Exhibit 10.1


 


U.S. SMALL BUSINESS
ADMINISTRATION PAYCHECK PROTECTION PROGRAM NOTE


 


	SBA Loan #:	9056777100
	SBA Loan Name:	Paycheck Protection Program Loan
	Loan Date:	4/25/2020
	Loan Amount:	$176,300.00
	Interest Rate:	1.00% fixed
	Borrower:	ARCH THERAPEUTICS, INC
	Lender:	First Republic Bank


 


This Note represents the
Loan (as defined below) made by Lender pursuant to the Paycheck Protection Program (the “PPP”). Borrower confirms
and agrees that the Loan is subject in all respects to the Coronavirus Aid, Relief, and Economic Security Act and the requirements,
rules, regulations, procedures and guidance concerning the PPP in effect as of the date of this Note and as may be promulgated
from time to time after the date of this Note by the U.S. Department of Treasury and/or SBA (collectively, the “PPP Regulations”),
including, without limitation, all PPP Regulations applicable to permitted uses of loan proceeds and loan forgiveness.


 


		1.	PROMISE TO PAY



 


In return for the Loan, Borrower promises to pay to
the order of Lender the amount of $176,300.00


 


Dollars, interest on the unpaid principal balance, and
all other amounts required by this Note.


 


		2.	DEFINITIONS



 


“Loan” means the loan evidenced by
this Note.


 


“Loan Documents”
means the documents related to this Loan signed by Borrower, including the Borrower Application Form for the Paycheck Protection
Program, the Borrower Certificate executed and delivered by Borrower in connection with this Note and all other attestations, certificates,
agreements and documents delivered by Borrower to Lender in connection with the Loan.


 


“SBA” means
the Small Business Administration, an Agency of the United States of America.


 


		3.	PAYMENT TERMS



 


Borrower must make all payments at the place Lender
designates. The payment terms for this Note are:


 


Initial Deferment Period: No payments are
due on this Loan for 6 months from the date of first disbursement of this Loan. Interest will continue to accrue during the deferment
period.





 






     


     


    

 


Loan Forgiveness:
Borrower may apply to Lender for forgiveness of the amount due on this Loan in an amount equal to the sum of the following costs
incurred by Borrower during the 8-week period beginning on the date of first disbursement of this Loan:


 


		a.	Payroll costs



		b.	Any payment of interest on a covered mortgage obligation (which shall not include any prepayment
of or payment of principal on a covered mortgage obligation)



		c.	Any payment on a covered rent obligation



		d.	Any covered utility payment



 


The amount of Loan forgiveness
shall be calculated (and may be reduced) in accordance with the requirements of the PPP, including the provisions of Section 1106
of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more than 25% of the amount forgiven
can be attributable to non-payroll costs. If Borrower has received an EIDL advance, then that amount shall be subtracted from the
loan forgiveness amount.


 


Maturity: This Note
will mature on the date that is two years from date of first disbursement of this Loan.


 


Repayment
Terms:


 


Interest Rate: The
interest rate on this Note is one percent per year. The interest rate is fixed and will not be changed during the life of the Loan.


 


Installment Payments
Following Deferment Period: Borrower must pay monthly principal and interest payments on the outstanding principal balance
of the Loan amortized over the term of the Loan, unless otherwise forgiven in whole or part in accordance with the PPP Regulations,
beginning 7 months from the date of the first disbursement of this Loan until the maturity date. Payments of principal and interest
must be made on such date as designated by Lender in the months during which they are due. Any Loan balance remaining following
forgiveness pursuant to the PPP Regulations, if any, will be fully reamortized over the remaining term of the Loan.


 


Application of Installment
Payments: Lender will apply each installment payment first to pay interest accrued to the day Lender received the payment,
then to bring principal current, and will apply any remaining balance to reduce principal.


 


Payment at Maturity.
All remaining principal and accrued interest is due and payable two years from the date of first disbursement of this Loan.


 


Loan Prepayment: Notwithstanding
any provision in this Note to the contrary:


 


Borrower may prepay this
Note at any time without penalty. Borrower may prepay 20 percent or less of the unpaid principal balance at any time without
notice. If Borrower prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower must:


 


		a.	Give Lender written notice;



		b.	Pay all accrued interest; and



		c.	If the prepayment is received less than 21 days from the date Lender receives
the notice, pay an amount equal to 21 days interest from the date Lender receives the notice, less any interest accrued during
the 21 days and paid under b. of this paragraph.



 




     


     


    

 


If Borrower does not prepay within 30 days from
the date Lender receives the notice, Borrower must give Lender a new notice.


 


Non-Recourse: Lender
and SBA shall have no recourse against any individual shareholder, member or partner of Borrower for non-payment of the Loan, except
to the extent that such shareholder, member or partner uses the Loan proceeds for an unauthorized purpose.


 


		4.	DEFAULT



 


Borrower is in default under this Note if Borrower
does not make a payment when due under this Note, or if Borrower:


 


		A.	Fails to do anything required by this Note and other
Loan Documents;



 


		B.	Defaults on any other loan with Lender;



 


		C.	Does not disclose, or anyone acting on its behalf
does not disclose, any material fact to Lender or SBA;



 


		D.	Makes, or anyone acting on its behalf makes, (i) a
materially false or misleading representation to Lender or SBA or (ii) a false or incorrect statement or certification in any
certificate, attestation or agreement included in any Loan Documents;



 


		E.	Defaults on any loan or agreement with another creditor,
if Lender believes the default may materially affect Borrower’s ability to pay this Note;



 


		F.	Fails to pay any taxes when due;



 


		G.	Becomes the subject of a proceeding under any bankruptcy
or insolvency law;



 


		H.	Has a receiver or liquidator appointed for any part
of their business or property;



 


		I.	Makes an assignment for the benefit of creditors;



 


		J.	Has any adverse change in financial condition or business
operation that Lender believes may materially affect Borrower’s ability to pay this Note;



 


		K.	Reorganizes, merges, consolidates, or otherwise changes
ownership or business structure without Lender’s prior written consent; or



 


		L.	Becomes the subject of a civil or criminal action
that Lender believes may materially affect Borrower’s ability to pay this Note.



 


		5.	LENDER’S RIGHTS IF THERE IS A DEFAULT



 


Without notice or demand and without giving up any of
its rights, Lender may:


 


		A.	Require immediate payment of all amounts owing under
this Note;



 


		B.	Collect all amounts owing from Borrower; or



 




     


     


    

 


		C.	File suit and obtain judgment.



 


		6.	LENDER’S GENERAL POWERS



 


Without notice and without Borrower’s
consent, Lender may:


 


		A.	Incur expenses to collect amounts due under this Note, enforce the terms
of this Note or any other Loan Document. Among other things, the expenses may include payments for property taxes, prior liens,
insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If Lender incurs such expenses,
it may demand immediate repayment from Borrower or add the expenses to the principal balance; and



 


		B.	Release anyone obligated to pay this Note.



 


		7.	WHEN FEDERAL LAW APPLIES; GOVERNING LAW AND VENUE



 


When SBA is the holder, this
Note will be interpreted and enforced under federal law, including SBA regulations. As to this Note, Borrower may not claim or
assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.


 


When the SBA is not the holder,
this Note will be interpreted and enforced under the laws of the State of California. All judicial proceedings arising in or under
or related to the Loan, this Note or any of the other Loan Documents may be brought in any state or federal court located in a
state where Lender has an office (each, a “Lender’s State”). By execution and delivery of this Note, Borrower
generally and unconditionally:


(a) consents to nonexclusive
personal jurisdiction in each Lender’s State; (b) waives any objection as to jurisdiction or venue in each Lender’s
State; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably
agrees to be bound by any judgment rendered thereby in connection with the Loan, this Loan or the other Loan Documents.


 


		8.	SUCCESSORS AND ASSIGNS



 


Under this Note, Borrower includes
its successors, and Lender includes its successors and assigns.


 


Lender may at any time assign
to one or more assignees all or a portion of its rights and obligations under this Note.


 


		9.	OTHER AGREEMENTS AND GENERAL PROVISIONS



 


		A.	Borrower understands and agrees, and waives and releases Lender, as follows:



 


		a.	Forgiveness of the Loan is only available for principal
that is used for the limited purposes that qualify for forgiveness under the PPP Regulations, and that to obtain forgiveness,
Borrower must request it and must provide documentation in accordance with the PPP Regulations, and certify that the amounts Borrower
is requesting to be forgiven qualify under the PPP Regulations. Borrower also understands that Borrower shall remain responsible
under the Loan for any amounts not forgiven, and that interest payable under the Loan will not be forgiven but that the SBA may
pay the Loan interest on forgiven amounts.



 


		b.	Forgiveness is not automatic and Borrower must request
it. Borrower is not relying on Lender for its understanding of the requirements for forgiveness such as eligible expenditures, necessary records/documentation,
or possible reductions due to changes in number of employees or compensation. Rather Borrower will consult the PPP Regulations
and SBA’s program materials.



 




     


     


    

  


		B.	All individuals and entities signing this Note are
jointly and severally liable.



 


		C.	Borrower waives all suretyship defenses.



 


		D.	Borrower must sign all documents necessary at any
time to comply with the Loan Documents.



 


		E.	Lender may exercise any of its rights separately or
together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any
of them.



 


		F.	Borrower may not use an oral statement of Lender or
SBA to contradict or alter the written terms of this Note.



 


		G.	If any part of this Note is unenforceable, all other
parts remain in effect.



 


		H.	To the extent allowed by law, Borrower waives all
demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also
waives any defenses based upon any claim that Lender did not obtain any guarantee.



 


		10.	FURTHER ASSURANCES



 


The Loan and this Note are
subject in all respects to the PPP Regulations, including any PPP Regulations promulgated after the date of this Note. If after
the date of this Note, any further PPP Regulations are promulgated or if the PPP Regulations mandate a form of or the terms of
the note, loan authorization or other loan documents for PPP loans, Borrower agrees to execute any further instruments and documents
and to take such further actions as Lender requests, including exchanging this Note for new note, executing an amendment to this
Note, or executing any other loan documents that Lender requests. In the event of any exchange of or amendment to this Note, the
disbursement date applicable to the Loan (and all related time periods under the PPP Regulations and the maturity date applicable
to this Loan) shall be the same as set forth in this Note.


 


		11.	BORROWER’S NAME AND SIGNATURE



 


By signing below, each individual or entity executing
this Note as “Borrower” becomes obligated under this Note as Borrower.


 


BORROWER:


 


	ARCH THERAPEUTICS, INC	 
	 	 	 
	By:	/s/ Richard E Davis	 
	 	RICHARD E DAVIS	 
	 	CHIEF FINANCIAL OFFICER	 
	 	 	 
	 	4/25/2020	 
	 	Date