EXHIBIT 10.22
 
GENERAL BUSINESS SECURITY AGREEMENT
 

 
1. SECURITY INTEREST
 Dated: December 18, 2007

 
In consideration of any financial accommodation at any time granted by Advanced
Biotherapy, Inc., a Delaware corporation (“Lender”), to Organic Farm Marketing,
LLC, a Wisconsin limited liability company (“Debtor”), Debtor hereby grants
Lender a security interest in all equipment, fixtures, inventory, documents,
general intangibles, accounts, deposit accounts, contract rights, chattel paper,
patents, trademarks and copyrights (and the good will associated with and
registrations and licenses of any of them), instruments, letter of credit rights
and investment property, now owned or hereafter acquired by Debtor, and all
additions and accessions to, all spare and repair parts, special tools,
equipment and replacements for software used in, all returned or repossessed
goods, together with all proceeds, supporting obligations and products of the
foregoing (“Collateral”), wherever located, to secure all debts, obligations and
liabilities to Lender arising out of credit previously granted, credit
contemporaneously granted and credit granted in the future by Lender to Debtor
including, without limitation, obligations of Debtor to Lender pursuant to the
Secured Promissory Note and the Convertible Note issued by Debtor in favor of
Lender, as well as the Investment Agreement and the Reimbursement Agreement, all
entered into concurrently herewith (collectively, the “Obligations”).
 
2. DEBTOR’S REPRESENTATIONS AND WARRANTIES
 
Debtor represents and warrants to Lender and agrees that while any of the
Obligations are unpaid:
 
(a) Ownership and Use. Debtor owns the Collateral free of all encumbrances and
security interests (except Lender’s security interest and the security interest
of Richard P. Kiphart). Chattel paper constituting Collateral evidences a
perfected security interest in the goods (including software used in the goods)
covered by it free from all other encumbrances and security interests, and no
financing statement is on file or control agreement in existence (other than
Lender’s and the security interest of Richard P. Kiphart) covering the
Collateral or any of it. Debtor, acting alone, may grant a security interest in
the Collateral and agree to the terms of this General Business Security
Agreement (“Agreement”). The Collateral is used or bought for use primarily for
business purposes.
 
(b) Sale of Goods or Services Rendered. Each account and chattel paper
constituting Collateral as of this date arose from the performance of services,
by Debtor or from a bona fide sale or lease of goods, which have been delivered
or shipped to the account debtor and for which Debtor has genuine invoices,
shipping documents or receipts.
 
(c) Enforceability. Each account, contract right and chattel paper constituting
Collateral as of this date is genuine and enforceable against the account debtor
according to its terms. It and the transaction out of which it arose comply with
all applicable laws and regulations. The amount represented by Debtor to Lender
as owing by each account debtor is the amount actually owing and is not subject
to setoff, credit, allowance or adjustment except discount for prompt payment,
nor has any account debtor returned the goods or disputed liability.

 
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(d) Due Date. There has been no default as of the date of this Agreement
according to the terms of any chattel paper or account constituting Collateral
and no step has been taken to foreclose the security interest it evidences or
otherwise enforce its payment.
 
(e) Financial Condition of Account Debtor. As of this date Debtor has no notice
or knowledge of anything which might impair the credit standing of any account
debtor and Debtor promptly will advise Lender upon receipt of any such notice or
knowledge affecting Collateral.
 
(f) Valid Organization. Debtor is duly organized, validly existing and in good
standing under the laws of the state of Wisconsin and is authorized to do
business in Wisconsin.
 
(g) Other Agreements. Debtor is not in default under any agreement for the
payment of money.
 
(h) Authority to Contract. The execution and delivery of this Agreement and any
instruments evidencing Obligations will not violate or constitute a breach of
Debtor’s articles of organization or operating agreement or any other agreement
or restriction to which Debtor is a party or is subject.
 
(i) Accuracy of Information. All information, certificates or statements given
to Lender pursuant to this Agreement shall be true and complete when given.
 
(j) Name and Address. Debtor’s exact legal name is Organic Farm Marketing, LLC.
The address of Debtor’s place of business, or if Debtor has more than one place
of business, then the address of Debtor’s chief executive office, is 302 West
Stanley Street, Thorp, Wisconsin 54771.
 
(k) Location. The address where the Collateral will be kept is 302 West Stanley
Street, Thorp, Wisconsin 54771. Such location shall not be changed without prior
written consent of Lender, but the parties intend that the Collateral, wherever
located, is covered by this Agreement.
 
(l) Environmental Laws. (i) No substance has been, is or will be present, used,
stored, deposited, treated, recycled or disposed of on, under, in or about any
real estate now or at any time owned or occupied by Debtor (“Property”) during
the period of Debtor’s ownership or use of the Property in a form, quantity or
manner which if known to be present on, under, in or about the Property, would
require clean-up, removal or some other remedial action (“Hazardous Substance”)
under any federal, state or local laws, regulations, ordinances, codes or rules
(“Environmental Laws”), (ii) Debtor has no knowledge, after due inquiry, of any
prior use or existence of any Hazardous Substance on the Property by any prior
owner of or person using the Property, (iii) without limiting the generality of
the foregoing, Debtor has no knowledge, after due inquiry, that the Property
contains asbestos, polychlorinated biphenyl components (PCBs) or underground
storage tanks, (iv) there are no conditions existing currently or likely to
exist during the term of this Agreement which would subject Debtor to any
damages, penalties, injunctive relief or clean-up costs in any governmental or
regulatory action or third-party claim relating to any Hazardous Substance, (v)
Debtor is not subject to any court or administrative proceeding, judgment,
decree, order or citation relating to any Hazardous Substance, and (vi) Debtor
in the past has been, at the present is, and in the future will, remain in
compliance with all Environmental Laws. Debtor shall indemnify and hold harmless
Lender, its directors, officers, employees and agents from all loss, cost
(including reasonable attorneys’ fees and legal expenses), liability and damage
whatsoever directly or indirectly resulting from, arising out of, or based upon
(1) the presence, use, storage, deposit, treatment, recycling or disposal, at
any time, of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from the Property, (2) the
violation or alleged violation of any Environmental Law, permit, judgment or
license relating to the presence, use, storage, deposit, treatment, recycling or
disposal of any Hazardous Substance on, under, in or about the Property, or the
transportation of any Hazardous Substance to or from the Property, or (3) the
imposition of any governmental lien for the recovery of environmental clean-up
costs expended under any Environmental Law. Debtor shall immediately notify
Lender in writing of any governmental or regulatory action or third-party claim
instituted or threatened in connection with any Hazardous Substance described
above on, in, under or about the Property.
 
 
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(m) Employees. There are no unpaid wages due employees of Debtor and there are
no outstanding liens against assets of Debtor for unpaid wages due employees of
Debtor.
 
(n) Fixtures. If any of the Collateral is affixed to real estate, the legal
description of the real estate set forth in each UCC Financing Statement signed
or authorized by Debtor is true and correct.
 
3. SALE AND COLLECTIONS
 
(a) State of Inventory. So long as no default exists under any of the
Obligations or this Agreement, Debtor may (a) sell inventory in the ordinary
course of Debtor’s business for cash or on terms customary in the trade, at
prices not less than any minimum sale price shown on instruments evidencing
Obligations and describing inventory, or (b) lease or license inventory on terms
customary in the trade.
 
(b) Verification and Notification. Lender may verify Collateral in any manner,
and Debtor shall assist Lender in so doing. Upon default, Lender may at any time
and Debtor shall, upon request of Lender, notify the account debtors or other
persons obligated on the Collateral to make payment directly to Lender and
Lender may enforce collection of, settle, compromise, extend or renew the
indebtedness of such account debtors or other persons obligated on the
Collateral. Until account debtors or other persons obligated on the Collateral
are so notified, Debtor, as agent of Lender, shall make collections and receive
payments on the Collateral.
 
(c) Deposit with Lender. At any time Lender may require that all proceeds of
Collateral received by Debtor shall be held by Debtor upon an express trust for
Lender, shall not be commingled with any other funds or property of Debtor and
shall be turned over to Lender in precisely the form received (but endorsed by
Debtor if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Lender directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Lender shall determine.
 

 
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4. DEBTOR’S COVENANTS
 
(a) Maintenance of Collateral. Debtor shall: maintain the Collateral in good
condition and repair and not permit its value to be impaired; keep it free from
all liens, encumbrances and security interests (other than Lender’s security
interest and the security interest of Richard P. Kiphart); defend it against all
claims and legal proceedings by persons other than Lender; pay and discharge
when due all taxes, license fees, levies and other charges upon it; not sell,
lease, license or otherwise transfer or dispose of it or permit it to become a
fixture or an accession to other goods, except for sales, leases or licenses of
inventory as provided in this Agreement; not permit it to be used in violation
of any applicable law, regulation or policy of insurance: and, as to Collateral
consisting of instruments, chattel paper and letter of credit rights, preserve
rights in it against prior parties. Loss of or damage to the Collateral shall
not affect the liabilities of Debtor under this Agreement, the Obligations or
other rights of Lender with respect to the Collateral.
 
(b) Insurance. Debtor shall keep the Collateral and Lender’s interest in it
insured under policies with such provisions, for such amounts and by such
insurers as shall be satisfactory to Lender from time to time, and shall furnish
evidence of such insurance satisfactory to Lender. Subject to Lender’s
satisfaction, Debtor is free to select the insurance agent or insurer through
which the insurance is obtained. Debtor assigns (and directs any insurer to pay)
to Lender the proceeds of all such insurance and any premium refund, and
authorizes Lender to endorse in the name of Debtor any instruments for such
proceeds or refunds and; at the option of Lender, to apply such proceeds and
refunds to any unpaid balance of the Obligations, whether or not due, and/or to
restoration of the Collateral, returning any excess to Debtor. Each insurance
policy shall contain a standard lender’s loss payable endorsement in favor of
Lender, and shall provide that the policy shall not be cancelled, and the
coverage shall not be reduced, without at least 10 days’ prior written notice by
the insurer to Lender. Lender is authorized, in the name of Debtor or otherwise,
to make, adjust and/or settle claims under, any credit insurance financed by,
Lender or any insurance on the Collateral, or cancel the same after the
occurrence of an event of default. If Debtor fails to keep any required
insurance on the Collateral, Lender may purchase such insurance for Debtor, such
insurance may be acquired by Lender solely to protect the interest of Lender
(and will not cover Debtor’s equity in the Collateral), and Debtor’s obligation
to repay Lender shall be in accordance with this Agreement.
 
(c) Maintenance of Security Interest. Debtor shall pay all expenses and upon
request, take any action reasonably deemed advisable by Lender to preserve the
Collateral or to establish, evidence, determine and maintain priority of,
perfect, continue perfected, terminate and/or enforce Lender’s interest in it or
rights under this Agreement. Debtor authorizes Lender to file Uniform Commercial
Code financing statements describing the Collateral (including describing the
Collateral as “all assets,” “all personal property” or with words of similar
effect) and amendments and correction statements to such financing statements
and ratifies any such financing statement or amendment filed prior to the date
of this Agreement. Debtor will cooperate with Lender in obtaining control of
Collateral or other security for the Obligations for which control may be
required to perfect Lender’s security interest under applicable law. If the
Collateral is in possession of a third party, Debtor will join with Lender at
its request in notifying the third party of Lender’s security interest and
obtaining an acknowledgment from the third party that it is holding the
Collateral for the benefit of Lender.
 
 
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(d) Taxes and Other Charges. Debtor shall pay and discharge all lawful taxes,
assessments and government charges upon Debtor or against its properties prior
to the date on which penalties attach, unless and to the extent only that such
taxes, assessments and charges are contested in good faith and by appropriate
proceedings by Debtor.
 
(e) Employees. Debtor shall pay all wages when due to employees of Debtor and
shall not permit any lien to exist against the assets of Debtor for unpaid wages
due employees of Debtor.
 
(f) Records and Statements. Debtor shall furnish to Lender financial statements
at least annually and such other financial information respecting Debtor at such
times and in such form as Lender may request. Debtor shall keep accurate and
complete records respecting the Collateral in such form as Lender may approve.
At such times as Lender may require, Debtor shall furnish to Lender a statement
certified by Debtor and in such form and containing such information as may be
prescribed by Lender, showing the current status and value of the Collateral.
Debtor shall furnish to Lender such reports regarding the payment of wages to
employees of Debtor and the number of employees of Debtor as Lender may from
time to time request, and without request shall furnish to Lender a written
report immediately upon, any material increase in the number of employees of
Debtor, the failure of Debtor to pay any wages when due to employees of Debtor
or the imposition of any lien against the assets of Debtor for unpaid wages due
employees of Debtor.
 
(g) Inspection of Collateral; Audit. Lender may examine, inspect and audit the
Collateral and Debtor’s records pertaining to it, wherever located, during
normal business hours, and make copies of records, and Debtor shall assist
Lender in so doing.
 
(h) Charges. In addition to the required payments under the Obligations and this
Agreement, Debtor shall pay all of Lender’s costs and expenses for inspection
and auditing in connection with this Agreement.
 
(i) Chattel Paper. Lender may require that chattel paper constituting Collateral
shall be on forms approved by Lender. Unless it consists of electronic chattel
paper, Debtor shall promptly mark all chattel paper constituting Collateral, and
all copies, to indicate conspicuously Lender’s interest and, upon request,
deliver them to Lender. If it consists of electronic chattel paper, Debtor shall
promptly notify Lender of the existence of the electronic chattel paper and, at
the request of Lender, shall take such actions as Lender may reasonably request
to vest in Lender control of such electronic chattel paper under applicable law.
 
(j) United States Contracts. If any Collateral arose out of contracts with the
United States or any of its departments, agencies or instrumentalities, Debtor
will notify Lender and execute writings required by Lender in order that all
money due or to become due under such contracts shall be assigned to Lender and
proper notice of the assignment given under the Federal Assignment of Claims
Act.
 
(k) Modifications. Without the prior written consent of Lender, Debtor shall not
alter, modify, extend, renew or cancel any accounts, letter of credit rights or
chattel paper constituting Collateral.
 
(l) Returns and Repossessions. Debtor shall promptly notify Lender of the return
to or repossession by Debtor of goods underlying any Collateral and Debtor shall
hold and dispose of them only as Lender directs.
 
 
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(m) Promissory Notes, Chattel Paper and Investment Property. If Debtor shall at
any time hold or acquire Collateral consisting of promissory notes, chattel
paper or certificated securities, Debtor shall endorse, assign and deliver the
same to Lender accompanied by such instruments of transfer or assignment duly
executed in blank as Lender may from time to time request.
 
(n) Change of Name, Address or Organization. Debtor shall not change Debtor’s
legal name or address without providing at least 30 days’ prior written notice
of the change to Lender. Debtor, if it is an organization, shall not change its
type of organization or state under whose law it is organized and shall preserve
its organizational existence, and Debtor whether or not Debtor is an
organization shall not, in one transaction or in a series of related
transactions, merge into or consolidate with any other organization, change
Debtor’s legal structure or sell or transfer all or substantially all of
Debtor’s assets.
 
5. RIGHTS OF LENDER
 
(a) Authority to Perform for Debtor. Upon the occurrence of an event of default
or if Debtor fails to perform any of Debtor’s duties set forth in this Agreement
or in any evidence of or document relating to the Obligations, Lender is
authorized, in Debtor’s name or otherwise, to take any such action including,
without limitation, signing Debtor’s name or paying any amount so required, and
the cost shall be one of the Obligations secured by this Agreement and shall be
payable by Debtor upon demand with interest from the date of payment by Lender
at the highest rate stated in any evidence of any Obligation but not in excess
of the maximum rate permitted by law.
 
(b) Set-Off. Debtor grants Lender, as further security for the Obligations, a
security interest and lien in money now or hereafter owed Debtor by Lender, and
agrees that Lender may, at any time after the occurrence of an event of default,
without prior notice or demand, set-off all or any part of the unpaid balance of
the Obligations against any money now or hereafter owed Debtor by Lender.
 
(c) Power of Attorney. Debtor irrevocably appoints any officer of Lender as
Debtor’s attorney, with power after an event of default to receive, open and
dispose of all mail addressed to Debtor (and Lender shall not be required as a
condition to the exercise of this power to prove the occurrence of an event of
default to the Post Office); to notify the Post Office authorities to change the
address for delivery of all mail addressed to Debtor to such address as Lender
may designate; to endorse the name of Debtor upon any instruments which may come
into Lender’s possession; and to sign and make draws under any letter of credit
constituting Collateral on Debtor’s behalf. Debtor authorizes Lender to honor
any such draft accompanied by invoices aggregating the amount of the draft and
describing inventory to be shipped to Debtor and to pay any such invoices not
accompanied by drafts. Debtor appoints any employee of Lender as Debtor’s
attorney, with full power to sign Debtor’s name on any instrument evidencing an
Obligation, or any renewals or extensions, and such instruments may be payable
at fixed times or on demand, shall bear interest at the rate from time to time
fixed by Lender and Debtor agrees, upon request of Lender, to execute any such
instruments. This power of attorney to execute instruments may be revoked by
Debtor only by written notice to Lender and no such revocation shall affect any
instruments executed prior to the receipt by Lender of such notice. All acts of
such attorney are ratified and approved and such attorney is not liable for any
act or omission or for any error of judgment or mistake of fact or law. This
power is a power coupled with an interest and is given as security for the
Obligations, and the authority conferred by this power is and shall be
irrevocable and shall remain in full force and effect until renounced by Lender.
 
 
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(d) Nonliability of Lender. Lender has no duty to determine the validity of any
invoice, the authority of any shipper to ship goods to Debtor or compliance with
any order of Debtor. Lender has no duty to protect, insure, collect or realize
upon the Collateral or preserve rights in it against prior parties. Debtor
releases Lender from any liability for any act or omission relating to the
Obligations, the Collateral or this Agreement, except Lender’s willful
misconduct.
 
6. DEFAULT
 
(a) Event of Default. Upon the occurrence of one or more of the following events
of default (each an “event of default”):
 
(i) Nonperformance. Any of the Obligations are not paid when due or Debtor fails
to perform, or rectify the breach of, any representation, warranty or covenant
or other undertaking in this Agreement or in any evidence of or document
relating to the Obligations or an event of default occurs under any evidence of
or document relating to any other obligation secured by the Collateral;
 
(ii) Inability to Perform. Debtor or a guarantor or surety of any of the
Obligations dies, ceases to exist, becomes insolvent or the subject of
bankruptcy or insolvency proceedings or any guaranty of the Obligations is
revoked or becomes unenforceable for any reason;
 
(iii) Misrepresentation. Any warranty or representation made to induce Lender to
extend credit to Debtor, under this Agreement or otherwise, is false in any
material respect when made; or
 
(iv) Insecurity. At any time Lender believes in good faith that the prospect of
payment or performance of any of the Obligations or performance under any
agreement securing the Obligations is impaired;
 
all of the Obligations shall, at the option of Lender and without notice or
demand, become immediately payable; and Lender shall have all rights and
remedies for default provided by the Wisconsin Uniform Commercial Code and this
Agreement, as well as other applicable law, and under any evidence of or
document relating to any Obligation, and all such rights and remedies are
cumulative and may be exercised from time to time. Without limiting in any way
the generality of the foregoing, Lender shall have the rights and remedies set
forth in this Section 6.
 
(b) Repossession. Lender may take possession of Collateral, without notice or
hearing, which Debtor waives.
 
(c) Assembling Collateral. Lender may require Debtor to assemble the Collateral
and to make it available to Lender at any place reasonably designated by Lender.
 
(d) Notice of Disposition. Lender may dispose of the Collateral upon written
notice, when required by law, sent to any address of Debtor in this Agreement
and ten (10) calendar days (counting the day of sending) before the date of a
proposed disposition of the Collateral is deemed reasonable notice.
 
 
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(e) Expenses and Application of Proceeds. Debtor shall reimburse Lender for any
expense incurred by Lender in protecting or enforcing its rights under this
Agreement, before and after judgment, including, without limitation, reasonable
attorneys’ fees and legal expenses (including those incurred in successful
defense or settlement of any counterclaim brought by Debtor or incident to any
action or proceeding involving Debtor brought pursuant to the United States
Bankruptcy Code) and all expenses of taking possession, holding, preparing for
disposition and disposing of Collateral (provided, however, Lender has no
obligation to cleanup or otherwise prepare the Collateral for sale). After
deduction of such expenses, Lender shall apply the proceeds of disposition to
the extent actually received in cash to the Obligations in such order and
amounts as it elects or as otherwise required by this Agreement if Lender sells
any Collateral on credit, Debtor will be credited only with payments that the
purchaser actually makes and that Lender actually receives and applies to the
unpaid balance of the purchase price of the Collateral.
 
(f) Waiver. Lender may permit Debtor to remedy any default without waiving the
default so remedied, and Lender may waive any default without waiving any other
subsequent or prior default by Debtor. Lender shall continue to have all of its
rights and remedies under this Agreement even if it does not fully and properly
exercise them on all occasions.
 
7. WAIVER AND CONSENT
 
Debtor expressly consents to and waives notice of the following by Lender
without affecting the liability of Debtor: (a) any surrender, release,
impairment, sale or other disposition of any security or collateral for the
Obligations, (b) any release or agreement not to sue any guarantor or surety of
the Obligations, (c) any failure to perfect a security interest in or realize
upon any security or collateral for the Obligations, (d) any failure to realize
upon any of the Obligations or to proceed against any guarantor or surety, (e)
any renewal or extension of the time of payment, (f) any allocation and
application of payments and credits and acceptance of partial payments, (g) any
application of the proceeds of disposition of any collateral for the Obligations
to any obligation of any Debtor secured by such collateral in such order and
amounts as it elects, (h) any determination of what, if anything, may at any
time be done with reference to any security or collateral, and (i) any
settlement or compromise of the amount due or owing or claimed to be due or
owing from any guarantor or surety.
 
8. INTERPRETATION
 
The validity, construction and enforcement of this Agreement are governed by the
internal laws of the State of Wisconsin. All terms not otherwise defined have
the meanings assigned to them by the Wisconsin Uniform Commercial Code, as
amended from time to time, provided, however, that the term “instrument” shall
be such term as defined in the Wisconsin Uniform Commercial Code-Secured
Transactions Chapter 409. All references in this Agreement to sections of the
Wisconsin Statutes are to those sections as they may be renumbered from time to
time. Invalidity of any provision of this Agreement shall not affect the
validity of any other provision. This Agreement is intended by Debtor and Lender
as a final expression of this Agreement and as a complete and exclusive
statement of its terms, there being no conditions to the enforceability of this
Agreement. This Agreement may not be supplemented, amended or modified except in
writing, signed by the party against whom such supplement, amendment or
modification is sought to be enforced.
 
 
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9. PERSONS BOUND AND OTHER PROVISIONS
 
This Agreement benefits Lender, its successors and assigns, and binds Debtor and
its successors and permitted assigns and shall bind all persons and entities
that become bound as a debtor to this Agreement. Debtor acknowledges receipt of
a completed copy of this Agreement. This Agreement has been executed by the duly
authorized manager of the Debtor.
 

 
ORGANIC FARM MARKETING, LLC,
a Wisconsin limited liability company

By:______________________________
Chad L. Pawlak, Sr.

Address:  302 West Stanley Street
      Thorp, Wisconsin 54771

 
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