Unassociated Document


    
       

      EXHIBIT
        10.24

    

     

    INTERCREDITOR
      AGREEMENT

     

    This
      Intercreditor Agreement (“Agreement”) is entered into as of December 18, 2007,
      by and among Richard P. Kiphart, an individual (“Kiphart”), Advanced Biotherapy,
      Inc., a Delaware corporation (“Advanced”) and Organic Farm Marketing, LLC, a
      Wisconsin limited liability company (“Company”). This Agreement is made with
      respect to the following facts:

     

    RECITALS

     

    A. The
      Company has issued to Kiphart a convertible note dated as of April 17, 2007,
      in
      the original principal amount of $1,000,000 (the “April Convertible Note”), and
      an additional convertible note dated as of June 14, 2007, in the original
      principal amount of $625,000 (the “June Convertible Note”). The Company’s
      obligations under the April Convertible Note and the June Convertible Note
      are
      secured by a security interest in all of the Company’s personal property and all
      proceeds and products thereof, pursuant to a security agreement entered into
      by
      the Company in favor of Kiphart (the “Kiphart Security Agreement”).

     

    B. Concurrently
      herewith at the request of the Company, Advanced plans to arrange for The
      Northern Trust Company (“Bank”) of Chicago, Illinois, to issue an irrevocable
      letter of credit for the benefit of the Wisconsin Department of Agriculture,
      Trade and Consumer Protection, the designee of the Company (the “Letter of
      Credit”) as required by the State of Wisconsin in order for the Company to
      distribute certain dairy products. The Letter of Credit will be obtained on
      behalf of the Company by Advanced pursuant to the terms of the Investment
      Agreement and the Reimbursement Agreement, each dated herewith. The
      Reimbursement Agreement is set forth in Exhibit A hereto (the
“Reimbursement Agreement”). As collateral for repayment of funds advanced under
      the Letter of Credit, the Bank requires that Advanced enter into a pledge
      agreement (“Bank Pledge Agreement”) pursuant to which the Bank will be granted a
      security interest in a certificate of deposit account maintained by Advanced
      at
      the Bank. The terms of payment of certain obligations by the Company to Advanced
      under the Reimbursement Agreement will be evidenced by a promissory note (the
      “Promissory Note”), and the Company’s obligations under the Promissory Note and
      the Reimbursement Agreement are secured by the Company’s personal property and
      all proceeds and products thereof pursuant to a security agreement entered
      into
      concurrently herewith (the “Advanced Security Agreement”)

     

    C. Concurrently
      herewith Advanced also plans to make a working capital loan to the Company
      in
      the aggregate principal amount of $800,000 (the “Working Capital Loan’), of
      which $293,750 shall be used by the Company to redeem 23,850 Company Units
      from
      CWBA-OFM, LLC, in consideration of which the Company will issue to Advanced
      a
      convertible note in the original principal amount of $800,000 (the “December
      Convertible Note”). The Company’s obligations under the December Convertible
      Note also will be secured by the assets of the Company pursuant to the Advanced
      Security Agreement.

     

    D. As
      a
      condition to Advanced entering into the Bank Pledge Agreement in favor of the
      Bank and making the Working Capital Loan to the Company, Advanced requires
      that
      the Company and Kiphart enter into this agreement which provides, in part,
      that
      (i) the claims of Kiphart relating to the April Convertible Note, and the June
      Convertible Note shall be subordinate to payment of the Promissory Note and
      the
      Company’s obligations under the Reimbursement Agreement, in the manner set forth
      below, (ii) the December Convertible Note shall rank in the same priority,
      pari
      passu, with the April Convertible Note and the June Convertible Note, as set
      forth below, and (iii) the security interest granted by Company to Kiphart
      pursuant to the Kiphart Security Agreement shall be subordinate to the rights
      of
      Advanced with respect to the Promissory Note, as set forth below.

     

    
      
        
        

      

      
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    E. Kiphart
      holds a majority of the issued and outstanding shares of Advanced and serves
      as
      its Chairman of the Board. Kiphart has the right to nominate and elect a
      director of the Company. The April Convertible Note and the June Convertible
      Note are convertible into units of the Company representing in the aggregate
      a
      majority of the outstanding units on a fully diluted basis. Kiphart hereby
      acknowledges and affirms that Advanced’s loans to the Company constitute
      valuable consideration to the Company.

     

    Now
      therefore, in consideration of the foregoing recitals and for other good and
      valuable consideration had and received, the parties agree as
      follows:

     

    1. Subordination.

     

    (a) Indebtedness.
      Except
      as set forth in Section 2 of this Agreement, unless and until all Senior
      Indebtedness (as herein defined) has been fully paid and satisfied in cash,
      Kiphart shall not accept or receive, by setoff or in any other manner, from
      the
      Company any sums, in whole or in part, which may now or hereafter be owing
      to
      Kiphart by the Company, or any of its successors or assigns, including, without
      limitation, a receiver, trustee or debtor in possession (the term “Company”
shall hereinafter include any such successors or assigns) under or in connection
      with the Subordinated Obligations (as herein defined); provided
      that
      nothing herein shall be a prohibition against the accrual of payment-in-kind
      interest on the terms and subject to the conditions set forth in the April
      Convertible Note and the June Convertible Note (collectively, the “Subordinated
      Instrument”).

     

    (b) Liens
      and Security Interests.
      Any and
      all liens and security interests of Kiphart, whether now existing or hereafter
      granted or arising, including, without limitation, the security interest granted
      pursuant to the Kiphart Security Agreement, in each case shall be subordinate
      to
      the rights, liens and interests held by Advanced with respect to the Senior
      Indebtedness, but only the Senior Indebtedness.

     

    (c) Restrictions.
      Except
      as set forth in the last sentence of Section 3(a), unless and until all of
      the
      Senior Indebtedness has been fully and indefeasibly paid and satisfied in cash,
      Kiphart shall have no right either to possess any such assets, enforce any
      security interests in, foreclose, levy or execute upon, or collect or attach
      any
      such assets, whether by private or judicial action or otherwise.

     

    (d) Senior
      Indebtedness.
      The
      term “Senior Indebtedness” shall mean, collectively, (i) all indebtedness and
      other obligations of the Company now or hereafter existing under that certain
      Promissory Note of even date herewith and the Reimbursement Agreement (each
      as
      amended, restated, supplemented, modified or extended from time to time, subject
      to Section 7 below).

     

    
      
        
        

      

      
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    (e) Subordinated
      Obligations.
      The
      term “Subordinated Obligations” shall mean, collectively, all indebtedness and
      other obligations of the Company to Kiphart under the April Convertible Note
      and
      the June Convertible Note, and any other document, instrument, or agreement
      related to such Notes, whether the sums represent principal, interest,
      dividends, costs, attorneys’ fees, charges, or other obligations due or not due,
      whether incurred directly or indirectly and whether absolute or
      contingent.

     

    2. Permitted
      Payments. Subject to the conditions set forth herein, the Company may pay to
      Kiphart, and Kiphart may accept or receive and shall not be required to hold
      in
      trust, payments made in accordance with the April Convertible Note and the
      June
      Convertible Note, subject to and in accordance with Section 4 below
      (collectively, the “Permitted Payments”); provided, that no payment on any of
      the Subordinated Obligations may be made during any Payment Blockage instituted
      pursuant to Section 3 of this Agreement. Kiphart agrees that prepayments of
      the
      Subordinated Obligations or payments resulting from either the breach of any
      covenant or warranty contained in the Subordinated Instrument or the
      acceleration of any amounts due thereunder shall not be Permitted Payments
      for
      the purpose of this Agreement.

     

    3. Payment
      Blockages.

     

    (a) Payment
      Blockage Notices.
      Upon
      the occurrence and at any time during the continuation of any Event of Default
      under the Promissory Note or a breach by Kiphart of this Agreement, Advanced
      may
      deliver written notice thereof to Kiphart in the manner set forth herein (each
      a
“Payment
      Blockage Notice”),
      specifying the default or breach upon which such Payment Blockage Notice is
      based. A “Payment Blockage” shall be in effect for the purposes of Section 2
      hereof and no Permitted Payments may be made from (i) the earlier of (A) the
      date Kiphart knew of such defaults or breaches and (B) the date of delivery
      or
      deemed delivery of any Payment Blockage Notice through (ii) the earlier of
      (A)
      the date 180 days after the date any otherwise Permitted Payment was due and
      payable to Kiphart and could not be paid due to a Payment Blockage and (B)
      the
      date on which all defaults or breaches are cured or waived in writing or the
      benefits of such Payment Blockage are waived in writing by Advanced. Upon the
      expiration of the 180-day period provided for above (or upon any earlier written
      waiver by Advanced or full cure of such default and breaches by the Company),
      the prohibitions applicable to Kiphart set forth in this Section 3(a) shall
      no longer be effective.

     

    (b) Payments
      Received by Kiphart.
      Except
      for Permitted Payments as provided in Section 2 hereof, if any payment,
      distribution or any collateral proceeds thereof is received by Kiphart from
      the
      Company with respect to the Subordinated Obligations prior to the satisfaction
      in full of all the Senior Indebtedness in cash, Kiphart shall receive and hold
      the same in trust as trustee for the benefit of Advanced and shall forthwith
      deliver such assets to Advanced in precisely the form received (except for
      the
      endorsement or assignment by Kiphart where necessary), for application on any
      of
      the Senior Indebtedness, due or not due. In the event of the failure of Advanced
      to make any such endorsement or assignment to Advanced, Advanced and any of
      its
      officers or agents are hereby irrevocably authorized to make such endorsement
      or
      assignment.

     

    
      
        
        

      

      
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    4. Payment
      Pari Passu; Same Priority. Without limiting Sections 1, 2 and 3 above, the
      December Convertible Note shall have the same priority and shall be paid pari
      passu with the April Convertible Note and the June Convertible Note, and
      vice-versa. No payment of principal or interest (including, without limitation,
      any regularly scheduled installment, any prepayment, any payment upon maturity,
      any payment upon default or acceleration, any payment arising as a result of
      the
      exercise of any rights in and to any collateral securing such notes, or
      otherwise) shall be made by the Company to Kiphart relating to the April
      Convertible Note or the June Convertible Note unless a proportional payment
      of
      principal and/or interest, as applicable, shall be made to Advanced relating
      to
      the December Convertible Note, unless Advanced otherwise agrees in writing.
      No
      payment of principal or interest (including, without limitation, any regularly
      scheduled installment, any prepayment, any payment upon maturity, any payment
      upon default or acceleration, any payment arising as a result of the exercise
      of
      any rights in and to any collateral securing such notes, or otherwise) shall
      be
      made by the Company to Advanced relating to the December Convertible Note unless
      a proportional payment of principal and/or interest, as applicable, shall be
      made to Kiphart relating to the April Convertible Note and the June Convertible
      Note, unless Kiphart otherwise agrees in writing.

     

    5. Liens
      and Security Interest.

     

    (a) Subject
      to Sections 1, 2 and 3 above, notwithstanding the order or time of attachment,
      or the order, time or manner of perfection, or the order, or time of filing
      or
      recordation of any document or instrument, or other method of perfecting a
      security interest in favor of either Kiphart or Advanced in assets or rights
      of
      the Company (the “Collateral”), and notwithstanding any conflicting terms or
      conditions which may be contained in any of the agreements between the Company
      and/or Kiphart and Advanced, as applicable, any cash, consideration or other
      rights received by Kiphart or Advanced upon foreclosure or exercise of any
      right
      or other remedy with respect to the Collateral shall be subject to the
      provisions of Sections 1, 3 and 4 hereof.

     

    (b) Each
      party hereto shall be solely responsible for perfecting and maintaining the
      perfection of its lien in and to each item constituting Collateral in which
      such
      party has been granted a lien. The provisions of Sections 1, 4 and 5 hereof
      are intended solely to govern the respective lien priorities as between the
      parties hereto and shall not impose on either party any obligations with respect
      to the disposition of proceeds of foreclosure on any other creditor’s Collateral
      which would conflict with prior perfected claims therein in favor of any other
      person or entity or any order or decree of any court or other governmental
      authority or any applicable law. Neither Kiphart nor Advanced will contest
      the
      validity, perfection, priority or enforceability of the lien of the other party
      upon the Collateral as provided herein including, without limitation, as set
      forth in Sections 1 and 4 hereof and, as between the parties hereto, the terms
      of this Agreement shall govern even if part or all of such party’s debt or the
      lien securing payment and performance thereof are not perfected or are avoided,
      disallowed, set aside or otherwise invalidated in any judicial proceeding or
      otherwise.

     

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    (c) Subject
      to Sections 1, 4 and 5 hereof, each party hereto shall have the exclusive
      right to manage, perform, and enforce the terms of its agreements with the
      Company and to exercise its rights with respect to the Collateral, to exercise
      and enforce all privileges and rights thereunder according to its discretion
      and
      the exercise of its business judgment including, without limitation, the right
      to take or retake control or position of the Collateral and to hold, prepare
      for
      sale, process, sell, lease, dispose of or liquidate such Collateral; provided,
      however, that Kiphart and Advanced each agree that it shall give the other
      party
      not less than ten (10) business days’ notice of its intent to take any action
      with respect to the Collateral or the debt owed to it by the Company or to
      commence any procedure against the Company under any insolvency laws or similar
      laws for liquidation, dissolution or winding up or the appointment of a
      receiver, trustee or liquidator.

     

    (d) The
      lien
      and payment priorities provided for in this Agreement shall not be altered
      or
      otherwise affected by any action or inaction which either party hereto may
      take
      or fail to take with respect to the Collateral upon which such party has a
      lien.

     

    6. Maturity
      of Advanced’s Loans to Company. Kiphart acknowledges that the Promissory
      Note and the December Convertible Note mature by their respective terms on
      a
      date prior to the designated maturity date of the April Convertible Note and
      the
      June Convertible Note. From and after the maturity date of the December
      Convertible Note, Advanced agrees that any payments made by the Company to
      it
      shall be subject to Section 4 above (but excluding payments of any type or
      for
      any reason in connection with the Promissory Note), and treated the same as
      payments made by the Company in accordance with, or upon any default under
      the
      December Convertible Note, in each case in accordance with Section 4 above.
      Advanced, in its discretion, may extend the maturity date of the Promissory
      Note
      and the December Convertible Note, without notice to Kiphart.

     

    7. No
      Modification. Kiphart understands and agrees that the April Convertible
      Note, the June Convertible Note and the Kiphart Security Agreement shall not
      be
      modified or amended, without Advanced’s prior written consent. Advanced
      understands and agrees that the Promissory Note, the Reimbursement Agreement,
      the December Convertible Note and the Advanced Security Agreement shall not
      be
      modified or amended without Kiphart’s prior written consent, which consent shall
      not unreasonably withheld or delayed.

     

    8. Notice
      Upon Default.

     

    (a) Upon
      the
      occurrence of any default or breach of the April Convertible Note or the June
      Convertible Note, Kiphart shall deliver written notice thereof to Advanced
      in
      the manner set forth herein (each a “Default Notice”), specifying the default or
      breach by the Company. For the purposes of this Section 5(a), “default” means
      any Event of Default under and as defined in the April Convertible Note or
      the
      June Convertible Note, or the Investment Agreement dated as of April 17, 2007,
      between the Company and Kiphart, or any other document, instrument or agreement
      evidencing all or any part of the Company’s indebtedness to Kiphart, or any
      other failure to pay any portion of the principal of, premium, if any, or
      interest on any such indebtedness as and when due and payable (as a result
      of
      maturity, acceleration or otherwise).

     

    
      
        
        

      

      
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    (b) Upon
      the
      occurrence of any default or breach of the Promissory Note or the December
      Convertible Note, Advanced shall deliver written notice thereafter to Kiphart
      in
      the manner set forth herein specifying the default or breach by the Company.
      For
      purposes of this Section 5(b), a “default” means any Event of Default under and
      as defined in the Promissory Note or the December Convertible Note, or the
      Investment Agreement dated as of even date herewith between the Company and
      Advanced, or any other document, instrument or agreement evidencing all or
      any
      part of the Company’s indebtedness to Advanced, or any other failure to pay a
      portion of the principal of, premium, if any, or interest on any such
      indebtedness as and when due and payable (as a result of maturity, acceleration
      or otherwise).

     

    9. Kiphart
      Representations about Obligations. Kiphart warrants and represents that
      Kiphart has not previously assigned any interest in the obligations of the
      Company set forth in the April Convertible Note or the June Convertible Note
      (collectively, “Kiphart Obligations”), that no other party owns an interest in
      any of the Kiphart Obligations (whether as joint holders, participants or
      otherwise), and that the entire Kiphart Obligations is owing only to
      Kiphart.

     

    Kiphart
      further warrants and represents that the only indebtedness owing by the Company
      to him is the Kiphart Obligations; that to the best of his knowledge as of
      the
      date hereof, there is no default or breach with respect to any of such
      indebtedness; and, specifically, that nothing herein contained and nothing
      contained in any other document, instrument or agreement with or in favor of
      Advanced and known to Kiphart constitutes a default or breach with respect
      to
      any of such indebtedness.

     

    10. Unauthorized
      Payments. Except for payments by the Company in connection with the
      Promissory Note or the Senior Indebtedness, if any payment, distribution or
      any
      collateral proceeds thereof is received by either Kiphart or Advanced from
      Company in excess of the amount provided in Section 4 hereof, such party shall
      receive and hold the same in trust as trustee for the benefit of the other
      party
      (“shortfall party”) and shall forthwith deliver such amount of the excess
      payment, distribution or collateral proceeds to such shortfall party in
      precisely the form received (except for the endorsement or assignment where
      necessary), for application on any of the indebtedness, due or not
      due.

     

    11. Claims
      in Bankruptcy. In the event of any bankruptcy, assignment for the benefit of
      creditors or similar proceedings against the Company, Kiphart and Advanced
      may
      file all claims he or it may have against the Company, and shall notify the
      debtor in possession or trustee in bankruptcy, as appropriate, as to the
      existence of this Agreement and that payments to Kiphart and Advanced shall
      be
      made in the same priority, pari passu.

     

    12. Instrument
      Legends. The April Convertible Note and the June Convertible Note and any
      other instrument evidencing the Kiphart Obligations or any portion thereof
      will
      be forthwith inscribed with a legend conspicuously indicating that payment
      thereon is subject to the terms of this Agreement, and copies thereof will
      forthwith be delivered to Advanced. The December Convertible Note and any other
      instrument evidencing the obligations of the Company thereunder to Advanced
      or
      any portion thereof will be forthwith inscribed with a legend conspicuously
      indicating that payment thereon is subject to the terms of this Agreement,
      and
      copies thereof will forthwith be delivered to Kiphart.

     


    
      
        
        

      

      
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    13. Waivers.
      All of the indebtedness of the Company to Advanced shall be deemed to have
      been
      made or incurred in reliance upon this Agreement. Subject to Section 7 hereof,
      each of Advanced and Kiphart may, from time to time, enter into agreements
      and
      settlements with the Company as he or it may determine, including, without
      limitation, any substitution of collateral, any release of any lien or security
      interest and any release of the Company, without notice to or consent by the
      other party hereto. No waiver shall be deemed to be made by Advanced or Kiphart
      of any of their respective rights hereunder unless it is in writing signed
      by
      the waiving party. Each such waiver shall be a waiver only with respect to
      the
      specific instance involved and shall in no way impair the rights of the waiving
      party or the obligations of the other party to the waiving party in any other
      respect at any other time.

     

    14. Information
      Concerning Financial Condition. Kiphart and Advanced hereby assume
      responsibility for keeping himself and itself informed of the financial
      condition of the Company and of all other circumstances bearing upon the risk
      of
      nonpayment of the respective indebtedness of the Company to such party, and
      each
      agrees that the other party shall have no duty to advise it of information
      regarding such condition or any such circumstances. In the event Kiphart or
      Advanced, in his or its sole discretion, undertakes, at any time or from time
      to
      time, to provide any such information (“Disclosing Party”) to the other party
      (“Recipient Party”), the Disclosing Party shall be under no obligation (i) to
      provide any such information to the Recipient Party on any subsequent occasion,
      (ii) to undertake any investigation not a part of its regular business routine,
      or (iii) to disclose any information which such Disclosing Party otherwise
      wishes to maintain confidential.

     

    15. Third
      Party Beneficiaries. This Agreement is solely for the benefit of Kiphart and
      Advanced and their respective successors and assigns, and neither the Company
      nor any other persons or entities are intended to be third party beneficiaries
      hereunder or to have any right, benefit, priority or interest under, or because
      of the existence of, or to have any right to enforce, this Agreement. Advanced
      and Kiphart shall have the right to modify or terminate this Agreement at any
      time pursuant to a written agreement signed by both parties, without notice
      to
      or approval of the Company or any other person or persons. Neither party hereto
      may assign all or any part of their interest in the obligations of the Company
      to any other person or entity unless such assignment or transfer shall be made
      expressly subject to the terms and provisions of this Agreement. Any assignment
      or transfer which is not made subject to the terms and provisions of this
      Agreement shall be, for the purposes of this Agreement, null and
      void.

     

    16. Notices.
      For the purposes of this Agreement, written notices shall be made by personal
      delivery; or by facsimile confirmed by the recipient; or by reputable overnight
      delivery (with evidence of delivery) and addressed to the notified party at
      its
      address set forth below its signature line, or such other address specified
      by
      the party with like notice. Notices shall be deemed received on the day of
      personal delivery to the recipient, or on the day of delivery if by facsimile
      (with evidence of transmission) or if by overnight courier (with evidence of
      delivery).

     

    17. Costs
      and Attorneys’ Fees. If there is any claim or controversy litigated in any
      lawsuit between any of the parties hereto in connection with this Agreement,
      the
      prevailing parties in the lawsuit shall be entitled to recover from the other
      parties their costs and reasonable attorneys’ fees.


    
      
        
        

      

      
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    18. Governing
      Law. This Agreement shall be interpreted, and the rights and liabilities of
      the parties hereto determined, in accordance with the internal laws (as opposed
      to conflict of laws provisions) of the State of Delaware.

     

    19. Successors
      and Assigns. This Agreement shall be binding upon and shall inure to the
      benefit of the parties’ respective successors and assigns, subject to the
      provisions hereof.

     

    20. Integrated
      Agreement. This Agreement sets forth the entire understanding of the parties
      with respect to the within matters, supersedes all drafts, understandings,
      representations or other agreements regarding the subject matter hereof, and
      may
      not be modified or amended except upon a writing signed by all parties. Each
      party has been represented by his or its own counsel and this Agreement has
      been
      negotiated and prepared by all such counsel. 

     

    21. Authority.
      Each of the signatories hereto certifies that such party has all necessary
      authority to execute this Agreement.

     

    22. Counterparts.
      This Agreement may be executed in one or more counterparts, each one of which
      when so executed shall be deemed to be an original, and all of which taken
      together shall constitute one and the same agreement.

     

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
      the
      date first above written.

     

    
      	
              ADVANCED
                BIOTHERAPY, INC.

               

            	 
	
              By:
                _____________________________

            	
              ________________________________

            
	
              Christopher
                W. Capps, 

              Chief
                Executive Officer

            	
              Richard
                P. Kiphart

            
	 	 
	 	 


    

    


    


    All
      of
      the foregoing is consented and agreed to as of

    the
      date
      first set forth above:

    


    ORGANIC
      FARM MARKETING, LLC

    


    


    By:______________________________

    Chad
      L.
      Pawlak, Sr., President


    
      
        
        

      

      
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