LINE OF CREDIT AGREEMENT

 

THIS LINE OF CREDIT AGREEMENT (the “Agreement”) is effective this 10th day of
May, 2019 (the “Effective Date”), by and between Fromar Investments, LP, a
Delaware limited partnership (the “Lender”), and Mount Tam Biotechnologies,
Inc., a Nevada corporation (the “Borrower”). 

 

RECITALS

 

 

WHEREAS, on or about March 8, 2019, the Borrower and the Lender entered into
that certain Convertible Promissory Note in the principal amount of $80,000.00,
with a maturity date of September 20, 2019, at an interest rate of 8%. The
Company received $40,000 on March 8, 2019, and an additional $40,000 on March
14, 2019.

 

WHEREAS, on or about March 5, 2018, the Borrower and the Lender entered into
that certain Convertible Promissory Note in the principal amount of $500,000.00
(such Convertible Promissory Note, together with any and all modifications,
amendments and restatements shall hereinafter be collectively referred to as the
“Fromar Note”);

 

WHEREAS, on or about November 9, 2015, the Borrower and 0851229 BC Ltd., an
affiliate of the Lender, entered into that certain Secured Convertible
Promissory Note, which has been amended, restated and otherwise modified on
several different occasions (such Secured Convertible Promissory Note, together
with any and all modifications, amendments and restatements shall hereinafter be
collectively referred to as the “BC Note” and the BC Note shall be referred to
collectively with the Fromar Note as the “Prior Notes”);

 

WHEREAS, the Borrower desires to borrow from the Lender a maximum principal
amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) (the
“Maximum Amount”) to be used by Borrower to pay off the Prior Notes and to
provide for additional borrowings to be used for general business purposes; and

 

WHEREAS, pursuant to the terms of this Agreement, the Lender desires to loan to
the Borrower an amount not to exceed the Maximum Amount.  

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto do hereby mutually covenant and agree as follows: 

 

1.Periodic Loans.  During the term hereof, the Lender hereby agrees to make
periodic loans to the Borrower as requested from time to time by the Borrower,
so long as the aggregate principal amount outstanding at any time does not
exceed the Maximum Amount (such periodic loans are referred to herein as the
“Loan”).  In connection with the Loan, the Borrower shall execute and deliver to
the Lender a Promissory Note in the form of the Secured Promissory Note attached
hereto as Exhibit A and incorporated by reference herein (the “Note”).  

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During the term hereof, from time to time the Borrower shall notify the Lender
of the Borrower’s request to borrow funds pursuant to this Agreement.  For each
request to borrow funds, the Borrower, through a duly authorized officer, shall
deliver to the Lender a completed “Request to Borrow Funds,” substantially in
the form attached as Exhibit B and incorporated herein (the “Request”).  Unless
otherwise directed in a Request, the Lender shall remit the loan amount
requested by wire transfer in immediately payable U.S. funds to an account
designated by the Borrower by the end of the second business day following the
Lender’s receipt of the Request to Borrow Funds.  By virtue of this Agreement,
the Lender hereby acknowledges and agrees that the Prior Notes have been
satisfied in full and that no amounts are due and owing by Borrower under the
Prior Notes.  The Lender shall document loans hereunder by making notations to
the “Schedule of Loan Advances and Repayments,” attached as Exhibit C and
incorporated herein.

 

2.Interest.  All sums advanced pursuant to this Agreement shall bear simple
interest from the date each advance is made until paid in full at a fixed annual
interest rate of eight percent (8.00%). The advance to pay off/refinance the
Prior Notes shall be deemed to be made as of the Effective Date. Interest shall
be calculated on the basis of a 365-day year using the actual number of days
elapsed divided by 365.  

 

Notwithstanding the foregoing, upon the occurrence of an Event of Default (as
defined herein) and during the continuance thereof, the outstanding principal
balance of the amounts advanced pursuant to this Agreement shall, in the
Lender’s sole discretion and without prior notice to the Borrower, bear interest
at the rate of sixteen percent (16.00%) per annum, and shall continue at such
rate, both before and after judgment, until the outstanding amount is paid and
all of the Borrower’s other obligations to the Lender hereunder have been fully
paid and discharged.

 

3.Payments.  The Borrower may prepay, in whole or in part, any amounts due and
owing at any time without penalty and without the prior written consent of the
Lender. Payments shall be applied first to the interest outstanding, and then to
the principal outstanding.  The unpaid principal and all accrued but unpaid
interest shall be due and payable in full by the Borrower no later than August
30, 2019 (the “Maturity Date”).   

 

4.Term.  This Agreement shall commence as of the Effective Date, and shall
terminate on the Maturity Date, unless terminated earlier pursuant to the
default provisions set forth in Section 5 of this Agreement or unless terminated
earlier or extended upon mutual written consent of the parties hereto.   

 

5.Default Provisions.  The occurrence of one or more of the following events
shall constitute an “Event of Default” hereunder: 

 

(a)The nonpayment of any principal and/or interest of the loans described herein
when the same shall have become due and payable; 

 

(b)The Borrower files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or seeks the appointment of
a custodian, receiver, trustee (or other similar official) of the Borrower or
all or any substantial portion of the Borrower’s assets,  

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or makes any assignment for the benefit of creditors or takes any action in
furtherance of any of the foregoing, or fails to generally pay its debts as they
become due;

 

(c)An involuntary petition is filed, or any proceeding or case is commenced,
against the Borrower (unless such proceeding or case is dismissed or discharged
within 60 days of the filing or commencement thereof) under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt, liquidation or
moratorium statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
applied or appointed for the Borrower or to take possession, custody or control
of any property of the Borrower, or an order for relief is entered against the
Borrower in any of the foregoing;  

 

(d)Default in the obligation of the Borrower to any person for borrowed money,
other than the loans described herein, which shall continue for a period of
sixty (60) consecutive calendar days; or 

 

(e)An “Event of Default” under the Note. 

 

6.Acceleration.  At the option of the Lender, and without demand or notice, all
principal and any unpaid interest shall become immediately due and payable upon
an event of default as set forth in Section 5 above. 

 

7.Security.  The payment of all sums due hereunder shall be secured by, and the
Borrower hereby assigns, transfers, and conveys to the Lender, and grants the
Lender, in the following (collectively, the “Collateral”):  a security interest
in and to all of the Borrower’s tangible assets and personal properties of every
kind and nature, whether presently existing or hereafter acquired, developed or
arising, wherever the same may be located, including, without limitation, all
goods, fixtures, equipment and inventory, as more particularly set forth in the
security agreement among the Borrower and the Lender (the “Security Agreement”),
a form of which is attached hereto as Exhibit D.   

 

The Borrower shall execute and deliver to the Lender, or shall cause to be
executed and delivered to the Lender, such assignments, security agreements, UCC
financing statements (including continuation statements and amendments),
pledges, hypothecations, consents, acknowledgments, and other documents and
instruments as the Lender may request to further effect or perfect its security
interest in the Collateral.  The Borrower authorizes the Lender to file UCC
financing statements and continuation statements in such jurisdictions as the
Lender determines to be necessary to perfect its security interest in any of the
Collateral.

 

8.Miscellaneous.   

 

8.1.Headings.  All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or
intent of this Agreement or any provision thereof. 

 

8.2.Severability.  In the event any provision of this Agreement shall be held
invalid or unenforceable according to law, such holding or action shall not
invalidate or render  

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unenforceable any other provision hereof.  The foregoing provision, however,
shall not apply in relation to the obligations of the Borrower to repay
principal or to pay interest under this Agreement.

 

8.3.Counterparts.  This Agreement may be executed in counterparts, including by
electronic transmission or facsimile, each of which shall be an original, but
all of which shall constitute one and the same instrument. 

 

8.4.Entire Agreement.  This Agreement contains the entire agreement between the
parties and supersedes any prior negotiations, agreements, or understandings
between the parties, whether oral or written, concerning the subject matter
hereof. 

 

8.5.Amendments; Assignment.  This Agreement may not be amended nor may any
rights hereunder be waived except by an instrument in writing signed by the
parties hereto.  A party’s rights and duties under this Agreement may be
assigned by such party only with the written consent of the other party. 

 

8.6.Time of Essence.  It is agreed that time is of the essence hereunder. 

 

8.7.Governing Law. This Agreement, and the application or interpretation
thereof, shall be governed exclusively by its terms and by the laws of the State
of California determined without regard to conflict-of-law principles.  

 

8.8.Binding Agreement.  Except as herein otherwise specifically provided, this
Agreement shall be binding upon and inure to the benefit of the parties hereunto
and their successors and assigns. 

 

8.9.Attorneys’ Fees.  Should any party hereto reasonably retain counsel for the
purpose of enforcing or preventing the breach of any rights hereunder,
including, but not limited to, instituting any action or proceeding to enforce
any provision hereof, for damages by reason of any alleged breach of any
provision hereof, for a declaration of such party’s rights or obligations
hereunder or for any other judicial remedy, then if said matter is settled by
judicial determination (which term includes arbitration), the prevailing party
(whether at trial or on appeal) shall be entitled, in addition to such other
relief as may be granted, to be reimbursed by the losing party for all
reasonable costs and expenses incurred thereby, including, but not limited to,
all attorneys’ and expert witness fees and costs actually incurred for the
services rendered to such prevailing party.  Further, the prevailing party shall
be entitled to additional awards of attorneys’ and expert witness fees for
services reasonably rendered in aid of enforcing such judgment or award or in
collecting any monies awarded therein. 

 

8.10.No Presumption.  Should any provision of this Agreement require judicial
interpretation, the court interpreting or consulting the same shall not apply a
presumption that the terms hereof shall be more strictly construed against a
party hereto, by reason of the rule of construction that a document is to be
construed more strictly against the person who himself or through his agents
prepared the same, it being acknowledged that both parties hereto have
participated in the preparation hereof. 

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[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have read and signed this Line of Credit
Agreement as of the Effective Date.    

 

 

BORROWER:

 

MOUNT TAM BIOTECHNOLOGIES, INC.

 

 

 

By: /s/ Richard Marshak 

Name: Richard Marshak 

Title: Chief Executive Officer 

 

 

LENDER: 

 

FROMAR INVESTMENTS, LP

 

 

By:/s/ Doug Froese 

Name:Doug Froese 

Title:Partner 

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EXHIBIT A

 

FORM OF PROMISSORY NOTE

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EXHIBIT B

 

REQUEST TO BORROW FUNDS

 

Pursuant to that certain Line of Credit Agreement, signed and dated as of
__________ __, 2019 (the “Agreement”), Mount Tam Biotechnologies, Inc. hereby
requests funds from Fromar Investments, LP in the amount of
______________________________ Dollars ($____________________). 

 

 

Dated the _____ day of ________________, 20__. 

 

 

MOUNT TAM BIOTECHNOLOGIES, INC. 

 

 

By: ____________________________ 

Name: __________________________   

Its: _____________________________    

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EXHIBIT C

 

SCHEDULE OF LOAN ADVANCES AND REPAYMENTS

 

Pursuant to that certain Line of Credit Agreement dated ________ ___, 2019
between Fromar Investments, LP, a Delaware limited partnership, as Lender, and
Mount Tam Biotechnologies, Inc., a Nevada corporation, as Borrower, Lender
documents the following loans:

 

Date of Advance

Amount Advanced

Date of Repayment

Repayment Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT D

 

FORM OF SECURITY AGREEMENT

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