BRIDGE LOAN AGREEMENTBridge Loan Agreement |
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EXHIBIT 10.1
BRIDGE LOAN
SECURITY AGREEMENT
THIS BRIDGE LOAN SECURITY
AGREEMENT, dated as of January 12, 2006, is
entered into by and among GENELINK, INC., a Pennsylvania corporation, having an
address at Newport Financial Center, 113 Povonia Avenue, No. 313, Jersey City,
New Jersey 07310 ("Borrower"); DAVID BARRETT, INC., a California
corporation,
having an address at 10430 Wilshire Blvd., Ste 1103, Los Angeles, CA 9024,
Attn:
Barry Plost; ROBERT HOEKSTRA, an individual, having an address at 300 Sheoah
Blvd., #601, Winter Springs, FL, 32708; BERNARD L. KASTEN JR., an individual,
having an address at 4380 27th Court SW, Apt 104, Naples FL, 34116; JAMES
KREISSMAN, an individual, having an address at 1100 Union Street, Apt. 200, San
Francisco, CA 94109; KENNETH R. LEVINE, an individual, having an address at
1776
Broadway, Ste 1403, New York, NY 10019;and STRANCO INVESTMENTS, LTD., a British
Virgin Islands company, having an address at Idriss Building, 4th floor, Bashir
Kassar Street, Verdun, Beirut, Lebanon (each a "Bridge Lender" and
collectively
the "Bridge Lenders"); and KAREN LEVINE, an individual residing at
170 West 74th
Street, New York, New York 10023, as Collateral Agent for the Bridge Lenders
("Collateral Agent").
RECITALS:
A. Borrower has requested that
each Bridge Lender lend it a Bridge
Loan (each a "Bridge Loan" and collectively the "Bridge Loans")
as set forth in
and evidenced by the CONVERTIBLE SECURED PROMISSORY NOTE executed and delivered
by Borrower to each Bridge Lender concurrently with its execution and delivery
hereof (each a "Bridge Loan Note" and collectively the "Bridge
Loan Notes").
Each Bridge Lender has agreed to make such a loan to Borrower on the terms and
conditions of the Bridge Loan Note issued to it and on condition that Borrower
execute and deliver this Security Agreement to Collateral Agent and grant the
security interest set forth herein.
B. Borrower has agreed to grant
to Collateral Agent for the benefit of
the Bridge Lenders a first priority security interest in its Patents, as
described in Schedule 1 hereto (the "Collateral").
C. The Bridge Lenders have
agreed that this Security Agreement shall
also constitute an intercreditor agreement among them, establishing their
mutual
rights with respect to the Collateral and proceeds therefrom.
NOW, THEREFORE, in
consideration of the mutual covenants, conditions,
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. GRANT OF SECURITY INTEREST. Borrower hereby grants to Collateral
Agent, for the benefit of the Bridge Lenders, a first priority security
interest
in and lien on (which security interest and lien shall be continuing), and
pledges and assigns as security to Collateral Agent, all
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of Borrower's right, title and interest in and to the Collateral, for the
purpose of securing, in such order of priority as Lender shall elect, all
Obligations, and Collateral Agent shall have all rights of a secured party with
respect to the Collateral.
Section 2. COVENANTS OF BORROWER.
(a) No Transfers or Liens. Except as expressly permitted under this Agreement
or
the other documents executed by Borrower in connection with this Agreement or
the Bridge Loan (the "Loan Documents") or any Qualifying Loan
Agreement (as that
term is defined in the Bridge Loan Notes), Borrower agrees that it will not,
without the prior written consent of Collateral Agent, (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Collateral or
any interest in the Collateral, or (ii) create or suffer to exist any lien,
security interest, encumbrance or other charge upon or with respect to any
Collateral; provided, however, that Borrower shall be entitled to license any
of
the Collateral that constitutes intellectual property in arm's length
transactions to bona fide third parties in the ordinary course of business
without seeking the consent of the Collateral Agent; provided further that
Borrower shall notify Collateral Agent of any such licensing (in reasonable
detail) as soon as practical thereafter.
(b) Prior Notice. Borrower will give Collateral Agent prior written notice of
any change in its address or the office where it keeps its records concerning
the Collateral.
(c) Defense of Title. Borrower shall, at its expense, defend the Collateral
Agent's right, title and security interest in and to the Collateral against any
and all claims of any entity, except to the extent arising out of Collateral
Agent's gross negligence or willful misconduct.
(d) Further Actions. Borrower shall not take or fail to take any action when
requested by Collateral Agent or expressly required by the Loan Documents to do
so which Borrower knows would impair the enforceability of Collateral Agent's
security interest in any Collateral.
(e) No Further Assignments. Borrower shall have no right to further assign its
rights and/or its obligations under this Agreement or to further pledge or
otherwise encumber its interest in the Collateral, and any such attempted
assignment, pledge or encumbrance shall be null and void.
Section 3. INDEMNITY. Borrower shall indemnify, defend and hold harmless
Collateral Agent and each Bridge Lender from and against any and all claims,
losses and liabilities growing out of or resulting from this Agreement,
including, without limitation, (i) enforcement of any right under this
Agreement
and (ii) any liability for taxes in respect of income from any Collateral
received by or on behalf of Borrower.
Section 4. EVENTS OF DEFAULT; REMEDIES.
(a) Events of Default. Each of the following shall constitute an "Event of
Default" under this Agreement:
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(i) If Borrower shall fail to
pay when due and payable any payment
required to be made under any
Bridge Loan Note or hereunder; or
(ii) If Borrower shall fail to
perform any obligation required
hereunder within ten (10)
business days of receiving notice of such
failure by the Collateral
Agent; or
(iii) if any default beyond the
expiration of any applicable grace and
notice periods shall occur
under any other Loan Document.
(b) Remedies. Upon the happening of any Event of Default, Collateral Agent
shall
have the right, if such Event of Default shall then be continuing, in addition
to all of the remedies conferred upon Collateral Agent by law or equity or by
the terms of any of the Loan Documents (including, without limitation, the
right
to declare the Bridge Loan Notes to be immediately due and payable as provided
therein (unless such Note shall have been automatically declared immediately
due
and payable as provided therein)) to exercise in respect of the Collateral, on
behalf of the Bridge Lenders all of the rights and remedies of a secured party
on default under the Uniform Commercial Code of the State of New York, and each
other State with applicable jurisdiction, then in effect.
(c) Interim Use of Patents. Pending appropriate disposition of the Collateral
in
accordance herewith, upon the occurrence and during the continuance of an Event
of Default, Collateral Agent shall have the exclusive right, but not the duty,
with respect to all Patents that are part of the Collateral, from time to time
to enforce or use the Patents or to grant or issue any exclusive or
non-exclusive license under the Patents to any third party, upon such terms as
it may in its sole discretion deem commercially reasonable.
Section 5. ATTORNEY-IN-FACT. Borrower hereby irrevocably appoints Collateral
Agent as Borrower's attorney-in-fact and agent, said appointment to be
irrevocable during the term hereof and to be coupled with an interest, with
full
authority in the place and stead of Borrower and in the name of Borrower, upon
the occurrence of an Event of Default and acceleration to take any action and
to
execute any instrument which Collateral Agent, in its sole discretion, may deem
necessary to perfect or protect the first priority perfected security interest
created hereby, including, without limitation by means of executing and
delivering financing and continuation statements and any extensions,
modifications and refilings thereof, with the right (but not the duty) from
time
to time to create, prepare, complete, execute, deliver, endorse or file, in the
name and on behalf of Borrower, any and all instruments, documents,
applications
and other agreements and writings required to be obtained, executed, delivered
or endorsed by Borrower to give effect to the matters contemplated by this
Agreement, or necessary as the secured party after an Event of Default, to
enforce or use the Patents or to grant or issue any exclusive or non-exclusive
license under the Patents to any third party, or to sell, assign, transfer,
pledge, encumber or otherwise transfer title in or dispose of the Patents to
any
third party. Borrower hereby ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof. T






