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
Filed by the Registrant [X]
Filed by a Party other than the Registrant
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Check the appropriate box:
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[X]
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Preliminary Proxy Statement
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Confidential, for Use of the SEC Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to 14a-12
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VistaGen Therapeutics, Inc.
(Name of Registrant as Specified In Its Charter)
_________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table
below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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[ ] Fee paid
previously with preliminary materials.
[ ] Check box if any part
of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
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Form, Schedule or Registration Statement No.:
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Date Filed:
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July [ ], 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.
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Sincerely,
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Jon S. Saxe
Chairman of the Board of Directors
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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 [ ], 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.
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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.
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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:
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THE ANNUAL REPORT AND PROXY STATEMENT ARE
AVAILABLE ON THE INTERNET AT www.envisionreports.com/VTGN
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By Order of the Board of Directors,
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Jerrold D. Dotson
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Chief Financial Officer and Corporate Secretary
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South San Francisco, California
July [ ], 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 [ ], 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.
- 2 -
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
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Name
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Age
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Position
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Shawn K. Singh
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56
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Chief Executive Officer and Director
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H. Ralph Snodgrass, Ph.D.
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69
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President, Chief Scientific Officer and Director
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Jon S. Saxe
(1)
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82
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Director
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Brian J. Underdown, Ph.D.
(2)
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78
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Director
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Jerry B. Gin, Ph.D., MBA
(3)
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76
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Director
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Ann M. Cunningham, MBA
(4)
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51
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Director
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(1)
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Chairman of the Audit Committee and member of the Compensation
Committee and Corporate Governance and Nominating
Committee.
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(2)
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Chairman of the Compensation Committee and member of the Audit
Committee and Corporate Governance and Nominating
Committee.
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(3)
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Chairman of the Corporate Governance and Nominating Committee and
member of the Audit Committee and Compensation
Committee.
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(4)
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Member of the Corporate Governance and Nominating
Committee.
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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.
- 9 -
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.
- 17 -
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.
- 18 -
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.
- 19 -
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.
- 20 -
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.
- 21 -
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.
- 22 -
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.
- 23 -
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.
- 24 -
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.
- 25 -
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
|
(6)
|
66,407
|
(6)
|
1.27
|
8/5/2028
|
|
Total:
|
798,532
|
(7)
|
245,218
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
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
|
(6)
|
53,125
|
(7)
|
1.27
|
8/5/2028
|
|
Total:
|
527,283
|
(7)
|
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
|
|
1.50
|
9/29/2026
|
|
|
31,111
|
(2)
|
8,869
|
(8)
|
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 June 30, 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 June 30, 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 June 30,
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 June 30, 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)
|
1,557,913
|
3.53%
|
|
H. Ralph Snodgrass, Ph.D. (3)
|
1,057,584
|
2.42%
|
|
Mark A. Smith, M.D., Ph.D. (4)
|
732,152
|
1.69%
|
|
Jerrold D. Dotson (5)
|
768,709
|
1.77%
|
|
Mark McPartland (6)
|
573,565
|
1.30%
|
|
Jon S. Saxe (7)
|
401,167
|
*
|
|
Brian J. Underdown, Ph.D. (8)
|
377,166
|
*
|
|
Jerry B. Gin, Ph.D., MBA (9)
|
515,416
|
1.20%
|
|
Ann M. Cunningham (10)
|
40,625
|
*
|
|
|
|
|
|
5% Stockholders:
|
|
|
|
Montsant Partners, LLC (11)
|
4,239,331
|
9.08%
|
|
Pherin Pharmaceuticals, Inc. (12)
|
2,174,126
|
5.10%
|
|
Sphera Global Healthcare Master Fund
(13)
|
3,337,015
|
7.59%
|
|
|
|
|
|
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 June 30, 2019.
|
|
(2)
|
Includes options to purchase 1,034,304 shares of common stock
exercisable within 60 days of June 30, 2019 and warrants to
purchase 472,000 restricted shares of common stock exercisable
within 60 days of June 30, 2019.
|
- 36 -
|
(3)
|
Includes options to purchase 694,880 shares of common stock
exercisable within 60 days of June 30, 2019 and warrants to
purchase 300,000 restricted shares of common stock exercisable
within 60 days of June 30, 2019.
|
|
(4)
|
Includes options to purchase 732,152 shares of common stock
exercisable within 60 days of June 30, 2019.
|
|
(5)
|
Includes options to purchase 608,709 shares of common stock
exercisable within 60 days of June 30, 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 June 30, 2019.
|
|
(6)
|
Includes options to purchase 563,575 shares of common stock
exercisable within 60 days of June 30, 2019.
|
|
(7)
|
Includes options to purchase 300,416 shares of common stock
exercisable within 60 days of June 30, 2019 and warrants to
purchase 77,500 restricted shares of common stock exercisable
within 60 days of June 30, 2019.
|
|
(8)
|
Includes options to purchase 299,666 shares of common stock
exercisable within 60 days of June 30, 2019 and warrants to
purchase 77,500 restricted shares of common stock exercisable
within 60 days of June 30, 2019.
|
|
(9)
|
Includes 50,000 restricted shares of common stock held by Dr.
Gin’s wife, options to purchase 315,416 shares of common
stock exercisable within 60 days of June 30, 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 June 30, 2019.
|
|
(10)
|
Includes options to purchase 40,625 shares of common stock
exercisable within 60 days of June 30, 2019.
|
|
(11)
|
Based upon Company records of transactions between us and Montsant
Partners, LLC (Montsant) through June 30, 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 $3.97
million at June 30, 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 June 30, 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 13G filed on March
8, 2019 and the Company’s records. The primary business
address of Pherin Pharmaceuticals, Inc is P.O. Box 4081, Los Altos,
CA 94024. Kevin McCarthy, Chief Financial Officer and member of
Pherin’s Board of Directors, has voting and investment
control over the shares held by Pherin
Pharmaceuticals.
|
|
(13)
|
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 June 30, 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.
|
|
(14)
|
Includes options to purchase an aggregate of 4,589,723 shares of
common stock exercisable within 60 days of June 30, 2019 and
warrants to purchase an aggregate of 1,187,000 restricted shares of
common stock exercisable within 60 days of June 30,
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 5, 2020 and
July 5, 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.
- 41 -
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 [ ],
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.
- 42 -
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 September, 2019.
By:
______________________
Name:
Title:
- 43 -
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.
2.8 “Committee”
means the Compensation Committee of the Board or any committee or
other person or persons designated by the Board to administer the
Plan. The Board will cause the Committee to satisfy the
applicable requirements of any stock exchange on which the Common
Stock may then be listed. For purposes of Awards to Grantees
who are subject to Section 16 of the Exchange Act, Committee means
all of the members of the Committee who are “non-employee
directors” within the meaning of Rule 16b-3 adopted under the
Exchange Act. All references in the Plan to the Board shall
mean such Committee or the Board.
- 44 -
2.9 “Company”
means VistaGen Therapeutics, Inc., a Nevada corporation, or any
successor corporation.
2.10
“Common
Stock” or
“Stock” means a share of common stock of the
Company, par value $0.001 per share.
2.11 “Corporate
Transaction” means a
reorganization, merger, statutory share exchange, consolidation,
sale of all or substantially all of the Company’s assets, or
the acquisition of assets or stock of another entity by the
Company, or other corporate transaction involving the Company or
any of its Subsidiaries.
2.12
“Effective
Date” means [ ], 2019,
the date the Plan was approved by the Company’s
stockholders.
2.13 “Exchange
Act” means the Securities
Exchange Act of 1934, as now in effect or as hereafter
amended.
2.14 “Fair Market
Value” of a share of
Common Stock as of a particular date means (i) if the Common Stock
is listed on a national securities exchange, the closing or last
price of the Common Stock on the composite tape or other comparable
reporting system for the applicable date, or if the applicable date
is not a trading day, the trading day immediately preceding the
applicable date, or (ii) if the shares of Common Stock are not then
listed on a national securities exchange, the closing or last price
of the Common Stock quoted by an established quotation service for
over-the-counter securities, or (iii) if the shares of Common Stock
are not then listed on a national securities exchange or quoted by
an established quotation service for over-the-counter securities,
or the value of such shares is not otherwise determinable, such
value as determined by the Board in good faith in its sole
discretion.
2.15 “Family
Member” means a person
who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships,
of the applicable individual, any person sharing the applicable
individual’s household (other than a tenant or employee), a
trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any
one or more of these persons (or the applicable individual) control
the management of assets, and any other entity in which one or more
of these persons (or the applicable individual) own more than fifty
percent of the voting interests.
2.16 “Grant Date” means, as determined by the Board, the
latest to occur of (i) the date as of which the Board approves an
Award, (ii) the date on which the recipient of an Award first
becomes eligible to receive an Award under Section 6 hereof, or (iii) such other date as may be
specified by the Board in the Award Agreement.
2.17 “Grantee” means a person who receives or holds an
Award under the Plan.
2.18 “Incentive Stock
Option” means an
“incentive stock option” within the meaning of Section
422 of the Code, or the corresponding provision of any subsequently
enacted tax statute, as amended from time to
time.
2.19 “Non-Employee
Director” means a member
of the Board who is not an officer or employee of the Company or
any Subsidiary.
2.20 “Non-qualified Stock
Option” means an Option
that is not an Incentive Stock Option.
2.21 “Option” means an option to purchase one or more
shares of Stock pursuant to the Plan.
2.22
“Option
Price” means the exercise
price for each share of Stock subject to an
Option.
2.23 “Other Stock-based
Awards” means Awards
consisting of Stock units, or other Awards, valued in whole or in
part by reference to, or otherwise based on, Common Stock, other
than Options, Stock Appreciation Rights, Restricted Stock, and
Restricted Stock Units.
- 45 -
2.24 “Person” means an individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act.
2.25 “Plan” means this VistaGen Therapeutics, Inc.
2019 Omnibus Equity Incentive Plan, as amended from time to
time.
2.26 “Predecessor
Plan” means the VistaGen
Therapeutics, Inc. Amended and Restated 2016 Stock Incentive Plan
(formerly, the 2008 Stock Incentive Plan).
2.27 “Purchase
Price” means the purchase
price for each share of Stock pursuant to a grant of Restricted
Stock.
2.28 “Restricted
Period” shall have the
meaning set forth in Section 10.1
hereof.
2.29 “Restricted
Stock” means shares of
Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.30 “Restricted Stock
Unit” means a bookkeeping
entry representing the equivalent of shares of Stock, awarded to a
Grantee pursuant to Section 10 hereof.
2.31 “SAR Exercise
Price” means the per
share exercise price of a SAR granted to a Grantee under
Section 9
hereof.
2.32 “SEC” means the United States Securities and
Exchange Commission.
2.33 “Section
409A” means Section 409A
of the Code.
2.34 “Securities
Act” means the Securities
Act of 1933, as now in effect or as hereafter
amended.
2.35 “Separation from
Service” means a
termination of Service by a Service Provider, as determined by the
Board, which determination shall be final, binding and conclusive;
provided if any Award governed by Section 409A is to be distributed
on a Separation from Service, then the definition of Separation
from Service for such purposes shall comply with the definition
provided in Section 409A.
2.36 “Service” means service as a Service Provider to the
Company or an Affiliate. Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties
shall not result in interrupted or terminated Service, so long as
such Grantee continues to be a Service Provider to the Company or
an Affiliate.
2.37
“Service
Provider” means an
employee, officer, Non-Employee Director, consultant or advisor of
the Company or an Affiliate.
2.38 “Stock Appreciation
Right” or
“SAR” means a right granted to a Grantee
under Section 9 hereof.
2.39 “Subsidiary” means any “subsidiary
corporation” of the Company within the meaning of Section
424(f) of the Code.
2.40 “Substitute
Award” means any Award
granted in assumption of or in substitution for an award of a
company or business acquired by the Company or a Subsidiary or with
which the Company or an Affiliate combines.
2.41 “Ten Percent
Stockholder” means an
individual who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding stock of the
Company, its parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Section 424(d) of the
Code shall be applied.
2.42 “Termination
Date” means the date that
is ten (10) years after the Effective Date, unless the Plan is
earlier terminated by the Board under Section 5.2 hereof.
- 46 -
3.
ADMINISTRATION OF THE PLAN
3.1 General.
The
Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Company’s articles of incorporation and bylaws and applicable
law. The Board shall have the power and authority to delegate its
responsibilities hereunder to the Committee, which shall have full
authority to act in accordance with its charter, and with respect
to the authority of the Board to act hereunder, all references to
the Board shall be deemed to include a reference to the Committee,
to the extent such power or responsibilities have been
delegated. Except as otherwise may be required by applicable
law, regulatory requirement or the articles of incorporation or the
bylaws of the Company, the Board shall have full power and
authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award
Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan
that the Board deems to be necessary or appropriate to the
administration of the Plan. The Committee shall administer
the Plan; provided that, the Board shall retain the right to
exercise the authority of the Committee to the extent consistent
with applicable law and the applicable requirements of any
securities exchange on which the Common Stock may then be
listed. The interpretation and construction by the Board of
any provision of the Plan, any Award or any Award Agreement shall
be final, binding and conclusive. Without limitation, the Board
shall have full and final authority, subject to the other terms and
conditions of the Plan, to:
(i)
designate Grantees;
(ii)
determine the type or types of Awards to be made to a
Grantee;
(iii)
determine the number of shares of Stock to be subject to an
Award;
(iv)
establish the terms and conditions of each Award (including, but
not limited to, the Option Price of any Option, the nature and
duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture
of an Award or the shares of Stock subject thereto, and any terms
or conditions that may be necessary to qualify Options as Incentive
Stock Options);
(v)
prescribe the form of each Award Agreement; and
(vi)
amend, modify, or supplement the terms of any outstanding Award
including the authority, in order to effectuate the purposes of the
Plan, to modify Awards to foreign nationals or individuals who are
employed outside the United States to recognize differences in
local law, tax policy, or custom.
3.2
Clawbacks.
Awards
shall be subject to the requirements of (i) Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act
(regarding recovery of erroneously awarded compensation) and any
implementing rules and regulations thereunder, (ii) similar rules
under the laws of any other jurisdiction, (iii) any compensation
recovery policies adopted by the Company to implement any such
requirements or (iv) any other compensation recovery policies as
may be adopted from time to time by the Company, all to the extent
determined by the Committee in its discretion to be applicable to a
Grantee.
3.3
Minimum Vesting
Conditions.
Notwithstanding
any other provision of the Plan to the contrary, no more than 25%
of any equity-based Awards granted under the Plan shall vest on the
date the Award is granted, excluding, for this purpose, any (i)
Substitute Awards and (ii) shares delivered in lieu of fully vested
cash incentive compensation under any applicable plan or program of
the Company; and, provided, however, for the avoidance of doubt,
that the foregoing restriction does not apply to the Board’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.
- 47 -
3.4 Deferral
Arrangement.
The
Board may permit or require the deferral of any Award payment into
a deferred compensation arrangement, subject to such rules and
procedures as it may establish and in accordance with Section 409A,
which may include provisions for the payment or crediting of
interest or dividend equivalents, including converting such credits
into deferred Stock units.
3.5 No
Liability.
No
member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan, any Award or Award Agreement.
3.6 Book Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may
elect to satisfy any requirement under this Plan for the delivery
of stock certificates through the use of book-entry.
4.
STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of
Shares
Subject to adjustment under Section 14, the total number of shares of Common Stock
authorized to be awarded under the Plan shall not exceed
7,500,000. In addition, shares of Common Stock authorized and
available for issuance under the Predecessor Plan on the Effective
Date and/or underlying any outstanding award granted under the
Predecessor Plan that, following the Effective Date, expires, or is
terminated, surrendered or forfeited for any reason without
issuance of such shares shall be available for the grant of new
Awards under this Plan. As provided in Section 1, no new awards shall be granted under the
Predecessor Plan following the Effective Date. Shares issued
under the Plan may consist in whole or in part of authorized but
unissued shares, treasury shares, or shares purchased on the open
market or otherwise, all as determined by the Company from time to
time.
4.2 Share
Counting
4.2.1 General
Each share of Common Stock granted in connection
with an Award shall be counted as one share against the limit
in Section
4.1, subject to the provisions
of this Section 4.2.
4.2.2 Cash-Settled
Awards
Any
Award settled in cash shall not be counted as shares of Common
Stock for any purpose under this Plan.
4.2.3 Expired
or Terminated Awards
If
any Award under the Plan expires, or is terminated, surrendered or
forfeited, in whole or in part, without issuance or delivery of
vested shares, the unissued or surrendered Common Stock covered by
such Award shall again be available for the grant of Awards under
the Plan.
4.2.4 Payment
of Option Price or Tax Withholding in Shares
The full number of shares of Common Stock with
respect to which an Option or SAR is granted shall count against
the aggregate number of shares available for grant under the
Plan. Accordingly, if in accordance with the terms of the
Plan, a Grantee pays the Option Price for an Option by either
tendering previously owned shares or having the Company withhold
shares, then such shares surrendered to pay the Option Price shall
continue to count against the aggregate number of shares available
for grant under the Plan set forth in Section 4.1 above. In addition, if in accordance with
the terms of the Plan, a Grantee satisfies any tax withholding
requirement with respect to any taxable event arising as a result
of this Plan for any Award (including Restricted Stock and
Restricted Stock Units) by either tendering previously owned shares
or having the Company withhold shares, then such shares surrendered
to satisfy such tax withholding requirements shall continue to
count against the aggregate number of shares available for grant
under the Plan set forth in Section 4.1 above. Any shares of Common Stock
repurchased by the Company with cash proceeds from the exercise of
Options shall not be added back to the pool of shares available for
grant under the Plan set forth in Section 4.1 above.
- 48 -
4.2.5 Substitute
Awards
In
the case of any Substitute Award, such Substitute Award shall not
be counted against the number of shares reserved under the
Plan.
5.
EFFECTIVE DATE, DURATION, AND AMENDMENTS
5.1 Term.
The Plan shall be effective as of the Effective
Date, provided that it has been approved by the Company’s
stockholders. The Plan shall terminate automatically on the
ten (10) year anniversary of the Effective Date and may be
terminated on any earlier date as provided in Section 5.2.
5.2
Amendment and
Termination of the Plan.
The
Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any Awards which have not been made. An
amendment shall be contingent on approval of the Company’s
stockholders to the extent stated by the Board, required by
applicable law or required by applicable stock exchange listing
requirements. No Awards shall be made after the Termination
Date. The applicable terms of the Plan, and any terms and
conditions applicable to Awards granted prior to the Termination
Date shall survive the termination of the Plan and continue to
apply to such Awards. No amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee,
materially impair rights or obligations under any Award theretofore
awarded.
6.
AWARD ELIGIBILITY AND LIMITATIONS
6.1 Service
Providers.
Subject to this Section 6.1, Awards may be made to any Service Provider,
including any Service Provider who is an officer, Non-Employee
Director, consultant or advisor of the Company or of any Affiliate,
as the Board shall determine and designate from time to time in its
discretion.
6.2
Successive
Awards.
An
eligible person may receive more than one Award, subject to such
restrictions as are provided herein.
6.3 Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards
may, in the discretion of the Board, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for,
any other Award or any award granted under another plan of the
Company, any Affiliate, or any business entity to be acquired by
the Company or an Affiliate, or any other right of a Grantee to
receive payment from the Company or any Affiliate. Such additional,
tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for
another Award, the Board shall have the right to require the
surrender of such other Award in consideration for the grant of the
new Award. The Board shall have the right, in its discretion, to
make Awards in substitution or exchange for any other award under
another plan of the Company, any Affiliate, or any business entity
to be acquired by the Company or an Affiliate. In addition, Awards
may be granted in lieu of cash compensation, including in lieu of
cash amounts payable under other plans of the Company or any
Affiliate, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation (for example,
Restricted Stock Units or Restricted Stock).
- 49 -
7.
AWARD AGREEMENT
Each
Award shall be evidenced by an Award Agreement, in such form or
forms as the Board shall from time to time determine, consistent
with the terms of the Plan. Without limiting the foregoing,
an Award Agreement may be provided in the form of a notice which
provides that acceptance of the Award constitutes acceptance of all
terms of the Plan and the notice. Award Agreements granted
from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the
Plan. Each Award Agreement evidencing an Award of Options
shall specify whether such Options are intended to be Non-qualified
Stock Options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed Non-qualified Stock
Options.
8.
TERMS AND CONDITIONS OF OPTIONS
8.1
Option
Price.
The Option Price of each Option shall be fixed by
the Board and stated in the related Award Agreement. The Option
Price of each Option (except those that constitute Substitute
Awards) shall be at least the Fair Market Value on the Grant Date
of a share of Stock; provided, however, that in the event that a Grantee is a Ten
Percent Stockholder as of the Grant Date, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive
Stock Option shall be not less than 110 percent of the Fair Market
Value of a share of Stock on the Grant Date. In no case shall
the Option Price of any Option be less than the par value of a
share of Stock.
8.2 Vesting.
Subject to Section
8.3 hereof, each Option
shall become exercisable at such times and under such conditions
(including, without limitation, performance requirements) as shall
be determined by the Board and stated in the Award
Agreement.
8.3 Term.
Each Option shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the
expiration of ten (10) years from the Grant Date, or under such
circumstances and on such date prior thereto as is set forth in the
Plan or as may be fixed by the Board and stated in the related
Award Agreement; provided, however, that in the event that the Grantee is a Ten
Percent Stockholder, an Option granted to such Grantee that is
intended to be an Incentive Stock Option at the Grant Date shall
not be exercisable after the expiration of five (5) years from its
Grant Date.
8.4
Limitations on
Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, (i) prior to the date the Plan is
approved by the stockholders of the Company as provided herein or
(ii) after the occurrence of an event which results in termination
of the Option.
8.5 Method of
Exercise.
An
Option that is exercisable may be exercised by the Grantee’s
delivery of a notice of exercise to the Company, setting forth the
number of shares of Stock with respect to which the Option is to be
exercised, accompanied by full payment for the shares. To be
effective, notice of exercise must be made in accordance with
procedures established by the Company from time to
time.
8.6 Rights of Holders of
Options.
Unless otherwise stated in the related Award
Agreement, an individual holding or exercising an Option shall have
none of the rights of a stockholder (for example, the right to
receive cash or dividend payments or distributions attributable to
the subject shares of Stock or to direct the voting of the subject
shares of Stock) until the shares of Stock covered thereby are
fully paid and issued to her/him. Except as provided in
Section 14
hereof or the related Award Agreement,
no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such
issuance.
- 50 -
8.7
Delivery of Stock
Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled, subject
to any transaction fees, as required, to the issuance of a stock
certificate or certificates evidencing his or her ownership of the
shares of Stock subject to the Option.
8.8 Limitations on Incentive Stock
Options.
An
Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any
Subsidiary of the Company; (ii) to the extent specifically provided
in the related Award Agreement; and (iii) to the extent that the
aggregate Fair Market Value (determined at the time the Option is
granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans
of the Grantee’s employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into
account in the order in which they were granted.
9.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
9.1
Right to
Payment.
A SAR shall confer on the Grantee a right to
receive, upon exercise thereof, the excess of (i) the Fair Market
Value of one share of Stock on the date of exercise over (ii) the
SAR Exercise Price, as determined by the Board. The Award Agreement
for a SAR (except those that constitute Substitute Awards) shall
specify the SAR Exercise Price, which shall be fixed on the Grant
Date as not less than the Fair Market Value of a share of Stock on
that date. SARs may be granted alone or in conjunction with
all or part of an Option or at any subsequent time during the term
of such Option or in conjunction with all or part of any other
Award. A SAR granted in tandem with an outstanding Option following
the Grant Date of such Option shall have a grant price that is
equal to the Option Price; provided, however, that the SAR’s grant price may not be less
than the Fair Market Value of a share of Stock on the Grant Date of
the SAR to the extent required by Section 409A.
9.2 Other
Terms.
The
Board shall determine at the Grant Date, the time or times at which
and the circumstances under which a SAR may be exercised in whole
or in part (including based on achievement of performance goals
and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following Separation
from Service or upon other conditions, the method of exercise,
whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any
SAR.
9.3 Term
of SARs.
The term of a SAR granted under the Plan shall be
determined by the Board, in its sole discretion;
provided,
however, that such term shall not exceed ten (10)
years.
9.4 Payment of SAR
Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment
from the Company (in cash or Stock, as determined by the Board) in
an amount determined by multiplying:
(i)
the difference between the Fair Market Value of a
share of Stock on the date of exercise over the SAR Exercise Price;
by
(ii)
the number of shares of Stock with respect to which the SAR is
exercised.
- 51 -
10.
TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK
UNITS
10.1 Restrictions.
At the time of grant, the Board may, in its sole
discretion, establish a period of time (a
“Restricted
Period”) and any
additional restrictions including the satisfaction of corporate or
individual performance objectives applicable to an Award of
Restricted Stock or Restricted Stock Units as determined by the
Board. Each Award of Restricted Stock or Restricted Stock Units may
be subject to a different Restricted Period and additional
restrictions. Neither Restricted Stock nor Restricted Stock Units
may be sold, transferred, assigned, pledged or otherwise encumbered
or disposed of during the Restricted Period or prior to the
satisfaction of any other applicable
restrictions.
10.2 Restricted Stock
Certificates.
The Company shall issue stock, in the name of each
Grantee to whom Restricted Stock has been granted, stock
certificates or other evidence of ownership representing the total
number of shares of Restricted Stock granted to the Grantee, as
soon as reasonably practicable after the Grant Date. The Board may
provide in an Award Agreement that either (i) the Secretary of the
Company shall hold such certificates for the Grantee’s
benefit until such time as the Restricted Stock is forfeited to the
Company or the restrictions lapse, or (ii) such certificates shall
be delivered to the Grantee; provided, however, that such certificates shall bear a legend or
legends that comply with the applicable securities laws and
regulations and make appropriate reference to the restrictions
imposed under the Plan and the Award Agreement.
10.3 Rights of Holders of Restricted
Stock.
Unless the Board otherwise provides in an Award
Agreement and subject to Section
16.12, holders of Restricted
Stock shall have rights as stockholders of the Company, including
voting and dividend rights.
10.4 Rights of Holders of Restricted
Stock Units.
10.4.1
Settlement of
Restricted Stock Units.
Restricted
Stock Units may be settled in cash or Stock, as determined by the
Board and set forth in the Award Agreement. The Award Agreement
shall also set forth whether the Restricted Stock Units shall be
settled (i) within the time period specified for “short term
deferrals” under Section 409A or (ii) otherwise within the
requirements of Section 409A, in which case the Award Agreement
shall specify upon which events such Restricted Stock Units shall
be settled.
10.4.2
Voting and Dividend
Rights.
Unless otherwise stated in the applicable Award
Agreement and subject to Section
16.12, holders of Restricted
Stock Units shall not have rights as stockholders of the Company,
including no voting or dividend or dividend equivalents
rights.
10.4.3
Creditor’s
Rights.
A
holder of Restricted Stock Units shall have no rights other than
those of a general creditor of the Company. Restricted Stock Units
represent an unfunded and unsecured obligation of the Company,
subject to the terms and conditions of the applicable Award
Agreement.
10.5 Purchase of Restricted
Stock.
The Grantee shall be required, to the extent
required by applicable law, to purchase the Restricted Stock from
the Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in
the related Award Agreement. If specified in the Award Agreement,
the Purchase Price may be deemed paid by Services already rendered.
The Purchase Price shall be payable in a form described in
Section
11 or, in the discretion
of the Board, in consideration for past Services
rendered.
- 52 -
10.6 Delivery of
Stock.
Upon
the expiration or termination of any Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the
restrictions applicable to shares of Restricted Stock or Restricted
Stock Units settled in Stock shall lapse, and, unless otherwise
provided in the Award Agreement, a stock certificate for such
shares shall be delivered, free of all such restrictions, to the
Grantee or the Grantee’s beneficiary or estate, as the case
may be.
11.
FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
11.1 General
Rule.
Payment of the Option Price for the shares
purchased pursuant to the exercise of an Option or the Purchase
Price for Restricted Stock shall be made in cash or in cash
equivalents acceptable to the Company, except as provided in
this Section
11.
11.2 Surrender of
Stock.
To
the extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Stock may be made all or in part
through the tender to the Company of shares of Stock, which shares
shall be valued, for purposes of determining the extent to which
the Option Price or Purchase Price for Restricted Stock has been
paid thereby, at their Fair Market Value on the date of exercise or
surrender. Notwithstanding the foregoing, in the case of an
Incentive Stock Option, the right to make payment in the form of
already owned shares of Stock may be authorized only at the time of
grant.
11.3 Cashless
Exercise.
With respect to an Option only (and not with
respect to Restricted Stock), to the extent permitted by law and to
the extent the Award Agreement so provides, payment of the Option
Price may be made all or in part by delivery (on a form acceptable
to the Company) of an irrevocable direction to a licensed
securities broker acceptable to the Company to sell shares of Stock
and to deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in Section 16.3.
11.4 Other Forms of
Payment.
To
the extent the Award Agreement so provides, payment of the Option
Price or the Purchase Price for Restricted Stock may be made in any
other form that is consistent with applicable laws, regulations and
rules, including, but not limited to, the Company’s
withholding of shares of Stock otherwise due to the exercising
Grantee.
12.
OTHER STOCK-BASED AWARDS
12.1 Grant of Other Stock-based
Awards.
Other
Stock-based Awards may be granted either alone or in addition to or
in conjunction with other Awards under the Plan. Other
Stock-based Awards may be granted in lieu of other cash or other
compensation to which a Service Provider is entitled from the
Company or may be used in the settlement of amounts payable in
shares of Common Stock under any other compensation plan or
arrangement of the Company. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to
determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be
granted pursuant to such Awards, and all other conditions of such
Awards. Unless the Committee determines otherwise, any such
Award shall be confirmed by an Award Agreement, which shall contain
such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of this Plan with respect to
such Award.
12.2 Terms of Other Stock-based
Awards.
Any Common Stock subject to Awards made under
this Section
12 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period
lapses.
- 53 -
13.
REQUIREMENTS OF LAW
13.1 General.
The
Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would
constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or
regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If
at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to
an Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, no
shares of Stock may be issued or sold to the Grantee or any other
individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no
way affect the date of termination of the Award. Specifically, in
connection with the Securities Act, upon the exercise of any Option
or the delivery of any shares of Stock underlying an Award, unless
a registration statement under such Act is in effect with respect
to the shares of Stock covered by such Award, the Company shall not
be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other
individual exercising an Option may acquire such shares pursuant to
an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final,
binding, and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to
the Securities Act. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or
the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option
shall not be exercisable until the shares of Stock covered by such
Option are registered or are exempt from registration, the exercise
of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an
exemption.
13.2 Rule 16b-3.
During
any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the
Company that Awards and the exercise of Options granted to officers
and directors hereunder will qualify for the exemption provided by
Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Committee does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative
to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that
Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy
the requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
14.
EFFECT OF CHANGES IN CAPITALIZATION
14.1 Changes in
Stock.
If (i) the number of outstanding shares of Stock
is increased or decreased or the shares of Stock are changed into
or exchanged for a different number or kind of shares or other
securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date or (ii) there occurs any
spin-off, split-up, extraordinary cash dividend or other
distribution of assets by the Company, the number and kinds of
shares for which grants of Awards may be made under the Plan
(including the per-Grantee maximums set forth in
Section
4) shall be equitably adjusted
by the Company; provided that any such adjustment shall comply with
Section 409A. In addition, in the event of any such increase or
decease in the number of outstanding shares or other transaction
described in clause (ii) above, the number and kind of shares for
which Awards are outstanding and the Option Price per share of
outstanding Options and SAR Exercise Price per share of outstanding
SARs shall be equitably adjusted; provided that any such adjustment
shall comply with Section 409A.
- 54 -
14.2 Effect of Certain
Transactions.
Except as otherwise provided in an Award Agreement
and subject to the provisions of Section 14.3, in the event of a Corporate Transaction, the
Plan and the Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a
Corporate Transaction either (i) each outstanding Award shall be
treated as provided for in the agreement entered into in connection
with the Corporate Transaction or (ii) if not so provided in such
agreement, each Grantee shall be entitled to receive in respect of
each share of Common Stock subject to any outstanding Awards, upon
exercise or payment or transfer in respect of any Award, the same
number and kind of stock, securities, cash, property or other
consideration that each holder of a share of Common Stock was
entitled to receive in the Corporate Transaction in respect of a
share of Common stock; provided, however, that, unless otherwise determined by the
Committee, such stock, securities, cash, property or other
consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Awards prior to such Corporate Transaction. Without limiting
the generality of the foregoing, the treatment of outstanding
Options and SARs pursuant to this Section 14.2
in connection with a Corporate
Transaction in which the consideration paid or distributed to the
Company’s stockholders is not entirely shares of common stock
of the acquiring or resulting corporation may include the
cancellation of outstanding Options and SARs upon consummation of
the Corporate Transaction as long as, at the election of the
Committee, (i) the holders of affected Options and SARs have been
given a period of at least fifteen days prior to the date of the
consummation of the Corporate Transaction to exercise the Options
or SARs (to the extent otherwise exercisable) or (ii) the holders
of the affected Options and SARs are paid (in cash or cash
equivalents) in respect of each Share covered by the Option or SAR
being canceled an amount equal to the excess, if any, of the per
share price paid or distributed to stockholders in the Corporate
Transaction (the value of any non-cash consideration to be
determined by the Committee in its sole discretion) over the Option
Price or SAR Exercise Price, as applicable. For avoidance of
doubt, (1) the cancellation of Options and SARs pursuant to clause
(ii) of the preceding sentence may be effected notwithstanding
anything to the contrary contained in this Plan or any Award
Agreement and (2) if the amount determined pursuant to clause (ii)
of the preceding sentence is zero or less, the affected Option or
SAR may be cancelled without any payment therefore. The
treatment of any Award as provided in this Section 14.2
shall be conclusively presumed to be
appropriate for purposes of Section 14.1.
14.3 Change in
Control
14.3.1
Consequences of a
Change in Control
In
the event of a Change in Control of the Company, the Board, in its
discretion, may, at any time an Award is granted, or at any time
thereafter, (i) accelerate the time period relating to the exercise
or vesting of the Award; or (ii) take one or more of the following
actions, which may vary among individual Grantees: (A) provide for
the purchase of the Award for an amount of cash or other property
that could have been received upon the exercise or vesting of the
Award (less any applicable Option Price or SAR Exercise Price in
the cash of Options and SARs); (B) adjust the terms of the Awards
in a manner determined by the Board to reflect the Change in
Control; (C) cause the Awards to be assumed, or new rights
substituted therefor, by another entity, through the continuance of
the Plan and the assumption of outstanding Awards, or the
substitution for such Awards of comparable value covering shares of
a successor corporation, with appropriate adjustments as to the
number and kind of shares and exercise prices, in which event the
Plan and such Awards, or the new options and rights substituted
therefor, shall continue in the manner and under the terms so
provided; (D) accelerate the time at which Options or SARs then
outstanding may be exercised so that such Options and SARs may be
exercised for a limited period of time on or before a specified
date fixed by the Board, after which specified date, all
unexercised Options and SARs shall terminate; or (E) make such
other provision as the Board may consider equitable.
- 55 -
14.3.2
Change in Control
Defined
Except as may otherwise be defined in an Award
Agreement, a “Change in
Control” shall mean the
occurrence of any of the following events: (i) the acquisition,
directly or indirectly, by any Person or group (within the meaning
of Section 13(d)(3) of the Exchange Act) of the Beneficial
Ownership of more than fifty percent of the outstanding securities
of the Company; (ii) a merger or consolidation in which the Company
is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is
incorporated; (iii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; (i) a complete
liquidation or dissolution of the Company; or (v) any reverse
merger in which the Company is the surviving entity but in which
securities possessing more than fifty percent of the total combined
voting power of the Company’s outstanding securities are
transferred to a Person or Persons different from the Persons
holding those securities immediately prior to such
merger.
Notwithstanding
the foregoing, if it is determined that an Award hereunder is
subject to the requirements of Section 409A and payable upon a
Change in Control, the Company will not be deemed to have undergone
a Change in Control unless the Company is deemed to have undergone
a “change in control event” pursuant to the definition
of such term in Section 409A.
14.4 Adjustments
Adjustments under this Section 14 related to shares of Stock or securities of the
Company shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. No fractional
shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the
nearest whole share.
15.
NO LIMITATIONS ON COMPANY
The
making of Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business
or assets.
16.
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE
PLAN
16.1 Disclaimer of
Rights.
No
provision in the Plan or in any Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way
with any contractual or other right or authority of the Company
either to increase or decrease the compensation or other payments
to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award
Agreement, no Award granted under the Plan shall be affected by any
change of duties or position of the Grantee, so long as such
Grantee continues to be a Service Provider. The obligation of the
Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
16.2 Nonexclusivity of the
Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as
creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or
classes of individuals or specifically to a particular individual
or particular individuals), including, without limitation, the
granting of stock options as the Board in its discretion determines
desirable.
- 56 -
16.3 Withholding
Taxes.
The Company or an Affiliate, as the case may be,
shall have the right to deduct from payments of any kind otherwise
due to a Grantee any federal, state, or local taxes of any kind
required by law to be withheld (i) with respect to the vesting of
or other lapse of restrictions applicable to an Award, (ii) upon
the issuance of any shares of Stock upon the exercise of an Option
or SAR, or (iii) otherwise due in connection with an Award.
At the time of such vesting, lapse, or exercise, the Grantee shall
pay to the Company or the Affiliate, as the case may be, any amount
that the Company or the Affiliate may reasonably determine to be
necessary to satisfy such withholding obligation. Subject to the
prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in
its sole discretion, the Grantee may elect to satisfy such
obligations, or the Company may require such obligations (up to
maximum statutory rates) to be satisfied, in whole or in part, (i)
by causing the Company or the Affiliate to withhold the number of
shares of Stock otherwise issuable to the Grantee as may be
necessary to satisfy such withholding obligation or (ii) by
delivering to the Company or the Affiliate shares of Stock already
owned by the Grantee. The shares of Stock so delivered or withheld
shall have an aggregate Fair Market Value equal to such withholding
obligations (up to maximum statutory rates). The Fair Market
Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as
of the date that the amount of tax to be withheld is to be
determined. A Grantee who has made an election pursuant to
this Section
16.3 may satisfy his or her
withholding obligation only with shares of Stock that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements.
16.4 Captions.
The
use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of
any provision of the Plan or any Award Agreement.
16.5 Other
Provisions.
Each
Award Agreement may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in
its sole discretion. In the event of any conflict between the
terms of an employment agreement and the Plan, the terms of the
employment agreement govern.
16.6 Number and
Gender.
With
respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.
16.7 Severability.
If
any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof shall
be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other
jurisdiction.
16.8 Governing
Law.
The
Plan shall be governed by and construed in accordance with the laws
of the State of Nevada without giving effect to the principles of
conflicts of law, and applicable Federal law.
16.9 Section
409A.
The
Plan is intended to comply with Section 409A to the extent subject
thereto, and, accordingly, to the maximum extent permitted, the
Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within
the “short-term deferral period” as defined in Section
409A shall not be treated as deferred compensation unless
applicable laws require otherwise. Notwithstanding anything to the
contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Section 409A, amounts that would
otherwise be payable and benefits that would otherwise be provided
pursuant to the Plan during the six (6) month period immediately
following the Grantee’s Separation from Service shall instead
be paid on the first payroll date after the six-month anniversary
of the Grantee’s Separation from Service (or the
Grantee’s death, if earlier). Notwithstanding the foregoing,
neither the Company nor the Committee shall have any obligation to
take any action to prevent the assessment of any excise tax or
penalty on any Grantee under Section 409A and neither the Company
nor the Committee will have any liability to any Grantee for such
tax or penalty.
- 57 -
16.10 Separation from
Service.
The
Board shall determine the effect of a Separation from Service upon
Awards, and such effect shall be set forth in the appropriate Award
Agreement. Without limiting the foregoing, the Board may
provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, the actions that will
be taken upon the occurrence of a Separation from Service,
including, but not limited to, accelerated vesting or termination,
depending upon the circumstances surrounding the Separation from
Service.
16.11 Transferability of
Awards.
16.11.1
Transfers in
General.
Except as provided in Section
16.11.2, no Award shall be
assignable or transferable by the Grantee to whom it is granted,
other than by will or the laws of descent and distribution, and,
during the lifetime of the Grantee, only the Grantee personally (or
the Grantee’s personal representative) may exercise rights
under the Plan.
16.11.2 Family
Transfers.
If authorized in the applicable Award Agreement, a
Grantee may transfer, not for value, all or part of an Award (other
than Incentive Stock Options) to any Family Member. For the
purpose of this Section
16.11.2, a “not for
value” transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital
property rights; or (iii) a transfer to an entity in which more
than fifty percent of the voting interests are owned by Family
Members (or the Grantee) in exchange for an interest in that
entity. Following a transfer under this Section
16.11.2, any such Award shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of
transferred Awards are prohibited except to Family Members of the
original Grantee in accordance with this Section 16.11.2
or by will or the laws of descent and
distribution.
16.12 Dividends and Dividend
Equivalent Rights.
If
specified in the Award Agreement, the recipient of an Award (other
than Options or SARs) may be entitled to receive dividends or
dividend equivalents with respect to the Common Stock or other
securities covered by an Award. The terms and conditions of a
dividend equivalent right may be set forth in the Award
Agreement. Dividend equivalents credited to a Grantee may be
reinvested in additional shares of Stock or other securities of the
Company at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend was paid to
stockholders, as determined in the sole discretion of the
Committee. Notwithstanding any provision herein to the
contrary, in no event will dividends or dividend equivalents vest
or otherwise be paid out prior to the time that the underlying
Award (or portion thereof) has vested and, accordingly, will be
subject to cancellation and forfeiture if such Award does not vest
(including both time-based and performance-based
Awards).
As approved by the Board of Directors on May 27, 2019.
As adopted by the stockholders of VistaGen Therapeutics, Inc. on
[_______], 2019.
- 58 -
Appendix C
VISTAGEN THERAPEUTICS, INC.
2019 Employee Stock Purchase Plan
1.
Purpose. This
VistaGen Therapeutics, Inc., Employee Stock Purchase Plan (the
“Plan”) is
intended to provide employees of the Company and its Participating
Subsidiaries with an opportunity to acquire a proprietary interest
in the Company through the purchase of shares of Common Stock. The
Company intends that the Plan qualify as an “employee stock
purchase plan” under Section 423 of the Code and the Plan
shall be interpreted in a manner that is consistent with that
intent.
2.
Definitions.
“Board or Board of Directors” means
the Board of Directors of the Company, as constituted from time to
time.
“Code” means the U.S. Internal
Revenue Code of 1986, as it may be amended from time to time. Any
reference to a section of the Code shall be deemed to include a
reference to any regulations promulgated thereunder.
“Committee” means the committee
appointed by the Board to administer the Plan.
“Common Stock” means the common
stock of the Company, par value $0.001 per share.
“Company” means VistaGen
Therapeutics, Inc., a Nevada corporation, including any successor
thereto.
“Compensation” means the amount of
base pay, prior to salary reduction pursuant to Sections 125,
132(f) or 401(k) of the Code, but excluding overtime, commissions,
incentive or bonus awards, allowances and reimbursements for
expenses such as relocation allowances or travel expenses, income
or gains on the exercise of Company stock options, and similar
items.
“Corporate Transaction” means any
of the following:
(a) a
tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate
by the stockholders of the Company (as of the time immediately
prior to the commencement of such offer), any employee benefit plan
of the Company or its Subsidiaries, and their
affiliates;
(b) the
Company shall be merged or consolidated with another entity, unless
as a result of such merger or consolidation more than 50% of the
outstanding voting securities of the surviving or resulting entity
shall be owned in the aggregate by the stockholders of the Company
(as of the time immediately prior to such transaction), any
employee benefit plan of the Company or its Subsidiaries, and their
affiliates;
(c) the
Company shall sell substantially all of its assets to another
entity that is not wholly owned by the Company, unless as a result
of such sale more than 50% of such assets shall be owned in the
aggregate by the stockholders of the Company (as of the time
immediately prior to such transaction), any employee benefit plan
of the Company or its Subsidiaries and their affiliates;
or
(d) a
Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates.
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For
purposes of this definition, ownership of voting securities shall
take into account and shall include ownership as determined by
applying the provisions of Rule 13d-3(d)(1)(i) (as in effect on the
date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; provided, however, that a Person
shall not include (i) the Company or any of its Subsidiaries; (ii)
a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries; (iii) an
underwriter temporarily holding securities pursuant to an offering
of such securities; or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportion as their ownership of stock of the
Company.
“Designated Broker” means the
financial services firm or other agent designated by the Company to
maintain ESPP Share Accounts on behalf of Participants who have
purchased shares of Common Stock under the Plan.
“Effective Date” means the date as
of which this Plan is adopted by the Board, subject to the Plan
obtaining shareholder approval in accordance with Section 19.11
hereof.
“Employee” means any person who
renders services to the Company or a Participating Subsidiary as an
employee pursuant to an employment relationship with such employer.
For purposes of the Plan, the employment relationship shall be
treated as continuing intact while the individual is on military
leave, sick leave or other leave of absence approved by the Company
or a Participating Subsidiary that meets the requirements of
Treasury Regulation Section 1.421-1(h)(2). Where the period of
leave exceeds three (3) months, or such other period of time
specified in Treasury Regulation Section 1.421-1(h)(2), and the
individual’s right to re-employment is not guaranteed by
statute or contract, for purposes of the Plan, the employment
relationship shall be deemed to have terminated on the first day
immediately following such three-month period, or such other period
specified in Treasury Regulation Section
1.421-1(h)(2).
“Eligible Employee” means an
Employee who (i) has been employed by the Company or a
Participating Subsidiary for at least one (1) year, and (ii) is
customarily employed for at least twenty (20) hours per week.
Notwithstanding the foregoing, the Committee may exclude from
participation in the Plan or any Offering Employees who are
“highly compensated employees” of the Company or a
Participating Subsidiary (within the meaning of Section 414(q) of
the Code) or a sub-set of such highly compensated
employees.
“Enrollment Form” means an
agreement pursuant to which an Eligible Employee may elect to
enroll in the Plan, to authorize a new level of payroll deductions,
or to stop payroll deductions and withdraw from an Offering
Period.
“ESPP Share Account” means an
account into which Common Stock purchased with accumulated payroll
deductions at the end of an Offering Period are held on behalf of a
Participant.
“Exchange Act” means the U.S.
Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of
any date, the value of the shares of Common Stock as determined
below. If the shares are listed on any established stock exchange
or a national market system, including, without limitation, the New
York Stock Exchange or the NASDAQ Stock Market, the Fair Market
Value shall be the closing price of a share (or if no sales were
reported, the closing price on the date immediately preceding such
date) as quoted on such exchange or system on the day of
determination, as reported in such source as the Committee deems
reliable. In the absence of an established market for the shares,
the Fair Market Value shall be determined in good faith by the
Committee in a manner that complies with Section 423 of the Code,
and such determination shall be conclusive and binding on all
persons.
“Offering Date” means the first
Trading Day of each Offering Period as designated by the
Committee.
“Offering or Offering Period” means
a period of six (6) months beginning each January 1st and July 1st
of each year; provided, that, pursuant to Section 5, the Committee
may change the duration of future Offering Periods (subject to a
maximum Offering Period of twenty-seven (27) months) and/or the
start and end dates of future Offering Periods.
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“Participant” means an Eligible
Employee who is actively participating in the Plan.
“Participating Subsidiaries” means
the Subsidiaries that have been designated as eligible to
participate in the Plan, and such other Subsidiaries that may be
designated by the Committee from time to time in its sole
discretion.
“Plan” means this VistaGen
Therapeutics, Inc., Employee Stock Purchase Plan, as set forth
herein, and as amended from time to time.
“Purchase Date” means the last
Trading Day of each Offering Period.
“Purchase Price” means an amount
equal to the lesser of (i) eighty-five percent (85%) (or such
greater percentage as designated by the Committee) of the Fair
Market Value of a share of Common Stock on the Offering Date or
(ii) eighty-five percent (85%) (or such greater percentage as
designated by the Committee) of the Fair Market Value of a share of
Common Stock on the Purchase Date; provided, that, the Purchase
Price per share of Common Stock will in no event be less than the
par value of the Common Stock.
“Securities Act” means the
Securities Act of 1933, as amended.
“Subsidiary” means any corporation,
domestic or foreign, of which not less than 50% of the combined
voting power is held by the Company or a Subsidiary, whether or not
such corporation exists now or is hereafter organized or acquired
by the Company or a Subsidiary. In all cases, the determination of
whether an entity is a Subsidiary shall be made in accordance with
Section 424(f) of the Code.
“Trading Day” means any day on
which the national stock exchange upon which the Common Stock is
listed is open for trading or, if the Common Stock is not listed on
an established stock exchange or national market system, a business
day, as determined by the Committee in good faith.
3.
Administration. The
Plan shall be administered by the Committee which shall have the
authority to construe and interpret the Plan, prescribe, amend and
rescind rules relating to the Plan’s administration and take
any other actions necessary or desirable for the administration of
the Plan including, without limitation, adopting sub-plans
applicable to particular Participating Subsidiaries or locations,
which sub-plans may be designed to be outside the scope of Section
423 of the Code. The Committee may correct any defect or supply any
omission or reconcile any inconsistency or ambiguity in the Plan.
The decisions of the Committee shall be final and binding on all
persons. All expenses of administering the Plan shall be borne by
the Company.
4.
Eligibility. Unless
otherwise determined by the Committee in a manner that is
consistent with Section 423 of the Code, any individual who is an
Eligible Employee as of the first day of the enrollment period
designated by the Committee for a particular Offering Period shall
be eligible to participate in such Offering Period, subject to the
requirements of Section 423 of the Code.
Notwithstanding any
provision of the Plan to the contrary, no Eligible Employee shall
be granted an option under the Plan if (i) immediately after the
grant of the option, such Eligible Employee (or any other person
whose stock would be attributed to such Eligible Employee pursuant
to Section 424(d) of the Code) would own capital stock of the
Company or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any Subsidiary or
(ii) such option would permit his or her rights to purchase stock
under all employee stock purchase plans (described in Section 423
of the Code) of the Company and its Subsidiaries to accrue at a
rate that exceeds $25,000 of the Fair Market Value of such stock
(determined at the time the option is granted) for each calendar
year in which such option is outstanding at any time.
5.
Offering Periods.
The Plan shall be implemented by a series of Offering Periods, each
of which shall be six (6) months in duration, with new Offering
Periods commencing on or about January 1 and July 1 of each year
(or such other times as determined by the Committee). The Committee
shall have the authority to change the duration, frequency, start
and end dates of Offering Periods.
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6.
Participation.
6.1
Enrollment; Payroll
Deductions. An Eligible Employee may elect to participate in
the Plan by properly completing an Enrollment Form, which may be
electronic, and submitting it to the Company, in accordance with
the enrollment procedures established by the Committee.
Participation in the Plan is entirely voluntary. By submitting an
Enrollment Form, the Eligible Employee authorizes payroll
deductions from his or her pay check in an amount equal to at least
1%, but not more than 15% of his or her Compensation on each pay
day occurring during an Offering Period (or such other maximum
percentage as the Committee may establish from time to time before
an Offering Period begins). Payroll deductions shall commence on
the first payroll date following the Offering Date and end on the
last payroll date on or before the Purchase Date. The Company shall
maintain records of all payroll deductions but shall have no
obligation to pay interest on payroll deductions or to hold such
amounts in a trust or in any segregated account. Unless expressly
permitted by the Committee, a Participant may not make any separate
contributions or payments to the Plan.
6.2
Election Changes.
During an Offering Period, a Participant may decrease or increase
his or her rate of payroll deductions applicable to such Offering
Period only once. To make such a change, the Participant must
submit a new Enrollment Form authorizing the new rate of payroll
deductions at least 15 days before the Purchase Date.
6.3
Automatic
Re-enrollment. The deduction rate selected in the Enrollment
Form shall remain in effect for subsequent Offering Periods unless
the Participant (a) submits a new Enrollment Form authorizing a new
level of payroll deductions in accordance with Section 6.2, (b)
withdraws from the Plan in accordance with Section 10, or (c)
terminates employment or otherwise becomes ineligible to
participate in the Plan.
7.
Grant of Option. On
each Offering Date, each Participant in the applicable Offering
Period shall be granted an option to purchase, on the Purchase
Date, a number of shares of Common Stock determined by dividing the
Participant’s accumulated payroll deductions by the
applicable Purchase Price; provided, however, that in no event
shall any Participant purchase more than 5,000 shares of Common
Stock during an Offering Period (subject to adjustment in
accordance with Section 18 and the limitations set forth in Section
13 of the Plan).
8.
Exercise of
Option/Purchase of Shares. A Participant’s option to
purchase shares of Common Stock will be exercised automatically on
the Purchase Date of each Offering Period. The Participant’s
accumulated payroll deductions will be used to purchase the maximum
number of whole shares that can be purchased with the amounts in
the Participant’s notional account. No fractional shares may
be purchased, but notional fractional shares of Common Stock will
be allocated to the Participant’s ESPP Share Account to be
aggregated with other notional fractional shares of Common Stock on
future Purchase Dates, subject to earlier withdrawal by the
Participant in accordance with Section 10 or termination of
employment in accordance with Section 11.
9.
Transfer of Shares.
As soon as reasonably practicable after each Purchase Date, the
Company will arrange for the delivery to each Participant of the
shares of Common Stock purchased upon exercise of his or her
option. The Committee may permit or require that the shares be
deposited directly into an ESPP Share Account established in the
name of the Participant with a Designated Broker and may require
that the shares of Common Stock be retained with such Designated
Broker for a specified period of time. Participants will not have
any voting, dividend or other rights of a shareholder with respect
to the shares of Common Stock subject to any option granted
hereunder until such shares have been delivered pursuant to this
Section 9.
10.
Withdrawal.
10.1
Withdrawal
Procedure. A Participant may withdraw from an Offering by
submitting to the Company a revised Enrollment Form indicating his
or her election to withdraw at least 15 days before the Purchase
Date. The accumulated payroll deductions held on behalf of a
Participant in his or her notional account (that have not been used
to purchase shares of Common Stock) shall be paid to the
Participant promptly following receipt of the Participant’s
Enrollment Form indicating his or her election to withdraw and the
Participant’s option shall be automatically terminated. If a
Participant withdraws from an Offering Period, no payroll
deductions will be made during any succeeding Offering Period,
unless the Participant re-enrolls in accordance with Section 6.1 of
the Plan.
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10.2
Effect on Succeeding
Offering Periods. A Participant’s election to withdraw
from an Offering Period will not have any effect upon his or her
eligibility to participate in succeeding Offering Periods that
commence following the completion of the Offering Period from which
the Participant withdraws.
11.
Termination of Employment;
Change in Employment Status. Upon termination of a
Participant’s employment for any reason, including death,
disability or retirement, or a change in the Participant’s
employment status following which the Participant is no longer an
Eligible Employee, which in either case occurs at least thirty days
(30) before the Purchase Date, the Participant will be deemed to
have withdrawn from the Plan and the payroll deductions in the
Participant’s notional account (that have not been used to
purchase shares of Common Stock) shall be returned to the
Participant, or in the case of the Participant’s death, to
the person(s) entitled to such amounts under Section 17, and the
Participant’s option shall be automatically terminated. If
the Participant’s termination of employment or change in
status occurs within thirty (30) days before a Purchase Date, the
accumulated payroll deductions shall be used to purchase shares on
the Purchase Date.
12.
Interest. No
interest shall accrue on or be payable with respect to the payroll
deductions of a Participant in the Plan.
13.
Shares Reserved for
Plan.
13.1
Number of Shares. A
total of 1,000,000 shares of Common Stock have been reserved as
authorized for the grant of options under the Plan. The shares of
Common Stock may be newly issued shares, treasury shares or shares
acquired on the open market.
13.2
Over-subscribed
Offerings. The number of shares of Common Stock that a
Participant may purchase in an Offering under the Plan may be
reduced if the Offering is over-subscribed. No option granted under
the Plan shall permit a Participant to purchase shares of Common
Stock which, if added together with the total number of shares of
Common Stock purchased by all other Participants in such Offering
would exceed the total number of shares of Common Stock remaining
available under the Plan. If the Committee determines that, on a
particular Purchase Date, the number of shares of Common Stock with
respect to which options are to be exercised exceeds the number of
shares of Common Stock then available under the Plan, the Company
shall make a pro rata allocation of the shares of Common Stock
remaining available for purchase in as uniform a manner as
practicable and as the Committee determines to be
equitable.
14.
Transferability. No
payroll deductions credited to a Participant, nor any rights with
respect to the exercise of an option or any rights to receive
Common Stock hereunder may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 17 hereof) by
the Participant. Any attempt to assign, transfer, pledge or
otherwise dispose of such rights or amounts shall be without
effect.
15.
Application of
Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate
purpose to the extent permitted by applicable law, and the Company
shall not be required to segregate such payroll deductions or
contributions.
16.
Statements.
Participants will be provided with statements at least annually
which shall set forth the contributions made by the Participant to
the Plan, the Purchase Price of any shares of Common Stock
purchased with accumulated funds, the number of shares of Common
Stock purchased, and any payroll deduction amounts remaining in the
Participant’s notional account.
17.
Designation of
Beneficiary. A Participant may file, on forms supplied by
the Committee, a written designation of beneficiary who is to
receive any shares of Common Stock and cash in respect of any
fractional shares of Common Stock, if any, from the
Participant’s ESPP Share Account under the Plan in the event
of such Participant’s death. In addition, a Participant may
file a written designation of beneficiary who is to receive any
cash withheld through payroll deductions and credited to the
Participant’s notional account in the event of the
Participant’s death prior to the Purchase Date of an Offering
Period.
18.
Adjustments Upon Changes
in Capitalization; Dissolution or Liquidation; Corporate
Transactions.
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18.1
Adjustments. In the
event that any dividend or other distribution (whether in the form
of cash, Common Stock, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Common
Stock or other securities of the Company, or other change in the
Company’s structure affecting the Common Stock occurs, then
in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan,
the Committee will, in such manner as it deems equitable, adjust
the number of shares and class of Common Stock that may be
delivered under the Plan, the Purchase Price per share and the
number of shares of Common Stock covered by each outstanding option
under the Plan, and the numerical limits of Section 7 and Section
13.
18.2
Dissolution or
Liquidation. Unless otherwise determined by the Committee,
in the event of a proposed dissolution or liquidation of the
Company, any Offering Period then in progress will be shortened by
setting a new Purchase Date and the Offering Period will end
immediately prior to the proposed dissolution or liquidation. The
new Purchase Date will be before the date of the Company’s
proposed dissolution or liquidation. Before the new Purchase Date,
the Committee will provide each Participant with written notice,
which may be electronic, of the new Purchase Date and that the
Participant’s option will be exercised automatically on such
date, unless before such time, the Participant has withdrawn from
the Offering in accordance with Section 10.
18.3
Corporate
Transaction. In the event of a Corporate Transaction, (i)
any surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) may
assume or continue all outstanding options or may substitute
similar rights (including a right to acquire the same consideration
paid to the stockholders in the Corporate Transaction) for all
outstanding options, or (ii) if any surviving or acquiring
corporation (or its parent company) does not assume or continue all
such options or does not substitute similar rights for such
options, then each Participant’s accumulated payroll
deductions will be used to purchase the maximum number of whole
shares that can be purchased with the amounts in the
Participant’s notional account (rounded down to the nearest
whole share) within ten business days prior to the Corporate
Transaction under the outstanding option, and the option will
terminate immediately after such purchase.
19.
General
Provisions.
19.1
Equal Rights and
Privileges. Notwithstanding any provision of the Plan to the
contrary and in accordance with Section 423 of the Code, all
Eligible Employees who are granted options under the Plan shall
have the same rights and privileges.
19.2
No Right to Continued
Service. Neither the Plan nor any compensation paid
hereunder will confer on any Participant the right to continue as
an Employee or in any other capacity.
19.3
Rights as
Shareholder. A Participant will become a shareholder with
respect to the shares of Common Stock that are purchased pursuant
to options granted under the Plan when the shares are transferred
to the Participant’s ESPP Share Account. A Participant will
have no rights as a shareholder with respect to shares of Common
Stock for which an election to participate in an Offering Period
has been made until such Participant becomes a shareholder as
provided above.
19.4
Successors and
Assigns. The Plan shall be binding on the Company and its
successors and assigns.
19.5
Entire Plan. This
Plan constitutes the entire plan with respect to the subject matter
hereof and supersedes all prior plans with respect to the subject
matter hereof.
19.6
Compliance with
Law. The obligations of the Company with respect to payments
under the Plan are subject to compliance with all applicable laws
and regulations. Common Stock shall not be issued with respect to
an option granted under the Plan unless the exercise of such option
and the issuance and delivery of the shares of Common Stock
pursuant thereto shall comply with all applicable provisions of
law, including, without limitation, the Securities Act, the
Exchange Act, and the requirements of any stock exchange upon which
the shares may then be listed.
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19.7
Notice of Disqualifying
Dispositions. Each Participant shall give the Company prompt
written notice of any disposition or other transfer of shares of
Common Stock acquired pursuant to the exercise of an option
acquired under the Plan, if such disposition or transfer is made
within two years after the Offering Date or within one year after
the Purchase Date.
19.8
Term of Plan. The
Plan shall become effective on the Effective Date and, unless
terminated earlier pursuant to Section 19.9, shall have a term of
ten years.
19.9
Amendment or
Termination. The Committee may, in its sole discretion,
amend, suspend or terminate the Plan at any time and for any
reason. If the Plan is terminated, the Committee may elect to
terminate all outstanding Offering Periods either immediately or
once shares of Common Stock have been purchased on the next
Purchase Date (which may, in the discretion of the Committee, be
accelerated) or permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment in accordance with
Section 18). If any Offering Period is terminated before its
scheduled expiration, all amounts that have not been used to
purchase shares of Common Stock will be returned to Participants
(without interest, except as otherwise required by law) as soon as
administratively practicable.
19.10
Applicable Law. The
laws of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of the Plan, without
regard to such state’s conflict of law rules.
19.11
Shareholder
Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted by the Board.
19.12
Section 423. The
Plan is intended to qualify as an “employee stock purchase
plan” under Section 423 of the Code. Any provision of the
Plan that is inconsistent with Section 423 of the Code shall be
reformed to comply with Section 423 of the Code.
19.13
Withholding. To the
extent required by applicable Federal, state or local law, a
Participant must make arrangements satisfactory to the Company for
the payment of any withholding or similar tax obligations that
arise in connection with the Plan.
19.14
Severability. If
any provision of the Plan shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, and the Plan shall be
construed as if such invalid or unenforceable provision were
omitted.
19.15
Headings. The
headings of sections herein are included solely for convenience and
shall not affect the meaning of any of the provisions of the
Plan.
As approved by the Board of Directors of VistaGen Therapeutics,
Inc. on June 13, 2019.
As adopted by the stockholders of VistaGen Therapeutics, Inc. on
[_______], 2019.
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