<PAGE>
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
<PAGE>
interest and lien shall be continuing), and pledges and assigns as
security to
Collateral Agent, all 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:
2
<PAGE>
(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. The power of attorney
granted
3
<PAGE>
herein shall terminate upon the payment and performance of all
obligations of
Borrower under the Loan Documents.
Section 6. COLLATERAL AGENT.
(a) Appointment of Collateral Agent. By its execution hereof, each
Bridge Lender
hereby designates and appoints Karen Levine as its agent to receive
on its
behalf the grant of security and assignment of interest in the
Collateral to
secure Borrower's repayment of the principal and interest of the
Bridge Loan
made by such Bridge Lender, and all other obligations to such
Bridge Lender in
respect of its Bridge Loan and this Agreement and the other Loan
Documents (the
"Security Interest"). By her acceptance hereof, Karen Levine
accepts such
designation and appointment and agrees to act as the agent for each
Bridge
Lend
