Exhibit 10.1
SECURITIES EXCHANGE
AGREEMENT
This Securities Exchange
Agreement (this “ Agreement ”) is dated as of
July 28, 2009 , between PhytoMedical Technologies, Inc., a
Nevada corporation (the “Company ”), and each
security holder identified on the signature pages hereto (each,
including its successors and assigns, a “ Purchaser
” and collectively, the “ Purchasers
”).
WHEREAS
, subject to the terms
and conditions set forth in this Agreement and pursuant to Section
3(a)(9) of the Securities Act of 1933, as amended (the “
Securities Act ”), the Company desires to exchange
with each Purchaser, and each Purchaser, severally and not jointly,
desires to exchange with the Company, securities of the Company as
more fully described in this Agreement.
WHEREAS,
pursuant to the terms
of the Subscription Agreements dated as of September 11, 2007
between the Company and each of the Purchasers (the “
Subscription Agreements ”), the Purchasers purchased
from the Company an aggregate of 10,897,081 units, each consisting
of one (1) share of the Company’s common stock $0.0001 par
value (“ Common Stock ”) and one (1) Class A
Warrant (collectively, the “ Class A Warrants
”).
WHEREAS,
each Class A Warrant
entitles the holder thereof to purchase one share of Common Stock
at an exercise price of $0.40 per share (the “
Exercise Price ”) through September 10,
2010.
WHEREAS,
the Class A Warrants
provide for a reduction in the Exercise Price of the Class A
Warrant if the Company or any
Subsidiary thereof, as applicable, at any time while this Warrant
is outstanding, shall sell or grant any option to purchase, or sell
or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling
any Person to acquire shares of Common Stock, at an effective price
per share less than the then Exercise Price.
WHEREAS,
currently hold all of
the issued and outstanding Class A Warrants.
WHEREAS
, each of the
Purchasers and Company believe that it is in their respective best
interest to provide for the exchange and cancellation of the Class
A Warrants in accordance with the terms of this
Agreement.
NOW,
THEREFORE, in
consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each
Purchaser agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions. In addition to the terms defined
elsewhere in this Agreement the following terms have the meanings
set forth in this Section 1.1:
“
Affiliate ” means any Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 405 under the Securities
Act.
“ Closing
” means the closing of the exchange of the Securities
pursuant to Section 2.1 .
“ Closing
Date ” means the Trading Day when all of the Transaction
Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to deliver the Class A Warrants to be
exchanged and (ii) the Company’s obligations to deliver the
Exchange Shares have been satisfied or waived.
“
Commission ” means the United States Securities and
Exchange Commission.
“ Common Stock Equivalents
” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any
time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive Common
Stock.
“ Exchange
Act ” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“ Liens
” means a lien, charge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction.
“ Material
Adverse Effect ” means (i) a material adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the
Company, taken as a whole but excluding the effect of the economy
in general on the Company’s business, or (iii) a material
adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any
Transaction Document.
“
Person ” means an individual or corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of
any kind.
“
Proceeding ” means an action, claim, suit,
investigation or proceeding (including, without limitation, an
informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
“ Rule
144 ” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such
Rule.
“ Short
Sales ” means all “short sales” as defined in
Rule 200 of Regulation SHO under the Exchange Act and any other
transaction designed to hedge the risk of ownership of the Common
Stock, however structured.
“ To the
knowledge of the Company ” means the actual knowledge of
the management of the Company.
“ Trading
Day ” means a day on which the principal Trading Market
is open for trading.
“ Trading
Market ” means the following markets or exchanges on
which the Common
Stock is listed or quoted for
trading on the date in question: the NYSE Amex, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange or the OTC Bulletin Board.
“ Transaction
Documents ” means this Agreement and all schedules and
exhibits hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
“ Transfer Agent ” means Holladay Stock Transfer, Inc., located at 2939
North 67th Place, Suite C, Scottsdale, AZ 85251,
and any successor transfer agent of
the Company.
ARTICLE
I
PURCHASE AND
SALE
2.1
Closing. On the Closing Date, upon the terms and
subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the
parties hereto, the Purchasers agree, severally and not jointly, to
exchange all of their respective Class A Warrants for an aggregate
for the Exchange Shares, on the basis of one (1) Exchange Share for
every ten (10) Class A Warrants. Each Purchaser shall deliver to
the Company their Class A Warrants and the Company shall deliver to
each Purchaser their respective shares of Common Stock as
determined pursuant to Section 2.2(a) and the other items set forth
in Section 2.2 issuable at the Closing. Upon
satisfaction of the conditions set forth in Sections 2.2 and
2.3 , the Closing shall occur at the offices of Sierchio &
Company, LLP. 430 Park Avenue or such other location as the parties
shall mutually agree. Anything herein to the contrary
notwithstanding, no fractional shares shall be issued in exchange
for the Class A Warrants.
2.2
Deliveries.
(a) On
the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) this Agreement
duly executed by the Company;
(ii) a certificate
evidencing the requisite Exchange Shares to be registered in
the name of such Purchaser as set forth opposite such
Purchaser’s name on Exhibit A hereto; and
(iii) an
officer’s certificate from the Chief Executive Officer,
dated as of the Closing Date, certifying and setting forth (A)
the names, signatures and positions of the Persons authorized
to execute this Agreement and any other Transaction Documents
to which the Company is a party, (B) a copy of the resolutions of
the Company authorizing the execution, delivery and
performance of this Agreement, and (C) certifying that the
representations and warranties of the Company are true and correct
as of the Closing Date and that the Company has satisfied all of
the conditions to the Closing.
(b) On
the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by such
Purchaser; and
(ii) such
Purchaser’s Class A Warrant, properly endorsed such that the
Warrants may be cancelled by the Company.
2.3
Closing Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being met:
(i)
the accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the
Purchasers contained herein;
(ii)
all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have
been performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement.
Anything herein to the
contrary notwithstanding, the Company shall have no obligations
whatsoever hereunder unless all of the issued and outstanding Class
A Warrants are tendered in exchange for the Exchange Shares in
accordance with this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being
met:
(i)
the accuracy in all material
respects when made and on the Closing Date of the representations
and warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section
2.2(a) of this Agreement; and
(iv) from
the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market (except for any suspension
of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing).
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES
3.1
Representations and Warranties of the Company.
Except as set forth in the disclosure schedules, if
any, attached to this Agreement or the SEC Reports (collectively,
“ Disclosure Schedules ”), which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:
(a
) Organization
and Qualification. The Company is an entity
duly
incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently
conducted.
(b)
Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
therewith. Each Transaction Document to which it is a
party has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
(c)
Issuance of the Securities. The Exchange Shares
are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Exchange Shares,
when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction
Documents.
(d)
Capitalization. The Company has not issued any
capital stock since its most recently filed periodic report under
the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans and pursuant to the
conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the
Exchange Act, and the issuance of shares in connection with the
Transaction Documents No Person (other than the Purchasers) has any
right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(e)
SEC Reports; Financial Statements. The Company
has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to
file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “ SEC
Reports ”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. The financial statements of the
Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP,
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(f)
Material Changes. Since the date of the latest
audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed
prior to the date hereof, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued
any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. Except for the
issuance of the Securities contemplated by this Agreement, no
event, liability or development has occurred or exists with respect
to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be
required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that
has not been publicly disclosed at least one Trading Day prior to
the date that this representation is made.
3.2
Representations and Warranties of the Purchasers.
Each Purchaser, for itself and for no other Purchaser,
hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:
(a)
Organization; Authority. Such Purchaser is an
entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated
by the Transaction Documents have been duly authorized by all
necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a
party has been duly executed by such Purchaser, and when delivered
by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
(b)
Own Account . Such Purchaser understands that the
Exchange Shares are “restricted securities” and have
not been registered under the Securities Act or any
applicable
state securities law and is
acquiring the Exchange Shares as principal for its own account and
not with a view to or for distributing or reselling such Securities
or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Exchange Shares in violation of the
Securities Act or any applicable state securities law and has no
direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such
Exchange Shares (this representation and warranty not limiting such
Purchaser’s right to sell the Exchange Shares pursuant in
compliance with applicable federal and state securities laws) in
violation of the Securities Act or any applicable state securities
law. Such Purchaser is acquiring the Exchange Shares
hereunder in the ordinary course of its business.
(c)
Purchaser Status . At the time such Purchaser was
offered the Exchange Shares, it was, and as of the date hereof it
is, either: (i) an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities
Act. Such Purchaser is not required to be registered as
a broker-dealer under Section 15 of the Exchange Act.
(d)
Experience of Such Purchaser. Each Purchaser, either
alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so
as to be capable of evaluating the merits and risks of the
prospective exchange of the Class A Warrants for the Exchange
Shares, and has so evaluated the merits and risks of such
transaction. Such Purchaser is able to bear the economic
risk of an acquisition of
