EXHIBIT 10.23
REIMBURSEMENT AGREEMENT
This
Reimbursement Agreement (“Agreement”), dated as of
December 18, 2007, is by and between Organic Farm
Marketing, LLC (“Company”), a Wisconsin limited
liability company, and Advanced Biotherapy, Inc.
(“Investor”), a Delaware corporation.
R E C I T A L S:
A.
Concurrently
herewith, Investor is loaning to the Company the principal
amount of Eight Hundred Thousand Dollars ($800,000.00), to be
evidenced by a Company convertible note (“December
Convertible Note”), pursuant to an agreement between the
Company and the Investor of even date herewith
(“Investment Agreement”). The Company agreed to
secure its obligations under the December Convertible Note by
a General Business Security Agreement of even date herewith
(“Security Agreement”).
B.
The
Wisconsin Department of Agriculture, Trade and Consumer
Protection (“Department”) has required the Company
to secure an irrevocable letter of credit in the amount of
$1.0 million (“Letter of Credit”) in favor of the
Department so that the Company may distribute dairy products
in the State of Wisconsin.
C.
The
Investor has arranged on behalf of the Company to obtain the
Letter of Credit from The Northern Trust Company of Chicago,
Illinois (“Bank”).
D.
As
a condition to issuing the Letter of Credit, the Bank requires
that the Investor grant the Bank a security interest in a
certificate of deposit account maintained at the Bank as
collateral for payment by the Company of funds advanced
pursuant to the Letter of Credit (“Bank Pledge
Agreement”).
E.
To
induce the Investor to execute the Bank Pledge Agreement, the
Company has agreed to enter into this Agreement and to issue a
secured promissory note (“Secured Promissory
Note”) in favor of the Investor of even date herewith
which evidences the Company’s obligations to pay the
Investor the amount which the Investor shall be obligated to
pay the Bank pursuant to the Bank Pledge Agreement or
otherwise, and to secure its obligation hereunder and
thereunder by a General Business Security Agreement of even
date herewith.
NOW,
THEREFORE, in consideration of the foregoing recitals and the
covenants contained herein, and to induce the Investor to lend
its credit so that the Company may apply for the Letter of
Credit, the parties agree as follows:
SECTION
1.
DEFINITIONS .
As
used in this Agreement, the following terms shall have the
indicated meanings:
“
Agreed Rate ” means
the rate of interest charged the Company by the Investor on any
outstanding principal under the Secured Promissory
Note.
“
Agreement ” or
“
Reimbursement Agreement ”
means this Reimbursement Agreement, and all of the exhibits,
appendices and schedules attached hereto, all of which are
incorporated herein by this reference and made a part
hereof.
“
Bank ”
means The Northern Trust Bank of Chicago, Illinois.
“
Date of Issuance ”
means the date as of which the Letter of Credit is issued and
delivered to the Department.
“
Default ”
- See Section 7.
“
Department ”
- See Recitals.
“
Draw ”
or “
Drawn ”
with respect to the Letter of Credit means payment by the Bank on
account of the Letter of Credit.
“
Events of Default ”
means any condition or event stated in Sections 4.1 through 4.4
which, with the lapse of time or the giving of notice, or both,
would constitute a Default.
“
Expiration Date ”
means the date the Company’s obligations in connection with
the Letter of Credit expire.
“
Investor ”
- See Recitals.
“
L/C Certificates ”
means those certain certificates required by the Bank from the
Company.
“
Letter of Credit ”
means that certain irrevocable letter of credit in the amount of
One Million Dollars ($1,000,000.00), dated concurrently herewith,
issued by the Bank with the Company as account party, and the
Department as beneficiary, and such other letter of credit that may
be issued in substitution or replacement thereof.
“
Lien ”
means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and any
agreement to give any lien or security interest).
“
Security Documents ”
means, collectively, the General Business Security Agreement dated
of even date herewith and all documents or instruments executed in
connection therewith.
“
Units ”
means five thousand (5,000) Units of the Company, representing a
membership interest in the Company and such other rights,
privileges and preferences as set forth in the Company’s
Operating Agreement, made as of February 23, 2007, as amended
by Certificate of Amendment to Operating Agreement dated April 17,
2007, and as amended by the Amendment to Operating Agreement dated
concurrently herewith, and as otherwise provided under the laws of
the State of Wisconsin.
SECTION
2. UNDERTAKING
FOR LETTER OF CREDIT, REIMBURSEMENT AND OTHER
PAYMENTS .
2.1
Undertaking to Obtain Letter of Credit .
The Company shall undertake and obtain the Letter of Credit from
the Bank and to execute the L/C Certificates, and to execute all
agreements, documents and instruments that may be necessary or
desirable to obtain the Letter of Credit.
2.2
Reimbursement for Draw Upon Letter of Credit and Other
Amounts .
The Company hereby agrees (i) to pay the Investor the
aggregate amount which the Investor shall pay to the Bank pursuant
to or in connection with the Bank Pledge Agreement or otherwise,
and any interest thereon at the Agreed Rate accruing from the date
of advance or payment by the Investor, subject to and in accordance
with the Secured Promissory Note; and (ii) to reimburse the
Investor on demand for all costs, expenses, fees, of whatever kind
and any liabilities or obligations paid or payable by the Investor
to the Bank pursuant to or in connection with or arising from the
Letter of Credit, the L/C Certificates or the Secured Promissory
Note, including, without limitation, all origination and
administration fees and attorneys’ fees and
disbursements.
2.3
Fees .
The Company shall pay to the Investor a fee equal to ten percent
(10%) of the face amount of the original Letter of Credit, payable
as follows:
(a)
on
the Date of Issuance, Fifty Thousand Dollars ($50,000.00), by
cash or immediately available funds. The Company hereby agrees
and authorizes the Investor to deduct from and retain for its
own benefit, subject to the occurrence of the Date of
Issuance, such $50,000 fee from the loan proceeds to be
advanced to the Company under the Working Capital Loan at the
closing as provided in the Investment Agreement;
and
(b)
on
the Date of Issuance, the Company shall issue the five
thousand (5,000) Units to Investor, representing an agreed
value per Unit of Ten Dollars ($10.00), together with a
certificate in form satisfactory to the Investor. Concurrently
with the issuance of such 5,000 Units, the Investor agrees to
execute a Joinder Agreement pursuant to which the Investor
agrees to be bound by the terms and conditions of the
Operating Agreement as in effect on the date hereof, and any
amendments thereto as to which the Investor has consented in
writing.
The
Investor will maintain the Bank Pledge A
greement
or make other arrangements suitable to the
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