Exhibit 10.38
 
VISTAGEN THERAPEUTICS, INC.
 
SENIOR CONVERTIBLE BRIDGE NOTE AND WARRANT PURCHASE
AGREEMENT
 
This Senior Convertible Bridge Note and Warrant Purchase Agreement (the
"Agreement") is made as of August 13, 2006, by and between VistaGen
Therapeutics, Inc., a California corporation (the "Company"), and the purchasers
listed on Exhibit A hereto (each a "Purchaser" and, collectively, the
"Purchasers").
The parties hereby agree as follows:
 
AGREEMENT SECTION 1
 
AMOUNT AND TERMS OF THE LOAN; ISSUANCE OF WARRANTS
 
1.1  The Loans. Subject to the terms of this Agreement, at each Closing (as
defined below), the Company shall borrow from each Purchaser participating in
such Closing and each Purchaser participating in such Closing shall loan to the
Company an amount equal to the loan amount with respect to such Closing set
forth opposite such Purchaser's name on Exhibit A attached hereto (the "Loan
Amount").
 
1.2  The Notes. All indebtedness incurred by the Company pursuant to this
Agreement shall be evidenced by senior convertible promissory notes (the
"Notes") in the form attached as Exhibit B hereto. From time to time upon the
funding of indebtedness hereunder, corresponding Notes shall be completed by the
Company with the name of the respective Purchaser, the principal amount
evidenced by such Note and the date that the Note was funded, and such Note
shall be a binding obligation of the Company upon execution thereof by the
Company and delivery to the Purchaser.
 
1.3  Issuance of Warrants. Subject to the terms and conditions of this
Agreement, as soon as is reasonably practicable after the date of issuance of a
Note by the Company to a Purchaser, the Company shall issue to such Purchaser a
warrant (the "Warrant") in the form of Exhibit C attached hereto, representing
the right to purchase up to that number of shares of Common Stock of the Company
(as adjusted pursuant to the terms thereof) calculated as follows:
 
For Notes purchased on or before August 31, 2006: number of shares of Common
Stock issuable      =      principal amount of the Note * 100% upon exercise of
the  Conversion Price (as defined below) Warrant For Notes purchased on or
before September 29, 2006: number of shares of Common Stock issuable upon
exercise of theprincipal amount of the Note * 75% Conversion Price (as defined
below) WarrantFor Notes purchased after September 29, 2006: number of shares of
Common Stock issuable upon exercise of the principal amount of the Note* 50%
Conversion Price (as defined below) Warrant

 
-2-

--------------------------------------------------------------------------------

 

The Warrant shall be exercisable on the terms and conditions set forth therein.
 
1.4   Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
 
(a)  "Conversion Price" shall mean the price per share of the equity security of
the. Company sold by the Company in its Qualified Financing (as defined below),
or with respect to a conversion triggered by a Sale of the Company occurring
prior to the Qualified Financing, the Conversion Price will be equal to $0.60
per share, the price of the Company's Series C Senior Preferred issued in its
most recent equity financing.
 
(b)  "Sale of the Company" shall mean (A) the acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation but,
excluding any merger effected exclusively for the purpose of changing the
domicile of the Company); or (B) a sale of all or substantially all of the
assets of the Company by means of a transaction or series of related
transactions; unless the Company's shareholders of record as constituted
immediately prior to such acquisition or sale' will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
Company's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity
 
(c)  "Qualified Financing" shall mean the sale by the Company after the date of
this Agreement of shares of its equity security to investors in one or more
transactions for aggregate gross cash proceeds to the Company (not including
conversion of the Notes) of at least $5,000,000.
 
SECTION 2
 
THE CLOSING
 
  2.1   Initial Closing. The initial closing of the funding of indebtedness
hereunder and the initial issuance of the corresponding Notes (the "Initial
Closing") shall be held at the offices ofDLA Piper Rudnick Gray Cary US LLP, 153
Townsend St., Suite 800, San Francisco,California 94107,
on                                             , 2006 or at such other place and
date as the Companyand Purchasers loaning at least a majority of the aggregate
amount of indebtedness incurred by the Company at the Initial Closing mutually
agree upon orally or in writing.

 
-3-

--------------------------------------------------------------------------------

 
 
2.2  Subsequent Closings. Subsequent to the Initial Closing, the Company may
incur additional indebtedness hereunder up to an aggregate of $2,500,000 in
aggregate principal amount (including the indebtedness incurred at the Initial
Closing) to such, additional investors as it shall select. Any such additional
investor shall execute and deliver a counterpart signature page to this
Agreement, and thereby become a party to and be deemed a Purchaser hereunder.
All additional Purchasers and all additional indebtedness incurred hereunder
shall be reflected on Exhibit A, which shall be automatically amended without
any further action by any party hereto. The closing of the funding of such
additional indebtedness hereunder and the issuance of the corresponding Notes
shall be held at the offices of DLA Piper Rudnick Gray Cary US LLP, 153 Townsend
St., Suite 800, San Francisco, California 94107, on such date or at such other
place as the Company and Purchasers loaning at least a majority of the aggregate
amount of indebtedness incurred by the Company at such closing mutually agree
upon orally or in writing (which each such date and place, together with the
Initial Closing, are designated as a "Closing").
 
2.3  Delivery. At each Closing (i) each Purchaser participating in such Closing
shall deliver to the Company a check or wire transfer of immediately available
funds in the amount of such Purchaser's Loan Amount with respect to such Closing
set forth opposite such Purchaser's name on Exhibit A attached hereto; and (ii)
the Company shall deliver to each such Purchaser a corresponding Note in the
principal amount of such Purchaser's Loan Amount.
 
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
 
Each Purchaser, severally and not jointly, hereby represents, warrants and
covenants to the Company that:
 
3.1  Purchase for Own Account. Such Purchaser is acquiring the Note, the equity
securities issuable upon conversion of the Note and the Warrant (collectively,
the "Securities") solely for its own account and beneficial interest for
investment and not as a nominee or agent, and not with a view to the resale or
distribution of the Securities or any part thereof, has no present intention of
selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
 
3.2  Information and Sophistication. Such Purchaser has received all the
information it has requested from the Company and considers necessary or
appropriate for deciding whether to acquire the Securities. Such Purchaser
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and
 
conditions of the offering of the Securities and to obtain any additional
information necessary to verify the accuracy of the information given to such
Purchaser. Such Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
 
3.3  Ability to Bear Economic Risk. Such Purchaser acknowledges that investment
in the Securities involves a high degree of risk, and represents that it is
able, without materially impairing its financial condition, to hold the
Securities for an indefinite period of time and to suffer a complete loss of its
investment.
 
3.4  Accredited Investor. Such Purchaser represents that it is an "accredited
investor" as such term is defined in Rule 501 under the Securities Act of 1933,
as amended.

 
-4-

--------------------------------------------------------------------------------

 
 
3.5  Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and any other agreement which the purchasers of equity security
are required to execute and deliver in connection with the Qualified Financing,
and:
 
(a) There is then in effect a registration statement under the Securities Act of
1933, as amended, covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
 
(b) (i) Such Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and
 
(ii) if reasonably requested by the Company, such Purchaser shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such shares under the
Securities Act of 1933, as amended.
 
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by a Purchaser to a shareholder or partner (or retired partner) of such
Purchaser, or transfers by gift, will or intestate succession to any spouse or
lineal descendants or ancestors, if all transferees agree in writing to be
subject to the terms hereof to the same extent as if they were an original
Purchaser hereunder.
 
  3.6   Lock-Up Agreement. Each Purchaser hereby agrees that, during the period
of duration specified by the Company and an underwriter of common stock or other
securities of the Company, following the effective date of a registration
statement of the Company filed under the Securities Act of 1933, as amended, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities
 
of the Company held by it at any time during such period except common stock
included in such registration; provided, however, that:
 
(a) such agreement shall be applicable only to the first two such registration
statements of the Company which cover common stock (or other securities) to be
sold on its behalf to the public in an underwritten offering;
 
(b) all officers and directors of the Company and all other persons with
registration rights enter into similar agreements; and
 
(c) such market stand-off time period shall not exceed one hundred eighty (180)
days.
 
In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Securities of each Purchaser (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.

 
-5-

--------------------------------------------------------------------------------

 
 
Notwithstanding the foregoing, the obligations described in this Section 3.6
shall not apply to a registration relating solely to employee benefit plans on
Form S-l or Form S-8 or similar forms which may be promulgated in the future, or
a registration relating solely to a Commission Rule 145 transaction on Form S-14
or Form S-15 or similar forms which may be promulgated in the future.
 
3.7  Cooperation. Such Purchaser agrees that it will take all actions and
execute all documents requested by Company in connection with this Agreement,
the Note or conversion of the Note and the Warrant.
 
3.8  Further Representations by Foreign Purchasers. If such Purchaser is a
person who is not a resident of the United States, or is a corporation or other
entity created or organized under the laws of a jurisdiction other than the
United States, such Purchaser hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale, or transfer of the Securities. Such
Purchaser hereby further represents and warrants (a) that its subscription and
payment for, and its continued beneficial ownership of the Securities, will not
violate any applicable securities or other laws of its jurisdiction and (b) that
such Purchaser is not subject to any non-U.S. laws or regulations relating to
the sale and purchase of the Securities or otherwise that could require the
Company to register the Securities or the sale thereof under, or to make any
filing pursuant to, or to take any other action under, any such laws or
regulations by reason of the undersigned's purchase of the Securities.
 
SECTION 4
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants to each Purchaser that:
 
4.1  Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted.
 
4.2  Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company hereunder and the authorization, issuance, sale and delivery of the
Securities has been taken or will be taken prior to the Initial Closing.

 
-6-

--------------------------------------------------------------------------------

 
 
SECTION 5
 
 MISCELLANEOUS
 
5.1  Survival of Representations, Warranties and Covenants. The warranties,
representations and covenants of the Company and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and all Closings and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Purchasers or the
Company.
 
5.2  Binding Agreement. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any third party any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.
 
5.3  Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California as applied to agreements among California
residents, made and to be performed entirely within the State of California.
 
5.4  Counterpart Execution: Facsimile Delivery. This Agreement may be executed
in two or more counterparts and delivered by facsimile, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
 
5.5  Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
5.6  Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed effectively given upon receipt or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the Company at 1450 Rollins Road, Burlingame, CA
94010, or to each Purchaser at the address listed on the signature pages hereto,
or at such other address as such party may designate by ten (10) days advance
written notice to the other party.
 
5.7  Amendments and Waivers. Any term of this Agreement, and of any Note or
Warrant issued hereunder, may be amended and the observance of any such term may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Purchasers
holding Notes representing at least a majority of the aggregate amount of
indebtedness incurred by the Company under all Notes issued pursuant to this
Agreement. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Securities acquired under this
Agreement at the time outstanding (including securities into which such
Securities are convertible), each future holder of all such Securities, and the
Company.
 
5.8  California Legend. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100,25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 
-7-

--------------------------------------------------------------------------------

 
 
5.9  Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision was so excluded and shall be enforceable in accordance with its terms.
 
  5.10 Expenses. Each party shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, any Note or any Warrant, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
 
5.11  Finder's Fee. Each Purchaser agrees, severally and not jointly, to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a broker's or finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
such Purchaser or any of its officers, partners, employees, or representatives
is responsible. The Company agrees to indemnify and to hold harmless each
Purchaser from any liability for any commission or compensation in the nature of
a broker's or finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
partners, employees, or representatives is responsible.
Entire Agreement. This Agreement and the documents referred to herein constitute
the entire agreement among the parties with respect to the subject matter hereof
and no party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
5.12  

 
-8-

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
 
PURCHASER(S) (INDIVIDUAL)

 
Signature

 
Type/Print Name of Individual Purchaser (Specify "as joint tenant," as trustee,"
etc. if applicable)
PURCHASER (ENTITY)

 
(Name of Corporation or Other Entity)
 
By:                                                              
Signature of Authorized Officer, Trustee or Partner

Signature of Joint Purchaser

Title

Type/Print Name of Individual Purchaser (Specify "as joint tenant," as trustee,"
etc. if applicable)
Tax Identification or Social Security Number for Purchaser(s)
Tax Identification Number for Purchaser

Name/Address

 
-9-

--------------------------------------------------------------------------------

 

 
EXHIBIT A Schedule of Purchasers
 
Loan Amount

 
-10-

--------------------------------------------------------------------------------

 
 
Exhibit B Convertible Promissory Note
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. NO SALE OR DISPOSITION MA Y BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.
 
CONVERTIBLE PROMISSORY NOTE

$              .00                                                                                                                  ,
2006
Burlingame, California

 
FOR VALUE RECEIVED, VistaGen Therapeutics, Inc., a California corporation (the
"Company"), promises to pay to the order
of                                                                                             ,
or its permitted assigns (each
a "Holder"), the principal sum
of                                                                            US
Dollars ($                              ) with interest on the
outstanding principal amount at the simple rate of 10.0% per annum (computed on
the basis of actual calendar days elapsed and a year of 360 days). Interest
shall commence with the date hereof and shall accrue on the outstanding
principal until converted or paid in accordance with the provisions hereof.
 
1. This note (the "Note") is issued pursuant to the terms of that certain Senior
Convertible Bridge Note and Warrant Purchase Agreement (the "Agreement") dated
as of
, 2006, by and among Company and the purchasers set forth in the Schedule
of Purchasers attached thereto as Exhibit A. This Note is one of a series of
notes (the "Notes") having like tenor and effect (except for variations
necessary to express the name of the holders, the principal amount of each of
the Notes and the date on which each Note is issued) issued or to be issued by
the Company in accordance with the terms of the Agreement. The Notes shall be
senior in preference or priority of any kind over one another, and all payments
on account of principal and interest with respect to any of the Notes shall be
applied first on the outstanding Notes.
 
2. Unless sooner converted in accordance with Paragraph 3, the entire unpaid
balance of principal and all unpaid accrued interest shall become fully due and
payable on August 30, 2007. The principal and accrued interest under this Note
may be prepaid at any time and from time to time, without penalty.
 
3. The outstanding principal balance and unpaid accrued interest under this Note
shall be automatically converted into equity securities of the Company
("Securities") upon the earlier to occur of the (a) the closing of a Qualified
Financing (as defined in the Agreement, or (b) the closing of a Sale of the
Company, as defined in the Agreement. If conversion of this

 
-11-

--------------------------------------------------------------------------------

 
 
Convertible Promissory Note
 
Note is occasioned by a Qualified Financing, then the terms and conditions
pursuant to which Holder will acquire the Securities will be the same terms and
conditions for the Investors in the Qualifed Financing. The Holder acknowledges
that the price, terms and conditions of the Financing and the terms, preferences
and privileges of Securities have not, as of the date of this Note, been
established and are subject to negotiation with the Investors. If the conversion
of this Note is occasioned by the Sale of the Company, then such conversion
shall be deemed to have occurred immediately prior to, and contingent upon the
occurrence of, the closing of the Sale of the Company. In the case of Sale of
the Company, the price per share at which the outstanding principal balance and
unpaid accrued interest under this Note shall be converted into Securities shall
be $0.60 per share, the price of the Company's Series C Senior Preferred issued
in its most recent equity financing. In connection with its participation in the
Qualified Financing, the Holder agrees to execute any documents reasonably
requested by the Company which are to be executed by the Investors, including
without limitation, a stock purchase agreement with customary representations
and warranties of the Investors. This Note shall not otherwise be convertible
into securities of the Company.
 
4. Upon conversion of this Note into the Securities, the Holder shall surrender
this Note, duly endorsed, at the principal office of the Company. At its
expense, the Company shall, as soon as practicable thereafter, issue and deliver
to the Holder at such principal office a certificate or certificates for the
Securities into which the Note is converted (bearing such legends as may be
required or advisable in the opinion of counsel to the Company), together with a
check payable to the Holder for any cash amounts payable as described in Section
5 below.
 
5. No fractional shares shall be issued upon conversion of this Note. In lieu of
the Company issuing any fractional shares to the Holder upon the conversion of
this Note, the Company shall pay to the Holder an amount in cash equal to the
product obtained by multiplying the conversion price applied to effect such
conversion by the fraction of a share not issued pursuant to the previous
sentence. Upon conversion of this Note in full and the payment of the amounts
specified in this Note, the Company shall be released from all its obligations
and liabilities under this Note.
 
6. The terms of this Note shall be construed in accordance with and governed by
the laws of the State of California, as applied to contracts entered into by
California residents within the State of California, which contracts are to be
performed entirely within the State of California.
 
7. Any term of this Note and all Notes issued pursuant to the Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Company and the holders of
Notes representing at least a majority of the aggregate amount of indebtedness
incurred by the Company under all outstanding Notes issued pursuant to the
Agreement. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon the Company, the Holder and the holders of all Notes
issued pursuant to the Agreement.
 
8. If any provision of this Note, or the application of such provision to any
person or circumstance, is held invalid or unenforceable, the remainder of this
Note, or the application of
 
Convertible Promissory Note
 
such provisions to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.

 
-12-

--------------------------------------------------------------------------------

 
 
9. Except as may be otherwise provided herein, all notices, requests, waivers
and other communications made pursuant to this Note shall be made in accordance
with Section 5.6 of the Agreement.
 
10. In case any Note shall be mutilated, lost, stolen or destroyed, the Company
shall issue a new Note of like date, tenor and denomination and deliver the same
in exchange and substitution for and upon surrender and cancellation of any
mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt
of evidence satisfactory to the Payor of the loss, theft or destruction of such
Note.
 
11. Notwithstanding any other provision to the contrary herein, in no event
shall the interest attributable to this Note exceed the maximum rate of interest
then permitted under applicable law.
 
This Note is executed as of the day first above written.
 
 
VISTAGEN THERAPEUTICS, INC.

 
By:                                                  
H. Ralph Snodgrass, President
 
[signature sheet Convertible Promissory Notes]

 
-13-

--------------------------------------------------------------------------------

 
 
EXHIBIT C
 
[Attach Form of Warrant]

 
-14-

--------------------------------------------------------------------------------

 
 
Warrant

 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
 
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER CONTAINED IN THAT CERTAIN SENIOR CONVERTIBLE NOTE AND WARRANT PURCHASE
AGREEMENTDATED                                       , 2006, WHICH RESTRICTIONS
ON TRANSFER ARE INCORPORATED HEREIN BY REFERENCE.
 
Dated:                        ,2006
 
 
WARRANT TO PURCHASE COMMON STOCK OF VISTAGEN THERAPEUTICS, INC.
 
This certifies that                                                  , or its
permitted assigns (each a "Holder"), for value
received, is entitled to purchase, at an exercise price per share equal to the
Conversion Price (as defined below) (the "Exercise Price") from VISTAGEN
THERAPEUTICS, Inc., a California corporation (the "Company"), up to that number
of fully paid and nonassessable shares of the Company's Common Stock ("Common
Stock"), equal to the quotient obtained in accordance with the following
calculation:
 
For Notes purchased on or before August 31, 2006:
 
number of shares of
Common Stock issuable      =      principal amount of the Note * 100%
upon exercise of
the                                                     Conversion Price
Warrant
 
For Notes purchased on or before September 29, 2006:
 
number of shares of
Common Stock issuable      =       principal amount of the Note * 75%
upon exercise of
the                                                     Conversion Price
Warrant
 
Warrant
 
For Notes purchased after September 29, 2006: number of shares of
Common Stock issuable      =       principal amount of the Note* 50%
upon exercise of
the                                                     Conversion Price
Warrant

 
-15-

--------------------------------------------------------------------------------

 
 
This Warrant shall be exercisable at any time from time to time from and after
the closing of the Qualified Financing (shall have the meaning given such Term
in the Agreement) (such date being referred to herein as the "Initial Exercise
Date") up to and including 5:00 p.m. (Pacific Time) on the first to occur of (i)
three (3) years from the date hereof, (ii) ten (10) days preceding the closing
date of any of the following transactions: (A) the acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation but,
excluding any merger effected exclusively for the purpose of changing the
domicile of the Company); or (B) a sale of all or substantially all of the
assets of the Company by means of a transaction or series of related
transactions; unless the Company's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
Company's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity (any such transaction, a "Change of
Control"), or (ii) the date of closing of the Company's initial public offering
of equity securities (such earlier date being referred to herein as the
"Expiration Date"), upon surrender to the Company at its principal office (or at
such other location as the Company may advise the Holder in writing) of this
Warrant properly endorsed with (a) the Form of Subscription attached hereto duly
completed and executed, and (b) payment pursuant to Section 2 of the aggregate
Exercise Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Exercise
Price and the number of shares purchasable hereunder are subject to adjustment
as provided in Section 4 of this Warrant. For purposes of this Warrant, (a) the
term "Note" shall mean the note issued to the original Holder of this Warrant
pursuant to the terms of that certain Senior Convertible Note and Warrant
Purchase
Agreement dated as of                                                   , 2006,
by and between Company and the purchasers set
forth in the Schedule of Purchasers attached thereto as Exhibit A (the
"Agreement"), and (b) the term "Conversion Price" have the meaning given such
term in the Agreement.
 
1.      Exercise: Issuance of Certificates; Acknowledgement. This Warrant is
exercisable at the option of the holder of record hereof, at any time from or
after the Initial Exercise Date up to the Expiration Date for all or any part of
the Warrant Shares (but not for a fraction of a share) which may be purchased
hereunder. The Company agrees that the shares of Common Stock purchased under
this Warrant shall be and are deemed to be issued to the Holder hereof as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered, properly endorsed, the completed,
executed Form of Subscription delivered and payment made for such shares.
Certificates for the shares of the Common Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company atthe Company's
expense within a reasonable time after the rights represented by this Warrant
have been so exercised. Each certificate so delivered shall be in such
denominations of the Warrant Shares as may be requested by the Holder hereof and
shall be registered in the name of such Holder. In case of a purchase of less
than all the Warrant Shares, the Company shall execute and deliver to Holder
within a reasonable time an acknowledgement in the form attached hereto
indicating the number of Warrant Shares which remain subject to this Warrant, if
any.
 
2. Payment for Shares. The aggregate purchase price for Warrant Shares being
purchased hereunder may be paid either by cash or wire transfer of immediately
available funds.

 
-16-

--------------------------------------------------------------------------------

 
 
3. Shares to be Fully Paid; Reservation of Shares. The Company covenants and
agrees that all shares of Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes* liens and charges with respect to the
issue thereof. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved, for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of authorized but unissued shares of Common Stock.
 
4. Adjustment of Exercise Price and Number of Shares. The Exercise Price and the
number of shares purchasable upon the exercise of this Warrant shall be subject
to adjustment from time to time upon the occurrence of certain events described
in this Section 4. Upon each adjustment of the Exercise Price, the Holder of
this Warrant shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment, and
dividing the product thereof by the Exercise Price resulting from such
adjustment.

 
4.1 Subdivision or Combination of Stock. In case the Company shall at any time
subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding shares of
the Common Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased.
 
4.2 Reclassification. If any reclassification of the capital stock of the
Company shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities, or other assets or property, then, as a
condition of such reclassification, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive (in lieu of the shares of the Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby)
such shares of stock, securities or other assets or property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number ofshares of such Common Stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby. In any reclassification described above, appropriate
provision shall be made with respect to the rights and interests of the Holder
of this Warrant to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.

 
-17-

--------------------------------------------------------------------------------

 
 
4.3 Notice of Adjustment. Upon any adjustment of the Exercise Price or any
increase or decrease in the number of shares purchasable upon the exercise of
this Warrant, the Company shall give written notice thereof, by first class mail
postage prepaid, addressed to the registered Holder of this Warrant at the
address of such Holder as shown on the books of the Company. The notice shall be
signed by the Company's chief financial officer and shall state the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
 
4.4 Other Notices. If at any time:

 
(1) the Company shall declare any cash dividend upon its
Common Stock;
 
(2) there shall be a Change of Control;
 
(3) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
 
(4) there shall be an initial public offering of the Company's
equity securities;
 
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least twenty (20) days
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend or for determining rights to vote
in respect of any such Change of Control or dissolution, liquidation or
winding-up, and (b) in the case of any such Change of Control or dissolution,
liquidation, winding-up or initial public offering, at least twenty (20) days
prior written notice of the date when the same shall take place; provided,
however, that the Holder shall make a best efforts attempt to respond to such
notice as early as possible after the receipt thereof. Any notice given in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, the date on which the holders of Common Stock shall be entitled
thereto. Any notice given in accordance with the foregoing clause (b) shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such Change of Control, dissolution, liquidation, winding-up, conversion or
initial public offering, as the case may be.
 
Warrant
 
5. No Voting or Dividend Rights. Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote or to consent
to receive notice as a shareholder of the Company or any other matters or any
rights whatsoever as a shareholder of the Company. No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.

 
-18-

--------------------------------------------------------------------------------

 
 
6. Warrants Transferable. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder may be transferred,
in whole or in part, without charge to the holder hereof (except for transfer
taxes), upon the prior written consent of the Company and, thereafter, upon
surrender of this Warrant properly endorsed and compliance with the provisions
of the Agreement. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant, when endorsed in blank, shall
be deemed negotiable, and that the holder hereof, when this Warrant shall have
been so endorsed, may be treated by the Company, at the Company's option, and
all other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company and notice to the
contrary notwithstanding; but until such transfer on such books, the Company may
treat the registered owner hereof as the owner for all purposes.
 
7. Lost Warrants. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
 
8. Modification and Waiver. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only (a) with the
written consent of the Company and the Holder hereof, or (b) as provided in
Section 5.7 of the Agreement. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon the Company and the Holder.
 
9. Notices. All notices and other communications from the Company to the Holder,
or vice versa, shall be deemed delivered and effective when given personally or
mailed by first-class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company or the Holder, as the case may
be, in writing by the Company or such holder from time to time.
 
10. Titles and Subtitles; Governing Law; Venue. The titles and subtitles used in
this Warrant are used for convenience only and are not to be considered in
construing or interpreting this Agreement. This Warrant is to be construed in
accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the

 
-19-

--------------------------------------------------------------------------------

 
 
Exhibit C Warrant

 
State of California to the rights and duties of the Company and the Holder. All
disputes and controversies arising out of or in connection with this Warrant
shall be resolved exclusively by the state and federal courts located in San
Mateo County in the State of California, and each of the Company and the Holder
hereto agrees to submit to the jurisdiction of said courts and agrees that venue
shall lie exclusively with such courts.
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its officers, thereunto duly authorized as of the date first above written.

VistaGen Therapeutics, Inc.
 
By:                                        
H. Ralph Snodgrass, President
 
 
 

--------------------------------------------------------------------------------

 
 
[signature sheet Warrant]
 
Warrant FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
 
To:                                                    
 
The undersigned, the holder of a right to purchase shares of Common Stock of
VISTAGEN THERAPEUTICS, INC. (the "Company") pursuant to that certain Warrant to
Purchase Common Stock of VISTAGEN THERAPEUTICS, INC. (the "Warrant"), dated as
of, 2006, hereby irrevocably elects to exercise the purchase right represented
by
such Warrant for, and to purchase
thereunder,                                                                                                              (                   )shares
of Common Stock of the Company and herewith makes payment ofDollars
($                                 ) therefor in cash.
 
The undersigned represents that it is acquiring such securities for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof and in order to induce the issuance of such securities
makes to the Company, as of the date hereof, the representations and warranties
set forth in Section 3 of the Convertible Note and WarrantPurchase Agreement,
dated as
of                                                                      , 2006,
by and among the Company and thePurchasers listed on Exhibit A thereto.
 
DATED:                                           
[Name of Holder]
 
By:                                                   
Name:                                                   
Its:                                                   
 
Exhibit C Warrant ACKNOWLEDGMENT

 
To: [Name of Holder]
 
The undersigned hereby acknowledges that as of the date hereof,
(                     ) shares of Common Stock remain subject to the right of
purchase in favor of
[Name of Holder] pursuant to that certain Warrant to Purchase Common Stock of
VISTAGEN
THERAPEUTICS, INC., dated as
of                                                                           ,
2006.
 
DATED:                                           
 
VistaGen Therapeutics, Inc.
 
By:                   :                               
 
Name:                                                  
 
Its:                                                  

 
-20-

--------------------------------------------------------------------------------

 

VISTAGEN THERAPEUTICS, INC.

AMENDMENT NO. 1 TO SENIOR CONVERTIBLE BRIDGE
NOTE AND WARRANT PURCHASE AGREEMENT

This Amendment No. 1 to Senior Convertible Bridge Note and Warrant Purchase
Agreement (the “Amendment”) is made as of January __, 2007, by and among
VistaGen Therapeutics, Inc., a California corporation (the “Company”), Tracy K.
Price Descendants Trust, Richard K. Wagner Family Trust (with respect to its
$60,000 investment made on 8/31/06), Waldo Griffin, David Young, Herman F.
Greene and Sandra Payne Greene JTWROS, Jeffrey Lederman and G. Thomas Stromberg
Jr. (collectively, the “Original Purchasers”), the Bernhard Votteri and Linda
Votteri Family Trust, the Bernhard Votteri MD, Inc. Profit Sharing Plan, the
Richard K. Wagner Family Trust (with respect to its $30,000 investment made on
1/16/07) and the Singh Family Trust (collectively, the “Subsequent Closing
Purchasers”) and the purchasers listed on Exhibit A-1 hereto (collectively, the
“New Purchasers”).
 
RECITALS
 
WHEREAS, the Original Purchasers, the Subsequent Closing Purchasers and the
Company are parties to that certain Senior Convertible Bridge Note and Warrant
Purchase Agreement dated as of August 31, 2006 (the “Agreement”), pursuant to
which the Original Purchasers and the Subsequent Closing Purchasers purchased
Notes (as defined in the Agreement) and Warrants (as defined in the Agreement)
issued by the Company in accordance with the terms of the Agreement.
 
WHEREAS, the Company desires to sell additional Notes and Warrants to the New
Purchasers and to allow the New Purchasers to become a party to the Agreement.
 
WHEREAS, the Agreement currently provides that the Company will issue a Warrant
to each purchaser of a Note calculated as follows:
 
For Notes purchased on or before August 31, 2006 (such calculation referred to
herein as “100% Warrant Coverage”):
 
number of shares of
Common Stock
issuable                                                      =           principal
amount of the Note * 100%
upon exercise of the
Warrant                                                                Conversion
Price  (as defined in the Agreement)
 
For Notes purchased on or before September 29, 2006 (such calculation referred
to herein as “60% Warrant Coverage”):
 
number of shares of
Common Stock
issuable                                                      =           principal
amount of the Note * 75%
upon exercise of the
Warrant                                                                Conversion
Price  (as defined in the Agreement)
 
For Notes purchased after September 29, 2006 (such calculation referred to
herein as “50% Warrant Coverage”):
 
number of shares of
Common Stock
issuable                                                      =           principal
amount of the Note* 50%
upon exercise of the
Warrant                                                                Conversion
Price (as defined in the Agreement)
 

 
-21-

--------------------------------------------------------------------------------

 

WHEREAS, the Original Purchasers received 100% Warrant Coverage and the
Subsequent Closing Purchasers received 50% Warrant Coverage in accordance with
the terms of the Agreement.

WHEREAS, as a material inducement to the New Purchasers to purchase additional
Notes and Warrants, the Company, the Original Purchasers, and the Subsequent
Closing Purchasers desire to: (i) amend the Agreement to provide, among other
things, that the Warrant issuable to each purchaser of a Note in accordance with
the Agreement will receive 100% Warrant Coverage without regard to when the Note
was actually purchased; (ii) cancel the Warrants issued to the Subsequent
Closing Purchasers with 50% Warrant Coverage in exchange for a new Warrant with
100% Warrant Coverage.
 
NOW, THEREFORE, in consideration of the mutual premises and covenants set forth
herein, the Company, the Original Purchasers hereby agree to amend the Agreement
as set forth herein, and the parties hereto agree as follows:

A M E N D M E N T

1. Definitions.  Except as otherwise provided herein, capitalized terms used in
this Amendment shall have the definitions set forth in the Agreement. All
references to a “Purchaser” or the “Purchasers” in the Agreement shall be deemed
to include an New Purchaser or the New Purchasers, as applicable.
 
2. Amendment to Section 1.2. Section 1.2 of the Agreement shall be amended to
read in its entirety as follows:
 
 
“1.2
The Notes.  All indebtedness incurred by the Company pursuant to this Agreement
shall be evidenced by senior convertible promissory notes (the “Notes”) in the
form attached as Exhibit B hereto.  From time to time upon the funding of
indebtedness hereunder, corresponding Notes shall be completed by the Company
with the name of the respective Purchaser, the principal amount evidenced by
such Note and the date that the Note was funded, and such Note shall be a
binding obligation of the Company upon execution thereof by the Company and
delivery to the Purchaser.”

 
3. Amendment to Section 1.3.  Section 1.3 of the Agreement shall be amended to
read in its entirety as follows:
 
 
“1.3
Issuance of Warrants; Exchange of Warrants with 50% Warrant Coverage.

 
 
(a)
Subject to the terms and conditions of this Agreement, as soon as is reasonably
practicable after the date of issuance of a Note by the Company to a Purchaser,
the Company shall issue to such Purchaser a warrant (the “Warrant”) in the form
of Exhibit C attached to this Amendment, representing the right to purchase up
to that number of shares of Common Stock of the Company (as adjusted pursuant to
the terms thereof) calculated as follows:

 
number of shares of
Common Stock
issuable                                                      =           principal
amount of the Note * 100%
upon exercise of the
Warrant                                                                Conversion
Price (as defined below).
 
 
(b)
Upon execution of this Amendment, each Subsequent Closing Investor shall deliver
to the Company for cancellation the originally executed Warrants they received
with 50% Warrant Coverage against issuance and delivery by the Company to such
Subsequent Closing Investor of a new, fully executed Warrant with 100% Warrant
Coverage.

 

 
-22-

--------------------------------------------------------------------------------

 

4. Amendment to Section 2.1.  Section 2.2 of the Agreement shall be amended to
read in its entirety as follows:
 
 
“2.2
Subsequent Closings.  Subsequent to the Initial Closing, the Company may incur
additional indebtedness hereunder up to an aggregate of $2,500,000 in aggregate
principal amount (including the indebtedness incurred at the Initial Closing) to
such additional investors as it shall select.  Any such additional investor
shall execute and deliver a counterpart signature page to this Agreement, and
thereby become a party to and be deemed a Purchaser hereunder.  All additional
Purchasers and all additional indebtedness incurred hereunder shall be reflected
on Exhibit A-1, which shall be automatically amended without any further action
by any party hereto.  The closing of the funding of such additional indebtedness
hereunder and the issuance of the corresponding Notes shall be held at the
offices of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California
94304, on such date or at such other place as the Company and Purchasers loaning
at least a majority of the aggregate amount of indebtedness incurred by the
Company at such closing mutually agree upon orally or in writing (which each
such date and place, together with the Initial Closing, are designated as a
“Closing”).”

5. Terms of Agreement.  Except as expressly modified hereby, all terms,
conditions and provisions of the Agreement shall continue in full force and
effect.
 
6. Conflicting Terms.  In the event of any inconsistency or conflict between the
Agreement and this Amendment, the terms, conditions and provisions of this
Amendment shall govern and control.
 
7. Entire Agreement.  This Amendment and the Agreement constitute the entire and
exclusive agreement between the parties with respect to the subject matter
hereof.  All previous discussions and agreements with respect to this subject
matter are superseded by the Agreement and this Amendment.  This Amendment may
be executed in one or more counterparts, each of which shall be an original and
all of which taken together shall constitute one and the same instrument.
 

 
-23-

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY:

VISTAGEN THERAPEUTICS, INC.

By:         ______________________________
H. Ralph Snodgrass, President

Address:                      1450 Rollins Road,
Burlingame, CA  94043

[Signature Page to Amendment No. 1 Senior Convertible Bridge Note and Warrant
Purchase Agreement]

 
-24-

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
 
THE ORIGINAL PURCHASERS:
 
TRACY K. PRICE DESCENDANTS TRUST
 
By:_____________________________________
Its:_____________________________________
RICHARD K. WAGNER FAMILY TRUST
(with respect to its $60,000 investment made on 8/31/06)
By:_____________________________________
Its:_____________________________________
 
________________________________________
Waldo Griffin
 
________________________________________
David Young
HERMAN F. GREENE AND SANDRA PAYNE GREENE JTWROS
________________________________________
Herman F. Greene
________________________________________
Sandra Payne Greene
 
 
 
________________________________________
Jeffrey J. Lederman
 
________________________________________
G. Thomas Stromberg Jr.
 

 
 [Signature Page to Amendment No. 1 Senior Convertible Bridge Note and Warrant
Purchase Agreement]
 

 
-25-

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
THE SUBSEQUENT CLOSING PURCHASERS:
 
BERNHARD VOTTERI AND LINDA VOTTERI FAMILY TRUST
By:_____________________________________
Its:_____________________________________
RICHARD K. WAGNER FAMILY TRUST
(with respect to its $30,000 investment made on 1/16/07)
By:_____________________________________
Its:_____________________________________
THE BERNHARD VOTTERI MD, INC. PROFIT SHARING PLAN
By:_____________________________________
Its:_____________________________________
THE SINGH FAMILY TRUST
 
By:_____________________________________
Its:_____________________________________

 

 
-26-

--------------------------------------------------------------------------------

 

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

NEW PURCHASER(S) (INDIVIDUAL)
NEW PURCHASER (ENTITY)
 
Signature
 
(Name of Corporation or Other Entity)
 
Type/Print Name of Individual Purchaser (Specify “as joint tenant,” as trustee,”
etc. if applicable)
By:
Signature of Authorized Officer, Trustee or Partner
 
Signature of Joint Purchaser
 
Title
 
Type/Print Name of Individual Purchaser (Specify “as joint tenant,” as trustee,”
etc. if applicable)
 
 
Tax Identification or Social Security Number for Purchaser(s)
 
Tax Identification Number for Purchaser

[Signature Page to Amendment No. 1 Senior Convertible Bridge Note and Warrant
Purchase Agreement]

 
-27-

--------------------------------------------------------------------------------

 

EXHIBIT A-1
Schedule of New Purchasers
 

 
Name/Address
Loan Amount
                               

 

 
-28-

--------------------------------------------------------------------------------

 

EXHIBIT B

Form of Convertible Promissory Note

 
-29-

--------------------------------------------------------------------------------

 

EXHIBIT C

Form of Warrant

 
-30-

--------------------------------------------------------------------------------

 

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933.  NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.

CONVERTIBLE PROMISSORY NOTE

$_______.00 ________________, 2007
 Burlingame, California

FOR VALUE RECEIVED, VistaGen Therapeutics, Inc., a California corporation (the
“Company”), promises to pay to the order of _________________, or its permitted
assigns (each a “Holder”), the principal sum of _________________ US Dollars
($_____) with interest on the outstanding principal amount at the simple rate of
10.0% per annum (computed on the basis of actual calendar days elapsed and a
year of 360 days).  Interest shall commence with the date hereof and shall
accrue on the outstanding principal until converted or paid in accordance with
the provisions hereof.

1. This note (the “Note”) is issued pursuant to the terms of that certain Senior
Convertible Bridge Note and Warrant Purchase Agreement dated as of August 31,
2006, by and among Company and the purchasers set forth in the Schedule of
Purchasers attached thereto as Exhibit A, as amended by that certain Amendment
No.1 to Senior Convertible Bridge Note and Warrant Purchase Agreement (the
“Agreement”).  This Note is one of a series of notes (the “Notes”) having like
tenor and effect (except for variations necessary to express the name of the
holders, the principal amount of each of the Notes and the date on which each
Note is issued) issued or to be issued by the Company in accordance with the
terms of the Agreement.  The Notes shall be senior in preference or priority of
any kind over one another, and all payments on account of principal and interest
with respect to any of the Notes shall be applied first on the outstanding
Notes.
 
2. Unless sooner converted in accordance with Paragraph 3, the entire unpaid
balance of principal and all unpaid accrued interest shall become fully due and
payable on August 30, 2007.  The principal and accrued interest under this Note
may be prepaid at any time and from time to time, without penalty.
 

 
-31-

--------------------------------------------------------------------------------

 

3. The outstanding principal balance and unpaid accrued interest under this Note
shall be automatically converted into equity securities of the Company
(“Securities”) upon the earlier to occur of the (a) the closing of a Qualified
Financing (as defined in the Agreement, or (b) the closing of a Sale of the
Company, as defined in the Agreement.  If conversion of this Note is occasioned
by a Qualified Financing, then the terms and conditions pursuant to which Holder
will acquire the Securities will be the same terms and conditions for the
Investors in the Qualifed Financing.  The Holder acknowledges that the price,
terms and conditions of the Financing and the terms, preferences and privileges
of Securities have not, as of the date of this Note, been established and are
subject to negotiation with the Investors.  If the conversion of this Note is
occasioned by the Sale of the Company, then such conversion shall be deemed to
have occurred immediately prior to, and contingent upon the occurrence of, the
closing of the Sale of the Company.  In the case of Sale of the Company, the
price per share at which the outstanding principal balance and unpaid accrued
interest under this Note shall be converted into Securities shall be $0.60 per
share, the price of the Company’s Series C Senior Preferred issued in its most
recent equity financing.  In connection with its participation in the Qualified
Financing, the Holder agrees to execute any documents reasonably requested by
the Company which are to be executed by the Investors, including without
limitation, a stock purchase agreement with customary representations and
warranties of the Investors.  This Note shall not otherwise be convertible into
securities of the Company.
 
4. Upon conversion of this Note into the Securities, the Holder shall surrender
this Note, duly endorsed, at the principal office of the Company.  At its
expense, the Company shall, as soon as practicable thereafter, issue and deliver
to the Holder at such principal office a certificate or certificates for the
Securities into which the Note is converted (bearing such legends as may be
required or advisable in the opinion of counsel to the Company), together with a
check payable to the Holder for any cash amounts payable as described in Section
5 below.
 
5. No fractional shares shall be issued upon conversion of this Note.  In lieu
of the Company issuing any fractional shares to the Holder upon the conversion
of this Note, the Company shall pay to the Holder an amount in cash equal to the
product obtained by multiplying the conversion price applied to effect such
conversion by the fraction of a share not issued pursuant to the previous
sentence.  Upon conversion of this Note in full and the payment of the amounts
specified in this Note, the Company shall be released from all its obligations
and liabilities under this Note.
 
6. The terms of this Note shall be construed in accordance with and governed by
the laws of the State of California, as applied to contracts entered into by
California residents within the State of California, which contracts are to be
performed entirely within the State of California.
 

 
-32-

--------------------------------------------------------------------------------

 

7. Any term of this Note and all Notes issued pursuant to the Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Company and the holders of
Notes representing at least a majority of the aggregate amount of indebtedness
incurred by the Company under all outstanding Notes issued pursuant to the
Agreement.  Any amendment or waiver effected in accordance with this paragraph
shall be binding upon the Company, the Holder and the holders of all Notes
issued pursuant to the Agreement.
 
8. If any provision of this Note, or the application of such provision to any
person or circumstance, is held invalid or unenforceable, the remainder of this
Note, or the application of such provisions to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
 
9. Except as may be otherwise provided herein, all notices, requests, waivers
and other communications made pursuant to this Note shall be made in accordance
with Section 5.6 of the Agreement.
 
10. In case any Note shall be mutilated, lost, stolen or destroyed, the Company
shall issue a new Note of like date, tenor and denomination and deliver the same
in exchange and substitution for and upon surrender and cancellation of any
mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt
of evidence satisfactory to the Payor of the loss, theft or destruction of such
Note.
 
11. Notwithstanding any other provision to the contrary herein, in no event
shall the interest attributable to this Note exceed the maximum rate of interest
then permitted under applicable law.
 

 
This Note is executed as of the day first above written.
 

VISTAGEN THERAPEUTICS, INC.

By:                                                                        
H. Ralph Snodgrass, President

[signature page to Convertible Promissory Note]