EXHIBIT 10.22
GENERAL
BUSINESS SECURITY AGREEMENT
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1. SECURITY INTEREST
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Dated:
December 18, 2007
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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.
(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.
(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.
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 ins
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