Exhibit 10.1





 





 
Exhibit 10.1




EXCHANGE AGREEMENT


 


This
EXCHANGE AGREEMENT (this “Agreement”) is made
effective as of January 17, 2017 (the “Execution Date”) by and
among MetaStat, Inc., a Nevada corporation (the “Company”) and Dolphin
Offshore Partners, L.P. (the “Investor”).


 



RECITALS


 


WHEREAS, the
Company and the Investor entered into that certain Note Purchase
Agreement dated July 30, 2015 (the “Note Purchase
Agreement”), pursuant to which the Company issued to
the Investor a non-convertible promissory note (the
“Promissory
Note”), in the aggregate principal amount of
$1,200,000 and having an initial maturity date of July 31, 2016, in
accordance with the terms of the Note Purchase
Agreement;


 


WHEREAS, the
Company and the Investor entered into that certain Amendment No. 1
to Promissory Note effective February 12, 2016 (the
“Note
Amendment”), pursuant to which the Company and the
Investor amended certain terms of the Promissory Note and extended
the maturity date thereof to December 31, 2016 (the
“Note Maturity
Date”);


 


WHEREAS, effective
October 21, 2016, $600,000 principal amount of the Promissory Note
plus $48,000 of accrued interest thereon were automatically
exchanged into the securities issued in Company’s private
placement, consisting of shares of the Company’s common
stock, par value $0.0001 per share (the “Common Stock”), shares of
the Company’s Series A-2 Preferred Stock, convertible into
Common Stock and common stock purchase warrants to purchase shares
of Common Stock;


WHEREAS, $600,000
principal amount of the Promissory Note plus accrued and unpaid
interest (the “Note
Outstanding Balance”) are currently
outstanding;


WHEREAS, the
Company and the Investor entered into that certain OID Note
Purchase Agreement dated February 12, 2016 (the “OID Note Purchase
Agreement”), pursuant to which the Company issued to
the Investor a non-convertible original issue discount promissory
note (the “OID
Note”), in the aggregate principal amount of $240,000
and having an initial maturity date of August 12, 2016, in
accordance with the terms of the OID Note Purchase
Agreement;


 


WHEREAS, the
Company and the Investor entered into that certain Amendment No. 1
to the OID Note effective August 12, 2016 (the “Note Amendment”),
pursuant to which the Company and the Investor amended certain
terms of the OID Note, including increasing the principal amount to
$264,000, extending the maturity date to November 12, 2016, and
granting the Company an option (the “Extension Option”) to
further extend the OID Note Maturity Date by increasing the OID
Principal Amount an additional 10%;


 


WHEREAS, effective
November 12, 2016, the Company exercised the Extension Option, and
the principal amount of the OID Note was increased to $290,400 (the
“OID Note
Outstanding Balance”) and the maturity date was
extended to February 12, 2017 (the “OID Note Maturity
Date”);


 


WHEREAS, the
Company desires, and the Investor agrees, that the Investor
exchange (the “Exchange”) the Promissory
Note and the OID Note for a new convertible promissory note (the
“Convertible
Note”), in the form attached hereto as Exhibit A, upon the terms and
conditions set forth herein. The Convertible Note shall have a
principal balance of $1,000,000, a maturity date of September 30,
2017, accrue interest at a rate of ten (10%) per annum, and a
conversion price equal to $2.00 per share. The shares of Common
Stock the Convertible Note are exercisable into shall be referred
to as the “Conversion
Shares”;


 


WHEREAS, in
consideration for the Exchange, the Company will issue to the
Investor a five-year common stock purchase warrant to purchase
100,000 shares of Common Stock with an exercise price per share of
$3.00 (the “Exchange
Warrant”), upon the terms and conditions set forth
herein. The shares of Common Stock the Exchange Warrant are
exercisable into shall be referred to as the “Warrant Shares”;
and


 




 

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WHEREAS, each of
the Convertible Note, the Conversion Shares, the Exchange Warrant
and the Warrant Shares is intended to qualify as an exempted
security under Section 3(a)(9) of the Securities Act of 1933, as
amended (the “Securities
Act”).

 






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 the Investor agree as follows:


 



ARTICLE I



THE EXCHANGE


 


1.1           Closing.
Subject to the terms and conditions set forth in this Agreement,
the Company and the Investor shall exchange the Promissory Note at
the Note Outstanding Balance and the OID Note at the OID Note
Outstanding Balance in consideration for the issuance of the
Convertible Note with a total principal balance of $1,000,000 and
the Exchange Warrant. The closing of the Exchange and issuance of
the Convertible Note and the Exchange Warrant (the
“Closing”) shall take
place at the offices of the Company, 27 Drydock Ave., 2nd Floor, Boston, MA
02210 on the date hereof or such other date as the parties shall
agree (the “Closing
Date”).


 


1.2           Exchange.


 


(a)           Investor
Obligations. At the Closing, the Investor shall deliver or
promptly cause to be delivered to the Company (i) the original
Promissory Note, (ii) the original OID Note, and (iii) an executed
copy of this Agreement.


 


(b)           Company
Obligations. At the Closing, the Company shall deliver or
promptly cause to be delivered to the Investor (i) the Convertible
Note, (ii) the Exchange Warrant, and (iii) an executed copy of this
Agreement.


 


(c)           
Promissory Note and OID
Note. Effective as of the Closing Date, the Promissory Note
and the OID Note shall be deemed automatically canceled and of no
further force or effect and shall thereafter represent only the
right to receive the Convertible Note and the Exchange Warrant
(sometimes collectively referred to herein as the
“New
Securities”).


 



ARTICLE II



REPRESENTATIONS AND WARRANTIES


 


2.1           Investor
Representations and Warranties. The Investor hereby
represents and warrants to the Company as follows on the Execution
Date and the Closing Date:


 


(a)           Organization;
Authority. The Investor, if not a natural person, is an
entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization. The Investor has
the requisite power and authority to enter into and to consummate
the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder. This Agreement has been duly
executed by the Investor, and when delivered by the Investor in
accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Investor, enforceable against it
in accordance with its terms.


 


(b)           
Ownership of the
Promissory Note and OID Note. The Investor is the sole owner
of the Promissory Note and the OID Note, free and clear of any and
all liens, claims and encumbrances of any kind.


 


 




 

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(c)           Investment
Intent. The Investor is acquiring the New Securities as
principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such New Securities
or any part thereof, except pursuant to sales that are exempt from
the registration requirements of the Securities Act and/or sales
registered under the Securities Act. The Investor does not have any
agreement or understanding, directly or indirectly, with any person
or entity to distribute the New Securities. Notwithstanding
anything in this Section
2.1(c) to the contrary, by making the representations
herein, the Investor does not agree to hold the New Securities for
any minimum or other specific term and reserves the right to
dispose of the New Securities at any time in accordance with or
pursuant to a registration statement or an exemption from the
registration requirements under the Securities Act.


 


(d)           Investor
Status. At the time the Investor was offered the New
Securities, it was, and at the date hereof it is, an
“accredited investor” as defined in Rule 501(a) of
Regulation D under the Securities Act. The Investor is not a
broker-dealer.


 


(e)           General
Solicitation. The Investor is not acquiring the New
Securities as a result of or subsequent to any advertisement,
article, notice or other communication regarding the New Securities
published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other
general solicitation or general advertisement.


 


(f)           
Reliance. The
Investor understands and acknowledges that (i) the New
Securities are being offered and sold to it without registration
under the Securities Act in a transaction that is exempt from the
registration provisions of the Securities Act, and (ii) the
availability of such exemption depends in part on, and the Company
will rely upon the accuracy and truthfulness of, the foregoing
representations, and the Investor hereby consents to such
reliance.


 


(g)           
Brokers and
Finders. The Investor has no knowledge of any person who
will be entitled to or make a claim for payment of any finder fee
or other compensation as a result of the consummation of the
transactions contemplated by this Agreement.


 


2.2           Company
Representations and Warranties. The Company hereby makes the
following representations and warranties to each Investor on the
Execution Date and on the Closing Date:


 


(a)           Organization
and Qualification. The Company is a corporation
incorporated, validly existing and in good standing under the laws
of the State of Nevada, with the requisite corporate power and
authority to own and use its properties and assets and to carry on
its business as currently conducted. The Company is duly qualified
as a foreign corporation to do business and is in good standing in
every jurisdiction where the nature of the business it conducts
makes such qualification necessary, except where the failure to do
so would not have a material adverse effect on the
Company.


 


(b)           
Authorization;
Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and to issue the Convertible Note
and the Conversion Shares, upon conversion of the Convertible Note
in accordance with the terms of the Convertible Note, to issue the
Exchange Warrant and Warrant Shares, upon exercise of the Exchange
Warrant in accordance with the terms of the Exchange Warrant and
otherwise to carry out its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and any
other agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the
Company’s Board of Directors, and no further consent or
authorization of the Company, its Board of Directors (including any
committee thereof) or any class of the Company’s stockholders
is required. This Agreement, the Convertible Note, and the Exchange
Warrant have been duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and
binding obligations of the Company enforceable against the Company,
in accordance with their 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.


 


 




 

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(c)           Issuance
of the New Securities. The Convertible Note, the Conversion
Shares, the Exchange Warrant, and the Warrant Shares when issued at
the Closing, will be duly authorized, validly issued, fully paid
and non-assessable and will be free and clear of all taxes, liens,
options or other encumbrances of any nature (except for those
imposed under applicable securities laws).


 


(d)           
No Conflicts. The
execution, delivery and performance of this Agreement, the Joinder
Agreement and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance, as applicable, of the
Conversion Shares and Warrant Shares will not, (i) result in a
violation of the certificate of incorporation of the Company (the
“Certificate of
Incorporation”) or the bylaws of the Company (the
“Bylaws”) or (ii) result
in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws
and regulations and rules or regulations of any self-regulatory
organizations to which either the Company or its securities are
subject) applicable to the Company or by which any property or
asset of the Company is bound or affected. The Company is not in
violation of its Certificate of Incorporation, Bylaws or other
organizational documents. The Company is not in default (and no
event has occurred which, with notice or lapse of time or both,
would put the Company in default) under, nor has there occurred any
event giving others (with notice or lapse of time or both) any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company is a
party except for such violations, defaults or events that have had
a material adverse effect.


 


(e)           
Absence of Certain
Changes. Since August 31, 2016, there has been no material
adverse change and no material adverse development in the business,
properties, operations, prospects, financial condition or results
of operations of the Company, except as disclosed in the reports,
schedules, forms, statements and other documents (including all
financial statements and schedules thereto and all exhibits
included therein and documents incorporated by reference therein)
required to be filed by the Company with the Securities and
Exchange Commission (the “SEC”) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended, filed before the date hereof. The Company has not taken
any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy or receivership law nor does
the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings
with respect to the Company.


 


(f)           
Certain Fees. No
fees or commissions will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement.


 



ARTICLE III



OTHER COVENANTS


 


3.1           Securities
Laws. The Investor acknowledges that the Convertible Note,
the Conversion Shares, Exchange Warrant and Warrant Shares have not
been registered under the Securities Act and may only be disposed
of pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities
Act.


 


3.2           Restrictive
Legend. The Investor agrees to the imprinting of the
following legend on the Convertible Note and Exchange
Warrant:


 


THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.


 


 




 

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3.3           

Reservation of Shares. The
Company shall at all times have authorized and reserved for the
purpose of issuance a sufficient number of Conversion Shares and
Warrant Shares.






 



ARTICLE IV



MISCELLANEOUS


 


4.1           Fees
and Expenses. Except as set forth in this Section 4.1, each
party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection
with the issuance of the New Securities.


 


4.2           Entire
Agreement; Amendments. This Agreement together with the
exhibits and schedules hereto, dated as of the Execution Date,
contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents,
exhibits and schedules.


 


4.3           Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email at the email address
specified in this Section prior to 6:00 p.m. (New York City time)
on a business day, against electronic confirmation thereof, (ii)
the business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email at the email address specified in this Agreement later than
6:00 p.m. (New York City time) on any date, against electronic
confirmation thereof, (iii) the business day following the date of
mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and
communications shall be as follows:


 



If to the
Company: 

MetaStat,
Inc.






27
Drydock Ave., 2nd Floor


Boston,
MA 02210


Facsimile No.:
(646) 304-7086


Email:
dschniederman@metastat.com


Attn:
Daniel Schneiderman


 


With
copies to (which shall     


not
constitute notice):  
                 
           Loeb & Loeb
LLP

           
      
                                                             
345 Park Ave.


New
York, NY 10154


Facsimile No.:
(212) 898-1184


Email:
dlevine@loeb.com


Attn:
David Levine


 



If to the
Investors: 

At the address of
the Investor set forth on Schedule 2.1 to this
Agreement.






 


or such
other address as may be designated in writing hereafter, in the
same manner, by such person or entity.


 


4.4           Amendments;
Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an
amendment, by the Company and by the Investor. No waiver of any
default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.


 


 




 

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4.5           Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


4.6           Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns. The Investor may not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the
Company.


 


4.7           No
Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person or
entity.


 


4.8         
Governing Law. This
Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. The Company
and the Investor irrevocably consent to the jurisdiction of the
United States federal courts and state courts located in the State
of New York in any suit or proceeding based on or arising under
this Agreement and irrevocably agree that all claims in respect of
such suit or proceeding may be determined in such
courts.


 


4.9           Survival.
The representations and warranties contained herein shall survive
until the expiration of the first anniversary following the
Closing. The agreements and covenants contained herein shall
survive the Closing and the delivery of the New Securities until
the expiration of the applicable statute of limitations (if any)
therefor.


 


4.10        
Execution. This
Agreement may be executed in one or more counterparts, all of which
when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood
that all parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission or a
scanned copy via electronic mail, such signature shall create a
valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and
effect as if such facsimile or scanned signature page were an
original thereof.


 


4.11         
Severability. In
case any one or more of the provisions of this Agreement shall be
invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and
the parties will attempt to agree upon a valid and enforceable
provision which shall be a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this
Agreement.


 


4.12        
Further Assurances.
The parties hereto agree that each shall execute and deliver any
and all further agreements, instruments, certificates and other
documents, and shall take any and all action, as any of the parties
hereto may reasonably deem necessary or desirable in order to carry
out the intent of the parties to this Agreement.


4.13         
Attorneys’
Fees. If either party shall commence an action or proceeding
to enforce any provisions relating to the obligations to close the
transactions contemplated by this Agreement prior to the Closing,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such action or
proceeding.


 


[signature
page follows]




 

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IN
WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.


 


COMPANY:


 


METASTAT,
INC.


 


By:
________________________



Name:
Douglas A. Hamilton


Title:
President & CEO


 


 


 


[additional
signature page follows]


 




[Company
Signature Page to Exchange Agreement]


 

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INVESTOR:


 



DOLPHIN OFFSHORE PARTNERS, L.P.


 


 



By:                                                       








Name:




Title: 




 


 


 


 




[Investor
Signature Page to Exchange Agreement]


 

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Exhibit A


 


[Form
of Convertible Note]


 


 




 

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Exhibit B


 


[Form
of Exchange Warrant]


 




 

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