)         Each
Grantor shall not move the location of its principal executive offices without prior written notification to the Collateral Agent.


 



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(e)         Without
the prior written consent of the Holders, each Grantor shall not sell, lease or otherwise dispose of any Equipment or Fixtures,
except in the ordinary course of their business.


 


(f)         Promptly
upon request of the Holders or the Collateral Agent from time to time, each Grantor shall furnish the Holders or the Collateral
Agent with such information and documents regarding the Collateral and each Grantor’s financial condition, business, assets
or liabilities, at such times and in such form and detail as the Holders may reasonably request.


 


(g)         During
the term of this Agreement, each Grantor shall deliver to the Holders or the Collateral Agent, upon their reasonable, written request
from time to time, without limitation,


 


(i)         all
invoices and customer statements rendered to account debtors, documents, contracts, chattel paper, instruments and other writings
pertaining to each Grantor’s contracts or the performance of each Grantor’s contracts,


 


(ii)         evidence
of each Grantor’s accounts and statements showing the aging, identification, reconciliation and collection thereof, and


 


(iii)         reports
as to each Grantor’s inventory and sales, shipment, damage or loss thereof, all of the foregoing to be certified by authorized
officers or other employees of each Grantor, and Borrower shall take all necessary action during the term of this Agreement to
perfect any and all security interests in favor of each Grantor and to assign to Holders all such security interests in favor of
each Grantor.


 


(h)         Notwithstanding
the security interest in the Collateral granted to and created in favor of the Holders under this Agreement, each Grantor shall
have the right until one or more Events of Default shall occur, at its own cost and expense, to collect the Accounts and the Chattel
Paper and to enforce their contract rights.


 


(i)         After
the occurrence of an Event of Default, the Collateral Agent shall have the right, in its sole discretion, to give notice of the
Holders’ security interest to account debtors obligated to each Grantor and to take over and direct collection of the Accounts
and the Chattel Paper, to notify such account debtors to make payment directly to the Holders and to enforce payment of the Accounts
and the Chattel Paper and to enforce each Grantor’s contract rights. It is understood and agreed by each Grantor that the
Collateral Agent shall have no liability whatsoever under this subsection (i) except for their own gross negligence or willful
misconduct.


 


(j)         At
all times during the term of this Agreement, each Grantor shall promptly deliver to the Collateral Agent, upon its written request,
all existing leases, and all other leases entered into by each Grantor from time to time, covering any material Equipment or Inventory
(“Leased Inventory”) which is leased to third parties.


 



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(k)         Each
Grantor shall not change its name, entity status, federal taxpayer identification number, or provincial organizational or registration
number, or the state under which it is organized without the prior written consent of the Holders, which consent shall not be unreasonably
withheld, conditioned or delayed.


 


(l)         Each
Grantor shall not close any of its Deposit Accounts or open any new or additional Deposit Accounts without first giving the Holders
at least ten (10) days’ prior written notice thereof; however, Holders grant the Collateral Agent the power to waive a portion
of the notice period if such waiver does not harm Holders’ security position.


 


(m)         Each
Grantor shall cooperate with the Holders and the Collateral Agent, at each Grantor’s reasonable expense, in perfecting Holders’
security interest in any of the Collateral. Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Collateral
Agent may reasonably request, in order to perfect and protect the security interests granted or purported to be granted hereby
or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.


 


(n)         The
Collateral Agent may file any necessary financing statements and other documents the Collateral Agent deems reasonably necessary
in order to perfect Holders’ security interest without either Grantor’s signature. Each Grantor grants to the Collateral
Agent a power of attorney for the sole purpose of executing any documents on behalf of each Grantor which the Collateral Agent
deems reasonably necessary to perfect Holders’ security interest. Such power, coupled with an interest, is irrevocable.


 


4.         Actions
with Respect to Accounts. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent its true and lawful
attorney-in-fact with power to sign its name and to take any of the following actions after the occurrence and prior to the cure
of an Event of Default, at any time without notice to either Grantor and at each Grantor’s reasonable expense:


 


(a)         Verify
the validity and amount of, or any other matter relating to, the Collateral by mail, telephone, telegraph or otherwise;


 


(b)         Notify
all account debtors that the Accounts have been assigned to the Holders and that the Holders have a security interest in the Accounts;


 


(c)         Direct
all account debtors to make payment of all Accounts directly to the Holders;


 


(d)         Take
control in any reasonable manner of any cash or non-cash items of payment or proceeds of Accounts;


 


(e)         Receive,
open and respond to all mail addressed to each Grantor;


 


(f)         Take
control in any manner of any rejected, returned, stopped in transit or repossessed goods relating to Accounts;


 



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(g)          Enforce
payment of and collect any Accounts, by legal proceedings or otherwise, and for such purpose the Holders may:


 


(1)          Demand
payment of any Accounts or direct any account debtors to make payment of Accounts directly to the Holders;


 


(2)          Receive
and collect all monies due or to become due to each Grantor pursuant to the Accounts;


 


(3)          Exercise
all of each Grantor’s rights and remedies with respect to the collection of Accounts;


 


(4)          Settle,
adjust, compromise, extend, renew, discharge or release Accounts in a commercially reasonable manner;


 


(5)          Sell
or assign Accounts on such reasonable terms, for such reasonable amounts and at such reasonable times as the Holders reasonably
deem advisable;


 


(6)          Prepare,
file and sign each Grantor’s name or names on any Proof of Claim or similar documents in any proceeding filed under federal
or state bankruptcy, insolvency, reorganization or other similar law as to any account debtor;


 


(7)          Prepare,
file and sign each Grantor’s name or names on any notice of lien, claim of mechanic’s lien, assignment or satisfaction
of lien or mechanic’s lien or similar document in connection with the Collateral;


 


(8)          Endorse
the name of each Grantor upon any chattel papers, documents, instruments, invoices, freight bills, bills of lading or similar documents
or agreements relating to Accounts or goods pertaining to Accounts or upon any checks or other media of payment or evidence of
a security interest that may come into the Holders’ possession;


 


(9)          Sign
the name or names of each Grantor to verifications of Accounts and notices of Accounts sent by account debtors to each Grantor;
or


 


(10)          Take
all other actions that the Holders reasonably deem to be necessary or desirable to protect each Grantor’s interest in the
Accounts.


 


(h)          Negotiate
and endorse any Document in favor of the Holders or their designees, covering Inventory which constitutes Collateral, and related
documents for the purpose of carrying out the provisions of this Agreement and taking any action and executing in the name(s) of
Borrower any instrument which the Holders may reasonably deem necessary or advisable to accomplish the purpose hereof. Without
limiting the generality of the foregoing, the Collateral Agent shall have the right and power to receive, endorse and collect checks
and other orders for the payment of money made payable to each Grantor representing any payment or reimbursement made under, pursuant
to or with respect to, the Collateral or any part thereof and to give full discharge to the same. Each Grantor does hereby ratify
and approve all acts of said attorney and agrees that said attorney shall not be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law, except for said attorney’s own gross negligence or willful misconduct.
This power, being coupled with an interest, is irrevocable until the Notes are paid in full (at which time this power shall terminate
in full) and each Grantor shall have performed all of its obligations under this Agreement. Each Grantor further agrees to use
its reasonable efforts to assist the Collateral Agent in the collection and enforcement of the Accounts and will not hinder, delay
or impede the Holders in any manner in its collection and enforcement of the Accounts.


 



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5.          Preservation
and Protection of Security Interest. Each Grantor represents and warrants that it has, and covenants and agrees that at all
times during the term of this Agreement, it will have, good and marketable title to the Collateral now owned by it free and clear
of all mortgages, pledges, liens, security interests, charges or other encumbrances, except for the Permitted Liens and those junior
in right of payment and enforcement to that of the Holders or in favor of the Holders, and shall defend the Collateral against
the claims and demands of all persons, firms and entities whomsoever. Assuming Holders have taken all required action to perfect
a security interest in the Collateral as provided by the Code, each Grantor represents and warrants that as of the date of this
Agreement the Holders have, and that all times in the future the Holders will have, a first priority perfected security interest
in the Collateral, prior and superior to the rights of all third parties in the Collateral existing on the date of this Agreement
or arising after the date of this Agreement, subject to the Permitted Liens. Except as permitted by this Agreement, each Grantor
covenants and agrees that it shall not, without the prior written consent of the Holders (i) borrow against the Collateral or any
portion of the Collateral from any other person, firm or entity, except for borrowings which are subordinate to the rights of the
Holders, (ii) grant or create or permit to attach or exist any mortgage, pledge, lien, charge or other encumbrance, or security
interest on, of or in any of the Collateral or any portion of the Collateral except those in favor of the Holders or the Permitted
Liens, (iii) permit any levy or attachment to be made against the Collateral or any portion of the Collateral, except those subject
to the Permitted Liens, or (iv) permit any financing statements to be on file with respect to any of the Collateral, except financing
statements in favor of the Holders or those with respect to the Permitted Liens. Each Grantor shall faithfully preserve and protect
the Holders’ security interest in the Collateral and shall, at its own reasonable cost and expense, cause, or assist the
Holders to cause that security interest to be perfected and continue perfected so long as the Notes or any portion of the Notes
are outstanding, unpaid or executory. For purposes of the perfection of the Holders’ security interest in the Collateral
in accordance with the requirements of this Agreement, each Grantor shall from time to time at the request of the Holders file
or record, or cause to be filed or recorded, such instruments, documents and notices, including assignments, financing statements
and continuation statements, as the Holders may reasonably deem necessary or advisable from time to time in order to perfect and
continue perfected such security interest. Each Grantor shall do all such other acts and things and shall execute and deliver all
such other instruments and documents, including further security agreements, pledges, endorsements, assignments and notices, as
the Holders in their discretion may reasonably deem necessary or advisable from time to time in order to perfect and preserve the
priority of such security interest as a first lien security interest in the Collateral prior to the rights of all third persons,
firms and entities, subject to the Permitted Liens and except as may be otherwise provided in this Agreement. Each Grantor agrees
that a carbon, photographic or other reproduction of this Agreement or a financing statement is sufficient as a financing statement
and may be filed instead of the original.


 



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6.          Insurance.
Risk of loss of, damage to or destruction of the Equipment, Inventory and Fixtures is on each Grantor. Each Grantor shall insure
the Equipment, Inventory and Fixtures against such risks and casualties and in such amounts and with such insurance companies as
is ordinarily carried by corporations or other entities engaged in the same or similar businesses and similarly situated or as
otherwise reasonably required by the Holders in their sole discretion. In the event of loss of, damage to or destruction of the
Equipment, Inventory or Fixtures during the term of this Agreement, each Grantor shall promptly notify the Collateral Agent of
such loss, damage or destruction. At the reasonable request of the Holders, each Grantor’s policies of insurance shall contain
loss payable clauses in favor of each Grantor and the Holders as their respective interests may appear and shall contain provision
for notification of the Holders thirty (30) days prior to the termination of such policy. At the request of the Holders, copies
of all such policies, or certificates evidencing the same, shall be deposited with the Holders. If any Grantor fails to effect
and keep in full force and effect such insurance or fail to pay the premiums when due, the Holders may (but shall not be obligated
to) do so for the account of such Grantor and add the cost thereof to the Notes. The Holders are irrevocably appointed attorney-in-fact
of each Grantor to endorse any draft or check which may be payable to each Grantor in order to collect the proceeds of such insurance.
Unless an Event of Default has occurred and is continuing, the Holders will turn over to each Grantor the proceeds of any such
insurance collected by it on the condition that each Grantor apply such proceeds either (i) to the repair of damaged Equipment,
Inventory or Fixtures, or (ii) to the replacement of destroyed Equipment, Inventory or Fixtures with Equipment, Inventory or Fixtures
of the same or similar type and function and of at least equivalent value (in the sole judgment of the Holders), provided such
replacement Equipment, Fixtures or Inventory is made subject to the security interest created by this Agreement and constitutes
a first lien security interest in the Equipment, Inventory and Fixtures subject only to Permitted Liens and other security interests
permitted under this Agreement, and is perfected by the filing of financing statements in the appropriate public offices and the
taking of such other action as may be necessary or desirable in order to perfect and continue perfected such security interest.
Any balance of insurance proceeds remaining in the possession of the Holders after payment in full of the Notes shall be paid over
to the applicable Grantor or its order.


 


7.          Maintenance
and Repair. Each Grantor shall maintain the Equipment, Inventory and Fixtures, and every portion thereof, in good condition,
repair and working order, reasonable wear and tear alone excepted, and shall pay and discharge all taxes, levies and other impositions
assessed or levied thereon as well as the cost of repairs to or maintenance of the same. If any Grantor fails to do so, the Holders
may (but shall not be obligated to) pay the cost of such repairs or maintenance and such taxes, levies or impositions for the account
of such Grantor and add the amount of such payments to the principal of the Notes


 



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8.          Preservation
of Rights against Third Parties; Preservation of Collateral in Holders’ Possession. Until such time as the Holders exercise
their right to effect direct collection of the Accounts and the Chattel Paper and to effect the enforcement of each Grantor’s
contract rights, each Grantor assumes full responsibility for taking any and all commercially reasonable steps to preserve rights
in respect of the Accounts and the Chattel Paper and their contracts against prior parties. The Holders shall be deemed to have
exercised reasonable care in the custody and preservation of such of the Collateral as may come into its possession from time to
time if the Holders take such action for that purpose as the relevant Grantor shall request in writing, provided that such requested
action shall not, in the judgment of the Holders, impair the Holders’ security interest in the Collateral or its right in,
or the value of, the Collateral, and provided further that the Holders receive such written request in sufficient time to permit
the Holders to take the requested action.


 


		9.	Events of Default and Remedies.



 


(a)          If
any one or more of the Events of Default shall occur or shall exist, the Collateral Agent may then or at any time thereafter, so
long as such default shall continue, foreclose the lien or security interest in the Collateral in any way permitted by law, or
upon twenty (20) days’ prior written notice to the relevant Grantor, sell any or all Collateral at private sale at any time
or place in one or more sales, at such price or prices and upon such terms, either for cash or on credit, as the Collateral Agent,
in its sole discretion, may elect, or sell any or all Collateral at public auction, either for cash or on credit, as the Collateral
Agent, in its sole discretion, may elect, and at any such sale, the Collateral Agent may bid for and become the purchaser of any
or all such Collateral. Pending any such action the Collateral Agent may liquidate the Collateral.


 


(b)          If
any one or more of the Events of Default shall occur or shall exist, the Collateral Agent may then, or at any time thereafter,
so long as such default shall continue, grant extensions to, or adjust claims of, or make compromises or settlements with, debtors,
guarantors or any other parties with respect to Collateral or any securities, guarantees or insurance applying thereon, without
notice to or the consent of any Grantor, without affecting each Grantor’s liability under this Agreement or the Notes. Each
Grantor waives notice of acceptance, of nonpayment, protest or notice of protest of any Accounts or Chattel Paper, any of its contract
rights or Collateral and any other notices to which each Grantor may be entitled.


 


(c)          If
any one or more of the Events of Default shall occur or shall exist and be continuing, then in any such event, the Collateral Agent
shall have such additional rights and remedies in respect of the Collateral or any portion thereof as are provided by the Code
and such other rights and remedies in respect thereof which it may have at law or in equity or under this Agreement, including
without limitation the right to enter any premises where Equipment, Inventory and/or Fixtures are located and take possession and
control thereof without demand or notice and without prior judicial hearing or legal proceedings, which each Grantor expressly
waives.


 


(d)          The
Collateral Agent shall apply the Proceeds of any sale or liquidation of the Collateral, and, subject to Section 5, any Proceeds
received by the Collateral Agent from insurance, first to the payment of the reasonable costs and expenses incurred by the Collateral
Agent in connection with such sale or collection, including without limitation reasonable attorneys’ fees and legal expenses;
second to the payment of the Notes, pro rata, whether on account of principal or interest or otherwise as the Collateral Agent,
in its sole discretion, may elect, and then to pay the balance, if any, to the relevant Grantor or as otherwise required by law.
If such Proceeds are insufficient to pay the amounts required by law, the Grantors shall be liable for any deficiency.


 



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(e)          Upon
the occurrence of any Event of Default, each Grantor shall promptly upon written demand by the Collateral Agent assemble the Equipment,
Inventory and Fixtures and make them available to the Holders at a place or places to be designated by the Collateral Agent. The
rights of the Collateral Agent under this paragraph to have the Equipment, Inventory and Fixtures assembled and made available
to it is of the essence of this Agreement and the Collateral Agent may, at its election, enforce such right by an action in equity
for injunctive relief or specific performance, without the requirement of a bond.


 


10.          Defeasance.
Notwithstanding anything to the contrary contained in this Agreement upon the earlier of (i) payment and performance in full of
the Notes or (ii) the conversion of the Notes, this Agreement shall terminate and be of no further force and effect and the Holders
shall thereupon terminate their security interest in the Collateral. Until such time, however, this Agreement shall be binding
upon and inure to the benefit of the parties, their successors and assigns, provided that, without the prior written consent of
the Holders, no Grantor may assign this Agreement or any of its rights under this Agreement or delegate any of its duties or obligations
under this Agreement and any such attempted assignment or delegation shall be null and void. This Agreement is not intended and
shall not be construed to obligate the Holders to take any action whatsoever with respect to the Collateral or to incur expenses
or perform or discharge any obligation, duty or disability of any Grantor.


 


		11.	The Collateral Agent.



 


(a)          Delegation
of Duties. The Collateral Agent may execute any of its duties under this Agreement or any other Transaction Document by or
through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Collateral Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that
it selects with reasonable care.


 


(b)          Liability
of Collateral Agent. None of the Collateral Agent Related Persons (as defined below) shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement or any other Transaction Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of
the Holders for any recital, statement, representation or warranty made by any other party, or any officer thereof, contained in
this Agreement or in any other Transaction Document, or in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Transaction Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document,
or for any failure of any other party to this Agreement or any other Transaction Document to perform its obligations hereunder
or thereunder. No Collateral Agent Related Person shall be under any obligation to any Holder to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Transaction
Document, or to inspect the properties, books or records of the Company or any of the Company’s Subsidiaries or Affiliates.
“Collateral Agent Related Persons” means the Collateral Agent, its shareholders, members, officers, directors, employees,
agents and any successor agent arising hereunder, together with their respective affiliates, and the officers, directors, employees,
agents and attorneys-in-fact of such persons and affiliates.


 



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(c)          Reliance
by Collateral Agent. The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper person or
persons, and upon advice and statements of legal counsel (including counsel to the Company or any Grantor), independent accountants
and other experts selected by the Collateral Agent. The Collateral Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of the
Majority Holders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Holders
against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.
The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any
other Transaction Document in accordance with a request or consent of the Majority Holders and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Holders. “Majority Holders” means at any time a
Holder or Holders then holding in excess of 50% of the then aggregate unpaid principal amount of the Notes.


 


(d)          Notice
of Default. The Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any default or Event
of Default, except with respect to defaults in the delivery of any documents or certificates required to be delivered to the Collateral
Agent hereunder for the benefit of the Holders, unless the Collateral Agent shall have received written notice from a Holder or
the Company or any Grantor referring to this Agreement, describing such default or Event of Default and stating that such notice
is a “notice of default”. The Collateral Agent will notify the Holders of its receipt of any such notice. The Collateral
Agent shall take such action with respect to such Default or Event of Default as may be requested by the Majority Holders in accordance
with this Agreement; provided, however, that unless and until the Collateral Agent has received any such request, the Collateral
Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such default or
Event of Default as it shall deem advisable or in the best interest of the Holders.


 



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(e)          Indemnification
of the Collateral Agent. Whether or not the transactions contemplated hereby and by the other Transaction Documents are consummated,
the Holders shall indemnify upon demand the Collateral Agent Related Persons (to the extent not paid by or on behalf of the Company
or any Grantor), pro rata, from and against any and all Indemnified Liabilities (as defined below); provided, however, that no
Holder shall be liable for the payment to the Collateral Agent Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person’s gross negligence or willful misconduct. Without limitation of the foregoing, each Holder shall
reimburse the Collateral Agent upon demand for its ratable share of any costs or out of pocket expenses (including reasonable fees
and disbursements of legal counsel) incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement, any other Transaction Document, or any document contemplated by or referred
to herein, to the extent that the Collateral Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking
in this paragraph shall survive the payment of all obligations hereunder and the resignation or replacement of the Collateral Agent.
“Indemnified Liabilities” means all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including fees and disbursements of legal counsel) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the Notes and the termination, resignation or replacement of
the Collateral Agent) be imposed on, incurred by or asserted against any Collateral Agent Related Person in any way relating to
or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby
and thereby, or any action taken or omitted by any such Collateral Agent Related Person under or in connection with any of the
foregoing, including with respect to any investigation, litigation or proceeding (including any bankruptcy or insolvency proceeding
or appellate proceeding) related to or arising out of this Agreement or the Notes or the other Transaction Documents or the use
of the proceeds thereof, whether or not any Collateral Agent Related Person is a party thereto. The agreements in this Section
11(e) will survive the payment of all obligations under the Transaction Documents.


 


(f)          Collateral
Agent in Individual Capacity. Any Collateral Agent Related Person may engage in transactions with, make loans to, acquire equity
interests in and generally engage in any kind of business with the Company or any Grantor and their affiliates, including purchasing
and holding Notes, as though the Collateral Agent were not the Collateral Agent hereunder and without notice to or consent of the
Holders. The Holders acknowledge that, pursuant to such activities, any Collateral Agent Related Person may receive information
regarding the Company or any Grantor and their affiliates (including information that may be subject to confidentiality obligations
in favor of the Company or any Grantor and their affiliates) and acknowledge that the Collateral Agent shall be under no obligation
to provide such information to them. With respect to any Notes it holds, a Collateral Agent Related Person shall have the same
rights and powers under this Agreement as any other Holder and may exercise the same as though the Collateral Agent were not the
Collateral Agent, and the terms “Holder” and “Holders” include any such Collateral Agent Related Person
in its individual capacity.


 


(g)          Collateral
Agent’s Expenses. The reasonable expenses of the Collateral Agent (including reasonable attorneys fees and expenses)
incurred in connection with the administration of the Collateral Agent’s duties under this Agreement shall be payable by
the Company to the Collateral Agent on demand.


 



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(h)
         Successor Collateral Agent. The Collateral Agent may, and at the
request of the Majority Holders shall, resign as Collateral Agent upon 10 days’ notice to the Holders. If the
Collateral Agent resigns under this Agreement, the Majority Holders shall appoint from among the Holders or Aegis Capital
Corp. a successor agent for the Holders, which successor agent shall be approved by the Company, such approval not to be
unreasonably withheld. If no successor agent is appointed prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may appoint, after consulting with the Holders and the Company, a successor agent from among the
Holders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Collateral Agent and the term “Collateral Agent” shall mean such
successor agent and the retiring Collateral Agent’s appointment, powers and duties as Collateral Agent shall
be terminated. After any retiring Collateral Agent’s resignation hereunder as Collateral Agent, the provisions of this
Section  11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Collateral Agent
under this Agreement. If no successor agent has accepted appointment as Collateral Agent by the date which is 10 days
following a retiring Collateral Agent’s notice of resignation, the retiring Collateral Agent’s resignation shall
nevertheless thereupon become effective and the Holders shall perform all of the duties of the Collateral Agent hereunder
until such time, if any, as the Majority Holders appoint a successor agent as provided for above.


 


(i)          Posting
of Approved Electronic Communications. The Company hereby agrees, unless directed otherwise by the Collateral Agent, that it
will provide to the Agent all information, documents and other materials that it is obligated to furnish to the Collateral Agent
and the Holders pursuant to the Notes (collectively the “Communications”), by transmitting the Communications in an
electronic/soft medium (including .pdfs sent via electronic mail) that is properly identified in a format acceptable to the Collateral
Agent to an electronic mail address as directed by the Collateral Agent.


 


		12.	Miscellaneous.



 


(a)          The
provisions of this Agreement are intended to be severable. If any provision of this Agreement shall for any reason be held invalid
or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such provision
in any other jurisdiction or any other provision of this Agreement in any jurisdiction.


 


(b)          No
failure or delay on the part of the Holders in exercising any right, remedy, power or privilege under this Agreement and the Notes
shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Holders under this Agreement, the Notes
or any of the other Loan Documents; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude
any other right, remedy, power or privilege or further exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges of the Holders under this Agreement, the Notes and the other Loan Documents are cumulative
and not exclusive of any rights or remedies which they may otherwise have.


 


(c)          Unless
otherwise provided herein, all demands, notices, consents, service of process, requests and other communications hereunder shall
be in writing and shall be delivered in person or by overnight courier service, or mailed by certified mail, return receipt requested,
addressed:


 



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If to Borrower or any
other Grantor: At the address for the Company set forth in the Securities Purchase Agreement


 


If to the Holder: At the address for such
Holder set forth in the Holder’s signature page to the Securities Purchase Agreement or the address otherwise communicated
by such Holder to the Company in writing for such notice purposes.


 


Any such notice shall
be effective when delivered, if delivered by hand delivery, overnight courier service, or U.S. Mail return receipt requested.


 


(d)          The
section headings contained in this Agreement are for reference purposes only and shall not control or affect its construction or
interpretation in any respect.


 


(e)          Unless
the context otherwise requires, all terms used in this Agreement which are defined by the Code shall have the meanings stated in
the Code.


 


(f)          The
Code shall govern the settlement, perfection and the effect of attachment and perfection of the Holders’ security interest
in the Collateral, and the rights, duties and obligations of the Holders and each Grantor with respect to the Collateral. This
Agreement shall be deemed to be a contract under the laws of the State of New York and the execution and delivery of this Agreement
and, to the extent not inconsistent with the preceding sentence, the terms and provisions of this Agreement shall be governed by
and construed in accordance with the laws of that State. EACH GRANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


(g)          This
Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same instrument. All of such counterparts shall be read as though one, and they shall have the same force and effect
as though all the signers had signed a single page. In the event that any signature is delivered by facsimile transmission or by
an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create
a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect
as if such signature page were an original thereof.


 


[SIGNATURE PAGE FOLLOWS]


 



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IN WITNESS WHEREOF,
and intending to be legally bound, the parties have executed and delivered this Security Agreement as of the day and year set forth
at the beginning of this Security Agreement.


 


	GRANTORS:	BOLDFACE GROUP, INC., a Nevada corporation
	 	 
	 	By:	/s/ Nicole Ostoya
	 	Name: Nicole Ostoya
	 	Title:   Chief Executive Officer and President
	 	 
	 	BOLDFACE LICENSING + BRANDING, 

    a Nevada corporation
	 	 
	 	By:	/s/ Nicole Ostoya
	 	Name: Nicole Ostoya
	 	Title:   Chief Executive Officer


 


[SECURED PARTIES SIGN BY EXECUTING
OMNIBUS SIGNATURE PAGE 


TO THE SECURITIES PURCHASE AGREEMENT]


 



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ACCEPTED BY:


 


GOTTBETTER & PARTNERS, LLP, 


as the Collateral Agent


 


	By: 	/s/ Adam S. Gottbetter	 
	Name:  Adam S. Gottbetter	 
	Title:    Managing Partner	 


 



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Schedule I


 


		1.	State(s)/Jurisdictions in which Collateral is located:



 


California


Florida


New Jersey


New Mexico


New York


Pennsylvania


Rhode Island


Canada


China


Hong Kong


Indonesia


Italy


Germany


Korea


 


		2.	Grantor Information:



 


Grantor


BOLDFACE Group, Inc.


a Nevada corporation


NV Entity No.: E0479382007-2


 


Executive Offices Address:


 


1309 Pico Blvd., Suite A


Santa Monica, CA 90405


Chief Executive Officer: Nicole Ostoya


 


BOLDFACE Licensing + Branding,


a Nevada corporation


NV Entity No.: E0233812012-6


 


Executive Offices Address:


 


1309 Pico Blvd., Suite A


Santa Monica, CA 90405


Chief Executive Officer: Nicole Ostoya


 








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