Exhibit 10.2

 

THIS NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into
as of March 15, 2010, by and between PhytoMedical Technologies, Inc. a Nevada
corporation (the “Company”) having an address at 100 Overlook Drive, 2nd Floor,
Princeton, New Jersey 08540,  and James F. Lynch, having an address at  145
Wentworth Drive, Berkeley Heights, NJ 07922  (“Optionee”):

 

            This Stock Option Agreement has been executed and delivered pursuant
to Paragraph 3 of the Employment Agreement dated as of March 15, 2010, between
the Optionee and the Company (the “Employment Agreement”).

 

            In consideration of the covenants herein set forth, the parties
hereto agree as follows:

 

            1.         Option Grant

 

(a)        Date of Grant Authorized:     March 15, 2010 

(b)        Number of Shares:                  4,000,000 

(c)        Exercise Price:                         $0.04 (Share price as of
market close March 15, 2010)

 

            2.         Acknowledgements.

 

          (a)          Optionee is the Company’s President and Chief Executive
Officer and Director.
.

 

          (b)          The Board of Directors (the “Board” which term shall
include an authorized committee of the Board of Directors) have this day
approved the granting of this Option subject to the execution of this Agreement;
and

 

         (c)           The Board has authorized the granting to Optionee of a
nonstatutory stock option (“Option”) to purchase shares of common stock of the
Company (“Stock”) upon the terms and conditions hereinafter stated and pursuant
to an exemption from registration under the Securities Act of 1933, as amended
(the “Securities Act”).

 

            3.         Shares; Price.

 

The Company hereby grants to Optionee the right to purchase, upon and subject to
the terms and conditions herein stated, the number of shares of Stock set forth
in Section 1above (the “Shares”) for cash (or other consideration as is
authorized under the Plan and acceptable to the Board, in their sole and
absolute discretion) at the price per Share set forth in Section 1above (the
“Exercise Price”), such price being not less than [e.g., 100%] of the fair
market value per share of the Shares covered by this Option as of the date
hereof.

 

            4.         Term of Option; Continuation of Service.

 

Subject to the early termination provisions set forth in Sections 7 and 8
hereof, this

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Option shall expire, and all rights hereunder to purchase the Shares shall
terminate 10 years from the date hereof. Nothing contained herein shall be
construed to interfere in any way with the right of the Company or its
shareholders to remove or not elect Optionee as an officer of the Company, or to
increase or decrease the compensation of Directors from the rate in effect at
the date hereof.

 

             5.        Vesting of Option.

 

Subject to the provisions of Sections 7 and 8 hereof, this Option shall become
exercisable during the term that Optionee serves as an officer of the Company as
follows:

 

a)      as to 600,000 shares when, to the Board’s sole determination and
satisfaction, as a result of your efforts, the Company’s proprietary
pharmacological compound, ‘D11B’, achieves IV formulation and stability
milestones, enabling further development;

 

b)      as to 600,000 when, to the Board’s sole determination and satisfaction,
as a result of your efforts, the Company’s proprietary pharmacological compound,
‘D11B’, achieves toxicity and pharmacokinetic milestones, enabling further
development;

 

c)      as to 300,000 shares when, to the Board’s sole determination and
satisfaction, as a result of your efforts, the Company successfully prepares an
Investigator’s Brochure (IB) in accordance with ICH guidelines, for a product or
products related to its proprietary pharmacological compound, ‘D11B’;

 

d)     as to 450,000 shares when, to the Board’s sole determination and
satisfaction, as a result of your efforts, the Company successfully files an
Investigational New Drug Application (IND) with the US Food & Drug
Administration for a product or products related to its proprietary
pharmacological compound, ‘D11B’;

 

e)      as to 300,000 shares when, to the Board’s sole determination and
satisfaction, as a result of your efforts, the Company successfully administers
‘first patient-first dose’ for a product or products related to its proprietary
pharmacological compound, ‘D11B’;

 

f)       as to 1,000,000 shares when, in the Board’s sole determination and
satisfaction, as a result of your efforts, the Company successfully adds a new
compound (or product(s) derived therefrom) to its pipeline other than compounds
(or products derived from any compounds contemplated) by the Company’s license
agreement with the Trustees of Dartmouth College;

 

g)      as to 250,000 shares (500,000 shares in the aggregate), on each of,
March  15, 2012  and March  15, 2013;

 

h)      as to 62,500 (250,000 shares in aggregate) on each of June 15, 2010,
September 15, 2010, December 15, 2010 and March 15, 2011

 

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Anything herein to the contrary notwithstanding if there shall be a Change of
Control (as defined below) at any time during the term of the Employment
Agreement, then any unvested Options shall vest on the date that such Change of
Control was consummated. For purposes of this Agreement “Change of Control”
means (i) the acquisition, directly or indirectly, during the term of the
Employment Agreement, by any person (as such  term is defined in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 in one  transaction or a
series of related transactions (other than through an offer and sale of
securities pursuant to a registration statement filed with the United States
Securities and Exchange Commission), of securities of the Company representing
in excess of fifty percent (50%) or more of the combined voting power of the
Company’s.

 

            All determinations and calculations with respect hereto shall be
made by the Board or any committee thereof to which the Board has delegated such
authority, in good faith in accordance with applicable law, the Articles of
Incorporation and By-laws of the Company, in its sole discretion, and shall be
final, conclusive and binding on all persons, including the Optionee and the
personal representative of the Optionee’s estate.

 

               6.      Exercise.

 

This Option shall be exercised, as to the vested shares, by delivery to the
Company of (a) written notice of exercise stating the number of Shares being
purchased (in whole shares only) and such other information set forth on the
form of Notice of Exercise attached hereto as Exhibit A hereto, (b) a check or
cash in the amount of the Exercise Price of the Shares covered by the notice (or
such other consideration as has been approved by the Board of Directors
consistent with the Plan) and (c) a written investment representation as
provided for in Section 13 hereof. This Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
shall be exercisable only by Optionee during his or her lifetime.

 

            7.         Termination of Service.

 

If the Employment Agreement is terminated, effective as of the Termination Date
(as defined in Paragraph 2 of the Employment Agreement, no further installments
shall vest pursuant to Section 5, and the maximum number of Shares that Optionee
may purchase pursuant hereto shall be limited to the number of Shares that were
vested as of the Termination Date. Thereupon, Optionee shall have the right at
any time within ninety (90) days following the Termination Date (the
“Termination Exercise Period”) to exercise this Option to the extent vested and
purchase Shares, to the extent, but only to the extent, that Optionee could have
exercised this Option as of the Termination Date; following the expiration of
the Termination Exercise Period, this Agreement shall terminate in its entirety
and be of no further force or effect.

 

              8.       Death of Optionee.

 

If the Optionee shall die during the term of the Employment Agreement,
Optionee’s personal representative or the person entitled to Optionee’s rights
hereunder may at any time within 180 following the date of Optionee’s death,
exercise this Option and purchase Shares to the extent, but only to the extent,
that Optionee could have exercised this Option as of the date of

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Optionee’s death; following the expiration of the aforesaid 180 day exercise
period, this Agreement shall terminate in its entirety and be of no further
force or effect.

 

            9.         No Rights as Shareholder.

 

Optionee shall have no rights as a shareholder with respect to the Shares
covered by any installment of this Option until the effective date of issuance
of the Shares following exercise of this Option, and no adjustment will be made
for dividends or other rights for which the record date is prior to the date
such stock certificate or certificates.

 

            10.       Recapitalization.

 

Subject to any required action by the shareholders of the Company, the number of
Shares covered by this Option, and the Exercise Price thereof, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a subdivision or consolidation of shares or the payment of
a stock dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been “effected without receipt of consideration by the Company.”

 

            In the event of a proposed dissolution or liquidation of the
Company, a merger or consolidation in which the Company is not the surviving
entity, or a sale of all or substantially all of the assets or capital stock of
the Company (collectively, a “Reorganization”), this Option shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board; provided, however, if Optionee shall be an officer at the
time such Reorganization is approved by the stockholders, Optionee shall have
the right to exercise this Option to the extent vested, for a period beginning
30 days prior to the consummation of such Reorganization and ending as of the
Reorganization or the expiration of this Option, whichever is earlier, subject
to the consummation of the Reorganization. In any event, the Company shall
notify Optionee, at least 30 days prior to the consummation of such
Reorganization, of his exercise rights, if any, and that the Option shall
terminate upon the consummation of the Reorganization.

 

            Subject to any required action by the shareholders of the Company,
if the Company shall be the surviving entity in any merger or consolidation,
this Option thereafter shall pertain to and apply to the securities to which a
holder of Shares equal to the Shares subject to this Option would have been
entitled by reason of such merger or consolidation, and the installment
provisions of Section 5 shall continue to apply.

 

            In the event of a change in the shares of the Company as presently
constituted, which is limited to a change of all of its authorized Stock without
par value into the same number of shares of Stock with a par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Option.

 

            To the extent that the foregoing adjustments relate to shares or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final,

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binding and conclusive. Except as hereinbefore expressly provided, Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
Stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the number and price
of Shares subject to this Option shall not be affected by, and no adjustments
shall be made by reason of, any dissolution, liquidation, merger, consolidation
or sale of assets or capital stock, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any class.

 

            The grant of this Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure or to merge, consolidate, dissolve
or liquidate or to sell or transfer all or any part of its business or assets.

 

            11.       Taxation upon Exercise of Option.

 

Optionee understands that, upon exercise of this Option, Optionee will recognize
income, for Federal and state income tax purposes, in an amount equal to the
amount by which the fair market value of the Shares, determined as of the date
of exercise, exceeds the Exercise Price. The acceptance of the Shares by
Optionee shall constitute an agreement by Optionee to report such income in
accordance with then applicable law and to cooperate with Company in
establishing the amount of such income and corresponding deduction to the
Company for its income tax purposes. Withholding for federal or state income and
employment tax purposes will be made, if and as required by law, from Optionee’s
then current compensation, or, if such current compensation is insufficient to
satisfy withholding tax liability, the Company may require Optionee to make a
cash payment to cover such liability as a condition of the exercise of this
Option.

 

            12.       Modification, Extension and Renewal of Options.

 

The Board or a duly appointed committee thereof, may modify, extend or renew
this Option or accept the surrender thereof (to the extent not theretofore
exercised) and authorize the granting of a new option in substitution therefore
(to the extent not theretofore exercised), subject at all times to the Code and
applicable securities laws. Notwithstanding the foregoing provisions of this
Section 12, no modification shall, without the consent of the Optionee, alter to
the Optionee’s detriment or impair any rights of Optionee hereunder.

 

13.       Investment Intent; Restrictions on Transfer.

 

             (a)       Optionee represents and agrees that if Optionee exercises
this Option in whole or in part, Optionee will in each case acquire the Shares
upon such exercise for the purpose of investment and not with a view to, or for
resale in connection with, any distribution thereof; and that upon such exercise
of this Option in whole or in part Optionee (or any person or persons entitled
to exercise this Option under the provisions of Sections 7 and 8 hereof) shall
furnish to the Company a written statement to such effect, satisfactory to the
Company in form and substance. If the Shares represented this Option are
registered under the Securities Act, either before or after the exercise this
Option in whole or in part, the Optionee shall be relieved of the

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foregoing investment representation and agreement and shall not be required to
furnish the Company with the foregoing written statement.

 

                        (b)        Optionee further represents that Optionee has
had access to the financial statements or books and records of the Company, has
had the opportunity to ask questions of the Company concerning its business,
operations and financial condition, and to obtain additional information
reasonably necessary to verify the accuracy of such information.

 

                         (c)       Unless and until the Shares represented by
this Option are registered under the Securities Act, all certificates
representing the Shares and any certificates subsequently issued in substitution
therefor and any certificate for any securities issued pursuant to any stock
split, share reclassification, stock dividend or other similar capital event
shall bear legends in substantially the following form:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’) OR UNDER THE APPLICABLE OR
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY
STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED MARCH 15, 2010 BETWEEN THE
COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE
SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

 

and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stop transfer instructions with respect to
the Shares have been placed with the Company’s transfer agent.

 

             14.      Stand-off Agreement.  Optionee agrees that, in connection
with any registration of the Company’s securities under the Securities Act, and
upon the request of the Company or any underwriter managing an underwritten
offering of the Company’s securities, Optionee shall not sell, short any sale
of, loan, grant an option for, or otherwise dispose of any of the Shares (other
than Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of up to one
year following the effective date of registration of such offering.

 

            15.       Restriction Upon Transfer.  This Option is not
transferable by the Optionee, except as contemplated by Section 8 hereof.

 

            16.       Notices.  Any notice required to be given pursuant to this
Option or the Plan shall be in writing and shall be deemed to be delivered upon
receipt or, in the case of notices by the Company, five (5) days after deposit
in the U.S. mail, postage prepaid, addressed to Optionee at

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the address last provided by Optionee for use in Company records related to
Optionee.

 

            17.       Agreement Subject to Plan; Applicable Law. This Option is
made pursuant to the Plan and shall be interpreted to comply therewith. A copy
of such Plan is available to Optionee, at no charge, at the principal office of
the Company. Any provision of this Option inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Option has been granted, executed and delivered in the State of Nevada, and the
interpretation and enforcement shall be governed by the laws thereof and subject
to the exclusive jurisdiction of the courts therein.

 

            IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.

 

             PhytoMedical Technologies, Inc. 

 

             By: _/s/ Greg Wujek__________________________________________ 

            Name:  Greg Wujek

            Title:    President & CEO

 

 

 

/s/ James F. Lynch      ________________________________________________ 

            James F. Lynch

 

Optionee 

 

 (One of the following, as appropriate, shall be signed): 

 

 

I certify that as of March 15, 2010 I am not married

 

__________________________________   

Optionee        

 

[If married please have spouse sign below]

 

            By his or her signature, the undersigned spouse of the Optionee
named herein hereby agrees   to be bound by the provisions of   the foregoing
NONSTATUTORY STOCK OPTION AGREEMENT 

 

 

_____/s/ Lynn M. Lynch__________________________      Dated: March 15, 2010

Spouse of Optionee 

 

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Exhibit  A

 

NOTICE OF EXERCISE

(Stock Option)

To:     PHYTOMEDICAL Technologies, Inc.

Attention:

            The undersigned hereby elects to purchase ______________ shares (the
“Purchased Shares”) of the Company pursuant to the terms of the Stock Option
Agreement Dated March 15, 2010 between the undersigned and PhytoMedical
Technologies, Inc and the undersigned, herewith tenders 
$_______________________ in payment of exercise price in full, together with all
applicable transfer taxes, if any, for the Purchased Shares, by:

            (a) Check (subject to collection); or

            (b) Wire transfer in accordance with wiring instructions provided by
the Company.

            Please issue a certificate or certificates representing said Shares
in the name of the undersigned as is specified below and forward the same to the
address set forth below.

 

__________________________________

Signature of Optionee

 

Print Name of Optionee: _______________________________________

 

Address For Delivery of Shares:

___________________________________

___________________________________

___________________________________

___________________________________

 

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