LINE OF CREDIT AGREEMENT

 

THIS LINE OF CREDIT AGREEMENT (the “ Agreement ”) is effective this 10 ^th 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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PROMISSORY NOTE

 

Aggregate Amount: $1,750,000.00	Effective Date: May 1, 2019

FOR VALUE RECEIVED, Mount Tam Biotechnologies, Inc., a Nevada corporation (the “ Maker ”), promises to pay to Fromar Investments, LP, a Delaware limited partnership, or its permitted assigns (the “ Holder ”) the principal sum of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00), or such lesser amount as shall have been advanced by Lender, from time to time, to or on behalf of Borrower under the Loan Agreement (as defined below), together with interest on the unpaid principal balance(s) under the Loan Agreement from time to time outstanding at the rate of 8.0% per year, minus any amounts prepaid by the Maker pursuant to the terms of the Loan Agreement until paid in full. The Maker will make all payments in lawful money of the United States of America and shall be in immediately available funds. Subject to the terms of the Loan Agreement, all outstanding principal and accrued interest shall be due and payable on August 30, 2019 (the “ Maturity Date ”).

This Promissory Note is delivered pursuant to that certain Line of Credit Agreement dated as of the date hereof between the Maker and the Holder (the “ Loan Agreement ”) and is subject to the terms thereof. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Loan Agreement. The payment of all amounts due under this Note, and the performance of all obligations of Maker under the Loan Agreement and this Note, are fully secured by the Security Agreement between the Maker and Holder effective as of the date hereof.

This Note shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events of default (individually, an “ Event of Default ” and collectively, “ Events of Default ”):

 

(1) the Maker fails to pay any of the principal, interest or any other amounts payable under this Note when due and payable;  

 

(2) the Maker 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 Maker or all or any substantial portion of the Maker’s assets, 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;  

 

(3) an involuntary petition is filed, or any proceeding or case is commenced, against the Maker (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 Maker or to take possession, custody or control of any property of the Maker, or an order for relief is entered against the Maker in any of the foregoing;  

 

(4) the occurrence of a breach or default under any agreement, instrument or document to which the Maker is a party or by which it is bound, involving any obligation for borrowed money of more than $100,000 in the aggregate;  

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(5) the Maker materially breaches any other agreement with the Holder (including without limitation any security agreement); or  

 

(6) the Maker borrows any funds from a third party (other than Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company, or its affiliates) without repaying this Note in full or obtaining Holder’s written consent (excluding for this purpose account and trade payables incurred by the Maker in the ordinary course of business), or the Maker is party to a merger, or there is a sale of a controlling interest in the outstanding stock of the Maker, or a sale of all or substantially all of the Maker’s assets, or enters into an agreement for any of the foregoing.  

 

Upon the occurrence of an Event of Default, the Holder shall have then, or at any time thereafter, all of the rights and remedies afforded creditors generally by the applicable federal laws or the laws of the State of California.

 

Notwithstanding anything to the contrary, this Note may be prepaid, in whole or in part, without the prior written consent of the Holder.

 

All payments by the Maker under this Note shall be made without set-off or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed by law.

 

The Maker shall pay the reasonable costs and expenses (including reasonable attorney’s fees and disbursements) that it incurs and, upon presentation of appropriate receipts, that the Holder incurs with respect to the preparation, negotiation, execution and delivery of this Note, any security agreement and any other agreement or instrument contemplated hereby or thereby. After the occurrence of an Event of Default, the Maker shall pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs, incurred in connection with any act or actions taken to collect or otherwise satisfy the obligations due under this Note, any security agreement and any other agreement or instrument contemplated hereby or thereby.

 

No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. This Note may not be amended or modified without the prior written consent of the Maker and the Holder.

 

All payments by the Maker under this Note shall be applied first to any fees and expenses due and payable hereunder, then to the accrued interest due and payable hereunder and the remainder, if any, to the outstanding principal.

 

The Maker hereby waives presentment, demand, protest and notices of every kind and assents to any permitted extension of the time of payment and to the addition or release of any other party primarily or secondarily liable hereunder.

 

All rights and obligations hereunder shall be governed by the laws of the State of California (without giving effect to principles of conflicts or choices of law) and this Note is executed as an

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instrument under seal.

 

Neither the Maker nor the Holder may assign, sell or otherwise transfer this Note or any of their respective rights and duties hereunder without the prior written consent of the other party hereto.

 

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Note effective as of the effective date set forth above.

 

 

MAKER:

 

MOUNT TAM BIOTECHNOLOGIES, INC.

 

 

 

By: /s/ Richard Marshak  

Name: Richard Marshak

Title: Chief Executive Officer

 

 

HOLDER:

 

FROMAR INVESTMENTS, LP

 

 

By: /s/ Doug Froese  

Name: Doug Froese  

Title: Partner  

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SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “ Agreement ”) by and between Mount Tam Biotechnologies, Inc., a Nevada corporation (the “ Debtor ”) on the one hand, and Fromar Investments, LP, a Delaware limited partnership, on the other hand (“ Secured Party ”) is effective as of May 1, 2019. In consideration of the financial accommodations extended to the Debtor by the Secured Party, the Debtor hereby agrees that the Secured Party shall have all of the rights given herein against the Debtor in addition to those given by law or by Line of Credit Agreement dated on or about the date hereof between the Debtor and the Secured Party, as amended (the “ Loan Agreement ”), the Promissory Note issued by the Debtor to the Secured Party on or about the date hereof, as amended (the “ Note ”), or any other agreement or document underlying the Liabilities:

1. The term “ Liabilities ” as herein used shall include all indebtedness, obligations and liabilities of any kind of Debtor to the Secured Party, whether now existing or hereafter incurred, including without limitation those pursuant to or arising under the Loan Agreement, the Note and any other promissory notes or any other future advances (the Loan Agreement, the Note, such other promissory notes and any other agreement evidencing future advances, together with this Agreement, the “ Loan Documents ”) executed between the Debtor and the Secured Party (as the same may be amended, modified or restated from time to time and any Loan Documents exchanged or substituted for the Loan Documents).    

2. In order to secure the performance of the Debtor’s payment and other obligations under the Loan Documents, the Debtor hereby grants to the Secured Party a security interest (the “ Security Interest ”), subject only to Permitted Security Interests, in all of the present and future assets of the Debtor and all products and proceeds of those assets, including but not limited to the following, to secure the Debtor’s due and punctual payment of the Loan Documents (hereinafter referred to collectively as the “ Collateral ”):  

(a)  All equipment, including machinery, motor vehicles, office equipment, furniture, fixtures, along with all other parts, tools, trade-ins, repairs, accessories, accessions, modifications, and replacements, whether now owned or subsequently acquired, constructed, or attached or added to, or placed in, the foregoing;

 

(b)  All inventory, wherever located, including goods, merchandise and other personal property, held for sale or lease or furnished or to be furnished under a contract of service, or constituting raw materials, work in process or materials used or consumed in the Debtor’s business, or consigned to others or held by others for return to the Debtor, whether now owned or subsequently acquired or manufactured and wherever located;

 

(c)  All accounts, including, without limitation, accounts receivable, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles, and any other obligations of any kind whether now existing or hereafter arising out of or in connection with the sale or lease of goods or the rendering of services, and all rights now or hereafter existing in and to all security agreements, notes, leases, licenses, franchises, supply agreements, and other

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contracts securing or otherwise relating to any such accounts, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles, or obligations;

 

(d)  All general intangibles, including, but not limited to, corporate names, trade names, trademarks, service marks, trade secrets, inventions, copyrights (including without limitation copyrights for computer programs) and all tangible property embodying copyrights, patents and patent applications, license agreements relating to any of the foregoing and income therefrom, books and records, blue prints and plans, computer programs, tapes and related electronic data processing software, and all corporate ledgers;

 

(e)  Any and all additions, accessions, substitutions or replacements to or for any of the foregoing;

 

(f)  Any and all products and proceeds of any or all of the foregoing, including, without limitation, cash, cash equivalents, tax refunds and the proceeds of insurance policies providing coverage against the loss or destruction of or damage to any of the Collateral, or any indemnity, warranty, or guarantee payable by reason of loss or damage to or otherwise with respect to any of the Collateral (whether or not the Debtor is the loss payee thereof);

 

(g)  All of the Debtor’s after-acquired property of the kinds and types described in paragraphs (a) - (f) herein; and

 

(h)  All records and data relating to any of the property described above, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of the Debtor’s right, title, and interest in and to all computer software required to utilize, create, maintain and process any of such records or data or electronic media.

“ Permitted Security Interests ” means (i) liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; (ii) liens arising from judgments, decrees, or attachments; (iii) liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (iv) purchase money security liens on equipment or vehicles that are hereafter acquired by the Debtor; and (v) the security interests granted on or about the date hereof to Climate Change Investigation, Innovation and Investment Company, LLC.

 

3. The Debtor shall preserve the Collateral, keep the Collateral in good repair, subject to ordinary wear and tear, and abstain from and not permit the commission of waste with regard thereto.  The Debtor shall maintain insurance coverage in accordance with good business practice against loss or damage to the Collateral by fire and other hazards, with such insurance carriers as are reasonably satisfactory to the Secured Party.  In the event of loss or damage to the Collateral, the Debtor shall give immediate written notice thereof to the Secured Party.  In such event, if the Debtor fails promptly to adjust or compromise any loss claims under the insurance, the Secured Party shall have the right, at their election, to adjust or compromise any such loss claims under such insurance.    

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4. The Secured Party is hereby authorized to from time to time to file one or more financing statements (and extensions thereof) under the Uniform Commercial Code (the “ Code ”), as in effect from time to time in the State of Nevada and/or any such other jurisdiction as Secured Party may decide, naming the Debtor as Debtor and the Secured Party as Secured Party and indicating therein the items of Collateral herein specified. The Debtor will from time to time execute such statements and such other notices, affidavits or other documents as the Secured Party may reasonably deem necessary to protect its Collateral interest hereunder.  At this time, the Secured Party is not requesting that the Debtor enter into any agreements other than this Agreement with respect to the Security Interest or the perfection of the Security Interest (such as landlord waivers, deposit account control agreements and intellectual property security agreements) but it reserves the right to do so in its sole discretion to protect its rights hereunder.  

5. The Debtor shall not, without at least thirty days prior written notice to the Secured Party, change its principal place of business, change the location of the Collateral (excluding sales of inventory in the ordinary course of business), or change its name or any trade name, in any such case which would require the filing of an additional financing statement or statements then or at any time in the future to preserve the Secured Party’s Security Interest in the Collateral.  

6. Upon the occurrence of any Events of Default (as determined under the Loan Documents) as a result of which the Secured Party require the payment of amounts due under the Loan Documents whether or not prior to the stated maturity date thereof, the Debtor shall, at the request of the Secured Party, forthwith assemble the Collateral at such reasonable place or places as the Secured Party designate in their request.  In addition to any other rights granted by law or under this Agreement, the Secured Party shall have the rights and remedies with respect to the Collateral of a secured party under the Code (whether or not the Code is in effect in the jurisdiction where the rights and remedies are asserted).  In addition, with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession or custody of the Debtor, the Secured Party may sell or cause to be sold in Nevada or elsewhere, in one or more sales or parcels, at such price as the Secured Party may deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, all or any of the Collateral, at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale (provided that any such transactions shall be in accordance with the Code and all other applicable laws), and to the extent permitted by law, the purchaser of any or all of the Collateral so sold shall thereafter hold the same absolutely free from any claim or right of whatsoever kind, any such demand, notice, claim or right being hereby expressly waived and released. Notwithstanding the foregoing, unless the Collateral threatens to decline speedily in value or is of a type sold on a recognized market, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or any intended disposition is to be made. Any requirement of reasonable notice shall be met if such notice is mailed, postage prepaid, to Debtor at the address given below, at least five days before the time of the sale or disposition.  Secured Party may, in its own name, or in the name of any designee, buy at any public sale and if the Collateral is of a type sold in a recognized market, or is of a type which is the subject of widely distributed standard price quotations, buy at private sale. The Secured Party shall apply the net cash receipts from any such sale of the Collateral to the payment of principal of and/or interest of all of the remaining Liabilities, whether or not then due. Notwithstanding that the Secured Party, whether on its own  

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behalf and/or on behalf of another or others, may continue to hold any of the Collateral and regardless of the value thereof, the Debtor shall be and remain liable for the payment in full, of principal and interest, of any balance of the unsatisfied Liabilities at any time unpaid.

7. Subsequent to the occurrence of an Event of Default under the Loan Documents, if, in its sole discretion, the Secured Party deems it desirable, it may remove any Collateral held by it or its agents from the state, city, county or other governmental subdivision or jurisdiction in which it may now or hereafter be held or deposited to any place which it designates and there deal with it as herein provided and in accordance with applicable law.  

8. In the event that the Debtor fails to do so after 30 days written notice from the Secured Party, the Secured Party may, but shall not be obligated to, contest, pay and/or discharge all liens, encumbrances, taxes or assessments on, or claims or demands against (other than Permitted Security Interests), any of the Collateral without the consent of the Debtor and take all actions and proceedings in its name or in the name of the Debtor or of any other appropriate person to remove or contest such liens, encumbrances, taxes or assessments, claims or demands; and all sums advanced or paid by the Secured Party, and all reasonable costs, attorneys’ fees and expenses relating thereto, shall be Liabilities within the terms of this Agreement.  

9. The Secured Party shall not be deemed to have modified, discharged, terminated or waived any of its rights hereunder or any terms, provisions or conditions hereof unless such modification, discharge, termination or waiver is in writing and signed by its duly authorized officers or agents. No such modification, discharge, termination or waiver, unless so expressly stated therein, shall be effective as to any transaction which occurs subsequent to the date thereof nor to any continuance thereof.  This Agreement may not be amended or modified without the prior written consent of the Debtor and the Secured Party.  

10. Upon reasonable notice during normal business hours, the Debtor agrees to allow any representative of the Secured Party (or any agent or nominee of the Secured Party) to visit and inspect any of the Debtor’s properties relating to the Collateral, to examine the books and records and accounts of the Debtor, all at such reasonable times and as often as the Secured Party may reasonably request; provided that the Debtor shall not be obligated to provide information (i) that the Debtor reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form reasonably acceptable to the Debtor) or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Debtor and its counsel; provided further that in each such case, the Debtor shall inform the Secured Party in writing of its reliance on sub-clause (i) or (ii).  The Secured Party agrees, and shall cause each of its agents or nominees, to hold in confidence and trust and not to use (except in connection with monitoring its investment and prospects of repayment) or disclose any information provided to or learned by it in connection with its rights under the Loan Documents, unless required by applicable law, a court order or any other governmental authority or to exercise or enforce any of its rights under the Loan Documents.  

11. This Agreement shall inure to the benefit of the parties hereto, and their respective successors and assigns; provided that no party shall assign its rights hereunder or delegate its obligations hereunder without the prior written consent of the other party.  No delay on the part of a party in exercising any power or right hereunder shall operate as a waiver thereof; nor shall  

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any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right.  All rights and remedies of the Secured Party with respect to the Liabilities or the Collateral, whether evidenced hereby or by any other instrument of paper, shall be cumulative and may be exercised singularly or concurrently.

12. All notices, requests, instructions and documents, hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, as follows:  

if to the Debtor:

Mount Tam Biotechnologies, Inc.

106 Main Street #4E

Burlington, VT 05401

Attn: Chief Executive Officer

 

if to the Secured Party:

 

Fromar Investments, LP  

C/O US Equity Holdings  

336 Bon Air Center #418  

Greenbrae, CA 94904  

Attn: Doug Froese  

 

or at such other address as either party may by written notice to the other designate for this purpose. If delivered personally, the date on which a notice, request, instruction or document is delivered shall be the date on which such delivery is made, and if delivered by mail, the date on which such notice, request, instruction or document is deposited in the mail shall be the date of delivery.

13. If any term, condition or provision of this Agreement or of any other agreement or document executed and/or delivered pursuant hereto is determined to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other term, condition or provision of this Agreement.  

14. This Agreement and the Loan Documents contain the entire agreement between the Party hereto with respect to the transactions contemplated.  

(b) This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable in the case of contracts made and to be performed entirely within that state.  

(c) Each party hereto shall cooperate with and shall take such further action and shall execute and deliver such further documents as may be reasonably requested by the other party in order to carry out the provisions and purposes of this Agreement (including but not limited to any actions necessary to release the Security Interest upon the repayment or termination of the Note).  

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(d) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  

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IN WITNESS WHEREOF, this Security Agreement has been duly executed by the parties hereto as of the date first above written.

DEBTOR :

 

MOUNT TAM BIOTECHNOLOGIES, INC.

 

 

 

By: /s/ Richard Marshak  

Name: Richard Marshak  

Title: Chief Executive Officer  

 

 

SECURED PARTY :  

 

FROMAR INVESTMENTS, LP

 

 

By: /s/ Doug Froese  

Name: Doug Froese  

Title: Partner  

 

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LINE OF CREDIT AGREEMENT

 

THIS LINE OF CREDIT AGREEMENT (the “ Agreement ”) is effective this 10 ^th day of May , 2019 (the “ Effective Date ”), by and between Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company (the “ Lender ”), and Mount Tam Biotechnologies, Inc., a Nevada corporation (the “ Borrower ”).  

 

RECITALS

 

WHEREAS , on or about September 18th, 2018, the Borrower and the Lender entered into that certain Convertible Promissory Note in the principal amount of $100,000.00 (such Convertible Promissory Note, together with any and all modifications, amendments and restatements shall be collectively referred to as the “ 2018 Note ”);  

 

WHEREAS, on March 4, 2019, the Borrower and the Lender entered into that certain Convertible Promissory Note in the principal amount of $40,000.00 (such Convertible Promissory Note, together with any and all modifications, amendments and restatements shall hereinafter be collectively referred to as the “ 2019 Note ” and the 2019 Note shall be referred to collectively with the 2018 Note as the “ Prior Notes ”);

 

WHEREAS , the Borrower desires to borrow from the Lender a maximum principal amount of Three Hundred Fifty Thousand Dollars ($350,000) (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 ”). 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  

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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, 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  

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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 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.  

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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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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 :  

 

CLIMATE CHANGE INVESTIGATION,

INNOVATION AND INVESTMENT COMPANY, LLC

 

 

By: /s/ James J. Farrell  

Name: James J. Farrell  

Title: Manager  

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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 Climate Change Investigation, Innovation and Investment Company, LLC 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 Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company, 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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PROMISSORY NOTE

 

Aggregate Amount: $350,000.00

Effective Date: May 1, 2019

FOR VALUE RECEIVED, Mount Tam Biotechnologies, Inc., a Nevada corporation (the “ Maker ”), promises to pay to Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company or its permitted assigns (the “ Holder ”) the principal sum of Three Hundred Fifty Thousand Dollars ($350,000.00), or such lesser amount as shall have been advanced by Lender, from time to time, to or on behalf of Borrower under the Loan Agreement (as defined below), together with interest on the unpaid principal balance(s) under the Loan Agreement from time to time outstanding at the rate of 8.0% per year, minus any amounts prepaid by the Maker pursuant to the terms of the Loan Agreement until paid in full. The Maker will make all payments in lawful money of the United States of America and shall be in immediately available funds. Subject to the terms of the Loan Agreement, all outstanding principal and accrued interest shall be due and payable on August 30, 2019 (the “ Maturity Date ”).

This Promissory Note is delivered pursuant to that certain Line of Credit Agreement dated as of the date hereof between the Maker and the Holder (the “ Loan Agreement ”) and is subject to the terms thereof. All capitalized terms not otherwise defined herein shall have the meaning given to them in the Loan Agreement. The payment of all amounts due under this Note, and the performance of all obligations of Maker under the Loan Agreement and this Note, are fully secured by the Security Agreement between the Maker and Holder effective as of the date hereof.

This Note shall become immediately due and payable without notice or demand upon the occurrence at any time of any of the following events of default (individually, an “ Event of Default ” and collectively, “ Events of Default ”):

 

(1) the Maker fails to pay any of the principal, interest or any other amounts payable under this Note when due and payable;  

 

(2) the Maker 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 Maker or all or any substantial portion of the Maker’s assets, 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;  

 

(3) an involuntary petition is filed, or any proceeding or case is commenced, against the Maker (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 Maker or to take possession, custody or control of any property of the Maker, or an order for relief is entered against the Maker in any of the foregoing;  

 

(4) the occurrence of a breach or default under any agreement, instrument or document to which the Maker is a party or by which it is bound, involving any obligation for borrowed money of more than $100,000 in the aggregate;  

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(5) the Maker materially breaches any other agreement with the Holder (including without limitation any security agreement); or  

 

(6) the Maker borrows any funds from a third party (other than Fromar Investments, LP, a Delaware limited partnership, or its affiliates) without repaying this Note in full or obtaining Holder’s written consent (excluding for this purpose account and trade payables incurred by the Maker in the ordinary course of business), or the Maker is party to a merger, or there is a sale of a controlling interest in the outstanding stock of the Maker, or a sale of all or substantially all of the Maker’s assets, or enters into an agreement for any of the foregoing.  

 

Upon the occurrence of an Event of Default, the Holder shall have then, or at any time thereafter, all of the rights and remedies afforded creditors generally by the applicable federal laws or the laws of the State of California.

 

Notwithstanding anything to the contrary, this Note may be prepaid, in whole or in part, without the prior written consent of the Holder.

 

All payments by the Maker under this Note shall be made without set-off or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed by law.

 

The Maker shall pay the reasonable costs and expenses (including reasonable attorney’s fees and disbursements) that it incurs and, upon presentation of appropriate receipts, that the Holder incurs with respect to the preparation, negotiation, execution and delivery of this Note, any security agreement and any other agreement or instrument contemplated hereby or thereby. After the occurrence of an Event of Default, the Maker shall pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs, incurred in connection with any act or actions taken to collect or otherwise satisfy the obligations due under this Note, any security agreement and any other agreement or instrument contemplated hereby or thereby.

 

No delay or omission on the part of the Holder in exercising any right under this Note shall operate as a waiver of such right or of any other right of the Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. This Note may not be amended or modified without the prior written consent of the Maker and the Holder.

 

All payments by the Maker under this Note shall be applied first to any fees and expenses due and payable hereunder, then to the accrued interest due and payable hereunder and the remainder, if any, to the outstanding principal.

 

The Maker hereby waives presentment, demand, protest and notices of every kind and assents to any permitted extension of the time of payment and to the addition or release of any other party primarily or secondarily liable hereunder.

 

All rights and obligations hereunder shall be governed by the laws of the State of California (without giving effect to principles of conflicts or choices of law) and this Note is executed as an instrument under seal.

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Neither the Maker nor the Holder may assign, sell or otherwise transfer this Note or any of their respective rights and duties hereunder without the prior written consent of the other party hereto.

 

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Note effective as of the effective date set forth above.

 

 

MAKER:

 

MOUNT TAM BIOTECHNOLOGIES, INC.

 

 

 

By: /s/ Richard Marshak  

Name: Richard Marshak

Title: Chief Executive Officer

 

 

HOLDER:

 

CLIMATE CHANGE INVESTIGATION,

INNOVATION AND INVESTMENT COMPANY, LLC

 

 

By: _ /s/ James J. Farrell  

Name: James J. Farrell  

Title: Manager  

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SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “ Agreement ”) by and between Mount Tam Biotechnologies, Inc., a Nevada corporation (the “ Debtor ”) on the one hand, and Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company, on the other hand (“ Secured Party ”) is effective as of May 1, 2019. In consideration of the financial accommodations extended to the Debtor by the Secured Party, the Debtor hereby agrees that the Secured Party shall have all of the rights given herein against the Debtor in addition to those given by law or by Line of Credit Agreement dated on or about the date hereof between the Debtor and the Secured Party, as amended (the “ Loan Agreement ”), the Promissory Note issued by the Debtor to the Secured Party on or about the date hereof, as amended (the “ Note ”), or any other agreement or document underlying the Liabilities:

1. The term “ Liabilities ” as herein used shall include all indebtedness, obligations and liabilities of any kind of Debtor to the Secured Party, whether now existing or hereafter incurred, including without limitation those pursuant to or arising under the Loan Agreement, the Note and any other promissory notes or any other future advances (the Loan Agreement, the Note, such other promissory notes and any other agreement evidencing future advances, together with this Agreement, the “ Loan Documents ”) executed between the Debtor and the Secured Party (as the same may be amended, modified or restated from time to time and any Loan Documents exchanged or substituted for the Loan Documents).    

2. In order to secure the performance of the Debtor’s payment and other obligations under the Loan Documents, the Debtor hereby grants to the Secured Party a security interest (the “ Security Interest ”), subject only to Permitted Security Interests, in all of the present and future assets of the Debtor and all products and proceeds of those assets, including but not limited to the following, to secure the Debtor’s due and punctual payment of the Loan Documents (hereinafter referred to collectively as the “ Collateral ”):  

(a)  All equipment, including machinery, motor vehicles, office equipment, furniture, fixtures, along with all other parts, tools, trade-ins, repairs, accessories, accessions, modifications, and replacements, whether now owned or subsequently acquired, constructed, or attached or added to, or placed in, the foregoing;

 

(b)  All inventory, wherever located, including goods, merchandise and other personal property, held for sale or lease or furnished or to be furnished under a contract of service, or constituting raw materials, work in process or materials used or consumed in the Debtor’s business, or consigned to others or held by others for return to the Debtor, whether now owned or subsequently acquired or manufactured and wherever located;

 

(c)  All accounts, including, without limitation, accounts receivable, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles, and any other obligations of any kind whether now existing or hereafter arising out of or in connection with the sale or lease of goods or the rendering of services, and all rights now or hereafter existing in and to all security agreements, notes, leases, licenses, franchises, supply agreements, and other

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contracts securing or otherwise relating to any such accounts, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles, or obligations;

 

(d)  All general intangibles, including, but not limited to, corporate names, trade names, trademarks, service marks, trade secrets, inventions, copyrights (including without limitation copyrights for computer programs) and all tangible property embodying copyrights, patents and patent applications, license agreements relating to any of the foregoing and income therefrom, books and records, blue prints and plans, computer programs, tapes and related electronic data processing software, and all corporate ledgers;

 

(e)  Any and all additions, accessions, substitutions or replacements to or for any of the foregoing;

 

(f)  Any and all products and proceeds of any or all of the foregoing, including, without limitation, cash, cash equivalents, tax refunds and the proceeds of insurance policies providing coverage against the loss or destruction of or damage to any of the Collateral, or any indemnity, warranty, or guarantee payable by reason of loss or damage to or otherwise with respect to any of the Collateral (whether or not the Debtor is the loss payee thereof);

 

(g)  All of the Debtor’s after-acquired property of the kinds and types described in paragraphs (a) - (f) herein; and

 

(h)  All records and data relating to any of the property described above, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of the Debtor’s right, title, and interest in and to all computer software required to utilize, create, maintain and process any of such records or data or electronic media.

“ Permitted Security Interests ” means (i) liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; (ii) liens arising from judgments, decrees, or attachments; (iii) liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (iv) purchase money security liens on equipment or vehicles that are hereafter acquired by the Debtor; and (v) the security interests granted on or about the date hereof to Fromar Investments, LP.

 

3. The Debtor shall preserve the Collateral, keep the Collateral in good repair, subject to ordinary wear and tear, and abstain from and not permit the commission of waste with regard thereto.  The Debtor shall maintain insurance coverage in accordance with good business practice against loss or damage to the Collateral by fire and other hazards, with such insurance carriers as are reasonably satisfactory to the Secured Party.  In the event of loss or damage to the Collateral, the Debtor shall give immediate written notice thereof to the Secured Party.  In such event, if the Debtor fails promptly to adjust or compromise any loss claims under the insurance, the Secured Party shall have the right, at their election, to adjust or compromise any such loss claims under such insurance.    

4. The Secured Party is hereby authorized to from time to time to file one or more financing statements (and extensions thereof) under the Uniform Commercial Code (the  

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“ Code ”), as in effect from time to time in the State of Nevada and/or any such other jurisdiction as Secured Party may decide, naming the Debtor as Debtor and the Secured Party as Secured Party and indicating therein the items of Collateral herein specified. The Debtor will from time to time execute such statements and such other notices, affidavits or other documents as the Secured Party may reasonably deem necessary to protect its Collateral interest hereunder.  At this time, the Secured Party is not requesting that the Debtor enter into any agreements other than this Agreement with respect to the Security Interest or the perfection of the Security Interest (such as landlord waivers, deposit account control agreements and intellectual property security agreements) but it reserves the right to do so in its sole discretion to protect its rights hereunder.

5. The Debtor shall not, without at least thirty days prior written notice to the Secured Party, change its principal place of business, change the location of the Collateral (excluding sales of inventory in the ordinary course of business), or change its name or any trade name, in any such case which would require the filing of an additional financing statement or statements then or at any time in the future to preserve the Secured Party’s Security Interest in the Collateral.  

6. Upon the occurrence of any Events of Default (as determined under the Loan Documents) as a result of which the Secured Party require the payment of amounts due under the Loan Documents whether or not prior to the stated maturity date thereof, the Debtor shall, at the request of the Secured Party, forthwith assemble the Collateral at such reasonable place or places as the Secured Party designate in their request.  In addition to any other rights granted by law or under this Agreement, the Secured Party shall have the rights and remedies with respect to the Collateral of a secured party under the Code (whether or not the Code is in effect in the jurisdiction where the rights and remedies are asserted).  In addition, with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession or custody of the Debtor, the Secured Party may sell or cause to be sold in Nevada or elsewhere, in one or more sales or parcels, at such price as the Secured Party may deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, all or any of the Collateral, at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale (provided that any such transactions shall be in accordance with the Code and all other applicable laws), and to the extent permitted by law, the purchaser of any or all of the Collateral so sold shall thereafter hold the same absolutely free from any claim or right of whatsoever kind, any such demand, notice, claim or right being hereby expressly waived and released. Notwithstanding the foregoing, unless the Collateral threatens to decline speedily in value or is of a type sold on a recognized market, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or any intended disposition is to be made. Any requirement of reasonable notice shall be met if such notice is mailed, postage prepaid, to Debtor at the address given below, at least five days before the time of the sale or disposition.  Secured Party may, in its own name, or in the name of any designee, buy at any public sale and if the Collateral is of a type sold in a recognized market, or is of a type which is the subject of widely distributed standard price quotations, buy at private sale. The Secured Party shall apply the net cash receipts from any such sale of the Collateral to the payment of principal of and/or interest of all of the remaining Liabilities, whether or not then due. Notwithstanding that the Secured Party, whether on its own behalf and/or on behalf of another or others, may continue to hold any of the Collateral and  

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regardless of the value thereof, the Debtor shall be and remain liable for the payment in full, of principal and interest, of any balance of the unsatisfied Liabilities at any time unpaid.

7. Subsequent to the occurrence of an Event of Default under the Loan Documents, if, in its sole discretion, the Secured Party deems it desirable, it may remove any Collateral held by it or its agents from the state, city, county or other governmental subdivision or jurisdiction in which it may now or hereafter be held or deposited to any place which it designates and there deal with it as herein provided and in accordance with applicable law.  

8. In the event that the Debtor fails to do so after 30 days written notice from the Secured Party, the Secured Party may, but shall not be obligated to, contest, pay and/or discharge all liens, encumbrances, taxes or assessments on, or claims or demands against (other than Permitted Security Interests), any of the Collateral without the consent of the Debtor and take all actions and proceedings in its name or in the name of the Debtor or of any other appropriate person to remove or contest such liens, encumbrances, taxes or assessments, claims or demands; and all sums advanced or paid by the Secured Party, and all reasonable costs, attorneys’ fees and expenses relating thereto, shall be Liabilities within the terms of this Agreement.  

9. The Secured Party shall not be deemed to have modified, discharged, terminated or waived any of its rights hereunder or any terms, provisions or conditions hereof unless such modification, discharge, termination or waiver is in writing and signed by its duly authorized officers or agents. No such modification, discharge, termination or waiver, unless so expressly stated therein, shall be effective as to any transaction which occurs subsequent to the date thereof nor to any continuance thereof.  This Agreement may not be amended or modified without the prior written consent of the Debtor and the Secured Party.  

10. Upon reasonable notice during normal business hours, the Debtor agrees to allow any representative of the Secured Party (or any agent or nominee of the Secured Party) to visit and inspect any of the Debtor’s properties relating to the Collateral, to examine the books and records and accounts of the Debtor, all at such reasonable times and as often as the Secured Party may reasonably request; provided that the Debtor shall not be obligated to provide information (i) that the Debtor reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form reasonably acceptable to the Debtor) or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Debtor and its counsel; provided further that in each such case, the Debtor shall inform the Secured Party in writing of its reliance on sub-clause (i) or (ii).  The Secured Party agrees, and shall cause each of its agents or nominees, to hold in confidence and trust and not to use (except in connection with monitoring its investment and prospects of repayment) or disclose any information provided to or learned by it in connection with its rights under the Loan Documents, unless required by applicable law, a court order or any other governmental authority or to exercise or enforce any of its rights under the Loan Documents.  

11. This Agreement shall inure to the benefit of the parties hereto, and their respective successors and assigns; provided that no party shall assign its rights hereunder or delegate its obligations hereunder without the prior written consent of the other party.  No delay on the part of a party in exercising any power or right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise  

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thereof or the exercise of any other power or right.  All rights and remedies of the Secured Party with respect to the Liabilities or the Collateral, whether evidenced hereby or by any other instrument of paper, shall be cumulative and may be exercised singularly or concurrently.

12. All notices, requests, instructions and documents, hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, as follows:  

if to the Debtor:

Mount Tam Biotechnologies, Inc.

106 Main Street #4E

Burlington, VT 05401

Attn: Chief Executive Officer

 

if to the Secured Party:

 

CC3I  

12 San Rafael Avenue

Belvedere, CA 94920

Attn: James J. Farrell  

 

or at such other address as either party may by written notice to the other designate for this purpose. If delivered personally, the date on which a notice, request, instruction or document is delivered shall be the date on which such delivery is made, and if delivered by mail, the date on which such notice, request, instruction or document is deposited in the mail shall be the date of delivery.

13. If any term, condition or provision of this Agreement or of any other agreement or document executed and/or delivered pursuant hereto is determined to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other term, condition or provision of this Agreement.  

14. This Agreement and the Loan Documents contain the entire agreement between the Party hereto with respect to the transactions contemplated.  

(b) This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable in the case of contracts made and to be performed entirely within that state.  

(c) Each party hereto shall cooperate with and shall take such further action and shall execute and deliver such further documents as may be reasonably requested by the other party in order to carry out the provisions and purposes of this Agreement (including but not limited to any actions necessary to release the Security Interest upon the repayment or termination of the Note).  

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(d) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  

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IN WITNESS WHEREOF, this Security Agreement has been duly executed by the parties hereto as of the date first above written.

DEBTOR :

 

MOUNT TAM BIOTECHNOLOGIES, INC.

 

 

 

By: /s/ Richard Marshak  

Name: Richard Marshak  

Title: Chief Executive Officer  

 

 

SECURED PARTY :  

 

CLIMATE CHANGE INVESTIGATION,

INNOVATION AND INVESTMENT COMPANY, LLC

 

 

By: /s/ James J. Farrell  

Name: James J. Farrell  

Title: Manager  

 

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INTERCREDITOR AGREEMENT

 

This Intercreditor Agreement (“ Agreement ”) is entered into as of the 1 ^st day of May, 2019, by and among Mount Tam Biotechnologies, Inc., a Nevada corporation (“ Borrower ”), Fromar Investments, LP, a Delaware limited partnership (“ Fromar ”), and Climate Change Investigation, Innovation and Investment Company, LLC, a California limited liability company (“ CC3IC ”). Fromar and CC3IC are jointly referred to herein as the “ Creditors ”.  

 

R E C I T A L S :

 

WHEREAS , on or about May 1, 2019, Borrower and Fromar entered into that certain Line of Credit Agreement and Promissory Note in the principal amount of up to $1,750,000.00 (such Line of Credit Agreement and Promissory Note, together with any and all modifications, amendments and restatements shall hereinafter be collectively referred to as the “ Fromar Loan ”);

 

WHEREAS, the Fromar Loan is secured by that certain Security Agreement between Borrower and Fromar dated May 1, 2019 (the “ Fromar Security Agreement ”);

 

WHEREAS , on or about May 1, 2019, Borrower and CC3IC entered into that certain Line of Credit Agreement and Promissory Note in the principal amount of up to $350,000.00 (such Line of Credit Agreement and Promissory Note, together with any and all modifications, amendments and restatements shall hereinafter be collectively referred to as the “ CC3IC Loan ”);

 

WHEREAS, the CC3IC Loan is secured by that certain Security Agreement between Borrower and CC3IC dated May 1, 2019, (the “ CC3IC Security Agreement ,” and together with the Fromar Security Agreement, the “ Security Agreements ”);

 

WHEREAS, each of the Security Agreements provides each of the Creditors with a security interest in and to the same Collateral (as that term is defined in each of the Security Agreements, which definition is incorporated herein by this reference). Such security interests of the Creditors are referred to herein individually as a “Security Interest” and collectively as the “Security Interests”;

 

WHEREAS , the parties hereto desire to enter into an agreement providing other matters for the coordination of the loans being provided by the Creditors and the security thereunder.

 

NOW THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. The Security Interests of the Creditors shall rank pari passu . In the event of a default with respect to the obligations secured by any Security Interest, the Creditors agree to jointly share in the amount realized from the Collateral in proportion to the amount of their respective debt with respect to which a default has occurred to the total debt of each of the Creditors with respect to which defaults have occurred.  Accordingly, each Creditor shall jointly exercise their respective rights under the Security Interests including selling and otherwise disposing of the Collateral thereunder.  In connection therewith, before taking any action to enforce any of its rights or remedies under such  

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Collateral, such Creditor shall give the other Creditors notice of such action, together with information regarding the facts and circumstances on which such action is grounded.

 

2. The priorities specified herein are applicable without regard to the time, manner or order of attachment or perfection of any security interest or the time or order of filing of financing statements or the giving or failure to give notice of acquisition or expected acquisition of purchase money or other security interest.  

 

3. This Agreement shall remain in effect until one Creditor gives written notice to the other Creditors of its intention to terminate.  No notice of termination shall impair the Security Interest acquired by any Creditor prior to the notice or affect the priorities thereof hereunder.  

 

4. This Agreement is solely for the benefit of the undersigned Creditors and no other persons shall have any rights, benefits, priority, or interest under or because of the existence of this Agreement .  

 

5. The Creditors shall endeavor to notify each other of any amendment or modification in their respective notes, loan agreements and documents, but the failure to do so shall not create a cause of action against the Creditor failing to give notice or create a claim or right on behalf of any third party.  Each Creditor, upon request to another Creditor, is authorized to provide copies of all modifications or amendments and copies of all other documentation relevant to the Collateral.  The Creditors agree not to increase the amount of their respective loan facilities unless they have obtained the written consent of the other Creditors.  

 

6. The Creditors shall provide the other Creditors with a copy of any notice of the occurrence of an event of default simultaneously with the delivery of such notice to Borrower, but the failure to do so shall not affect the validity of such notice or create a cause of action against such Creditor for failing to give such notice. Borrower hereby consents to the Creditors sharing information with respect to the Collateral or Borrower’s business between each other.  

 

7. Miscellaneous.  

 

A. Counterparts .   This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. This Agreement shall become effective when executed by all parties hereto.  

 

B. Amendment .  Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing which purports to terminate, amend, supplement, waive or modify this Agreement or any of the terms hereof and is signed by all parties hereto.  

 

C. Successors and Assigns .  The terms of this Agreement shall be binding on, and inure to the benefit of, the parties hereto and their respective successors and assigns.  

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D. Governing Law . This Agreement, including all matters of construction, validity and performance, shall in all respects be governed by, and construed in accordance with, the laws of the State of California.  

 

E. Notices .  Except as otherwise provided in this Agreement, all notices hereunder shall be in writing and shall be given by mail, personal delivery, overnight courier, telecopy or any other customary means of written communication at the addresses set forth on the signature pages hereof, or at such other addresses as may be specified by written notice to the parties hereto, and shall become effective when received by the addressees.  

 

F. Severability of Provisions .  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceable of such provision in any other jurisdiction.  The provisions of this Agreement shall prevail over any inconsistent provisions in any agreement between any of the parties hereto.  

 

G. Headings . The headings used herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.  

 

H. Entire Agreement .  This Agreement embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings between the parties hereto relating to the subject matter hereof.  

 

I. Recitals .  The Recitals to this Agreement are incorporated into and shall constitute a part of this Agreement.  

 

[Signature Page Follows]

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IN WITNESS WHEREOF duly authorized officers of the undersigned have executed the foregoing Intercreditor Agreement.  

 

BORROWER:   MOUNT TAM BIOTECHNOLOGIES, INC.     By: /s/ Richard Marshak Name: Richard Marshak Title: Chief Executive Officer
CREDITORS:
FROMAR INVESTMENTS, LP     By: /s/ Doug Froese Name: Doug Froese   Title: Partner	ADDRESS:   Fromar Investments, LP C/O US Equity Holdings 336 Bon Air Center #418 Greenbrae, CA 94904 Attn: Doug Froese
CLIMATE CHANGE INVESTIGATION, INNOVATION AND INVESTMENT COMPANY, LLC     By: _ /s/ James J. Farrell Name: James. J. Farrell   Title: Manager	ADDRESS:   12 San Rafael Avenue Belvedere, CA 94920

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