Exhibit 10.1

 

THIS NOTE AND ANY SHARES ACQUIRED UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN OPINION
OF COUNSEL SATISFACTORY TO Mount Tam Biotechnologies, Inc. THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

See Schedule 1 for Principal Amount(s) Effective Date: November 9, 2015

 

FOR VALUE RECEIVED, Mount Tam Biotechnologies, Inc., a Nevada corporation (the
“Maker”), promises to pay to 0851229 BC Ltd. or its permitted assigns (the
“Holder”) the principal sum of the loans set forth on Schedule 1 hereto (as such
schedule may be updated for future loans), together with interest on the unpaid
principal balance(s) under this Note from time to time outstanding at the rate
of 3% per year until paid in full. Subject to the conversion provisions set
forth herein, all outstanding principal and accrued interest shall be due and
payable on March 18, 2017. Interest on the outstanding amounts due under this
Note shall be computed for each draw down from the date of each loan (to be set
forth on Schedule 1 hereto) on the basis of a year of 365 days for the actual
number of days elapsed. All cash payments by the Maker under this Note shall be
in immediately available funds.

 

As mutually agreed by the Maker and Holder, Holder may (but is not required to)
lend additional funds under this Note, and the Holder and the Maker shall update
Schedule 1 hereto to reflect the dates and amounts of such draw-downs. In the
event of any dispute, Holder’s books and records will be dispositive on the
issue of the amounts and dates of the loans absent manifest error.

 

The payment of all amounts due under this Note, and the performance of all
obligations of Maker under this Note, are fully secured by the Security
Agreement between the Maker and Holder effective as of November 9, 2015 (the
“Security Agreement”).

 

Effective upon the closing of any Financing (as defined below) while this Note
is outstanding, at the sole and exclusive option of the Holder, some or all of
the outstanding principal and interest under this Note (the “Outstanding
Amount”) can be converted into shares of the same class and series of capital
stock of the Maker issued to investors in the Financing (the “Financing
Securities”) at a conversion price equal to 80% of the price per share of
Financing Securities paid by the other investors in the Financing. “Financing”
means the issuance of stock by the Maker or any security convertible into,
exchangeable for, or exercisable for stock of the Maker, after the date hereof;
provided that the primary purpose of such issuance must be to raise capital (and
as such excludes, for the avoidance of doubt, issuances of stock of the Maker or
securities convertible into, exchangeable for or exercisable for stock of the
Maker to employees, directors, consultants or other service providers in
connection with the provision of goods or services to the Maker).

 

 

 

 

Effective upon the closing of any Financing resulting in gross proceeds to the
Maker, in one or a series of related transactions, of at least $2,000,000
(including the aggregate amount of any indebtedness converted into equity
securities in such Financing) in which either (i) the investor leading the
negotiation with the Maker is a bona fide institutional investor or (ii) if the
investor leading the negotiation is not a bona fide institutional investor, such
Financing includes commercially reasonable customary terms and conditions for an
equity financing of an early stage biopharmaceutical company, which may (but
shall not be required to) include one or more of the following terms:
liquidation preferences, dividend rights, protective provisions, voting rights,
anti-dilution provisions, conversion rights, board representation for the
investors, redemption rights, preemptive rights, information rights,
registration rights, drag-along rights, rights of first refusal and co-sale
rights (in the case a Financing satisfies either clause (i) or (ii) above, a
“Qualified Financing”) then the aggregate Outstanding Amount shall automatically
without any further action of the parties be converted into shares of the same
class and series of capital stock of the Maker issued to investors in the
Qualified Financing (the “Qualified Financing Securities”) at a conversion price
equal to 80% of the price per share of Qualified Financing Securities paid by
the other investors in the Qualified Financing. The parties acknowledge and
agree that a Financing which contains commercially reasonable customary terms
and conditions for an equity financing of an early stage biopharmaceutical
company does not have to contain all of the examples of terms listed in
sub-clause (ii) of the preceding sentence.

 

The Maker shall notify the Holder in writing of the anticipated occurrence of a
Financing at least 20 days prior to the closing date of the Financing or any
Qualified Financing.

 

In lieu of the Maker issuing any fractional shares to the Holder upon the
conversion of this Note, the Maker shall pay to the Holder an amount equal to
the product obtained by multiplying the applicable conversion price by the
fraction of a share not issued pursuant to the conversion of this Note.

 

Upon the conversion of this Note pursuant to the terms set forth herein, the
Holder agrees to (i) execute and deliver to the Maker a customary 180-day
lock-up agreement in connection with an initial public offering, and (ii)
execute and deliver to the Maker all transaction documents entered into in
connection with such conversion, which may include a purchase agreement,
investor rights agreement, voting agreement, right of first refusal and co-sale
agreement and/or other ancillary agreements, with customary representations and
warranties and transfer restrictions. The Holder agrees in connection with any
conversion of this Note to deliver the original of this Note (or a notice to the
effect that the original Note has been lost, stolen or destroyed and an
agreement acceptable to the Maker whereby the Holder agrees to indemnify the
Maker from any loss incurred by it in connection with this Note) prior to
conversion.

  

This Note shall become immediately due and payable without notice or demand (but
subject to the conversion rights set forth herein) 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;

 

(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 without repaying this Note in
full (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 not be prepaid, in whole
or in part, without the prior written consent of the Holder. The Maker shall
disclose in writing to the Holder if and when it is in material discussions with
respect to a Qualified Financing or a Financing.

 

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.

 

Until the conversion of this Note, the Holder shall not have or exercise any
rights by virtue of this Note as a stockholder of the Maker.

 

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.

 

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.

 

The Maker acknowledges that neither this Note nor any securities issuable upon
the conversion of this this Note (collectively, the “Note Securities”) will be
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or any state securities laws. The Holder represents that (i) it is acquiring the
Note Securities for its own account, for investment purposes only and not with a
view to, or for sale in connection with, any distribution and (ii) it is an
“accredited investor” under Regulation D promulgated under the Securities Act.

 

This Note amends and restates in their entirety the terms and conditions of the
loans made by the Holder to the Maker on November 9, 2015 (the aggregate
principal amount of which was $66,004.25), November 19, 2015 (the aggregate
principal amount of which was $25,000), December 17, 2015 (the aggregate
principal amount of which is $50,000), January 15, 2016 (the aggregate principal
amount of which is $35,000) and February 2, 2016 (the aggregate principal amount
of which was $40,000) (collectively, the “Previous Loans”). Upon the execution
of this Note, (i) the terms and conditions of the Previous Loans shall be
automatically without any further action of the parties be amended and restated
to the terms of this Note, (ii) any terms and conditions of the Previous Loans
which conflict with the terms and conditions of this Note shall be of no further
force and effect and (iii) each party shall only have the rights and obligations
set forth herein or in the Security Agreement with respect to the Previous
Loans. This Note constitutes the entire contract between the parties hereto with
regard to the subject matter hereof. It supersedes any other agreements,
representations or understandings (whether oral or written and whether express
or implied) that relate to the subject matter hereof (including any terms of the
Previous Loans).

 

 

 

 

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/ David R. Wells    
Print Name: David R. Wells   Title: Interim Chief Financial Officer

 

HOLDER:   0851229 BC Ltd.       By:  /s/ Doug Froese     Print Name: Doug Froese
  Title: Director  

 

 

 

 

Schedule 1

 

Schedule of Drawdowns

 

Date

Amount Maker Signature       11/9/15 $66,004.25

/s/ David R. Wells

Interim Chief Financial Officer

11/19/15 $25,000

/s/ David R. Wells

Interim Chief Financial Officer

12/17/15 $50,000

/s/ David R. Wells

Interim Chief Financial Officer

1/15/16 $35,000

/s/ David R. Wells

Interim Chief Financial Officer

2/2/16 $40,000

/s/ David R. Wells

Interim Chief Financial Officer