EXHIBIT
10.1
CREDIT ENHANCEMENT AND FINANCING SECURITY
AGREEMENT
THIS CREDIT ENHANCEMENT AND FINANCING
SECURITY AGREEMENT (the "Agreement") is made as of May 29, 2009
(the "Effective Date"), by and between GelTech Solutions, Inc., a
Delaware corporation (the "Company"), and Michael Reger (the
"Reger").
WITNESSETH
WHEREAS, Reger to expects obtain a
revolving line of credit (the "Loan"), in the principal amount of
$2,500,000.00 from Enterprise Bank (the "Bank") pursuant to a
certain Revolving Line of Credit Loan Agreement between the Company
and the Bank (the "Loan Agreement" ) and a related Revolving
Promissory Note (the "Note" ) and a Mortgage and Security Agreement
(“Mortgage”) (the Loan Agreement, Note and Mortgage are
hereinafter sometimes referred to as the “Loan
Documents”);
WHEREAS, Reger is personally responsible
for the Loan;
WHEREAS, the Bank has provided the Loan
to Reger on the condition that any disbursements under the Loan
made to Reger must be advanced to the Company for the business
purposes of using such advancement towards the Company’s
operating capital and for the payment of the Company’s direct
costs associated with acquisition of inventory;
WHEREAS, under the Loan Agreement,
Michael Cordani (“Cordani”) and Joseph Ingarra
(“Ingarra”) (collectively, Cordani and Ingarra are
hereinafter referred to as the “Company’s
Officers”) are Designated Persons authorized to request
advances from the Loan (the “Requested
Advances”);
WHEREAS, concurrent with Reger obtaining
the Loan from the Bank, the Company will obtain a revolving line of
credit from Reger (“Company’s Credit Line”) and
will enter into a Revolving Line of Credit Agreement (“the
Line of Credit Agreement”) and Revolving Promissory Note (the
“Company Note”), which Credit Line Agreement and
Company Note will contain similar terms of that of the Loan
Agreement and Note executed by Reger in favor of the Bank
(collectively, the Line of Credit Agreement and the Company Note
are hereinafter sometimes referred to as the (“Company Loan
Documents”);
WHEREAS, when the Requested Advances are
made from the Loan by the Company’s Officers, the Requested
Advances will be advanced to the Company and the Company will be
obligated under the Company Note to repay Reger pursuant to the
terms of the Line of Credit Agreement;
WHEREAS, Reger has issued two Line of
Credits to the Company: (1) a $1,000,000.00 line of
credit to the Company (“$1MM LOC”), on which the
Company has drawn against the $1MM LOC an amount equal to
$773,000.00 plus all accrued and unpaid interest thereon as of the
Effective Date of this Agreement (the “$1MM LOC Outstanding
Balance”) and (2) a $4,000,000.00 line of credit to the
Company (“$4MM LOC”), on which the Company has
drawn
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against the $4MM LOC an amount equal to
$___________ plus accrued and unpaid interest thereon as of the
Effective Date of the this Agreement (the $4MM LOC Outstanding
Balance”);
WHEREAS, as a condition precedent to the
Bank making the Loan, Reger will cause MR 1011, LLC, a
Florida limited liability company owned wholly by Reger (“MR
1011”), to enter into the Mortgage with the
Bank;
WHEREAS, the Mortgage will grant a
first-priority security interest in certain real property as
described and set forth on Exhibit “A ”) as
collateral for the making of the Loan and repayment of the Note
(the “Pledged Collateral”);
WHEREAS, in addition to the Pledged
Collateral, the Loan Documents require that Reger make further
security obligations in favor of the Bank in the form of
affirmative covenants which will restrict the use of the Pledged
Collateral and further burden Reger with continual reporting
obligations to the Bank (the “Affirmative
Obligations”);
WHEREAS, subject to the closing of the
Loan and in accordance with the terms of this Agreement, Reger has
agreed to the Mortgage and Affirmative Obligation set forth in the
Loan Documents; and
WHEREAS, as consideration for Reger to
grant, in favor of the Bank, a security interest in the
Pledged Collateral and agree to be burdened by the Affirmative
Obligations set forth in the Loan Documents, the Company has
agreed, upon the terms and conditions set forth herein, to (i)
issue Reger 150,000 shares of common stock, par value $ .001 per
share (the "Common Stock"), (ii) pay a Loan Acquisition Fee (as
described below), (iii) payoff the $1MM LOC Outstanding Balance and
the $4MM LOC Outstanding Balance and cancel the $1MM
LOC and the $4MM LOC and (iv) enter into the Company Loan
Documents.
NOW, THEREFORE, in consideration of the
foregoing premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the
parties hereto, the Company and Reger agree as follows:
1.
CONSIDERATION.
1.1
PLEDGE DOCUMENTS. In consideration of the
Company’s issuance of the Common Stock and payment of the
Loan Acquisition Fee (as defined in Section 1.2 below), Reger
hereby agrees that he shall, or he shall cause MR 10011, as the
case may be, at Closing (as defined in Section 2.1 below), execute
and deliver, in favor of the Bank, whatever documentation the Bank
reasonably requires in connection with the Loan, including but not
limited to executing the Note, Loan Agreement and
Mortgage.
1.2
ISSUANCE OF COMMON STOCK AND PAYMENT OF
LOAN AQUISITION FEE. In consideration of Reger causing MR 1011 to
execute a Mortgage in favor of the Bank and providing to the Bank
an additional security for payment of the Note through
Reger’s Affirmative Obligations contained in the Loan
Documents, the Company hereby agrees that it shall at Closing (as
defined in Section 2.1 below) (a) issue to the
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Reger the Common Stock; (b) pay Reger a
cash fee (the "Loan Acquisition Fee") in the amount of $60,000.00,
(c) pay to the Reger the $1MM LOC Outstanding Balance and the $4MM
LOC Outstanding Balance and cancel both the $1MM LOC and the
$4MM LOC and (d) enter into and execute Company Loan Documents for
a $2,500,000.00 line of credit.
2.
THE CLOSING.
2.1
CLOSING DATE. The parties agree to effect
the transactions contemplated hereby (the "Closing")
contemporaneously with the execution of this Agreement, which
Closing shall be contemporaneous with the closing of the
Loan.
2.2
CLOSING DELIVERABLES. (a) At the Closing,
the Company shall deliver, or cause to be delivered, as the case
may be, to Reger: (i) an executed copy of this Agreement; (ii) a
Board Resolution executed by the Board of the Directors of the
Company and (iii) the Loan Acquisition Fee and (iv) Revolving Line
of Credit Loan Cancelation Agreement, (iv) the Company Loan
Documents and (v) pay all Initial Expenses (as defined in Section 5
below). (b) At the Closing, Reger shall deliver or cause to be
delivered to the Company (i) an executed copy of this
Agreement and (ii) Reger shall, or Reger shall cause, as the case
may be, to deliver to the Bank duly executed copies of the Loan
Documents
3.
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY. The Company hereby represents warrants and
covenants to REGER and agrees as follows:
3.1
CORPORATE POWER. The Company is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a
material adverse effect on the Company’s business,
properties, or financial condition. The Company has all
re
