UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
 
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to 14a-12
 
VistaGen Therapeutics, Inc.
(Name of Registrant as Specified In Its Charter)
 
_________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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July 26, 2019
Dear Stockholders of VistaGen Therapeutics, Inc.:
 
You are cordially invited to attend the 2019 Annual Meeting of Stockholders of VistaGen Therapeutics, Inc. (the Annual Meeting). The Annual Meeting will be held at the San Francisco Airport Marriott Waterfront Hotel, located at 1800 Old Bayshore Highway, Burlingame, California 94010, on Thursday, September 5, 2019, at 10:00 a.m. local time.
 
Details of the business to be conducted at the Annual Meeting are described both in the Notice of Internet Availability of Proxy Materials (the Notice) you have received in the mail and in this Proxy Statement. We have also made our Annual Report on Form 10-K for our fiscal year ended March 31, 2019 (Annual Report) available to you with this Proxy Statement. We encourage you to read our Annual Report. It includes our audited financial statements and provides information about recent company highlights, upcoming milestones and progress executing on key priorities of our corporate strategy.
 
As part of our efforts to conserve environmental resources and prevent unnecessary corporate expenses, we have elected to provide access to our proxy materials electronically over the Internet, rather than producing and mailing paper copies. We believe that providing our proxy materials over the Internet increases our stockholders’ ability to access information they need, while also conserving natural resources and reducing the costs of our Annual Meeting.
 
Regardless of whether you plan to attend our Annual Meeting in person, please read the accompanying Proxy Statement and then vote by Internet, telephone or postal mail as promptly as possible. Please refer to the Notice for instructions on submitting your votes. Voting promptly will save us additional expense in further soliciting proxies and will ensure that your shares are represented at the Annual Meeting.
 
Our Board of Directors has unanimously approved the proposals set forth in the accompanying Proxy Statement and we recommend that you vote in favor of each such proposal.
 
We look forward to seeing you at our Annual Meeting.
 
 

 
 
Sincerely,
 
 
 

 
 
 
Jon S. Saxe
Chairman of the Board of Directors
 
 
 
 
 
 
 
 
VistaGen Therapeutics, Inc.
343 Allerton Avenue
South San Francisco, CA 94080
Tel. (650) 577-3600
Fax (888) 482-2602
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on September 5, 2019
 
Dear Stockholders of VistaGen Therapeutics, Inc.:
 
We are pleased to invite you to attend the 2019 Annual Meeting of Stockholders (the Annual Meeting) of VistaGen Therapeutics, Inc., a Nevada corporation (the Company, us, we or our), which will be held at the San Francisco Airport Marriott Waterfront Hotel, located at 1800 Old Bayshore Highway, Burlingame, California 94010, on Thursday, September 5, 2019, at 10:00 a.m. local time, for the following purposes:
 
1.
to elect six directors to our Board of Directors, each to serve until our 2020 Annual Meeting of Stockholders, or until her or his respective successor is elected and qualified;
 
2.
to approve an amendment to the Company’s Restated Articles of Incorporation to increase the authorized number of shares of common stock from 100.0 million shares to 175.0 million shares (the Charter Amendment);
 
3.
to approve the adoption of our 2019 Omnibus Equity Incentive Plan (2019 Plan ) and ratify all issuances thereunder to date;
 
4.
to approve the adoption of our 2019 Employee Stock Purchase Plan (2019 ESPP );
 
5.
to approve, on a non-binding advisory basis, the compensation paid to our Named Executive Officers;
 
6.
to ratify the appointment of OUM & Co. LLP as our independent registered public accountants for our fiscal year ending March 31, 2020; and
 
7.
to vote upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.
 
These matters are more fully discussed in the attached Proxy Statement.
 
We have elected to provide access to our proxy materials primarily electronically over the Internet, pursuant to the U.S. Securities and Exchange Commission’s (SEC) “notice and access” rules. We believe this process expedites our stockholders’ receipt of proxy materials, conserves natural resources and reduces the costs of the Annual Meeting. On or about July 26, 2019, we mailed a Notice of Internet Availability of Proxy Materials (the Notice) to each of our stockholders entitled to notice of and to vote at the Annual Meeting, which contained instructions for accessing the attached Proxy Statement, our Annual Report on Form 10-K for our fiscal year ended March 31, 2019 (the Annual Report) and voting instructions. The Notice also included instructions on how you can receive a paper copy of your proxy materials. The Proxy Statement and the Annual Report both are available on the Internet at: www.envisionreports.com/VTGN
 
 
 
 
 
 
The close of business on Friday, July 12, 2019 (the Record Date) has been fixed as the Record Date, for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. Only holders of record of our common stock at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. A complete list of these stockholders will be available for examination by any of our stockholders for purposes pertaining to the Annual Meeting at our corporate offices, located at 343 Allerton Avenue, South San Francisco, California 94080, during normal business hours for a period of ten days prior to the Annual Meeting, and at the time and place of the Annual Meeting.
 
 
 
 
 
YOUR VOTES ARE IMPORTANT
 
All stockholders are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to vote by Internet, telephone or postal mail in advance of the Annual Meeting, as promptly as possible. Submitting your votes in advance of the Annual Meeting assures that a quorum will be present at the Annual Meeting and will avoid the Company incurring additional expense for duplicate proxy solicitations. Any stockholder attending the Annual Meeting may vote in person, even if he or she has returned a proxy prior to the Annual Meeting.
 
 
 
 
  
 
Whether or not you expect to attend the Annual Meeting in person, we urge you to vote your shares in advance of the Annual Meeting, as promptly as possible, by Internet, telephone or postal mail so that your shares may be represented and voted at the Annual Meeting. If your shares are held in the name of a bank, broker, brokerage firm or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
 
Our Board of Directors has unanimously recommended that you vote “FOR” each of the Director nominees identified in Proposal No. 1, and "FOR" Proposals No. 2, 3, 4, 5 and 6, each of which is described in detail in the accompanying Proxy Statement.
 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING:
 
THE ANNUAL REPORT AND PROXY STATEMENT ARE AVAILABLE ON THE INTERNET AT www.envisionreports.com/VTGN
 
 
 
 
By Order of the Board of Directors,
 
 
Jerrold D. Dotson
 
Chief Financial Officer and Corporate Secretary
South San Francisco, California
July 26, 2019
 
 
 
 
 
 
 
 
VistaGen Therapeutics, Inc.
343 Allerton Avenue
South San Francisco, CA 94080
Tel. (650) 577-3600
Fax (888) 482-2602
 
PROXY STATEMENT
 
The enclosed proxy is solicited on behalf of the Board of Directors (the Board) of VistaGen Therapeutics, Inc., a Nevada corporation (the Company, us, we or our), for use at the Company’s 2019 Annual Meeting of Stockholders (the Annual Meeting) to be held on Friday, September 5, 2019, at 10:00 a.m. local time, and at any adjournment or postponement thereof, at the San Francisco Airport Marriott Waterfront Hotel, located at 1800 Old Bayshore Highway, Burlingame, California 94010.
 
We have elected to provide access to the proxy materials for the Annual Meeting primarily over the Internet in accordance with the U.S. Securities and Exchange Commission’s (SEC) “notice and access” rules. On or about July 26, 2019, we mailed a Notice of Internet Availability of Proxy Materials (the Notice) to each of our stockholders entitled to notice of and to vote at the Annual Meeting. The Notice contained instructions for accessing this Proxy Statement, our Annual Report on Form 10-K for our fiscal year ended March 31, 2019 (Annual Report) and Annual Meeting voting instructions. The Notice also included instructions on how you can receive a paper copy of your proxy materials. This Proxy Statement and the Annual Report are available on the Internet at: www.envisionreports.com/VTGN
 
Voting
 
 The specific proposals to be considered and acted upon at the Annual Meeting are each described in this Proxy Statement.  Only holders of our common stock as of the close of business on Friday, July 12, 2019 (the Record Date) are entitled to notice of and to vote at the Annual Meeting. On the Record Date, there were 42,622,965 shares of our common stock issued and outstanding. Each holder of common stock is entitled to one vote for each share held as of the Record Date.
 
Quorum
 
In order for any business to be conducted at the Annual Meeting, the holders of more than 50% of the shares entitled to vote must be represented at the Annual Meeting, either in person or by properly executed proxy. If a quorum is not present at the scheduled time of the Annual Meeting, the stockholders who are present may adjourn the Annual Meeting until a quorum is present. The time and place of the adjourned Annual Meeting will be announced at the time the adjournment is taken, and no other notice will be given. An adjournment will have no effect on the business that may be conducted at the Annual Meeting.
 
Required Vote for Approval
 
  Proposal No. 1: Election of Directors. The six nominees who receive the greatest number of votes cast at the Annual Meeting by the shares present, either in person or by proxy, and entitled to vote will be elected to serve on our Board of Directors until our 2020 Annual Meeting of Stockholders, or until her or his successor is duly elected and qualified.
 
 
 
- 1 -
 
 
 
Proposal No. 2: Amendment to Increase the Company’s Authorized Common Stock.  On June 13, 2019, our Board unanimously approved an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of common stock thereunder from 100 million to 175 million (the Charter Amendment). Pursuant to our Restated Articles of Incorporation, our Amended and Restated Bylaws and the Nevada Revised Statutes, the Charter Amendment must be approved by holders of a majority of our outstanding shares of common stock before taking effect. A copy of the Charter Amendment is attached to this Proxy Statement as Appendix A. The affirmative “FOR” vote of a majority of our outstanding shares of common stock entitled to vote as of the Record Date is required to approve this proposal.
 
 Proposal No. 3: Approval of the Adoption of the Company’s 2019 Omnibus Equity Incentive Plan and Ratification of All Issuances Thereunder to Date. Our Board unanimously approved the Company’s 2019 Omnibus Equity Incentive Plan (2019 Plan) on May 27, 2019 and the Compensation Committee of the Board subsequently issued options to purchase 170,000 shares of our common stock under the terms of the 2019 Plan, subject to approval of the 2019 Plan by the Company’s stockholders. A copy of the 2019 Plan is attached to this Proxy Statement as Appendix B. The affirmative “FOR” vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote is necessary of approval of this proposal. If approved, this proposal will become effective only subject to the affirmative vote on Proposal No. 2.
 
 Proposal No. 4: Approval of the Adoption of the Company’s 2019 Employee Stock Purchase Plan. Our Board unanimously approved our 2019 Employee Stock Purchase Plan (2019 ESPP) on June 13, 2019. A copy of the 2019 ESPP is attached to this Proxy Statement as Appendix C. The affirmative “FOR” vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote is necessary of approval of this proposal. If approved, this proposal will become effective only subject to the affirmative vote on Proposal No. 2.
 
Proposal No. 5: Approval, on a Non-Binding Advisory Basis, of the Compensation Paid to our Named Executive Officers. This proposal calls for a non-binding, advisory vote regarding the compensation paid to our Named Executive Officers (the Say-on-Pay Vote). Accordingly, there is no "required vote" that would constitute approval of this proposal. However, our Board, including the Compensation Committee of the Board, values the opinions of our stockholders and will consider the result of the vote when making future decisions regarding our executive compensation policies and practices.
 
Proposal No. 6: Ratification of Appointment of our Independent Registered Public Accounting Firm. The affirmative “FOR” vote of a majority of the shares present in person or by proxy at the Annual Meeting and entitled to vote is required for the ratification of the selection of OUM & Co. LLP as our independent registered public accounting firm for our current fiscal year.
 
Abstentions and Broker Non-Votes
 
All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. An abstention is the voluntary act of not voting by a stockholder who is present at a meeting and entitled to vote. A broker “non-vote” occurs when a broker nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary power for that particular item and has not received instructions from the beneficial owner. If you hold your shares in “street name” through a broker, brokerage firm or other nominee, your broker, brokerage firm or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon.  If you do not give your broker, brokerage firm or nominee specific instructions regarding such matters, your proxy will be deemed a “broker non-vote.”
 
As noted above, the six director nominees identified under Proposal No. 1 who receive the most votes at the Annual Meeting will be elected, thus abstentions and broker non-votes will have no effect on the outcome of Proposal No. 1.
 
As also noted above, approval of the Charter Amendment described in Proposal No. 2 requires the affirmative vote of a majority of our outstanding shares of common stock entitled to vote as of the Record Date. Accordingly, abstentions and broker non-votes have the effect of a vote against Proposal No. 2.
 
 
 
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Under Nevada law and our Amended and Restated Bylaws, each other matter (other than the election of directors and the Charter Amendment) will be determined by the vote of the holders of a majority of the voting power present or represented by proxy at the Annual Meeting. For this matter, abstentions and any broker non-votes cast will not be counted as votes in favor of such proposal, and will also not be counted as shares voting on such matter.
 
Voting and Revocation of Proxies
 
If your proxy is properly returned to the Company, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions specified thereon. If you return your proxy without specifying how the shares represented thereby are to be voted, the proxy will be voted in the manner unanimously approved by our Board, as follows: (i) FOR the election of thesix director nominees proposed by our Board; (ii) FOR the approval of the Charter Amendment, (iii) FOR the approval of our 2019 Plan; (iv) FOR the approval of our 2019 ESPP; (v) FOR the Say-on-Pay Vote; (vi) FOR ratification of the appointment of OUM & Co. LLP as our independent registered public accounting firm for our current fiscal year; and (vii) at the discretion of the proxy holders on any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof.
 
You may revoke or change your proxy at any time before the Annual Meeting by filing, with our Corporate Secretary at our principal executive offices, located at 343 Allerton Avenue, South San Francisco, California 94080, a notice of revocation or another signed proxy with a later date. You may also revoke your proxy by attending the Annual Meeting and voting in person.  Attendance at the Annual Meeting alone will not revoke your proxy.  If you are a stockholder whose shares are not registered in your own name, you will need additional documentation from your broker, brokerage firm or record holder to vote personally at the Annual Meeting.
 
Solicitation
 
We will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of the Notice, as well as the preparation and posting on the Internet of this Proxy Statement and any additional solicitation materials furnished to the stockholders. Copies of any solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward the solicitation materials to such beneficial owners. In addition, we may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners. The original solicitation of proxies may be supplemented by a solicitation, by telephone, email or other means, by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services. Except as described above, we do not presently intend to solicit proxies other than by the Internet, telephone, email and postal mail.
 
 
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
 
PROPOSAL NO. 1
 
ELECTION OF DIRECTORS
 
General
 
Our Bylaws provide that our Board of Directors (Board) shall consist of not less than one, nor more than seven directors, and that upon any change in the number of directors, any newly created directorships or eliminated directorships shall be apportioned by the remaining members of the Board or by stockholders. Our Board currently consists of six directors, and these six directors are nominated for election at the Annual Meeting to serve until our next annual meeting of stockholders, or until her or his successor is duly elected and qualified. Each nominee has confirmed that he or she is able and willing to continue serving as a director if elected. If any of the nominees becomes unable or unwilling to serve, your proxy will be voted for the election of a substitute nominee recommended by the current Board.
 
Upon recommendation of the members of its Corporate Governance and Nominating Committee, the Board has nominated for election as directors at our Annual Meeting Mr. Shawn K. Singh, Dr. H. Ralph Snodgrass, Mr. Jon S. Saxe, Dr. Brian J. Underdown, Dr. Jerry B. Gin and Ms. Ann M. Cunningham.
 
Required Vote and Recommendation
 
The election of directors requires the affirmative vote of a plurality of the voting shares present or represented by proxy and entitled to vote at the Annual Meeting. The six nominees receiving the highest number of affirmative votes will be elected. Unless otherwise instructed or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the election of the nominees.
 
The Board recommends that the stockholders vote “FOR” the election of Mr. Singh, Dr. Snodgrass, Mr. Saxe, Dr. Underdown, Dr. Gin and Ms. Cunningham.
 
The following sections sets forth certain information regarding the nominees for election as directors of the Company. There are no family relationships between any of the directors and the Company’s executive officers.
 
BOARD OF DIRECTORS
    
Name
 
Age
 
Position
Shawn K. Singh
 
56
 
Chief Executive Officer and Director
H. Ralph Snodgrass, Ph.D.
 
69
 
President, Chief Scientific Officer and Director
Jon S. Saxe  (1)   
 
83
 
Director
Brian J. Underdown, Ph.D.  (2)  
 
78
 
Director
Jerry B. Gin, Ph.D., MBA  (3)
 
76
 
Director
Ann M. Cunningham, MBA (4)   
 
51
 
Director
 
(1)  
Chairman of the Audit Committee and member of the Compensation Committee and Corporate Governance and Nominating Committee.
(2)  
Chairman of the Compensation Committee and member of the Audit Committee and Corporate Governance and Nominating Committee.
(3)
Chairman of the Corporate Governance and Nominating Committee and member of the Audit Committee and Compensation Committee.
(4)
Member of the Corporate Governance and Nominating Committee.
 
 
 
- 4 -
 
 
 
 
Shawn K. Singh has served as our Chief Executive Officer since August 2009, first as the Chief Executive Officer of VistaGen Therapeutics, Inc., a California corporation (VistaGen California), then as Chief Executive Officer of the Company after the merger by and between VistaGen California and the Company on May 11, 2011 (the Merger), at which time VistaGen California became a wholly-owned subsidiary of the Company. Mr. Singh first joined the Board of Directors of VistaGen California in 2000 and served on the VistaGen California management team (part-time) from late-2003, following VistaGen California’s acquisition of Artemis Neuroscience, of which he was President, to August 2009. In connection with the Merger, Mr. Singh was appointed as a member of our Board in 2011. Mr. Singh has over 25 years of experience working with biotechnology, medical device and pharmaceutical companies, both private and public. From February 2001 to August 2009, Mr. Singh served as Managing Principal of Cato BioVentures, a life science venture capital firm, and as Chief Business Officer and General Counsel of Cato Research Ltd, a contract research organization (CRO) affiliated with Cato BioVentures. Mr. Singh served as President (part-time) of Echo Therapeutics, a medical device company, from September 2007 to June 2009, and as a member of its Board of Directors from September 2007 to December 2011. He also served as Chief Executive Officer (part- time) of Hemodynamic Therapeutics, a private biopharmaceutical company affiliated with Cato BioVentures, from November 2004 to August 2009. From late-2000 to February 2001, Mr. Singh served as Managing Director of Start-Up Law, a management consulting firm serving biotechnology companies. Mr. Singh also served as Chief Business Officer of SciClone Pharmaceuticals (formerly NASDAQ: SCLN), a specialty pharmaceutical company with a substantial commercial business in China, from late-1993 to late-2000, and as a corporate finance associate of Morrison & Foerster LLP, an international law firm, from 1991 to late-1993. Mr. Singh earned a B.A. degree, with honors, from the University of California, Berkeley, and a Juris Doctor degree from the University of Maryland School of Law. Mr. Singh is a member of the State Bar of California.
 
We selected Mr. Singh to serve on our Board of Directors due to his substantial practical experience and expertise in senior leadership roles with multiple private and public biotechnology, pharmaceutical and medical device companies, and his extensive experience in corporate finance, venture capital, corporate governance, drug development, intellectual property, regulatory affairs and strategic collaborations.
 
H. Ralph Snodgrass, Ph.D. co-founded VistaGen California with Dr. Gordon Keller in 1998 and served as the Chief Executive Officer of VistaGen California until August 2009. Dr. Snodgrass has served as the President and Chief Scientific Officer of VistaGen California from inception to the present, and in the same positions with the Company following the completion of the Merger. He served as a member of the Board of Directors of VistaGen California from 1998 to 2011, and was appointed to serve on our Board after the completion of the Merger. Prior to founding VistaGen California, Dr. Snodgrass served as a key member of the executive management team that led Progenitor, Inc., a biotechnology company focused on developmental biology, through its initial public offering, and was its Chief Scientific Officer from June 1994 to May 1998, and its Executive Director from July 1993 to May 1994. He received his Ph.D. in immunology from the University of Pennsylvania, and has 25 years of experience in senior biotechnology management and over 10 year’s research experience as an assistant professor at the Lineberger Comprehensive Cancer Center, University of North Carolina Chapel Hill School of Medicine, and as a member of the Institute for Immunology, Basel, Switzerland. Dr. Snodgrass is a past Board Member of the Emerging Company Section of the Biotechnology Industry Organization (BIO), and past member of the International Society of Stem Cell Research (ISSCR) Industry Committee. Dr. Snodgrass has published more than 95 scientific papers, is the inventor on more than 21 patents and a number of patent applications, has been, the Principal Investigator on U.S. federal and private foundation sponsored research grants with budgets totaling more than $14.5 million and is recognized as an expert in stem cell biology with more than 32 years’ experience in the uses of stem cells as biological tools for research, drug discovery and development.
 
We selected Dr. Snodgrass to serve on our Board of Directors due to his expertise in biotechnology focused on developmental biology, including stem cell biology, his extensive senior management experience leading biotechnology companies at all stages of development, as well as his reputation and standing in the fields of biotechnology and stem cell research, which allow him to bring to us and the Board of Directors a unique understanding of the challenges and opportunities associated with pluripotent stem cell biology, as well as credibility in the markets in which we operate.
 
 
 
- 5 -
 
 
 
Jon S. Saxe, J.D., LL.M. has served as Chairman of our Board since 2000, first as Chairman of the Board of Directors of VistaGen California, then as Chairman of our Board after completion of the Merger. He also serves as the Chairman of our Audit Committee.  Mr. Saxe is the retired President and was a director of PDL BioPharma from 1989 to 2008. From 1989 to 1993, he was President, Chief Executive Officer and a director of Synergen, Inc. (acquired by Amgen). Mr. Saxe served as Vice President, Licensing & Corporate Development for Hoffmann-Roche from 1984 through 1989, and Head of Patent Law for Hoffmann-Roche from 1978 through 1989. Mr. Saxe currently is a director of Durect Corporation (NASDAQ: DRRX), and six private life science companies, Arbor Vita Corporation, Arcuo Medical, LLC, Cancer Prevention Pharmaceuticals, Inc., Lumos Pharma, Inc., Trellis Bioscience, Inc. and Epalex Corporation. Mr. Saxe has also served as a director of other biotechnology and pharmaceutical companies, including ID Biomedical (acquired by GlaxoSmithKline), Sciele Pharmaceuticals, Inc. (acquired by Shionogi), Amalyte (acquired by Kemin Industries), Cell Pathways (acquired by OSI Pharmaceuticals), and other companies, both public and private. Mr. Saxe has a B.S.Ch.E. from Carnegie-Mellon University, a J.D. degree from George Washington University and an LL.M. degree from New York University.
 
We selected Mr. Saxe to serve as Chairman of our Board of Directors due to his numerous years of experience as a senior executive with major pharmaceutical and biotechnology companies, including Protein Design Labs, Inc., Synergen, Inc. and Hoffmann-Roche, Inc., as well as his extensive experience serving as a director of numerous private and public biotechnology and pharmaceutical companies, serving as Chairman, and Chair and member of audit, compensation and governance committees of both private and public companies.  Mr. Saxe provides us and our Board of Directors with highly valuable insight and perspective into the biotechnology and pharmaceutical industries, as well as the strategic opportunities and challenges that we face.
 
Brian J. Underdown, Ph.D. has served as a member of our Board of Directors since November 2009, first as a director of VistaGen California, then as a member of our Board after the completion of the Merger. Dr. Underdown retired as a Venture Partner with Lumira Capital Corp.in December 2016, after having served as a Managing Director with Lumira from September 1997 through December 2015. His investment focus has been on therapeutics in both new and established companies in both Canada and the United States. Prior to joining Lumira and its antecedent company MDS Capital Corp., Dr. Underdown held a number of senior management positions in the biopharmaceutical industry and at universities. Dr. Underdown’s current board positions include the following private companies: Kisoji Biotechnology Inc., Naegis Pharmaceuticals, Inc. and Osteo QC. Some of Dr. Underdown’s previous board roles include: Argos Therapeutics (NASDAQ: ARGS), ID Biomedical (acquired by GlaxoSmithKline), enGene Inc. and Ception Therapeutics (acquired by Cephalon).  He has served on a number of Boards and advisory bodies of government-sponsored research organizations including CANVAC, the Canadian National Centre of Excellence in Vaccines, Ontario Genomics Institute (Chair), Allergen Plc., the Canadian National Centre of Excellence in Allergy and Asthma. Dr. Underdown obtained his Ph.D. in immunology from McGill University and undertook post-doctoral studies at Washington University School of Medicine.
 
We selected Dr. Underdown to serve on our Board of Directors due to his extensive background working in the biotechnology and pharmaceutical industries, as a director of numerous private and public companies, as well as his substantial corporate finance and venture capital experience funding and advising startup and established biopharmaceutical companies focused on development and commercialization of novel therapeutics.
 
Jerry B. Gin, Ph.D., MBA was appointed to serve on our Board of Directors on March 29, 2016. Dr. Gin is currently the co-founder and CEO of Nuvora, Inc., a private company founded in 2006 with a drug delivery platform for the sustained release of ingredients through the mouth for such indications as dry mouth, biofilm reduction and sore throat/cough relief. Dr. Gin is also co-founder and Chairman of Livionex, a private platform technology company founded in 2009 and focused on oral care, ophthalmology and wound care. Previously, Dr. Gin co-founded Oculex Pharmaceuticals in 1993, which developed technology for controlled release delivery of drugs to the interior of the eye, specifically to treat macular edema, and served as President and CEO until it was acquired by Allergan in 2003. Prior to forming Oculex, Dr. Gin co-founded and took public ChemTrak, which developed a home cholesterol test commonly available in drug stores today. Prior to ChemTrak, Dr. Gin was Director of New Business Development and Strategic Planning for Syva, the diagnostic arm of Syntex Pharmaceuticals, Director for Pharmaceutical and Diagnostic businesses for Dow Chemical, and Director of BioScience Labs (now Quest Laboratories), the clinical laboratories of Dow Chemical.  Dr. Gin received his Bachelor’s degree in Chemistry from the University of Arizona, his Ph.D. in Biochemistry from the University of California, Berkeley, his MBA from Loyola College, and conducted his post-doctoral research at the National Institutes of Health.
 
We selected Dr. Gin to serve on our Board of Directors due to his extensive experience in the healthcare industry, focusing his substantial business and scientific expertise on founding and developing numerous biopharmaceutical, diagnostic and biotechnology companies and propelling them to their next platforms of growth and value.
 
 
- 6 -
 
 
 
Ann M. Cunningham, MBA, was appointed to serve on our Board on January 10, 2019. Ms. Cunningham is the Founder and Managing Partner of i3 Strategy Partners, a consulting firm founded in 2018 that specializes in assisting companies in the pharmaceutical space. Prior to founding i3 Strategy Partners, Ms. Cunningham served as Vice President, Neurodegenerative Diseases and Psychiatry for Teva Pharmaceuticals Industries, Ltd. from 2015 to 2018, as Senior Marketing Director for Otsuka Pharmaceutical Companies from 2013 to 2015 and in several marketing-focused positions for Eli Lily and Company from 1999 to 2013, including serving as Global Marketing Senior Director from 2009 to 2013. Ms. Cunningham holds a B.A. degree in Psychology from Yale University and an MBA, with a focus on marketing management, from the University of Michigan.
 
We selected Ms. Cunningham to serve on our Board due to her substantial experience in healthcare marketing, particularly in the successful development, positioning and commercial launch of products to treat diseases of the central nervous system. Ms. Cunningham brings an insightful commercial perspective to us and to our Board that is critical as our pipeline products move from clinical development to commercialization.
 
Director Compensation
 
We adopted a director compensation policy for the independent directors of our Board, as “independent” is defined by the rules of the Nasdaq Stock Market rules, which policy became effective for our fiscal year beginning April 1, 2014. Under our independent director compensation policy, our independent directors are entitled to receive a $25,000 annual retainer, payable in cash or shares of our common stock. For service on a committee of the Board, an independent director is entitled to receive an additional annual cash retainer of $7,500 for service on our Audit Committee and Compensation Committee, and $5,000 for service on our Corporate Governance and Nominating Committee. In lieu of the annual cash retainer for committee participation, each independent director serving as a chair of a Board committee shall receive an annual cash retainer of $15,000 for the Audit Committee and Compensation Committee chairs and $10,000 for the Corporate Governance and Nominating Committee chair. In addition, each independent director will also receive an annual grant of an option or warrant to purchase a minimum of 12,000 shares of our common stock, which will vest monthly over a one--year period from the date of grant. Prorated grants are made for partial years of service.
 
We paid our independent directors cash compensation consistent with the policy noted above during our fiscal year ended March 31, 2019.
 
In addition, in August 2018, we granted to each of our three then-incumbent independent directors options to purchase 75,000 shares of our common stock at an exercise price of $1.27 per share. Further, in August 2018, as permitted by our Amended and Restated 2016 Stock Incentive Plan (the 2016 Plan), we reduced the exercise price of outstanding options held by our independent directors having an exercise price over $1.56 per share to $1.50 per share. Lastly, in January 2019, we granted options to purchase 25,000 shares of our common stock to Ms. Cunningham in connection with her appointment to our Board. Each grant awarded to our independent directors during the year ended March 31, 2019 expires ten years after the date of grant.
 
Subsequent to the year ended March 31, 2019, we granted options to purchase 50,000 shares of our common stock to each of our four independent directors under the terms of our 2016 Plan in May 2019.
 
 
- 7 -
 
 
The following table sets forth a summary of the compensation earned by our independent, non-employee directors in our fiscal year ended March 31, 2019.
 
 
   FeesPaid in Cash (1) 
 Option
Awards
(2)
 
 
 Other
Compensation
   Total
 
Name
   ($)   
   ($)   
 
   ($)   
   ($)   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jon S. Saxe (3)
 $52,500 
 $89,929
 (6)
 $- 
 $142,429 
Brian J. Underdown, Ph.D. (4)
 $52,500 
 $89,217
 (6)
 $- 
 $141,717 
Jerry B. Gin, Ph.D., M.B.A (5)
 $50,000 
 $99,267
 (6)
 $- 
 $149,267 
Ann M. Cunningham (6)
 $7,500 
 $32,271 
 
 $- 
 $39,771 
 
(1)
 
The amounts shown represent fees earned for service on our Board, and Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee during the fiscal year ended March 31, 2019, which amounts were paid in full during the fiscal year then ended.
 
 
 
(2)
 
The amounts in the “Option Awards” column do not represent any cash payments actually received by Mr. Saxe, Dr. Underdown, Dr. Gin or Ms. Cunningham with respect to any of such stock options awarded to them or modified during the fiscal year ended March 31, 2019.  Rather, the amounts represent (i) the aggregate grant date fair value of options to purchase shares of our common stock awarded to Mr. Saxe, Dr. Underdown, Dr. Gin and Ms. Cunningham during our fiscal year ended March 31, 2019, and (ii) the modification date incremental fair value resulting from the reduction of exercise prices in excess of $1.56 per share to $1.50 per share for options previously granted to Mr. Saxe, Dr. Underdown and Dr. Gin, both computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation (ASC 718). Other than the exercise of modified options to purchase 1,375 shares of our common stock at $1.50 per share by Mr. Saxe, to date, Mr. Saxe, Dr. Underdown, Dr. Gin and Ms. Cunningham have not exercised such stock options, and there can be no assurance that any of them will ever realize any of the ASC 718 grant date fair value amounts presented in the “Option Awards” column.
 
(3)
 
Mr. Saxe has served as the Chairman of our Board, the Chairman of our Audit Committee and a member of our Compensation Committee and Corporate Governance and Nominating Committee throughout our fiscal year ended March 31, 2019.  At March 31, 2019, Mr. Saxe held: (i) 23,251 shares of our common stock; (ii) options to purchase 320,000 registered shares of our common stock, of which options to purchase 211,436 shares were exercisable; and (iii) warrants to purchase 77,500 restricted shares of our common stock, all of which are exercisable.
 
(4)
 
Dr. Underdown has served as a member of our Board, as the Chairman of our Compensation Committee and as a member of our Audit Committee and Corporate Governance and Nominating Committee throughout the fiscal year ended March 31, 2019.  At March 31, 2019, Dr. Underdown held: (i) options to purchase 319,250 registered shares of our common stock, of which options to purchase 210,686 shares were exercisable; and (ii) warrants to purchase 77,500 restricted shares of our common stock, all of which are exercisable.
 
(5)
 
 
Dr. Gin has served as a member of our Board, as the Chairman of our Corporate Governance and Nominating Committee and as a member of our Audit Committee and Compensation Committee throughout the fiscal year ended March 31, 2019. At March 31, 2019, Dr. Gin held: (i) 50,000 shares of our unregistered common stock, (ii) options to purchase 335,000 registered shares of our common stock of which 226,436 were exercisable; and (ii) warrants to purchase 50,000 restricted shares of our common stock, all of which are exercisable.
 
(6)
 
 
Ms. Cunningham has served as a member of our Board and as a member of Corporate Governance and Nominating Committee since her appointment to both on January 10, 2019. At March 31, 2019, Ms. Cunningham held options to purchase 25,000 registered shares of our common stock, all of which were exercisable.
 
(7)
 
 
The table below provides information regarding the option awards we granted to Mr. Saxe, Dr. Underdown, Dr. Gin and Ms. Cunningham during fiscal 2019 and the assumptions used in the Black Scholes Option Pricing Model to determine the grant date fair values of the respective awards and modifications.
 
 
 
- 8 -
 
 
 
 
 
Option
 
 
Option
 
 
Option
 
 
 
 
 
 
Grant
 
 
Modifications
 
 
Grant
 
 
 
 
 
 
8/5/2018
 
 
8/29/2018
 
 
1/10/2019
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Saxe
 $73,748 
 $16,181 
 $- 
 $89,929 
Underdown
  73,748 
  15,469 
  - 
 $89,217 
Gin
  73,748 
  25,519 
  - 
 $99,267 
Cunningham
  - 
  - 
  32,271 
 $32,271 
 
    
    
    
    
 
 $221,243 
 $57,169 
 $32,271 
 $310,683 
 
    
    
    
    
Exercise Price
 $1.27 
    
 $1.74 
    
Grant Date stock price
 $1.27 
    
 $1.74 
    
Risk free interest rate
  2.84%
    
  0.00%
    
Expected Term (years)
  5.50 
    
  5.17 
    
Volatility
  99.29%
    
  95.84%
    
Dividend rate
  0.00%
    
  0.00%
    
 
    
    
    
    
Fair value per share
 $0.98 
    
 $1.29 
    
Aggregate option shares
  225,000 
    
  25,000 
    
 
Mr. Saxe, Dr. Underdown and Dr. Gin were each granted an option to purchase 75,000 shares of our common stock on August 5, 2019. Ms. Cunningham was granted an option to purchase 25,000 shares of our common stock on January 10, 2019 upon her appointment to the Board.
 
Amounts shown for option modifications reflect the modification date incremental fair value resulting from the reduction of exercise prices in excess of $1.56 per share to $1.50 per share for options previously granted to Mr. Saxe, Dr. Underdown and Dr. Gin. Options to purchase 96,375 and 94,250 shares of our common stock and having pre-modification exercise prices from $1.96 per share to $10.00 per share were modified to reduce the exercise price to $1.50 per share for Mr. Saxe and Dr. Underdown, respectively. Options to purchase 110,000 shares of our common stock and having pre-modification exercise prices from $1.96 per share to $8.00 per share were modified to reduce the exercise price to $1.50 per share for Dr. Gin.
 
On January 29, 2019, when the closing price of our common stock, as reported on the Nasdaq Capital Market, was $1.59 per share, Mr. Saxe exercised previously modified options to purchase an aggregate of 1,375 shares of our common stock at $1.50 per share.
 
Board Attendance at Board of Directors, Committee and Stockholder Meetings
 
Our Board met five times and acted by unanimous written consent four times during our fiscal year ended March 31, 2019. Our Audit Committee met four times. Our Compensation Committee met three times and acted by unanimous written consent once with respect to executive compensation matters and grants of equity securities and requested action by the entire Board with respect to modification of certain outstanding options. Our Corporate Governance and Nominating Committee met once with respect to its recommendation regarding the appointment of Ms. Cunningham to the Board and requested action by the entire Board for the formal appointment of Ms. Cunningham to the Board and with respect to resolutions to be presented to our stockholders at the annual meeting of stockholders and Board committee assignments. Each director serving during Fiscal 2019 attended all of the meetings of the Board and the committees of the Board upon which such director served that were held during the term of his or her service.
 
We do not have a formal policy regarding attendance by members of the Board at our annual meetings of stockholders, but directors are encouraged to attend. With the exception of Dr. Underdown, who was unavailable due to international travel, each of our directors attended our 2018 Annual Meeting of Stockholders in person.
 
 
 
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Independent Directors
 
Our securities are currently listed on the Nasdaq Capital Market, which requires that a majority of our directors be independent. Accordingly, we evaluate director independence under the standards established by the SEC and the rules of the Nasdaq Stock Market.
  
Subject to some exceptions, these standards generally provide that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues. 
 
Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board has determined that Mr. Saxe, Dr. Underdown and Dr. Gin are each “independent” as that term is defined by the rules of the Nasdaq Stock Market. Our Board has also determined that Mr. Saxe, Dr. Underdown and Dr. Gin, who together comprise our Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee, satisfy the independence standards set forth in the Nasdaq Stock Market rules. In making these determinations, our Board considered the current and prior relationships that each nonemployee director has with the Company and all other facts and circumstances that our Board deemed relevant.
 
Board Committees and Charters
 
Our Board has established an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. The composition and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our Board. Since April 1, 2017, only our independent directors, Mr. Saxe, Dr. Underdown and Dr. Gin, and, since January 10, 2019, Ms. Cunningham, serve as members of these committees.
 
The Audit Committee of our Board is comprised of Mr. Saxe, who serves as the committee chairman, Dr. Underdown and Dr. Gin. Mr. Saxe is also our Audit Committee financial expert, as that term is defined under SEC rules implementing Section 407 of the Sarbanes Oxley Act of 2002, and possesses the requisite financial sophistication, as defined under applicable rules. The Audit Committee operates under a written charter. Our Audit Committee charter is available on our website at www.vistagen.com. Under its charter, our Audit Committee is primarily responsible for, among other things, the following:
 
overseeing our accounting and financial reporting process;
 
selecting, retaining and replacing our independent auditors and evaluating their qualifications, independence and performance;
 
reviewing and approving scope of the annual audit and audit fees;
 
monitoring rotation of partners of independent auditors on engagement team as required by law;
 
discussing with management and independent auditors the results of annual audit and review of quarterly financial statements;
 
 
 
- 10 -
 
 
 
reviewing adequacy and effectiveness of internal control policies and procedures;
 
approving retention of independent auditors to perform any proposed permissible non-audit services;
 
overseeing internal audit functions and annually reviewing audit committee charter and committee performance; and
 
preparing the audit committee report that the SEC requires in our annual proxy statement.
 
Compensation Committee
 
The Compensation Committee of our Board is comprised of Dr. Underdown, who serves as the committee chairman, Mr. Saxe, and Dr. Gin. Our Compensation Committee charter is available on our website at www.vistagen.com. Under its charter, the Compensation Committee is primarily responsible for, among other things, the following:
 
reviewing and approving our compensation programs and arrangements applicable to our executive officers (as defined in Rule I 6a-I (f) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), including all employment-related agreements or arrangements under which compensatory benefits are awarded or paid to, or earned or received by, our executive officers, including, without limitation, employment, severance, change of control and similar agreements or arrangements;
 
determining the objectives of our executive officer compensation programs;
 
ensuring corporate performance measures and goals regarding executive officer compensation are set and determining the extent to which they are achieved and any related compensation earned;
 
establishing goals and objectives relevant to Chief Executive Officer compensation, evaluating Chief Executive Officer performance in light of such goals and objectives, and determiningChief Executive Officer compensation based on the evaluation;
 
endeavoring to ensure that our executive compensation programs are effective in attracting and retaining key employees and reinforcing business strategies and objectives for enhancing stockholder value, monitoring the administration of incentive-compensation plans and equity-based incentive plans as in effect and as adopted from time to time by the Board;
 
reviewing and approving any new equity compensation plan or any material change to an existing plan; and
 
reviewing and approving any stock option award or any other type of award as may be required for complying with any tax, securities, or other regulatory requirement, or otherwise determined to be appropriate or desirable by the committee or Board.
 
 
 
- 11 -
 
 
Corporate Governance and Nominating Committee
 
The Corporate Governance and Nominating Committee of our Board is comprised of Dr. Gin, who serves as the committee chairman, Mr. Saxe, Dr. Underdown and Ms. Cunningham. Our Corporate Governance and Nominating Committee charter is available on our website at www.vistagen.com. Under its charter, the Corporate Governance and Nominating Committee is primarily responsible for, among other things, the following:
 
monitoring the size and composition of the Board;
 
making recommendations to the Board with respect to the nominations or elections of our directors;
 
reviewing the adequacy of our corporate governance policies and procedures and our Code of Business Conduct and Ethics, and recommending any proposed changes to the Board for approval; and
 
considering any requests for waivers from our Code of Business Conduct and Ethics and ensure that we disclose such waivers as may be required by the exchange on which we are listed, if any, and rules and regulations of the SEC.
 
Compensation Committee Interlocks and Insider Participation
 
The Compensation Committee of our Board consists of Dr. Underdown, Mr. Saxe and Dr. Gin, each of whom is an independent, nonemployee director. None of the members of the Compensation Committee has a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.
 
Board Leadership Structure
 
The Board currently separates the roles of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. Our Chief Executive Officer, who is also a member of our Board, is responsible for setting the strategic direction of the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer and sets the agenda for the Board meetings and presides over meetings of the Board. Although these roles are currently separate, the Board believes it should be able to freely select the Chairman of the Board based on criteria that it deems to be in the best interest of the Company and its stockholders, and therefore one person may, in the future, serve as both the Chief Executive Officer and Chairman of the Board.
 
Board Role in Risk Assessment
 
Management, in consultation with outside professionals, as applicable, identifies risks associated with the Company’s operations, strategies and financial statements. Risk assessment is also performed through periodic reports received by the Audit Committee from management, counsel and the Company’s independent registered public accountants relating to risk assessment and management. Audit Committee members meet privately in executive sessions with representatives of the Company’s independent registered public accountants. The Board also provides risk oversight through its periodic reviews of the financial and operational performance of the Company.
  
Code of Ethics
 
We have adopted a Code of Business Conduct and Ethics applicable to our employees, officers and directors.  Our Code of Business Conduct and Ethics is available on our website at www.vistagen.com.  We intend to disclose any future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of these provisions, on our website or in filings with the SEC under the Exchange Act.
 
Stockholder Communications
 
If you wish to communicate with the Board, you may send your communication in writing to:
 
VistaGen Therapeutics, Inc.
343 Allerton Avenue
South San Francisco, California 94080
Attn: Corporate Secretary
 
 
- 12 -
 
 
 
 
You must include your name and address in the written communication and indicate whether you are a stockholder of the Company. The Corporate Secretary will review any communication received from a stockholder, and all material and appropriate communications from stockholders will be forwarded to the appropriate director or directors or committee of the Board based on the subject matter.
 
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
 
The Audit Committee has reviewed and discussed with management and OUM & Co. LLP (OUM), our independent registered public accounting firm, the audited consolidated financial statements in the VistaGen Therapeutics, Inc. Annual Report on Form 10-K for the year ended March 31, 2019. The Audit Committee has also discussed with OUM those matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16.
 
OUM also provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent auditor’s communication with the Audit Committee concerning independence. The Audit Committee has discussed with the registered public accounting firm their independence from our Company.
  
Based on its discussions with management and the registered public accounting firm, and its review of the representations and information provided by management and the registered public accounting firm, including as set forth above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended March 31, 2019.
 
 
Respectfully Submitted by:
 
MEMBERS OF THE AUDIT COMMITTEE 
Jon S. Saxe, Audit Committee Chairman
Jerry B. Gin
Brian J. Underdown
 
Dated: June 18, 2019
 
The information contained above under the caption “Report of the Audit Committee of the Board of Directors” shall not be deemed to be soliciting material or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
 
 
- 13 -
 
 
PROPOSAL NO. 2
 
APPROVAL OF AN AMENDMENT TO OUR RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE FROM 100 MILLION TO 175 MILLION
 
On June 13, 2019, our Board of Directors unanimously approved an amendment to our Restated Articles of Incorporation to increase the number of shares of common stock authorized therein from 100 million to 175 million (the Charter Amendment). Our stockholders are being asked to approve the Charter Amendment, a copy of which is attached to this proxy statement as Appendix A.
 
Purpose of the Charter Amendment
 
On July 12, 2019, we had 42,622,965 shares of common stock issued and outstanding, 18,525,633 shares of common stock that were authorized but unissued, and 38,851,402 shares reserved for future issuance, consisting of (i) 750,000 shares issuable upon conversion of outstanding shares of our Series A Preferred Stock, (ii) 1,160,240 shares issuable upon conversion of outstanding shares of our Series B Convertible Preferred Stock (Series B Preferred), (iii) 3,936,498 shares reserved for issuance as payment of accrued but unpaid dividends on outstanding shares of Series B Preferred, (iv) 2,318,012 shares issuable upon conversion of outstanding shares of our Series C Convertible Preferred Stock, (v) 21,453,402 shares issuable upon exercise of outstanding warrants, and (vi) 9,233,250 shares issuable upon exercise of outstanding stock options or reserved for future stock option grants.
  
The Board believes that the availability of additional authorized shares of common stock will provide the Company with necessary flexibility to not only provide a sufficient amount of shares for issuance under our 2019 Plan and our 2019 ESPP, but also to issue common stock for a variety of general corporate purposes as the Board may determine to be desirable including, without limitation, raising capital, future financings, investment opportunities, licensing agreements, acquisitions or other issuances. Without the proposed increase in the number of authorized shares of common stock, the number of remaining common shares may be insufficient to execute the Company’s corporate strategy and complete one or more of the above corporate actions, including utilizing the Company’s existing shelf registration statement declared effective by the SEC on May 12, 2017, when and if it is advisable and in the best interests of the stockholders to do so. Our Board and management believe that having the proposed additional authorized shares available to the Company for potential future issuance, upon approval of the Board, will be beneficial to our stockholders by allowing us to promptly consider and respond to future business opportunities as they arise, including in relation to capital raising activities to fund our ongoing clinical and nonclinical development of AV-101, PH94B and PH10, or to conduct clinical trials or other studies. The delay involved in calling and holding a stockholders' meeting to approve an increase in authorized shares at the time a business opportunity presents itself may prevent us from timely pursuing that opportunity, or may significantly adversely affect the economic or strategic value of that opportunity, and may have an adverse effect on our stockholders.
 
The Board has not authorized the Company to take any action with respect to the shares that would be authorized under this Proposal No. 2, and the Company currently does not have any definitive plans, arrangements or understandings with respect to the issuance of the additional shares of common stock authorized by the proposed amendment to the Restated Articles of Incorporation. Moreover, in the event this Proposal No. 2 is not approved by holders of a majority of the Company’s outstanding shares of common stock as of the Record Date, our 2019 Plan, as described in Proposal No. 3, and our 2019 ESPP, as described in Proposal No. 4, will not take effect.
 
Anti-Takeover Effects
 
The proposed Charter Amendment could, under certain circumstances, have an anti-takeover effect or delay or prevent a change in control of the Company by providing the Company with the capability to engage in actions that would be dilutive to a potential acquirer, to pursue alternative transactions, or to otherwise increase the potential cost to acquire control of the Company. Thus, while the Company currently has no intent to employ the additional unissued authorized shares as an anti-takeover device, the proposed Charter Amendment may have the effect of discouraging future unsolicited takeover attempts. The Board is not aware of any such attempt to take control of the Company, and would act in the best interest of stockholders if any attempt was made. The proposed Charter Amendment has only been prompted by business and financial considerations.
 
 
- 14 -
 
 
 
Effect of Charter Amendment
 
The proposed increase in the number of authorized shares of the Company's common stock will not change the number of shares of common stock outstanding, nor will it have any immediate dilutive effect or change the rights of current holders of the Company's common stock. However, the issuance of additional shares of common stock authorized by this Charter Amendment may occur at times or under circumstances so as to have a dilutive effect on earnings per share, book value per share or the percentage voting or ownership interest of the present holders of the Company's common stock.
 
If this Proposal No. 2 is approved, no further action by the stockholders would be necessary prior to the issuance of additional shares of common stock unless required by law or the rules of any stock exchange or national securities association on which the common stock is then listed or quoted. Under the proposed amendment, each of the newly authorized shares of common stock will have the same rights and privileges as currently authorized common stock. Adoption of the Charter Amendment will not affect the rights of the holders of currently outstanding common stock of the Company nor will it change the par value of the common stock, which will remain $0.001 per share. If the proposed amendment is adopted, it will become effective upon filing of an amendment to the Company's Restated Articles of Incorporation with the Nevada Secretary of State.
 
Vote Required and Recommendation
  
The affirmative vote of a majority of the Company’s shares of common stock outstanding as of the Record Date, or 21,311,483 shares, is required to approve this Proposal No. 2 to effect the Charter Amendment in order to increase the number of shares of common stock authorized from 100 million to 175 million. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” this Proposal No. 2.
 
    The Board unanimously recommends that stockholders vote “FOR” approval of the Charter Amendment to increase the number of shares authorized under the Company’s Restated Articles of Incorporation from 100 million to 175 million.
 
 
 
- 15 -
 
 
PROPOSAL NO. 3
 
APPROVAL OF THE ADOPTION OF OUR 2019 OMNIBUS EQUITY INCENTIVE PLAN AND RATIFICATION OF ALL ISSUANCES THEREUNDER TO DATE
 
General
 
Our Board unanimously approved our 2019 Omnibus Equity Incentive Plan (the 2019 Plan) on May 27, 2019. Our stockholders are being asked to approve our 2019 Plan, a copy of which is attached hereto as Appendix B. As of the date of this Proxy Statement, a total of 170,000 stock options have been issued under the 2019 Plan, subject to the approval of the 2019 Plan by our stockholders. Details regarding these issuances are presented below, under the section entitled “New Plan Benefits.” Adoption of the 2019 Plan is subject to both the approval of this Proposal No. 3 and the approval of Proposal No. 2 to increase the number of authorized shares of common stock that we may issue. If our stockholders approve this Proposal No. 3 but do not approve Proposal No. 2, then the 2019 Plan will not become effective.
 
If approved at the Annual Meeting, our 2019 Plan will supersede and replace the VistaGen Therapeutics, Inc. Amended and Restated 2016 Stock Incentive Plan (the 2016 Plan) and no new awards will be granted under the 2016 Plan thereafter. Any awards outstanding under the 2016 Plan on the date of approval of the 2019 Plan will remain subject to the 2016 Plan. Upon approval of our 2019 Plan, all shares of common stock remaining authorized and available for issuance under the 2016 Plan and any shares subject to outstanding awards under the 2016 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under our 2019 Plan.
 
The purposes of our 2019 Plan are to enhance our ability to attract and retain highly qualified officers, non-employee directors, key employees and consultants, and to motivate those service providers to serve the Company and to expend maximum effort to improve our businessresults by providing to those service providers an opportunity to acquire or increase a direct proprietary interest in our operations and future success. The 2019 Plan also will allow us to promote greater ownership in our Company by the service providers in order to align the service providers’ interests more closely with the interests of our stockholders. Awards granted under the 2019 Plan are designed to qualify for special tax treatment under Section 422 of the Internal Revenue Code of 1986 (the Code).
 
Key Features
 
The following features of the 2019 Plan are intended to align the interests of grantees receiving awards under the 2019 Plan with the interests of our stockholders:
 
 
Limitation on terms of stock options and stock appreciation rights. The maximum term of each stock option and stock appreciation right (SAR) is ten years.
 
 
No grant of discounted stock options. The 2019 Plan prohibits the granting of stock options or SARs with an exercise price less than the fair market value of the common stock on the date of grant.
 
 
No liberal share recycling. Shares used to pay the exercise price or withholding taxes related to an outstanding award and unissued shares resulting from the net settlement of outstanding options and SARs do not become available for issuance as future awards under the plan.
 
 
Limits on immediate vesting. The 2019 Plan limits the number of shares that may be vested on the grant date of an award to no more than 25% of any equity-based awards. Certain limited exceptions are permitted.
 
 
 
 
- 16 -
 
 
 
 
No single-trigger acceleration. Under the 2019 Plan, we do not automatically accelerate vesting of awards in connection with a change in control of the Company.
 
 
Dividends. We do not pay dividends or dividend equivalents on stock options, SARs or other unearned awards, whether time- or performance-vesting.
 
Summary of the 2019 Plan
 
The principal features of our 2019 Plan are summarized below. The following summary of our 2019 Plan does not purport to be a complete description of all of the provisions of the 2019 Plan. It is qualified in its entirety by reference to the complete text of the 2019 Plan, which is attached to this Proxy Statement as Appendix B.
 
Eligibility
 
Awards may be granted under the 2019 Plan to officers, employees and consultants of our Company and our subsidiaries and to our non-employee directors. Incentive stock options may be granted only to employees of our Company or one of our subsidiaries.
 
Administration
 
The 2019 Plan will be administered by the Compensation Committee of the Board. The Compensation Committee, in its discretion, selects the individuals to whom awards may be granted, the time or times at which such awards are granted, and the terms of such awards. The Compensation Committee may delegate its authority to the extent permitted by applicable law.
 
Number of Authorized Shares
 
A total of 7,500,000 shares of common stock are authorized for issuance under the 2019 Plan. In addition, any awards then outstanding under the 2016 Plan will remain subject to the 2016 Plan. Upon approval of the 2019 Plan, all shares of common stock remaining authorized and available for issuance under the 2016 Plan, approximately 1.4 million shares at July 12, 2019, and any shares then subject to outstanding awards under the 2016 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the 2019 Plan.
 
If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares or if shares are issued under the 2019 Plan and thereafter are forfeited to us, the shares subject to such awards and the forfeited shares will again be available for grant under the 2019 Plan. In addition, the following items will not count against the aggregate number of shares of common stock available for grant under the 2019 Plan:
 
the payment in cash of dividends or dividend equivalents under any outstanding award;
 
any award that is settled in cash rather than by issuance of shares of common stock; and
 
any awards granted in assumption of or in substitution for awards previously granted by an acquired company.
 
Shares tendered or withheld to pay the option exercise price or tax withholding for any award (including restricted stock and restricted stock units) will continue to count against the aggregate number of shares of common stock available for grant under the 2019 Plan. In addition, the total number of shares covering stock-settled stock appreciation rights (SARs) or net-settled options will be counted against the pool of available shares, not just the net shares issued upon exercise. Any shares of common stock repurchased by us with cash proceeds from the exercise of options will not be added back to the pool of shares available for grant under the 2019 Plan.
 
 
 
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Adjustments
 
If certain changes in the common stock occur by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the common stock without our receipt of consideration, or if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities for which stock options and other stock-based awards may be made under the 2019 Plan. In addition, if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by us, we will equitably adjust the number and kind of securities subject to any outstanding awards and the exercise price of any outstanding stock options or SARs.
 
Types of Awards
 
The 2019 Plan permits the granting of any or all of the following types of awards:
 
 
Stock Options. Stock options entitle the holder to purchase a specified number of shares of common stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The Compensation Committee may grant either incentive stock options, which must comply with Section 422 of the Code, or nonqualified stock options. The Compensation Committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less than 100% of the fair market value of the common stock on the date of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Unless the Compensation Committee determines otherwise, fair market value means, as of a given date, the closing price of the common stock. At the time of grant, the Compensation Committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting periods, term (which cannot exceed ten years) and other conditions on exercise.
 
 
Stock Appreciation Rights (SARs). The Compensation Committee may grant SARs as a right in tandem with the number of shares underlying stock options granted under the 2019 Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a combination of stock and cash, equal to the excess of the share’s fair market value on the date of exercise over the grant price of the SAR. The grant price of a tandem SAR is equal to the exercise price of the related stock option and the grant price for a freestanding SAR is determined by the compensation committee in accordance with the procedures described abovefor stock options. Exercise of a SAR issued in tandem with a stock option will reduce the number of shares underlying the related stock option to the extent of the SAR exercised. The term of a freestanding SAR cannot exceed ten years, and the term of a tandem SAR cannot exceed the term of the related stock option.
 
 
Restricted Stock, Restricted Stock Units and Other Stock-Based Awards . The Compensation Committee may grant awards of restricted stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right to receive shares of the common stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the Compensation Committee’s discretion. The restrictions may be based on continuous service with the Company or the attainment of specified performance goals, as determined by the Compensation Committee. Stock units may be paid in stock or cash or a combination of stock and cash, as determined by the Compensation Committee. The Compensation Committee may also grant other types of equity or equity-based awards subject to the terms of the 2019 Plan and any other terms and conditions determined by the Compensation Committee.
 
 
Performance Awards. The Compensation Committee may condition the grant, exercise, vesting, or settlement of any award on such performance conditions as it may specify. We refer to these awards as “performance awards.” The Compensation Committee may select such business criteria or other performance measures as it may deem appropriate in establishing any performance conditions.
 
 
 
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Limits on Immediate Vesting 
 
No more than 25% of any equity-based awards granted under the 2019 Plan will vest on the grant date of such award. This requirement does not apply to (i) substitute awards resulting from acquisitions or (ii) shares delivered in lieu of fully vested cash awards. In addition, the minimum vesting requirement does not apply to the Compensation Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, death, disability or a change in control, in the terms of the award or otherwise.
  
Clawback
 
All cash and equity awards granted under the 2019 Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time.
 
Transferability
 
Awards are not transferable other than by will or the laws of descent and distribution, except that in certain instances transfers may be made to or for the benefit of designated family members of the participant for no consideration.
 
Change in Control
 
In the event of a change in control of the Company, the Compensation Committee may accelerate the time period relating to the exercise of any award.  In addition, the Compensation Committee may take other action, including (a) providing for the purchase of any award for an amount of cash or other property that could have been received upon the exercise of such award had the award been currently exercisable, (b) adjusting the terms of the award in a manner determined by the compensation committee to reflect the change in control, or (c) causing an award to be assumed, or new rights substituted therefor, by another entity with appropriate adjustments to be made regarding the number and kind of shares and exercise prices of the award. “Change in Control” is defined under the 2019 Plan and requires consummation of the applicable transaction.
 
Term, Termination and Amendment of the 2019 Plan
 
Unless earlier terminated by the Board, the 2019 Plan will terminate, and no further awards may be granted, ten years after the date on which it is approved by stockholders. The board may amend, suspend or terminate the 2019 Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, stockholder approval will be required for any amendment. The amendment, suspension or termination of the 2019 Plan or the amendment of an outstanding award generally may not, without a participant’s consent, materially impair the participant’s rights under an outstanding award.
  
Federal Income Tax Information
 
The following is a brief summary of the U.S. federal income tax consequences of the 2019 Plan generally applicable to us and to participants in the 2019 Plan who are subject to U.S. federal taxes. The summary is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
 
Nonqualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of the common stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the exercise price of the stock option.
 
 
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Incentive Stock Options. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (one year in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
 
With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant.
 
Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant price at least equal to the fair market value of common stock on the date of grant and no additional deferral feature. Upon the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.
 
Restricted Stock Awards, Restricted Stock Units, and Performance Awards. A participant generally will not have taxable income upon the grant of restricted stock, restricted stock units or performance awards. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.
 
Other Stock or Cash-Based Awards. The U.S. federal income tax consequences of other stock or cash-based awards will depend upon the specific terms of each award.
 
Tax Consequences to Us. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to limitations imposed under the Code.
 
Section 409A. We intend that awards granted under the 2019 Plan comply with, or otherwise be exempt from, Section 409A of the Code, but make no representation or warranty to that effect.
 
Tax Withholding. We are authorized to deduct or withhold from any award granted or payment due under the 2019 Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of common stock or otherwise settle an award under the 2019 Plan until all tax withholding obligations are satisfied.
 
New Plan Benefits
 
Participation in the 2019 Plan is entirely within the discretion of the Compensation Committee. Because we cannot predict the rate at which the Compensation Committee will issue Awards or the terms of Awards granted under the 2019 Plan, it is not possible to determine the number of shares that will be purchased or the value of benefits that may be obtained by executive officers and other employees under the 2019 Plan in the future.
 
 
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The following table discloses information with respect to issuances under the 2019 Plan subject to the ratification of such grants by our stockholders through the date of this Proxy Statement to each of our current executive officers, independent directors and employees:
 
Name and Position
 
Issuances under the
2019 Omnibus
Equity Incentive Plan
 
 
 
No. of Shares
 
Shawn K. Singh
  170,000 
Chief Executive Officer and Director
    
 
    
H. Ralph Snodgrass, Ph.D.
  - 
President, Chief Scientific Officer
    
 
    
Mark A Smith, MD, Ph.D.
  - 
Chief Medical Officer
    
 
    
Jerrold D. Dotson
  - 
Vice President, Chief Financial Officer, Secretary
    
 
    
Mark A. McPartland
  - 
Vice President – Corporate Development
    
 
    
Independent Directors
  - 
 
    
Employees (excluding executive officers) and consultants
  - 
 
    
Total
  170,000 
  
The affirmative “FOR” vote of a majority of the shares present in person or by proxy and entitled to vote is necessary for approval of the adoption of the 2019 Plan and ratification of issuances thereunder to date. In addition, the 2019 Plan will take effect only if the Charter Amendment presented in Proposal No. 2 is approved. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” this Proposal No. 3.
 
The Board unanimously recommends that stockholders vote “FOR” approval of the adoption of our 2019 Omnibus Equity Incentive Plan.
 
 
 
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PROPOSAL NO. 4
 
APPROVAL OF THE ADOPTION OF OUR 2019 EMPLOYEE STOCK PURCHASE PLAN
 
General
On June 13, 2019, our Board unanimously approved the VistaGen Therapeutics, Inc. 2019 Employee Stock Purchase Plan (the 2019 ESPP), subject to approval by our stockholders. A copy of our 2019 ESPP is attached to this proxy statement as Appendix C.
 
Under our 2019 ESPP, shares of our common stock will be available for purchase by eligible employees who participate in our 2019 ESPP. Eligible employees will be entitled to purchase, by means of payroll deductions, limited amounts of our common stock during periodic option periods under the 2019 ESPP. The 2019 ESPP will not be effective without stockholder approval, and will become effective only if the Charter Amendment described in Proposal No. 2 is approved by stockholders at the Annual Meeting.
 
The Company believes that our 2019 ESPP will help the Company attract, retain and motivate eligible employees and help further align the interests of eligible employees with those of the Company’s stockholders.
 
Summary Description of Our 2019 ESPP
 
The principal terms of our 2019 ESPP are summarized below. The discussion of our 2019 ESPP that follows is qualified in its entirety by the description of and full terms of the 2019 ESPP that are included as part of Appendix C.
 
Purpose. The purpose of our 2019 ESPP is to provide eligible employees with an incentive to advance the best interests of the Company by providing them with an opportunity to purchase shares of the Company’s common stock at a favorable price through accumulated payroll deductions. The 2019 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code.
 
Administration. The Compensation Committee of the Board of Directors will administer the 2019 ESPP. The Compensation Committee has authority to construe, interpret and apply the terms of the 2019 ESPP.
 
Operation. The 2019 ESPP is generally expected to operate in consecutive semi-annual periods referred to as “option periods.” The first option period is expected to commence on January 1, 2020 and end on the last trading day in the semi-annual period ending June 30, 2020, with successive option periods expected to begin on the first day of January and July and to terminate on the last trading day of June and December, respectively. The 2019 ESPP gives the Compensation Committee the flexibility to change the duration of future option periods. However, option periods may not last longer than the maximum period permitted under Section 423 of the Code. Section 423 of the Code generally limits the length of such offerings to either 5 years or 27 months, depending on the terms of the offering.
 
On the first day of each option period (the Grant Date), each eligible employee for that option period will be granted an option to purchase shares of our common stock. Each participant’s option will permit the participant to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the option period by the applicable purchase price. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that option period for the purchase of stock under the 2019 ESPP. The participant’s payroll deduction election will generally remain in effect for future option periods unless terminated by the participant. A participant may not increase or decrease his or her payroll deductions during the option period. A participant may instead elect to withdraw from any option period prior to the last day of the option period, in which case the participant’s payroll deductions will be refunded and the participant’s outstanding options will terminate.
 
Each participant’s payroll deductions under the 2019 ESPP will be credited to a bookkeeping account in his or her name under the 2019 ESPP.
 
 
 
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Each option granted under the 2019 ESPP will automatically be exercised on the last day of the respective option period (referred to as the Exercise Date). The number of shares acquired by a participant upon exercise of his or her option will be determined by dividing the participant’s 2019 ESPP account balance as of the Exercise Date for the option period by the purchase price of the option. The purchase price for each option is generally expected to equal the lesser of (1) 85% of the fair market value of a share of the Company’s common stock on the applicable Grant Date, or (2) 85% of the fair market value of a share of the Company’s common stock on the applicable Exercise Date. However, the 2019 ESPP gives the Compensation Committee the flexibility to change the purchase price for future option periods that is consistent with Section 423 of the Code. A participant’s 2019 ESPP account will be reduced upon exercise of his or her option by the amount used to pay the purchase price of the shares acquired by the participant. No interest will be paid to any participant or credited to any account under the 2019 ESPP.
 
Eligibility. Only certain employees will be eligible to participate in the 2019 ESPP. All employees of the Company and any subsidiaries of the Company which have been designated by the Compensation Committee as eligible to participate in an option period will generally be eligible to participate in such offering period. However, the following employees will not be eligible to participate in such option period:
 
 
employees whose customary employment is for not more than 20 hours per week;
 
 
employees whose customary employment is for not more than five months per calendar year; and
 
 
employees who are citizens or residents of a foreign jurisdiction if the grant of an option is prohibited under the local laws of the jurisdiction.
 
Limits on Authorized Shares; Limits on Contributions. If the Company’s stockholders approve the 2019 ESPP at the Annual Meeting, a maximum of 1,000,000 shares of the Company’s common stock may be purchased under the 2019 ESPP.
 
Participation in the 2019 ESPP is also subject to the following limits:
 
 
A participant cannot contribute less than 1% or more than 15% of his or her compensation to the purchase of stock under the 2019 ESPP in any one payroll period;
 
 
A participant cannot accrue rights to purchase more than $25,000 of stock (valued at the Grant Date of the applicable offering period and without giving effect to any discount reflected in the purchase price for the stock) for each calendar year in which an option is outstanding; and
 
 
A participant will not be granted an option under the 2019 ESPP if it would cause the participant to own stock and/or hold outstanding options to purchase stock possessing five percent (5.0%) or more of the total combined voting power or value of all classes of stock of the Company or of its parent or one of its subsidiaries or to the extent it would exceed certain other limits under the Code.
 
The $25,000 and the 5% ownership limitations referred to above are required under the Code.
 
Termination of Employment. If a participant ceases to be an eligible employee for any reason, his or her payroll deductions will automatically cease.
 
Corporate Transactions. Generally in the event of a proposed sale of all or substantially all of the assets, property or stock of the Company, a reorganization, merger or consolidation of the Company with or into one or more corporations, or a dissolution or liquidation of the Company, unless a successor corporation or a parent or subsidiary thereof assumes or substitutes new options for all outstanding options, (i) the Board shall establish a new Exercise Date that is before the date of the corporate transaction and (ii) upon such effective date any unexercised options shall expire.
 
Adjustments. As is customary in stock incentive plans of this nature, the number of shares of stock available under the 2019 ESPP or subject to outstanding options, is subject to adjustment in the event of certain reorganizations, combinations, recapitalization of shares, stock splits, reverse stock split, subdivision or other similar change in respect of the Company’s common stock.
 
 
 
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Transfer Restrictions. A participant’s rights with respect to options or the purchase of shares under the 2019 ESPP, as well as payroll deductions credited to his or her 2019 ESPP account, may not be assigned, transferred, pledged or otherwise disposed of in any way except by will or the laws of descent and distribution.
 
Amendments. The Board generally may amend, suspend, or terminate the 2019 ESPP at any time and in any manner, except that stockholder approval is required to increase the number of shares authorized for issuance under the 2019 ESPP and for certain other amendments. No amendment to the 2019 ESPP may materially adversely affect the option rights previously granted to a participant under the 2019 ESPP, except as required by law or regulation.
 
Term. Subject to stockholder approval, our 2019 ESPP will become effective on January 1, 2020 and will continue in effect until the earlier of such time as all of the shares of the Company’s common stock subject to the 2019 ESPP have been sold under the 2019 ESPP or December 31, 2030, unless terminated earlier by the Board.
 
Federal Income Tax Consequences of the 2019 ESPP
 
Following is a general summary of the current federal income tax principles applicable to the 2019 ESPP. The following summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local or international tax consequences.
 
The 2019 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Participant contributions to the 2019 ESPP through payroll deductions are made on an after-tax basis. That is, a participant’s payroll deductions that are contributed to the 2019 ESPP are deducted from compensation that is taxable to the participant and for which the Company is generally entitled to a tax deduction.
 
Generally, no taxable income is recognized by a participant with respect to either the grant or exercise of his or her 2019 ESPP option. The Company will have no tax deduction with respect to either of those events. A participant will generally recognize income (or loss) only upon a sale or disposition of any shares that the participant acquires under the 2019 ESPP. The particular tax consequences of a sale or disposition of shares acquired under the 2019 ESPP depend on whether the participant has held the shares for a “Required Holding Period” before selling or disposing of the shares. The Required Holding Period ends on the later of (1) two years after the Grant Date of the offering period in which the participant acquired the shares, or (2) one year after the Exercise Date on which the participant acquired the shares.
 
If the participant holds the shares for the Required Holding Period and then sells the shares at a price in excess of the purchase price paid for the shares, the gain on the sale of the shares will be taxed as ordinary income to the participant to the extent of the lesser of (1) the amount by which the fair market value of the shares on the Grant Date of the offering period in which the participant acquired the shares exceeded the purchase price of the shares (calculated as though the shares had been purchased on the Grant Date), or (2) the gain on the sale of the shares. Any portion of the participant’s gain on the sale of the shares not taxed as ordinary income will be taxed as long-term capital gain. If the participant holds the shares for the Required Holding Period and then sells the shares at a price less than the purchase price paid for the shares, the loss on the sale will be treated as a long-term capital loss to the participant. The Company will not be entitled to a tax deduction with respect to any shares held by the participant for the Required Holding Period, regardless of whether the shares are eventually sold at a gain or a loss.
 
The participant has a “Disqualifying Disposition” if the participant disposes of the shares before the participant has held the shares for the Required Holding Period. If the participant sells the shares in a Disqualifying Disposition, the participant will realize ordinary income in an amount equal to the difference between the purchase price paid for the shares and the fair market value of the shares on the Exercise Date on which the participant acquired the shares, and the Company generally will be entitled to a corresponding tax deduction. In addition, if the participant makes a Disqualifying Disposition of the shares at a price in excess of the fair market value of the shares on the Exercise Date, the participant will realize capital gain in an amount equal to the difference between the selling price of the shares and the fair market value of the shares on the Exercise Date. Alternatively, if the participant makes a Disqualifying Disposition of the shares at a price less than the fair market value of the shares on the Exercise Date, the participant will realize a capital loss in an amount equal to the difference between the fair market value of the shares on the Exercise Date and the selling price of the shares. The Company will not be entitled to a tax deduction with respect to any capital gain realized by a participant.
 
Specific Benefits under the 2019 ESPP
 
The benefits that will be received by or allocated to eligible employees under the 2019 ESPP cannot be determined at this time because the amount of payroll deductions contributed to purchase shares of the Company’s common stock under the 2019 ESPP (subject to the limitations discussed above) is entirely within the discretion of each participant.
 
Vote Required and Recommendation
 
               The affirmative “FOR” vote of a majority of the shares present in person or by proxy and entitled to vote is necessary for approval of the adoption of our 2019 ESPP. In addition, our 2019 ESPP will not take effect unless the Charter Amendment, as described in Proposal No. 2, is approved by stockholders at the Annual Meeting. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” this Proposal No. 4.
 
The Board unanimously recommends that stockholders vote “FOR” approval of the adoption of the 2019 Employee Stock Purchase Plan.
 
 
 
 
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PROPOSAL NO. 5
 
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
 
General
 
We are providing our stockholders with the opportunity to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. This Say-on-Pay Vote is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act.
 
Our executive compensation programs are designed to attract key employees and to retain, motivate and reward our executive officers for their performance and contribution to our long-term success. Under these programs, our executive officers are rewarded for the achievement of corporate and individual performance objectives, and our executive officers’ incentives are aligned with stockholder value creation. These goals may include the achievement of specific financial or business development goals. Also, when possible and appropriate taking into account the Company’s financial condition and other related facts and circumstances, the Compensation Committee seeks to set performance goals that reach across all business areas and include achievements in finance/business development and corporate development.
 
The “Executive Compensation” section below describes, in detail, our executive compensation programs and the decisions made by management and the Board with respect to the fiscal years ended March 31, 2019 and 2018. Although we have no formal policy for a specific allocation between current and long-term compensation, or cash and non-cash compensation, when possible and appropriate taking into account the Company’s financial condition and other related facts and circumstances, we seek to implement a pay mix for our officers with a relatively equal balance of both, providing a competitive salary with a significant portion of compensation awarded on both corporate and personal performance.
 
As an advisory vote, the outcome of this proposal is not binding. The outcome of this Say-on-Pay Vote does not overrule any prior or future decision by the Company or the Board, including decisions made by the Compensation Committee, create or imply any change to the fiduciary duties of the Company or the Board, or create or imply any additional fiduciary duties for the Company or the Board. However, management and the Compensation Committee value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for Named Executive Officers.
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE FOLLOWING ADVISORY RESOLUTION:
 
RESOLVED, that the compensation paid to the Company's Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the disclosure under “Executive Compensation”, the compensation tables and accompanying narrative disclosure, and any related material disclosed in this Proxy Statement, is hereby approved.
 
Vote Required and Recommendation
 
On this advisory, non-binding matter, the affirmative vote of at least a majority of the votes cast at the Annual Meeting is required to approve this Proposal No. 5. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” this Proposal No. 5.
 
The Board unanimously recommends that stockholders vote “FOR” the non-binding advisory resolution above, approving of the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy statement.
 
 
 
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EXECUTIVE COMPENSATION
 
Executive Officers
 
The Company’s executive officers are appointed by the Board and serve at the discretion of the Board, subject to the terms of any employment agreements they may have with the Company. The following is a brief description of the present and past business experience of each of the Company’s current executive officers.
 
Name
 
Age
 
Position
Shawn K. Singh, JD
 
56
 
Chief Executive Officer and Director
H. Ralph Snodgrass, Ph.D.
 
69
 
Founder, President, Chief Scientific Officer and Director
Mark A. Smith, M.D., Ph.D.
 
63
 
Chief Medical Officer
Jerrold D. Dotson, CPA
 
66
 
Vice President, Chief Financial Officer and Secretary
Mark A. McPartland
 
53
 
Vice President, Corporate Development
 
Shawn K. Singh, JD Please see Mr. Singh’s biography on page 4 of this Proxy Statement, under the section titled “Directors.”
 
H. Ralph Snodgrass, Ph.D. Please see Dr. Snodgrass’s biography on page 5 of this Proxy Statement, under the section titled “Directors.”
 
Mark A. Smith, M.D., Ph.D. has served as our Chief Medical Officer since June 2016.  Dr. Smith served as the Clinical Lead for Neuropsychiatry at Teva Pharmaceuticals from November 2013 through June 2016.  He served as Senior Director of Experimental Medicine, Global Clinical Development and Innovation at Shire Pharmaceuticals from September 2012 to October 2013 and at AstraZeneca Pharmaceutical Company as Executive Director of Clinical Development and in other senior positions from June 2000 through September 2012. He served as a Senior Investigator and Principal Research Scientist in CNS Diseases Research at DuPont Pharmaceutical Company from 1996 to 2000 and in the Biological Psychiatry and Clinical Neuroendocrinology Branches of the National Institute of Mental Health from 1987 through 1996.  Dr. Smith has significant expertise in drug discovery and development and clinical trial design and execution, having directed approximately fifty clinical trials from Phase 0 through Phase II B and served as project leader in both the discovery and development of approximately twenty investigational new drugs aimed at depression, anxiety, schizophrenia and other disorders.  Dr. Smith received his Bachelor of Science and Master of Science degrees in Molecular Biophysics and Biochemistry from Yale University; his M.D and Ph.D. in Physiology and Pharmacology from the University of California, San Diego and completed his residency at Duke University Medical Center.
 
Jerrold D. Dotson, CPA has served as our Chief Financial Officer since September 2011, as our Corporate Secretary since October 2013 and as a Vice President since February 2014. Mr. Dotson served as Corporate Controller for Discovery Foods Company, a privately held Asian frozen foods company from January 2009 to September 2011.  From February 2007 through September 2008, Mr. Dotson served as Vice President, Finance and Administration (principal financial and accounting officer) for Calypte Biomedical Corporation (OTCBB: CBMC), a publicly held biotechnology company.  Mr. Dotson served as Calypte’s Corporate Secretary from 2001 through September 2008.  He also served as Calypte’s Director of Finance from January 2000 through July 2005 and was a financial consultant to Calypte from August 2005 through January 2007.  Prior to joining Calypte, from 1988 through 1999, Mr. Dotson worked in various financial management positions, including Chief Financial Officer, for California & Hawaiian Sugar Company, a privately held company.  Mr. Dotson is licensed as a CPA in California and received his B.S. degree in Business Administration with a concentration in accounting from Abilene Christian College.
 
Mark A. McPartland has served as our Vice-President, Corporate Development since October 2016. Mr. McPartland previously served as the Vice President of Corporate Development and Communications at Stellar Biotechnologies, Inc. (NASDAQ: SBOT), a leader in sustainable manufacture of KLH, an immune-stimulating protein widely used in the field of active immunotherapy, from November 2013 to September 2016. While at Stellar, Mr. McPartland was responsible for transforming and expanding its capital markets and corporate communications strategy, while also supporting its global business development activities. From September 2011 to November 2013, Mr. McPartland served as Senior Vice President at MZ Group, a subsidiary of @titude Global, the world's largest independent global investor relations consulting firm, and from January 2005 to January 2011, he served as Vice President and Partner at Alliance Advisors, LLC where he specialized in the implementation of capital markets strategy, market positioning and financial communications, and Regional Vice President of Hayden Communications, Inc. where he led investor relations and corporate communications programs for micro and small cap companies. Mr. McPartland received his Bachelors in Business Administration and Marketing from Coastal Carolina University.
 
 
 
- 26 -
 
 
Our Compensation Objectives
 
Our compensation practices are designed to attract key employees and to retain, motivate and reward our executive officers for their performance and contribution to our long-term success. Our Board, through the Compensation Committee, seeks to compensate our executive officers by combining short and long-term cash and equity incentives. It also seeks to reward the achievement of corporate and individual performance objectives, and to align executive officers’ incentives with stockholder value creation. When possible, the Compensation Committee seeks to tie individual goals to the area of the executive officer’s primary responsibility. These goals may include the achievement of specific financial or business development goals. Also, when possible and appropriate taking into account the Company’s financial condition and other related facts and circumstances, the compensation committee seeks to set performance goals that reach across all business areas and include achievements in finance/business development and corporate development.
 
The Compensation Committee makes decisions regarding salaries, annual bonuses, if any, and equity incentive compensation for our executive officers, approves corporate goals and objectives relevant to the compensation of the Chief Executive Officer and our other executive officers. The Compensation Committee solicits input from our Chief Executive Officer regarding the performance of our other executive officers. Finally, the Compensation Committee also administers our incentive compensation and benefit plans.
 
Although we have no formal policy for a specific allocation between current and long-term compensation, or cash and non-cash compensation, when possible and appropriate taking into account the Company’s financial condition and other related facts and circumstances, we seek to implement a pay mix for our officers with a relatively equal balance of both, providing a competitive salary with a significant portion of compensation awarded on both corporate and personal performance.
 
Compensation Components
 
As a general rule, and when possible and appropriate taking into account the Company’s financial condition and other related facts and circumstances, our compensation consists primarily of three elements: base salary, annual bonus and long-term equity incentives. We describe each element of compensation in more detail below.
 
Base Salary
 
Base salaries for our executive officers are established based on the scope of their responsibilities and their prior relevant experience, taking into account competitive market compensation paid by other companies in our industry for similar positions and the overall market demand for such executives, both initially at the time of hire and thereafter, to ensure that we retain our executive management team. An executive officer’s base salary is also determined by reviewing the executive officer’s other compensation to ensure that the executive officer’s total compensation is in line with our overall compensation philosophy.
 
Base salaries are reviewed periodically as deemed necessary by the Compensation Committee and increased for merit reasons, based on the executive officers’ success in meeting or exceeding individual objectives. Additionally, we may adjust base salaries as warranted throughout the year for promotions or other changes in the scope or breadth of an executive officer’s role or responsibilities.
 
Annual Bonus
 
The Compensation Committee assesses the level of the executive officer’s achievement of meeting individual goals, as well as that executive officer’s contribution towards our corporate-wide goals. The amount of the cash bonus depends on the level of achievement of the individual performance goals, with a target bonus generally set as a percentage of base salary and based on the achievement of pre-determined milestones.  During the years ended March 31, 2019 and 2018, each Named Executive Officer (NEO) serving during those periods was awarded a bonus by the Compensation Committee in the amount set forth in the Summary Compensation Table below. Payment of any bonus amounts is at the discretion of the Compensation Committee which may consider factors other than attainment of individual or corporate goals in its determination of bonus amounts to be granted.
 
Long-Term Equity Incentives
 
The Compensation Committee believes that to attract and retain management, key employees and non-management directors the compensation paid to these persons should include, in addition to base salary and potential annual cash incentives, equity-based compensation that is competitive with peer companies.  The Compensation Committee determines the amount and terms of equity-based compensation granted under our stock option plans or pursuant to other awards made to our executives and key employees.
 
 
 
- 27 -
 
  2019 Summary Compensation Table
 
The following table shows information regarding the compensation of our NEOs for services performed in the fiscal years ended March 31, 2019 and 2018.
 
 
 
 
 
 
 
 
 
 
 
All
 
 
 
 
 
 
 
 
 
 
 
 
Option
 
Other
 
 
 
 
 
Fiscal
 
Salary
 
 
Bonus (9)
 
Awards (6)
 
Compensation
 
 
Total
 
Name and Principal Position
 
Year
 
 
($)
 
 
($)
 
($)
 
($)
 
 
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shawn K. Singh (1)
2019
  466,365 
  110,305 
  374,445 (7)
  - 
  951,115 
Chief Executive Officer
2018
  424,597 
  206,369 
  641,934 (8)
  - 
  1,272,900 
 
    
    
    
    
    
H. Ralph Snodgrass, Ph.D. (2)
2019
  393,991 
  73,444 
  174,823 (7)
  - 
  642,258 
President. Chief Scientific Officer
2018
  376,224 
  128,001 
436,980 (8)
  - 
  941,205 
 
    
    
    
    
    
Mark A. Smith, M.D., Ph.D. (3)
2019
  393,991 
  73,444 
  154,922 (7)
  - 
  622,357 
Chief Medical Officer
2018
  376,224 
  146,287 
  458,461 (8)
  - 
  980,972 
 
    
    
    
    
    
Jerrold D. Dotson (4)
2019
  344,992 
  64,749 
  131,326 (7)
  - 
  541,067 
Vice President, Chief Financial
2018
  322,477 
  125,389 
  423,935 (8)
  - 
  871,801 
  Officer and Secretary
 
    
    
    
    
    
 
    
    
    
    
    
Mark A. McPartland (5)
2019
  268,750 
  50,874 
  187,017 (7)
  - 
  506,641 
Vice President, Corporate Development
2018
  240,833 
  83,125 
  323,984 (8)
  - 
  647,942 
 
(1)
Mr. Singh became Chief Executive Officer of VistaGen Therapeutics, Inc. (a California corporation) (VistaGen California) on August 20, 2009 and our Chief Executive Officer in May 2011, in connection with the Merger.  Pursuant to his January 2010 employment agreement, as amended in June 2016, Mr. Singh’s annual base cash salary, was contractually set at $395,000. The Compensation Committee adjusted Mr. Singh’s base annual salary to $434,460 effective in July 2017 and to $477,000 effective in July 2018. Pursuant to his employment agreement, Mr. Singh is eligible to receive an annual cash incentive bonus of up to fifty percent (50%) of his base cash salary.
  
 
(2)
Through August 20, 2009, Dr. Snodgrass served as VistaGen California’s President and Chief Executive Officer, at which time he became its President and Chief Scientific Officer.  He became our President and Chief Scientific Officer in May 2011, in connection with the Merger.  Pursuant to his January 2010 employment agreement, as amended in June 2016, Dr. Snodgrass’ annual base cash salary, was contractually set at $350,000. The Compensation Committee adjusted Dr. Snodgrass’ base annual salary to $384,965 effective in July 2017 and to $397,000 effective in July 2018. Pursuant to his employment agreement, Dr. Snodgrass is eligible to receive an annual cash incentive bonus of up to fifty percent (50%) of his base cash salary.
 
 
(3)
Dr. Smith became our Chief Medical Officer upon his employment effective June 18, 2016. During our fiscal year ended March 31, 2018, Dr. Smith’s annual base cash salary was $384,965. The Compensation Committee adjusted Dr. Smith’s base annual salary to $397,000 effective in July 2018.
 
 
(4)
Mr. Dotson served as Chief Financial Officer on a contract basis from September 19, 2011 through August 2012, at which time he became our full-time employee.  During our fiscal year ended March 31, 2018, Mr. Dotson’s annual base cash salary was $329,970. The Compensation Committee adjusted Mr. Dotson’s base annual salary to $350,000 effective in July 2018.
 
 
(5)
Mr. McPartland has served as our Vice-President, Corporate Development since October 2016 and was designated a NEO in September 2017. During our fiscal year ended March 31, 2018, Mr. McPartland’s annual base cash salary was $250,000. The Compensation Committee adjusted Mr. McPartland’s base annual salary to $275,000 effective in July 2018.
 
 
(6)
The amounts in the Option Awards column do not represent any cash payments actually received by the NEOs with respect to any of such options to purchase shares of our common stock awarded to them or modified during the periods presented.  Rather, the amounts in this column represent (i) the aggregate grant date fair value of options to purchase shares of our common stock awarded to Mr. Singh, Dr. Snodgrass, Dr. Smith, Mr. Dotson and Mr. McPartland during the fiscal year presented, and (ii) in Fiscal 2019, the modification date incremental fair value resulting from the reduction of exercise prices in excess of $1.56 per share to $1.50 per share for options previously granted to Mr. Singh, Dr. Snodgrass, Dr. Smith, Mr. Dotson and Mr. McPartland, both computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation (ASC 718). Other than the exercise of modified options to purchase 25,375 and 2,500 shares of our common stock at $1.50 per share by Mr. Singh and Dr. Snodgrass, respectively, to date, none of the NEOs have exercised any of such options to purchase common stock, and there can be no assurance that any of them will ever realize any of the ASC 718 grant date fair value amounts presented in the Option Awards column.
 
(7)
The table below provides information regarding the option awards we granted to the NEO’s during Fiscal 2019 and the assumptions used in the Black Scholes Option Pricing Model to determine the grant date fair values of the respective awards and modifications
 
- 28 -
 
 
 
 
 
Option Grant
 
 
Option Modifications
 
 
Option Grant
 
 
 
 
Option Award Compensation – Fiscal Year Ended March 31, 2019
 
8/5/2018
 
 
8/29/2018
 
 
1/14/2019
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Singh
 $- 
 $95,436 
 $279,009 
 $374,445 
Snodgrass
  122,913 
  51,910 
  - 
  174,823 
Smith
  98,330 
  56,592 
  - 
  154,922 
Dotson
  98,330 
  32,996 
  - 
  131,326 
McPartland 
  147,495 
  39,522 
  - 
  187,017 
 
 $467,068 
 $276,456 
 $279,009 
 $1,022,553 
 
 
 
Option Grant
 
 
Option Modifications
 
 
Option Grant
 
 
 
 
 Option Shares Granted - Fiscal Year Ended March 31, 2019
 
8/5/2018
 
 
8/29/2018
 
 
1/14/2019
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Singh
  - 
  - 
  220,000 
  600,000 
Snodgrass
  125,000 
  - 
  - 
  400,000 
Smith
  100,000 
  - 
  - 
  425,000 
Dotson
  100,000 
  - 
  - 
  400,000 
McPartland 
  150,000 
  - 
  - 
  300,000 
 
  475,000 
  - 
  220,000 
  2,125,000 
 
 
 
Option Grant  
 
 
  Option Modifications
 
 
Option Grant  
 
Option Award Assumptions – Fiscal Year Ended March 31, 2019  
 
8/5/2018  
 
 
  8/29/2018
 
 
1/14/2019  
 
 
 
 
 
 
 
 
 
 
 
Market price per share
 $1.27 
 
 
 
 $1.70 
Exercise price per share
 $1.27 
    
 $1.70 
Risk-free interest rate
  2.84%
    
  2.55%
Volatility
  99.29%
    
  93.56%
Expected term (years)
  5.50 
    
  5.50 
Dividend rate
  0%
    
  0%
 
    
    
    
Fair value per share
 $0.988 
    
 $1.27 
Aggregate shares
  475,000 
    
  220,000 
 
 
Amounts shown for option modification compensation reflect the modification date incremental fair value resulting from the reduction of exercise prices in excess of $1.56 per share to $1.50 per share for options previously granted to the NEOs, as permitted by the 2016 Plan. Options to purchase 555,375 shares, 346,250 shares and 231,001 shares of our common stock and having pre-modification exercise prices from $1.96 per share to $10.00 per share were modified to reduce the exercise price to $1.50 per share for Mr. Singh, Dr. Snodgrass and Mr. Dotson, respectively. Options to purchase 385,000 shares of our common stock and having pre-modification exercise prices from $1.96 per share to $3.80 per share were modified to reduce the exercise price to $1.50 per share for Dr. Smith. Options to purchase 265,000 shares of our common stock and having pre-modification exercise prices from $1.96 per share to $4.27 per share were modified to reduce the exercise price to $1.50 per share for Mr. McPartland.
 
(8)
The table below provides information regarding the option awards we granted to Mr. Singh, Dr. Snodgrass, Dr. Smith, Mr. Dotson and Mr. McPartland during Fiscal 2018 and the assumptions used in the Black Scholes Option Pricing Model to determine the grant date fair values of the respective awards and modifications
 
 
 
- 29 -
 
 
 
 Option Award Compensation – Fiscal Year Ended March 31, 2018
 
Option Grant
 
 
Option Grant
 
 
Option Grant
 
 
 
 
 
 
4/26/2017
 
 
9/19/2017
 
 
2/2/2018
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Singh
 $241,685 
 $142,474 
 $257,775 
 $641,934 
Snodgrass
  172,632 
  113,979 
  150,369 
  436,980 
Smith
  172,632 
  113,979 
  171,850 
  458,461 
Dotson
  138,106 
  113,979 
  171,850 
  423,935 
McPartland 
  138,106 
  56,990 
  128,888 
  323,984 
 
 $863,161 
 $541,401 
 $880,731 
 $2,285,293 
 
 Option Shares Granted - Fiscal Year Ended March 31, 2018
 
Option Grant
 
 
Option Grant
 
 
Option Grant
 
 
 
 
 
 
4/26/2017
 
 
9/19/2017
 
 
2/2/2018
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Singh
  175,000 
  125,000 
  300,000 
  600,000 
Snodgrass
  125,000 
  100,000 
  175,000 
  400,000 
Smith
  125,000 
  100,000 
  200,000 
  425,000 
Dotson
  100,000 
  100,000 
  200,000 
  400,000 
McPartland 
  100,000 
  50,000 
  150,000 
  300,000 
 
  625,000 
  475,000 
  1,025,000 
  2,125,000 
 
Option Award Assumptions – Fiscal Year Ended March 31, 2018  
 
Option Grant  
 
 
Option Grant  
 
 
Option Grant  
 
 
 
4/26/2017  
 
 
9/19/2017  
 
 
2/2/2018  
 
Market price per share
 $1.96 
 $1.56 
 $1.16 
Exercise price per share
 $1.96 
 $1.56 
 $1.16 
Risk-free interest rate
  1.98%
  1.90%
  2.63%
Volatility
  82.3%
  91.4%
  92.4%
Expected term (years)
  6.0 
  5.5 
  5.5 
Dividend rate
  0%
  0%
  0%
 
    
    
    
Fair value per share
 $1.38 
 $1.14 
 $0.86 
Aggregate shares
  625,000 
  475,000 
  1,025,000 
 
(9)
Amounts reported in the Bonus column reflect bonuses earned during the years ended March 31, 2019 and 2018, respectively, by each NEO for attainment of performance-based objectives during the applicable period. Bonus amounts earned during the years ended March 31, 2018 and 2019 were paid to each NEO during the subsequent fiscal year.
 
For the bonus amounts reported for the year ended March 31, 2018, amounts reported reflects an adjustment to previously disclosed bonus amounts in order to accurately reflect amounts earned by each NEO for the attainment of performance-based objectives during fiscal 2018, rather than bonus amounts paid during fiscal 2018 which were attributable to performance-based objectives attained during the year ended March 31, 2017.
 
None of the NEOs is entitled to any perquisites or other personal benefits that, in the aggregate, are worth over $50,000 or over 10% of their base salary.
 
Benefit Plans
 
401(k) Plan
 
We maintain, through a registered agent, a retirement and deferred savings plan for our officers and employees. This plan is intended to qualify as a tax-qualified plan under Section 401(k) of the Internal Revenue Code of 1986, as amended. The retirement and deferred savings plan provides that each participant may contribute a portion of his or her pre-tax compensation, subject to statutory limits. Under the plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee. The retirement and deferred savings plan also permits us to make discretionary contributions subject to established limits and a vesting schedule.  To date, we have not made any discretionary contributions to the retirement and deferred savings plan on behalf of participating employees.
 
 
 
- 30 -
 
  Outstanding Warrants and Options at March 31, 2019
 
The following table provides information regarding each unexercised stock option and warrant to purchase shares of our common stock held by each of the named executive officers as of March 31, 2019.
 
 
 
 
 
Stock Options and Warrants
 
Name
Number of Securities Underlying Unexercised Options and Warrants
(#) Exercisable
 
Number of Securities
Underlying Unexercised Options and Warrants
(#) Unexercisable
 
 
Exercise
Price
($)
 
 
Expiration
Date
 
 
 
 
 
 
 
Shawn K. Singh
  50,000 
 
  - 
 
  1.50 
11/4/2019
 
  5,000 
 
  - 
 
  1.50 
 4/26/2021
 
  72,000 
 
  - 
 
  7.00 
 3/3/2023
 
  150,000 
 
  - 
 
  7.00 
 1/11/2020
 
  250,000 
 
  - 
 
  7.00 
 9/2/2020
 
  137,499
(1)
  62,501
(1)
  1.50 
 6/19/2026
 
  77,777
(2)
  22,223
(2)
  1.50 
 11/9/2026
 
  111,799
(3)
  63,201
(3)
  1.50 
 4/26/2027
 
  104,164
(4)
  20,836
(4)
  1.56 
 9/19/2027
 
  196,875
(5)
  103,125
(5)
  1.16 
 2/2/2028
 
  68,750
(6)
  151,250
(6)
  1.70 
 1/14/2029
  Total: 
  1,223,864 
 
  423,136 
 
    
 
 
    
 
    
 
    
 
H. Ralph Snodgrass, Ph.D. 
  1,250 
 
  - 
 
  1.50 
6/17/2019
 
  12,500 
 
  - 
 
  1.50 
 12/30/2019
 
  50,000 
 
  - 
 
  7.00 
 3/3/2023
 
  100,000 
 
  - 
 
  7.00 
 1/11/2020
 
  150,000 
 
  - 
 
  7.00 
 9/20/2020
 
  85,937
(1)
  39,063
(1)
  1.50 
6/19/2026
 
  62,222
(2)
  17,778
(2)
  1.50 
11/9/2026
 
  79,856
(3)
  45,144
(3)
  1.50 
 4/26/2027
 
  83,331
(4)
  16,669
(4)
  1.56 
 9/19/2027
 
  114,843
(5)
  60,157
(5)
  1.16 
 2/2/2028
 
  58,593
(7)
  66,407
(7)
  1.27 
 8/5/2028
  Total:
  798,532 

  245,218 

    
 
 
    
 
    
 
    
 
Mark A. Smith, M.D. Ph.D.
  123,749
(1)
  56,251
(1)
  1.50 
6/19/2026
 
  62,222
(2)
  17,778
(2)
  1.50 
11/9/2026
 
  79,856
(3)
  45,144
(3)
  1.50 
4/26/2027
 
  83,331
(4)
  16,669
(4)
  1.56 
9/19/2027
 
  131,250
(5)
  68,750
(5)
  1.16 
2/2/2028
 
  46,875
(7)
  53,125
(7)
  1.27 
8/5/2028
  Total:
  527,283 

  257,717 
 
    
 
 
    
 
    
 
    
 
Jerrold D. Dotson
  5,001 
 
  - 
 
  1.50 
10/30/2022
 
  1,000 
 
  - 
 
  1.50 
10/27/2023
 
  10,000 
 
  - 
 
  7.00 
3/3/2023
 
  50,000 
 
  - 
 
  7.00 
1/11/2020
 
  100,000 
 
  - 
 
  7.00 
9/2/2020
 
  51,562
(1)
  23,438
(1)
  1.50 
6/19/2026
 
  38,888
(2)
  11,112
(2)
  1.50 
11/9/2026
 
  63,885
(3)
  36,115
(3)
  1.50 
4/26/2027
 
  83,881
(4)
  16,669
(4)
  1.56 
9/19/2027
 
  131,250
(5)
  68,750
(5)
  1.16 
2/2/2028
 
  46,875
(7)
  53,125
(7)
  1.27 
8/5/2028
  Total:
  232,284 
 
  363,717 
 
    
 
 
    
 
    
 
    
 
Mark A. McPartland
  78,124
(8)
  46,876 
(8)
  1.50 
9/29/2026
 
  31,111
(2)
  8,869
(2)
  1.50 
11/9/2026
 
  63,885
(3)
  36,115
(3)
  1.50 
4/26/2027
 
  41,665
(4)
  8,335
(4)
  1.56 
9/19/2027
 
  98,437
(5)
  51,563
(5)
  1.16 
2/2/2028
 
  70,312
(7)
  79,688
(7)
  1.27 
8/5/2028
  Total:
  383,534 
 
  231,466 
 
    
 
 
 
 
- 31 -
 
 
 
(1)
Represents an option to purchase shares of our common stock at $3.49 per share granted on June 19, 2016 when the market price of our common stock was $3.49 per share.  The option became exercisable for 25% of the shares granted on June 19, 2017 with the remaining shares becoming exercisable ratably monthly through June 19, 2020, when all shares granted will be fully exercisable. The exercise price of the option was reduced to $1.50 per share on August 29, 2018.
 
(2)
Represents an option to purchase shares of our common stock at $3.80 per share granted on November 9, 2016 when the market price of our common stock was $3.80 per share.  The option became exercisable for 1/36th of the shares granted each month beginning December 9, 2016 through November 9, 2019, when all shares granted will be fully exercisable. The exercise price of the option was reduced to $1.50 per share on August 29, 2018.
 
(3) 
Represents an option to purchase shares of our common stock at $1.96 per share granted on April 26, 2017 when the market price of our common stock was $1.96 per share.  The option become exercisable for 33.33% of the shares granted on April 26, 2018 with the remaining shares becoming exercisable ratably monthly through April 26, 2020, when all shares granted will be fully exercisable. The exercise price of the option was reduced to $1.50 per share on August 29, 2018.
 
(4)
Represents an option to purchase shares of our common stock at $1.56 per share granted on September 19, 2017 when the market price of our common stock was $1.56 per share.  The option became exercisable for 33.33% of the shares granted immediately upon grant, with the remaining shares becoming exercisable ratably monthly through September 19,2019, when all shares granted will be fully exercisable.
 
(5)
Represents an option to purchase shares of our common stock at $1.16 per share granted on February 2, 2018 when the market price of our common stock was $1.16 per share.  The option became exercisable for 25% of the shares granted immediately upon grant, with the remaining shares becoming exercisable ratably monthly through February 2, 2020, when all shares granted will be fully exercisable.
 
(6)
Represents an option to purchase shares of our common stock at $1.70 per share granted on January 14, 2019 when the market price of our common stock was $1.70 per share.  The option became exercisable for 25% of the shares granted immediately upon grant, with the remaining shares becoming exercisable ratably monthly through January 14, 2021, when all shares granted will be fully exercisable.
 
(7)
Represents an option to purchase shares of our common stock at $1.27 per share granted on August 5, 2018 when the market price of our common stock was $1.27 per share.  The option became exercisable for 25% of the shares granted immediately upon grant, with the remaining shares becoming exercisable ratably monthly through August 5, 2020, when all shares granted will be fully exercisable.
 
(8)
Represents an option to purchase shares of our common stock at $4.27 per share granted on September 29, 2016 when the market price of our common stock was $4.27 per share.  The option became exercisable for 25% of the shares granted on September 29, 2017, with the remaining shares becoming exercisable ratably monthly through September 29, 2020, when all shares granted will be fully exercisable. The exercise price of the option was reduced to $1.50 per share on August 29, 2018. 
 
 
 
- 32 -
 
 
 
On January 14, 2019, when the closing price of our common stock, as reported on the Nasdaq Capital Market, was $1.70 per share, Mr. Singh exercised previously modified options to purchase an aggregate of 25,375 shares of our common stock at $1.50 per share. On March 13, 2019, when the closing price of our common stock, as reported on the Nasdaq Capital Market, was $1.26 per share, Dr. Snodgrass exercised a previously modified option to purchase 2,500 shares of our common stock at $1.50 per share.
 
On May 23, 2019, when the closing price of our common stock, as reported on the Nasdaq Capital Market, was $0.80 per share, the Compensation Committee of the Board granted options from our 2016 Plan to each of Dr. Snodgrass, Dr. Smith, Mr. Dotson and Mr. McPartland to purchase 150,000 shares of our common stock at an exercise price of $1.00 per share. Such options were vested 25% upon grant with the remaining shares vesting ratably over three years. The Committee also granted options from our 2016 Plan to Mr. Singh to purchase 80,000 shares of our common stock at an exercise price of $1.00 per share, 50,000 shares of which were vested immediately, with the remaining 30,000 shares vesting ratably over three years.
 
On May 28, 2019, when the closing price of our common stock, as reported on the Nasdaq Capital Market, was $0.82 per share, the Compensation Committee granted options from the 2019 Plan to Mr. Singh to purchase 170,000 shares of our common stock at an exercise price of $1.00 per share, which grant is contingent upon the approval of our 2019 Plan by our stockholders, as described in Proposal No. 3 above. The option will vest 25% upon approval of our 2019 Plan with the remaining shares vesting ratably over three years.
 
Employment or Severance Agreements
 
We have employment agreements with Mr. Singh and Dr. Snodgrass, the material terms of which are described below.
 
Singh Agreement
 
We entered into an employment agreement with Mr. Singh on April 28, 2010. Under the agreement, as amended on June 22, 2016, Mr. Singh’s base salary was increased from $347,500 per year to $395,000 per year, effective June 16, 2016. The Compensation Committee adjusted Mr. Singh’s base annual salary to $434,460 effective in July 2017 and to $477,000 effective in July 2018. Under his agreement, Mr. Singh is eligible to receive an annual incentive cash bonus of up to 50% of his base salary. The Compensation Committee awarded Mr. Singh cash bonuses of $110,305 and $206,369 for attainment of performance-based objectives during the years ended March 31, 2019 and 2018, respectively. The award of his annual incentive bonus is at the discretion of the Compensation Committee of our Board of Directors. In the event we terminate Mr. Singh’s employment without cause, he is entitled to receive severance in an amount equal to:
 
twelve months of his then-current base salary payable in the form of salary continuation;
 
a pro-rated portion of the incentive cash bonus that the Board of Directors determines in good faith that Mr. Singh earned prior to his termination; and
 
such amounts required to reimburse him for Consolidated Omnibus Budget Reconciliation Act ( COBRA) payments for continuation of his medical health benefits for such twelve-month period.
 
In addition, in the event Mr. Singh terminates his employment with “good reason” following a “change of control” (each as defined below), he is entitled to twelve months of his then-current base salary payable in the form of salary continuation.
 
 
 
- 33 -
 
 
Snodgrass Agreement
 
We entered into an employment agreement with Dr. Snodgrass on April 28, 2010. Under the agreement, as amended on June 22, 2016, Dr. Snodgrass’s base salary was increased from $305,000 per year to $350,000 per year, effective June 16, 2016. The Compensation Committee adjusted Dr. Snodgrass’ base annual salary to $384,965 effective in July 2017 and to $397,000 effective in July 2018. Under his agreement, Dr. Snodgrass is eligible to receive an annual incentive cash bonus of up to 50% of his base salary. The Compensation Committee awarded Dr. Snodgrass cash bonuses of $73,444 and $128,001 for attainment of performance-based objectives during the years ended March 31, 2019 and 2018, respectively. The award of his annual incentive bonus is at the discretion of the Compensation Committee of the Board of Directors. In the event we terminate Dr. Snodgrass’s employment without cause, he is entitled to receive severance in an amount equal to:
 
twelve months of his then-current base salary payable in the form of salary continuation;
 
a pro-rated portion of the incentive bonus that the Board of Directors determines in good faith that Dr. Snodgrass earned prior to his termination; and
 
such amounts required to reimburse him for COBRA payments for continuation of his medical health benefits for such twelve-month period.
 
In addition, in the event Dr. Snodgrass terminates his employment with "good reason" (as defined below), he is entitled to twelve months of his then-current base salary payable in the form of salary continuation.
 
Change of Control Provisions
 
Pursuant to each of their respective employment agreements, Dr. Snodgrass is entitled to severance if he terminates his employment at any time for “good reason” (as defined below), while Mr. Singh is entitled to severance if he terminates his employment for good reason after a change of control. Under their respective agreements, “good reason” means any of the following events, if we affect the event without the executive’s consent (subject to our right to cure):
 
a material reduction in the executive’s responsibility; or
 
a material reduction in the executive’s base salary except for reductions that are comparable to reductions generally applicable to similarly situated executives of VistaGen.
 
Furthermore, pursuant to their respective employment agreements and their stock option award agreements, as amended, in the event we terminate the executive without cause within twelve months of a change of control, the executive’s remaining unvested option shares become fully vested and exercisable. Upon a change of control in which the successor corporation does not assume the executive’s stock options, the stock options granted to the executive become fully vested and exercisable.
 
Pursuant to their respective employment agreements, a change of control occurs when: (i) any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than VistaGen, a subsidiary, an affiliate, or a VistaGen employee benefit plan, including any trustee of such plan acting as trustee) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of VistaGen representing 50% or more of the combined voting power of VistaGen’s then outstanding securities; (ii) a sale of substantially all of VistaGen’s assets; or (iii) any merger or reorganization of VistaGen whether or not another entity is the survivor, pursuant to which the holders of all the shares of capital stock of VistaGen outstanding prior to the transaction hold, as a group, fewer than 50% of the shares of capital stock of VistaGen outstanding after the transaction.
 
In the event that, following termination of employment, amounts are payable to an executive pursuant to his employment agreement, the executive’s eligibility for severance is conditioned on executive having first signed a release agreement.
 
Pursuant to their respective employment agreements, the estimated amount that could be paid by us assuming that a change of control occurred on the last business day of our current fiscal year, is $498,000 for Mr. Singh and $416,850 for Dr. Snodgrass, excluding the imputed value of accelerated vesting of incentive stock options, if any.
 
 
- 34 -
 
 
PROPOSAL NO. 6
 
RATIFICATION OF THE APPOINTMENT OF
OUM & CO. LLP TO SERVE AS THE COMPANY'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR
 
Upon recommendation of the Audit Committee of the Board, the Board appointed OUM & Co. LLP (OUM) as our independent registered public accounting firm for the current fiscal year and hereby recommends that the stockholders ratify such appointment.
 
The Board may terminate the appointment of OUM as the Company’s independent registered public accounting firm without the approval of the Company’s stockholders whenever the Board deems such termination necessary or appropriate.
 
Representatives of OUM will be present at the Annual Meeting or available by telephone and will have an opportunity to make a statement if they so desire and to respond to appropriate questions from stockholders.
 
Fees and Services
 
OUM served as our independent registered public accounting firm for the fiscal years ended March 31, 2019 and 2018. Information provided below includes fees for professional services provided to us by OUM for our fiscal years ended March 31, 2019 and 2018.
 
 
 
Fiscal Years Ended
March 31,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
Audit fees
 $226,200 
 $216,000 
Audit-related fees
  57,600 
  114,600 
Tax fees
  16,000 
  15,000 
All other fees
  - 
  - 
Total fees
 $299,800 
 $345,600 
 
 Audit Fees:
 
Audit fees include fees billed for the annual audit of the Company’s financial statements and quarterly reviews for the fiscal years ended March 31, 2019 and 2018, and for services normally provided by OUM in connection with routine statutory and regulatory filings or engagements.
 
Audit-Related Fees:
 
Audit-related fees include fees billed for assurance and related services that are reasonably related to the performance of the annual audit or reviews of the Company’s financial statements and are not reported under “Audit Fees.” During our fiscal years ended March 31, 2019 and 2018, OUM billed the Company for services related to comfort letters and consents for the use of its audit opinion in our filings of Registration Statements on Form S-3, Form S-1, and Form S-8 that included or incorporated by reference the Company’s audited financial statements for the fiscal years ended March 31, 2018 and 2017.  
 
Tax Fees:
 
Tax fees include fees for professional services for tax compliance, tax advice and tax planning for the tax years ended March 31, 2019 and 2018.
 
All Other Fees:
 
All other fees include fees for products and services other than those described above.  During our fiscal years ended March 31, 2019 and 2018, no such fees were billed by OUM.
 
Required Vote and Recommendation
 
Ratification of the selection of OUM as the Company’s independent registered public accounting firm for our fiscal year ending March 31, 2020 requires the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the ratification of OUM as the Company’s independent registered public accounting firm for our fiscal year ending March 31, 2020.
 
The Board unanimously recommends that stockholders vote “FOR” the ratification of the selection of OUM as our independent registered public accounting firm for our fiscal year ending March 31, 2020.
 
 
 
 
 
- 35 -
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
 
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of July 12, 2019 for:
 
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
 
each of our directors;
 
each of our named executive officers; and
 
all of our directors and executive officers as a group.
 
Applicable percentage ownership is based on 42,622,965 shares of common stock outstanding at July 12, 2019. In computing the number of shares of common stock beneficially owned by a person, we deemed to be outstanding all shares of common stock subject to options or warrants and all shares of preferred stock held by that person or entity that are currently exercisable or exchangeable or that will become exercisable or exchangeable within 60 days of July 12, 2019.  In computing the percentage of shares beneficially owned, we deemed to be outstanding all shares of common stock subject to options or warrants and all shares of preferred stock held by that person or entity that are currently exercisable or exchangeable or that will become exercisable or exchangeable within 60 days of July 12, 2019.  Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o VistaGen Therapeutics, Inc., 343 Allerton Avenue, South San Francisco, California 94080.
 
Name and address of beneficial owner
 
 
Number of shares beneficially owned
 
 
 
Percent
of shares beneficially
owned (1)
 
Executive officers and directors:
 
 
 
 
 
 
Shawn K. Singh, JD (2)
 
 
1,560,690
 
 
 
3.54
%
H. Ralph Snodgrass, Ph.D. (3)
 
 
1,065,015
 
 
 
2.44
%
Mark A. Smith, M.D., Ph.D. (4)
 
 
738,541
 
 
 
1.70
%
Jerrold D. Dotson (5)
 
 
774,264
 
 
 
1.78
%
Mark McPartland (6)
 
 
570,936
 
 
 
1.32
Jon S. Saxe (7)
 
 
404,986
 
 
 
*
 
Brian J. Underdown, Ph.D. (8)
 
 
380,985
 
 
 
*
 
Jerry B. Gin, Ph.D., MBA (9)
 
 
519,235
 
 
 
1.21
%
Ann M. Cunningham (10)
 
 
40,625
 
 
 
*
 
 
 
 
 
 
 
 
 
 
5% Stockholders:
 
 
 
 
 
 
 
 
Montsant Partners, LLC (11)
 
 
4,239,331
 
 
 
9.08
%
Sphera Global Healthcare Master Fund (12)
 
 
3,337,015
 
 
 
7.59
%
Eric D. Weinberger and Megan G. Weinberger (13)
 
 
2,155,735
 
 
 
5.06
%
 
 
 
 
 
 
 
 
 
All executive officers and directors as a group (9 persons) (14)
 
 
5,973,682
 
 
 
12.34
%
 ____________________
*    less than 1%
 
(1)
Based on 42,622,965 shares of common stock issued and outstanding as of July 12, 2019.
 
(2)
Includes options to purchase 1,037,081 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase 472,000 restricted shares of common stock exercisable within 60 days of July 12, 2019
  
 
 
- 36 -
 
 


(3)
Includes options to purchase 702,291 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase 300,000 restricted shares of common stock exercisable within 60 days of July 12, 2019.
 
(4)
Includes options to purchase 738,541 shares of common stock exercisable within 60 days of July 12, 2019.
 
(5)
Includes options to purchase 613,638 shares of common stock exercisable within 60 days of July 12, 2019, including options to purchase 626 shares of common stock held by Mr. Dotson’s wife, and warrants to purchase 160,000 restricted shares of common stock exercisable within 60 days of July 12, 2019.
 
(6)
Includes options to purchase 570,936 shares of common stock exercisable within 60 days of July 12, 2019.
 
(7)
Includes options to purchase 304,235 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase 77,500 restricted shares of common stock exercisable within 60 days of July 12, 2019.
 
(8)
Includes options to purchase 304,485 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase 77,500 restricted shares of common stock exercisable within 60 days of July 12, 2019.
 
(9)
Includes 50,000 restricted shares of common stock held by Dr. Gin’s wife, options to purchase 319,235 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase 100,000 unregistered shares of common stock, including warrants to purchase 50,000 shares held by Dr. Gin’s wife, exercisable within 60 days of July 12, 2019.
 
(10)
Includes options to purchase 40,625 shares of common stock exercisable within 60 days of July 12, 2019.
 
(11)
Based upon Company records of transactions between us and Montsant Partners, LLC (Montsant), through July 12, 2019.  The number of beneficially owned shares reported includes 637,500 restricted shares of common stock that may currently be acquired by Montsant upon fixed exchange of 425,000 restricted shares of our Series A Preferred Stock (Series A Preferred). There is, however, a limitation on exchange such that the number of shares of our common stock that may be acquired by Montsant upon exchange of the Series A Preferred is limited to the extent necessary to ensure that, following such exchange, the total number of shares of our common stock then beneficially owned by Montsant does not exceed 9.99% of the total number of our then issued and outstanding shares of common stock without providing us with 61 days’ prior notice thereof.
 
Further, the reported number of shares beneficially owned by Montsant also includes 1,131,669 shares of common stock pursuant to its ownership of 1,131,669 shares of our Series B 10% Convertible Preferred Stock (Series B Preferred), immediately convertible into a like number of shares of our common stock, but excludes shares of common stock that may be issued as payment of accrued but unpaid dividends in the amount of approximately $4.01 million at July 12, 2019 on shares of Series B Preferred owned by Montsant. Pursuant to the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B 10% Convertible Preferred Stock, there is, however, a limitation on conversion of the Series B Preferred such that the number of shares of common stock that Montsant may beneficially acquire upon such conversion is limited to the extent necessary to ensure that, following such conversion, the total number of shares of common stock then beneficially owned by Montsant does not exceed 9.99% of the total number of then issued and outstanding shares of our common stock without providing us with 61 days’ prior notice thereof.
 
 
Further, the reported number of shares beneficially owned by Montsant also includes 2,318,012 shares of common stock pursuant to its ownership of 2,318,012 shares of our Series C Convertible Preferred Stock (Series C Preferred), immediately convertible on a fixed 1:1 conversion basis into a like number of shares of our restricted common stock. Pursuant to the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock, there is, however, a limitation on conversion of the Series C Preferred such that the number of shares of common stock that Montsant may beneficially acquire upon such conversion is limited to the extent necessary to ensure that, following such conversion, the total number of shares of common stock then beneficially owned by Montsant does not exceed 9.99% of the total number of then issued and outstanding shares of our common stock without providing us with 61 days’ prior notice thereof. Excluding the shares otherwise subject to the beneficial ownership restrictions noted above, Montsant may be deemed to be the beneficial owner of 152,150 shares or 0.36% of our common stock at July 12, 2019. 
 
 
 
- 37 -
 
 
 
 
Matthew Wright, Operating Manager of RHSW (Cayman) Ltd., and/or Moshe Feuer, Chief Executive Officer and authorized signatory of BAM may, subject to certain restrictions, be deemed to have voting and investment control over the shares held by Montsant. The address for Montsant is c/o BAM Administrative Services LLC, 105 Madison Avenue, 19th Floor, New York, NY 10016.
 
(12)
Based upon information contained in SEC Schedule 13F filed on May 15, 2019. The number of shares reported includes immediately exercisable warrants to purchase 1,314,949 registered shares of our common stock, which warrants are subject to a limitation on exercise such that the number of shares of common stock that Sphera Global Healthcare Master Fund and HFR HE Sphera Global Healthcare Master Trust (together, Sphera) may beneficially acquire upon such exercise is limited to the extent necessary to ensure that, following such exercise, the total number of shares of common stock then beneficially owned by Sphera does not exceed 4.99% of the total number of issued and outstanding shares of our common stock without providing us with 61 days’ prior notice thereof.  Excluding the shares otherwise subject to the beneficial ownership restrictions noted above, Sphera may be deemed to be the beneficial owner of 2,022,066 shares or 4.74% of our common stock at July 12, 2019. The primary business address of Sphera Global Healthcare Master Fund and its affiliates is c/o Sphera Funds Management Ltd., 21 Ha’arba’ah Street, Tel Aviv 64739, Israel. Moshe Arkin and Sphera Funds Management Ltd. have joint voting and investment control over the shares held by Sphera.
 
(13)
Based upon the Company’s records. The shares are held by Eric D. Weinberger and Megan G. Weinberger as joint tenants with right of survivorship. The Weinberger’s address is 14189 Caloosa Boulevard, West Palm Beach, FL 33418. Eric D. Weinberger and Megan G. Weinberger share voting and investment control over the shares held.
 
(14)
Includes options to purchase an aggregate of 4,630,693 shares of common stock exercisable within 60 days of July 12, 2019 and warrants to purchase an aggregate of 1,187,000 restricted shares of common stock exercisable within 60 days of July 12, 2019.
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
Equity Grants
 
As of March 31, 2019, options to purchase a total of 6,626,088 registered shares of our common stock were outstanding at a weighted average exercise price of $1.48 per share, of which 4,303,972 options were vested and exercisable at a weighted average exercise price of $1.53 per share and 2,322,116 were unvested and not exercisable at a weighted average exercise price of $1.40 per share. These options were issued under our Amended and Restated 2016 Stock Incentive Plan, formerly titled the 2008 Stock Incentive Plan (the 2016 Plan), as described below. At March 31, 2019, an additional 2,607,162 shares remained available for future equity grants under our 2016 Plan.
 
Plan category
 
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
 
 
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
 
 
Number of securities
remaining available for future issuance under equity compensation plans
(excluding securities
reflected in column (a))
(c)
 
Equity compensation plans approved by security holders
  6,626,088 
 $1.48 
  2,607,162 
Equity compensation plans not approved by security holders
  -- 
    
  -- 
Total
  6,626,088 
 $1.48 
  2,607,162 
 
 
 
- 38 -
 
 
 
Description of the 2016 Plan
 
The 2016 Plan provides for the grant of stock options, restricted shares of common stock, stock appreciation rights and dividend equivalent rights, collectively referred to as “Awards”. Stock options granted under the 2016 Plan may be either incentive stock options under the provisions of Section 422 of the Code, or non-qualified stock options. We may grant incentive stock options only to employees of the Company or any parent or subsidiary of the Company. Awards other than incentive stock options may be granted to employees, directors and consultants.
 
The Compensation Committee of the Board (the Committee), administers the 2016 Plan, including selecting the Award recipients, determining the number of shares to be subject to each Award, the exercise or purchase price of each Award and the vesting and exercise periods of each Award.
 
The exercise price of all incentive stock options granted under the 2016 Plan must be at least equal to 100% of the fair market value of the shares on the date of grant. The maximum term of an incentive stock option granted to any other participant may not exceed 10 years. The Committee determines the term and exercise or purchase price of all other Awards granted under the 2016 Plan.
 
Under the 2016 Plan, incentive stock options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. Other Awards shall be transferable:
 
by will and by the laws of descent and distribution; and
 
during the lifetime of the participant, to the extent and in the manner authorized by the Committee by gift or pursuant to a domestic relations order to members of the participant’s Immediate Family (as defined in the 2016 Plan).
 
The maximum number of shares with respect to which options and stock appreciation rights may be granted to any participant in any calendar year is 300,000 shares of common stock. In connection with a participant’s commencement of service with the Company, a participant may be granted options and/or stock appreciation rights for up to an additional 50,000 shares that will not count against the foregoing limitation. In addition, for Awards of restricted stock and restricted shares of common stock that are intended to be “performance-based compensation” (within the meaning of Section 162(m) of the Code), the maximum number of shares with respect to which such Awards may be granted to any participant in any calendar year is 300,000 shares of common stock. The limits described in this paragraph are subject to adjustment in the event of any change in our capital structure as described below.
 
The terms and conditions of Awards are determined by the Committee, including the vesting schedule and any forfeiture provisions. Awards under the 2016 Plan may vest upon the passage of time or upon the attainment of certain performance criteria. Although we do not currently have any Awards outstanding that vest upon the attainment of performance criteria, the Committee may establish criteria based on any one of, or a combination of, a number of financial measurements. 
 
Effective upon the consummation of a Corporate Transaction (as defined below), all outstanding Awards under the 2016 Plan will terminate unless the acquirer assumes or replaces such Awards. The Committee has the authority, exercisable either in advance of any actual or anticipated Corporate Transaction or Change in Control (as defined below) or at the time of an actual Corporate Transaction or Change in Control and exercisable at the time of the grant of an Award under the 2016 Plan or any time while an Award remains outstanding, to provide for the full or partial automatic vesting and exercisability of one or more outstanding unvested Awards under the 2016 Plan and the release from restrictions on transfer and repurchase or forfeiture rights of such Awards in connection with a Corporate Transaction or Change in Control, on such terms and conditions as the Committee may specify. The Committee also has the authority to condition any such Award vesting and exercisability or release from such limitations upon the subsequent termination of the service of the grantee within a specified period following the effective date of the Corporate Transaction or Change in Control. The Committee may provide that any Awards so vested or released from such limitations in connection with a Change in Control, shall remain fully exercisable until the expiration or earlier termination of the Award.
  
 
- 39 -
 
 
 
Under the 2016 Plan, a Corporate Transaction is generally defined as:
 
an acquisition of securities possessing more than fifty percent (50%) of the total combined voting power of our outstanding securities but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction;
 
a reverse merger in which we remain the surviving entity but: (i) the shares of common stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (ii) in which securities possessing more than fifty percent (50%) of the total combined voting power of our outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger;
 
a sale, transfer or other disposition of all or substantially all of the assets of the Company;
 
a merger or consolidation in which the Company is not the surviving entity; or
 
a complete liquidation or dissolution.
 
Under the 2016 Plan, a Change in Control is generally defined as: (i) the acquisition of more than 50% of the total combined voting power of our stock by any individual or entity which a majority of our Board (who have served on our board for at least 12 months) do not recommend our stockholders accept; (ii) or a change in the composition of our Board over a period of 12 months or less.
 
Unless terminated sooner, the 2016 Plan will automatically terminate in 2026. Our Board may at any time amend, suspend or terminate the 2016 Plan. Subject to the approval of the 2019 Plan pursuant to Proposal No. 3 in this Proxy Statement, upon the Effective Date of the 2019 Plan, no further awards will be made from the 2016 Plan and any remaining authorized shares will become available for awards from the 2019 Plan. To the extent necessary to comply with applicable provisions of U.S. federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein, we will obtain stockholder approval of any such amendment to the 2016 Plan in such a manner and to such a degree as required.
 
Certain Relationships and Related Transactions
 
Contract Research and Development Agreement with Cato Research Ltd.
 
Cato Holding Company (CHC), doing business as Cato BioVentures (CBV), is the parent of Cato Research Ltd. (CRL). CRL is a contract research, development and regulatory services organization (CRO) that we have engaged for a wide range of material aspects related to the nonclinical and clinical development and regulatory affairs associated with our efforts to develop and commercialize AV-101 for MDD, including our ELEVATE Study, and other potential CNS indications, PH94B, PH10, and other potential product candidates. At March 31, 2019, CBV held approximately 2% of our outstanding common stock.
 
In July 2017, we entered into a Master Services Agreement (MSA) with CRL, which replaced a substantially similar May 2007 master services agreement, pursuant to which CRL may assist us in the evaluation, development, commercialization and marketing of our potential product candidates, and provide regulatory and strategic consulting services as requested from time to time. Specific projects or services are and will be delineated in individual work orders negotiated from time-to-time under the MSA. Under the terms of work orders issued pursuant to the July 2017 MSA and our prior May 2007 master services agreement, we incurred expenses of $3,969,100 and $1,390,700 for the fiscal years ended March 31, 2019 and 2018, respectively. We anticipate periodic expenses for CRO services from CRL related to nonclinical and clinical development of, and regulatory affairs related to, AV-101, PH94B, PH10 and other potential product candidates will increase in future periods.
 
 
- 40 -
 
 
 
License and Option Agreements with Pherin Pharmaceuticals, Inc.
 
In September 2018, we issued an aggregate of 1,630,435 shares of our unregistered common stock having a fair market value of $2,250,000 to Pherin Pharmaceuticals, Inc. (Pherin) to acquire an exclusive worldwide license to develop and commercialize PH94B, a potential first-in-class neuroactive nasal spray with rapid-onset effects observed at microgram doses and without systemic exposure for the treatment of Social Anxiety Disorder (SAD), and an option to acquire a similar license for PH10, a potential first-in-class neuroactive nasal spray with rapid-onset antidepressant effects observed at microgram doses and without systemic exposure for the treatment of Major Depressive Disorder (MDD). In October 2018, we issued an additional 925,926 shares of our unregistered common stock having a fair market value of $2,000,000 to exercise the option to acquire an exclusive worldwide license to develop and commercialize PH10. We recorded the acquisition of the licenses and option as research and development expense. Additionally, between the acquisition of the PH94B license in September 2018 and March 31, 2019, we expensed $70,000 of monthly cash support payments to Pherin under the terms of the PH94B license agreement as research and development expense. At March 31, 2019, Pherin held approximately 6% of our outstanding common stock.
 
Section 16 Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own more than ten percent of our common stock (collectively, the Reporting Persons) to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC.  The Reporting Persons are also required by SEC rules to furnish us with copies of all reports that they file pursuant to Section 16(a). To the Company’s knowledge, based solely on our review of the copies of these reports furnished to the Company and written representations that no other reports were required during the fiscal year ended March 31, 2019, all Reporting Persons complied with all applicable reporting requirements.
 
ADDITIONAL INFORMATION
 
Deadline for Receipt of Stockholder Proposals for the 2020 Annual Meeting
 
Stockholder proposals that are intended to be presented by stockholders at the Company’s 2020 Annual Meeting of Stockholders must be received by the Secretary of the Company between June 7, 2020 and July 7, 2020 in order that they may be included, if appropriate, in the Company’s proxy statement and form of proxy relating to that meeting. A stockholder proposal not included in the Company’s proxy statement for the 2020 Annual Meeting of Stockholders will be ineligible for presentation at the meeting unless the stockholder gives timely notice of the proposal in writing to the Secretary of the Company at the principal executive offices of the Company and otherwise complies with the provisions of the Company’s Bylaws. To be timely, the Bylaws provide that the Company must have received the stockholder’s notice not less than 60 days nor more than 90 days prior to the first anniversary of the previous year’s annual meeting of stockholders. However, if the date of the 2020 Annual Meeting of Stockholders is changed by more than 30 days from the date of this year’s Annual Meeting, the Company must receive the stockholder’s notice no later than the close of business on (i) the 90th day prior to such annual meeting and (ii) the later of 60 days prior to such annual meeting, or, in the event the Company makes a public announcement of the date of such annual meeting less than 70 days before the meeting, 10 days after the Company’s public announcement.
 
Householding of Proxy Materials
 
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
 
 
 
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A number of brokers with account holders who are stockholders of the Company will be “householding” the Company’s proxy materials. A single set of the Company’s proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate set of the Company’s proxy materials, please notify your broker or direct a written request to the Company at 343 Allerton Avenue, South San Francisco, California 94080, or contact us at (650) 577-3600. The Company undertakes to deliver promptly, upon any such oral or written request, a separate copy of its proxy materials to a stockholder at a shared address to which a single copy of these documents was delivered. Stockholders who currently receive multiple copies of the Company’s proxy materials at their address and would like to request “householding” of their communications should contact their broker, bank or other nominee, or contact the Company at the above address or phone number.
 
Other Matters
 
At the date of this Proxy Statement, the Company knows of no other matters, other than those described above, that will be presented for consideration at the Annual Meeting. If any other business should come before the Annual Meeting, it is intended that the proxy holders will vote all proxies using their best judgment in the interest of the Company and the stockholders.
 
The Notice, mailed to stockholders on or about July 26, 2019, contains instructions on how to access the Company’s Annual Report on SEC Form 10-K for our fiscal year ended March 31, 2019. The Annual Report, which includes audited financial statements, does not form any part of the material for the solicitation of proxies.
 
The Board invites you to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting in person, please submit your vote by Internet, telephone or postal mail as promptly as possible so that your shares will be represented at the Annual Meeting.
   
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE READ THE ACCOMPANYING PROXY STATEMENT AND THEN VOTE BY INTERNET, TELEPHONE OR POSTAL MAIL AS PROMPTLY AS POSSIBLE.  VOTING PROMPTLY WILL SAVE US ADDITIONAL EXPENSE IN SOLICITING PROXIES AND WILL ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
 
 
 
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Appendix A
 
 
CERTIFICATE OF AMENDMENT
TO THE
RESTATED AND AMENDED
ARTICLES OF INCORPORATION
OF
VISTAGEN THERAPEUTICS, INC.
 
 
         VistaGen Therapeutics, Inc., a Nevada corporation (the "Corporation"), does hereby certify that:
 
         FIRST: This Certificate of Amendment amends the provisions of the Corporation's Restated and Amended Articles of Incorporation (the "Articles of Incorporation").
 
         SECOND: The terms and provisions of this Certificate of Amendment have been duly adopted in accordance with Section 78.380 of the Nevada Revised Statutes and shall become effective immediately upon filing this Certificate of Amendment.
 
         THIRD: The first paragraph of Article V of the Articles of Incorporation is hereby amended in its entirety and replaced with the following:
 
“This corporation is authorized to issue two classes of capital stock, to be designated “Common Stock” and “Preferred Stock.” The total number of shares of Common Stock which this corporation is authorized to issue is One Hundred Seventy Five Million (175,000,000), each having a par value of $0.001. The total number of shares of Preferred Stock which this corporation is authorized to issue is Ten Million (10,000,000), each having a par value of $0.001.  The holders of the Common Stock shall have one (1) vote per share on each matter submitted to a vote of stockholders.  The capital stock of this corporation, after the amount of the subscription price has been paid in, shall never be assessable, or assessed to pay debts of this corporation.”
 
         IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its officers thereunto duly authorized this ____ day of [               ], 2019.
 
                                    By: ______________________
                                    Name:  
                                    Title:
 
 
 
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Appendix B
 
VISTAGEN THERAPEUTICS, INC.
2019 OMNIBUS EQUITY INCENTIVE PLAN
 
VistaGen Therapeutics, Inc., a Nevada corporation, sets forth herein the terms of its 2019 Omnibus Equity Incentive Plan, as follows:
 
1.
PURPOSE
 
The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability to attract and retain highly qualified officers, Non-Employee Directors (as defined herein), key employees, consultants and advisors, and to motivate such officers, Non-Employee Directors, key employees, consultants and advisors to serve the Company and its Affiliates and to expend maximum effort to improve the business operations, prospects and results of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company.  To this end, the Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of performance goals in accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock options or incentive stock options, as provided herein.  On the Effective Date, the Plan replaces, and no further awards shall be made under, the Predecessor Plan (as defined herein).
 
2.
DEFINITIONS
 
For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:
 
2.1      “Affiliate means any company or other trade or business that “controls,” is “controlled by” or is “under common control” with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.
 
2.2      “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Other Stock-based Award under the Plan.
 
2.3      “Award Agreement” means a written agreement between the Company and a Grantee, or notice from the Company or an Affiliate to a Grantee that evidences and sets forth the terms and conditions of an Award.
 
2.4      “Beneficial Owner” means “Beneficial Owner” as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act; except that, in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The term “Beneficial Ownership” has a corresponding meaning.
 
2.5      “Board” means the Board of Directors of the Company.
 
2.6      “Change in Control” shall have the meaning set forth in Section 14.3.2.
 
2.7      “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.