Exhibit 10.3
 
VISTAGEN, INC. SCIENTIFIC ADVISORY BOARD 1998 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
 
Grantee’s Name and
Address:                                                                                                                                     
 

 

 
You have been granted an option to purchase shares of Common Stock, subject to
the terms and conditions of this Notice of Stock Option Award (the “Notice”),
the VistaGen, Inc. Scientific Advisory Board 1998 Stock Incentive Plan, as
amended from time to time (the “Plan”) and the Stock Option Award Agreement (the
“Option Agreement”) attached hereto, as follows.  Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Notice.
 
Award Number
   
Date of Award
   
Vesting Commencement Date
   
Exercise Price per Share
$
 
Total Number of Shares Subject
   
to the Option (the “Shares”)
   
Total Exercise Price
$
 
Type of Option:
Non-Qualified Stock Option
 
Expiration Date:
   
Post-Termination Exercise Period:
Three (3) Months
 

Vesting Schedule:
 
Subject to Grantee’s Continuous Service and other limitations set forth in this
Notice, the Plan and the Option Agreement, the Option may be exercised, in whole
or in part, in accordance with the following schedule:
 
1/48 of the Shares subject to the Option shall vest on each monthly anniversary
of the Vesting Commencement Date.
 
During any authorized leave of absence, the vesting of the Option as provided in
this schedule shall cease after the leave of absence exceeds a period of ninety
(90) days.  Vesting of the Option shall resume upon the Grantee’s termination of
the leave of absence and return to service to the Company or a Related Entity.

 
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IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.
 
VistaGen, Inc.,
 
a California corporation
 
By:                                                                        
 
Title:                                                                        
 
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER).  THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE’S CONTINUOUS
SERVICE.
 
The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement,
and represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts the Option subject to all of the terms and provisions hereof
and thereof.  The Grantee has reviewed this Notice, the Plan, and the Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Notice, and fully understands all provisions of
this Notice, the Plan and the Option Agreement.  The Grantee hereby agrees that
all disputes arising out of or relating to this Notice, the Plan and the Option
Agreement shall be resolved in accordance with Section 18 of the Option
Agreement.  The Grantee further agrees to notify the Company upon any change in
the residence address indicated in this Notice.
 
Dated:
______________________                                             Signed:_____________________
                                     Grantee
 

 
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Award Number:  ___________
 
VISTAGEN, INC. SCIENTIFIC ADVISORY BOARD 1998 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
 
1. Grant of Option.  VistaGen, Inc., a California corporation (the “Company”),
hereby grants to the Grantee (the “Grantee”) named in the Notice of Stock Option
Award (the “Notice”), an option (the “Option”) to purchase the Total Number of
Shares of Common Stock subject to the Option (the “Shares”) set forth in the
Notice, at the Exercise Price per Share set forth in the Notice (the “Exercise
Price”) subject to the terms and provisions of the Notice, this Stock Option
Award Agreement (the “Option Agreement”) and the Company’s Scientific Advisory
Board 1998 Stock Incentive Plan, as amended from time to time (the “Plan”),
which are incorporated herein by reference.  Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this
Option Agreement.
 
2. Exercise of Option.
 
(a) Right to Exercise.  The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement.  The Option shall
be subject to the provisions of Section 10(b) of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction.  No partial exercise of the Option may be for less than the lesser
of five percent (5%) of the total number of Shares subject to the Option or the
remaining number of Shares subject to the Option.  In no event shall the Company
issue fractional Shares.
 
(b) Method of Exercise.  The Option shall be exercisable only by delivery of an
Exercise Notice (attached as Exhibit A) which shall state the election to
exercise the Option, the whole number of Shares in respect of which the Option
is being exercised, and such other provisions as may be required by the
Administrator.  The Exercise Notice shall be signed by the Grantee and shall be
delivered in person, by certified mail, or by such other method as determined
from time to time by the Administrator to the Company accompanied by payment of
the Exercise Price.  The Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price, which, to
the extent selected, shall be deemed to be satisfied by use of the broker-dealer
sale and remittance procedure to pay the Exercise Price provided in
Section 4(c), below.
 
(c) Taxes.  No Shares will be delivered to the Grantee or other person pursuant
to the exercise of the Option until the Grantee or other person has made
arrangements acceptable to the Administrator for the satisfaction of applicable
income tax, employment tax, and social security tax withholding obligations,
including, without limitation, obligations incident to the receipt of Shares.
 
3. Grantee’s Representations.  The Grantee understands that neither the Option
nor the Shares exercisable pursuant to the Option have been registered under the
Securities Act of 1933, as amended or any United States securities laws.  In the
event the Shares purchasable pursuant to the exercise of the Option have not
been registered under the Securities Act of 1933, as amended, at the time the
Option is exercised, the Grantee shall, if requested by the Company,
concurrently with the exercise of all or any portion of the Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.
 
4. Method of Payment.  Payment of the Exercise Price shall be made by any of the
following, or a combination thereof, at the election of the Grantee; provided,
however, that such exercise method does not then violate any Applicable Law:
 
(a) cash;

 
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(b) check;
 
(c) if the exercise occurs on or after the Registration Date, surrender of
Shares or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market
Value on the date of surrender or attestation equal to the aggregate Exercise
Price of the Shares as to which the Option is being exercised (but only to the
extent that such exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price);
or
 
(d) if the exercise occurs on or after the Registration Date, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (i)
shall provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
Shares and (ii) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction.
 
5. Restrictions on Exercise.  The Option may not be exercised if the issuance of
the Shares subject to the Option upon such exercise would constitute a violation
of any Applicable Laws.
 
6. Termination or Change of Continuous Service.  In the event the Grantee’s
Continuous Service terminates, the Grantee may, to the extent otherwise so
entitled at the date of such termination (the “Termination Date”), exercise the
Option during the Post-Termination Exercise Period.  In no event shall the
Option be exercised later than the Expiration Date set forth in the
Notice.  Except as provided in Sections 7 and 8 below, to the extent that the
Grantee is not entitled to exercise the Option on the Termination Date, or if
the Grantee does not exercise the Option within the Post-Termination Exercise
Period, the Option shall terminate.
 
7. Disability of Grantee.  In the event the Grantee’s Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the Option to the extent he or she was otherwise
entitled to exercise it on the Termination Date.  To the extent that the Grantee
is not entitled to exercise the Option on the Termination Date, or if the
Grantee does not exercise the Option to the extent so entitled within the time
specified herein, the Option shall terminate.
 
8. Death of Grantee.  In the event of the termination of the Grantee’s
Continuous Service as a result of his or her death, or in the event of the
Grantee’s death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee’s Termination of Continuous Service as a
result of his or her Disability, the Grantee’s estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the date
of termination, within twelve (12) months from the date of death (but in no
event later than the Expiration Date).  To the extent that the Grantee is not
entitled to exercise the Option on the date of death, or if the Option is not
exercised to the extent so entitled within the time specified herein, the Option
shall terminate.
 
9. Transferability of Option.  The Option may be transferred by will, by the
laws of descent and distribution, and to the extent and in the manner authorized
by the Administrator, to members of the Grantee’s immediate family (as
determined by the Administrator) or pursuant to a domestic relations order.  The
terms of the Option shall be binding upon the executors, administrators, heirs
and successors of the Grantee.
 
10. Term of Option.  The Option may be exercised no later than the Expiration
Date set forth in the Notice or such earlier date as otherwise provided herein.

 
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11. Company’s Right of First Refusal.
 
(a) Transfer Notice.  Neither the Grantee nor a transferee (either being
sometimes referred to herein as the “Holder”) shall sell, hypothecate, encumber
or otherwise transfer any Shares or any right or interest therein without first
complying with the provisions of this Section 11 or obtaining the prior written
consent of the Company.  In the event the Holder desires to accept a bona fide
third-party offer for any or all of the Shares, the Holder shall provide the
Company with written notice (the “Transfer Notice”) of:
 
(i)  
The Holder’s intention to transfer;

 
(ii)  
The name of the proposed transferee;

 
(iii)  
The number of Shares to be transferred; and

 
(iv)  
The proposed transfer price or value and terms thereof.

 
(b) First Refusal Exercise Notice.  The Company shall have the right to purchase
(the “Right of First Refusal”) all but not less than all, of the Shares which
are described in the Transfer Notice (the “Offered Shares”) at any time during
the period commencing upon receipt of the Transfer Notice and ending forty-five
(45) days after the first date on which the Company determines that the Right of
First Refusal may be exercised without incurring an accounting expense with
respect to such exercise (the “Option Period”) at the per share price or value
and in accordance with the terms stated in the Transfer Notice, which Right of
First Refusal shall be exercised by written notice (the “First Refusal Exercise
Notice”) to the Holder.  During the Option Period and the 120-day period
following the expiration of the Option Period, the Company also may exercise its
Repurchase Right in lieu or in addition to its Right of First Refusal if the
Repurchase Right is or becomes exercisable during the Option Period or such
120-day period.
 
(c) Payment Terms.  The Company shall consummate the purchase of the Offered
Shares on the terms set forth in the Transfer Notice within 15 days after
delivery of the First Refusal Exercise Notice; provided, however, that in the
event the Transfer Notice provides for the payment for the Offered Shares other
than in cash, the Company and/or its assigns shall have the right to pay for the
Offered Shares by the discounted cash equivalent of the consideration described
in the Transfer Notice as reasonably determined by the Administrator.  Upon
payment for the Offered Shares to the Holder or into escrow for the benefit of
the Holder, the Company or its assigns shall become the legal and beneficial
owner of the Offered Shares and all rights and interest therein or related
thereto, and the Company shall have the right to transfer the Offered Shares to
its own name or its assigns without further action by the Holder.
 
(d) Assignment.  Whenever the Company shall have the right to purchase Shares
under this Right of First Refusal, the Company may designate and assign one or
more employees, officers, directors or shareholders of the Company or other
persons or organizations, to exercise all or a part of the Company’s Right of
First Refusal.
 
(e) Non-Exercise.  If the Company and/or its assigns do not collectively elect
to exercise the Right of First Refusal within the Option Period or such earlier
time if the Company and/or its assigns notifies the Holder that it will not
exercise the Right of First Refusal, then the Holder may transfer the Shares
upon the terms and conditions stated in the Transfer Notice, provided that:
 
(i) The transfer is made within 120 days of the expiration of the Option Period;
and
 
(ii) The transferee agrees in writing that such Shares shall be held subject to
the provisions of this Option Agreement.
 
 
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(f) Expiration of Transfer Period.  Following such 120-day period, no transfer
of the Offered Shares and no change in the terms of the transfer as stated in
the Transfer Notice (including the name of the proposed transferee) shall be
permitted without a new written Transfer Notice prepared and submitted in
accordance with the requirements of this Right of First Refusal.
 
(g) Exception for Certain Family Transfers.  Anything to the contrary contained
in this section notwithstanding, the transfer of any or all of the Shares during
the Grantee’s lifetime or on the Grantee’s death by will or intestacy to the
Grantee’s Immediate Family or a trust for the benefit of the Grantee or the
Grantee’s Immediate Family shall be exempt from the provisions of this Right of
First Refusal (a “Permitted Transfer”); provided, however, that (i) the
transferee or other recipient shall receive and hold the Shares so transferred
subject to the provisions of this Option Agreement, and there shall be no
further transfer of such Shares except in accordance with the terms of this
Option Agreement and (ii) prior to any such transfer, each transferee shall
execute an agreement pursuant to which such transferee shall agree to receive
and hold such Shares subject to the provisions of this Option
Agreement.  “Immediate Family” as used herein shall mean spouse, domestic
partner (as determined by the Administrator), child, lineal descendant or
antecedent, father, mother, brother or sister and the lineal descendants of such
individuals.
 
(h) Termination of Right of First Refusal.  The provisions of this Right of
First Refusal shall terminate as to all Shares upon the Registration Date.
 
(i) Additional Shares or Substituted Securities.  In the event of any
transaction described in Section 10 of the Plan, any new, substituted or
additional securities or other property which is by reason of any such
transaction distributed with respect to the Shares shall be immediately subject
to the Right of First Refusal, but only to the extent the Shares are at the time
covered by such right.
 
(j) Corporate Transaction.  Immediately prior to the consummation of a Corporate
Transaction, the Right of First Refusal shall automatically lapse in its
entirety, except to the extent this Option Agreement is assumed by the successor
corporation (or its Parent) in connection with such Corporate Transaction, in
which case the Right of First Refusal shall apply to the new capital stock or
other property received in exchange for the Shares in consummation of the
Corporate Transaction, but only to the extent the Shares are at the time covered
by such right.
 
12. Stop-Transfer Notices.  In order to ensure compliance with the restrictions
on transfer set forth in this Option Agreement, the Notice or the Plan, the
Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
 
13. Refusal to Transfer.  The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Option Agreement or (ii) to treat as owner of
such Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been so transferred.
 
14. Tax Consequences.  Set forth below is a brief summary as of the date of this
Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
 
(a) Exercise of Non-Qualified Stock Option.  On exercise of a Non-Qualified
Stock Option, the Grantee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price.
 
 
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(b) Disposition of Shares.  In the case of a Non-Qualified Stock Option, if
Shares are held for more than one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax purposes
and subject to tax at a maximum rate of 20%.
 
15. Lock-Up Agreement.
 
(a) Agreement.  The Grantee, if requested by the Company and the lead
underwriter of any public offering of the Common Stock or other securities of
the Company (the “Lead Underwriter”), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify.  The Grantee further agrees to sign such documents as
may be requested by the Lead Underwriter to effect the foregoing and agrees that
the Company may impose stop-transfer instructions with respect to such Common
Stock subject until the end of such period.  The Company and the Grantee
acknowledge that each Lead Underwriter of a public offering of the Company’s
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 15.
 
(b) No Amendment Without Consent of Underwriter.  During the period from
identification as a Lead Underwriter in connection with any public offering of
the Company’s Common Stock until the earlier of (i) the expiration of the
lock-up period specified in Section 15(a) in connection with such offering or
(ii) the abandonment of such offering by the Company and the Lead Underwriter,
the provisions of this Section 15 may not be amended or waived except with the
consent of the Lead Underwriter.
 
16. Entire Agreement: Governing Law.  The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee.  Nothing in the
Notice, the Plan and this Option Agreement (except as expressly provided
therein) is intended to confer any rights or remedies on any persons other than
the parties.  The Notice, the Plan and this Option Agreement are to be construed
in accordance with and governed by the internal laws of the State of California
(as permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) 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 State of California to the rights and duties of the parties.  Should
any provision of the Notice, the Plan or this Option Agreement be determined by
a court of law to be illegal or unenforceable, such provision shall be enforced
to the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.
 
17. Headings.  The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
 
18. Dispute Resolution  The provisions of this Section 18 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan
and this Option Agreement.  The Company, the Grantee, and the Grantee’s
assignees (the “parties”) shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by
negotiation between individuals who have authority to settle the
controversy.  Negotiations shall be commenced by either party by notice of a
written statement of the party’s position and the name and title of the
individual who will represent the party.  Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to resolve the
dispute.  If the dispute has not been resolved by negotiation, the parties agree
that any suit, action, or proceeding arising out of or relating to the Notice,
the Plan or this Option Agreement shall be brought in the United States District
Court for the Northern District of California (or should such court lack
jurisdiction to hear such action, suit or proceeding, in a California state
court in the County of Santa Clara) and that the parties shall submit to the
jurisdiction of such court.  The parties irrevocably waive, to the fullest
extent permitted by law, any objection the party may have to the laying of venue
for any such suit, action or proceeding brought in such court.  THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING.  If any one or more provisions of this Section 18
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.
 
19. Notices.  Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may
designate in writing from time to time to the other party.
 
 
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EXHIBIT A
 
VISTAGEN, INC. SCIENTIFIC ADVISORY BOARD 1998 STOCK INCENTIVE PLAN
EXERCISE NOTICE
 
VistaGen, Inc.
325 E. Middlefield Road
Mountain View, CA  94043
Attention: Secretary
 
1. Effective as of today, ______________, ___ the undersigned (the “Grantee”)
hereby elects to exercise the Grantee’s option to purchase ___________ shares of
the Common Stock (the “Shares”) of VistaGen, Inc. (the “Company”) under and
pursuant to the Company’s Scientific Advisory Board 1998 Stock Incentive Plan,
as amended from time to time (the “Plan”) and the Non-Qualified Stock Option
Award Agreement (the “Option Agreement”) and Notice of Stock Option Award (the
“Notice”) dated ______________, ________.  Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Exercise
Notice.
 
2. Representations of the Grantee.  The Grantee acknowledges that the Grantee
has received, read and understood the Notice, the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.
 
3. Rights as Shareholder.  Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option.  The Company shall issue (or
cause to be issued) such stock certificate promptly after the Option is
exercised.  No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 10(a) of the Plan.
 
The Grantee shall enjoy rights as a shareholder until such time as the Grantee
disposes of the Shares or the Company and/or its assignee(s) exercises the Right
of First Refusal.  Upon such exercise, the Grantee shall have no further rights
as a holder of the Shares so purchased except the right to receive payment for
the Shares so purchased in accordance with the provisions of the Option
Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
 
4. Delivery of Payment.  The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected, shall be deemed to
be satisfied by use of the broker-dealer sale and remittance procedure to pay
the Exercise Price provided in Section 4(c) of the Option Agreement.
 
5. Tax Consultation.  The Grantee understands that the Grantee may suffer
adverse tax consequences as a result of the Grantee’s purchase or disposition of
the Shares.  The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.
 
6. Taxes.  The Grantee agrees to satisfy all applicable federal, state and local
income and employment tax withholding obligations and herewith delivers to the
Company the full amount of such obligations.

 
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7. Restrictive Legends.  The Grantee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
 
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER, A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS
SET FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
ISSUER.  SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
 
8. Successors and Assigns.  The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure
to the benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Exercise Notice shall be binding
upon the Grantee and his or her heirs, executors, administrators, successors and
assigns.
 
9. Headings.  The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.
 
10. Dispute Resolution.  The provisions of Section 18 of the Option Agreement
shall be the exclusive means of resolving disputes arising out of or relating to
this Exercise Notice.
 
11. Governing Law; Severability.  This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of California (as
permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) 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 State of California to the rights and duties of the parties.  Should
any provision of this Exercise Notice be determined by a court of law to be
illegal or unenforceable, such provision shall be enforced to the fullest extent
allowed by law and the other provisions shall nevertheless remain effective and
shall remain enforceable.
 
12. Notices.  Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.
 
13. Further Instruments.  The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the
purposes and intent of this agreement.

 
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14. Entire Agreement.  The Notice, the Plan and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.
 
Submitted by:
Accepted by:
GRANTEE:
VISTAGEN, INC.
 
By:                                                                            
(Signature)
Title:                                                                            
Address:
Address:
 
325 Middlefield Road
Mountain View, CA  94043

 
 
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EXHIBIT B
 
VISTAGEN, INC. SCIENTIFIC ADVISORY BOARD 1998 STOCK INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
 
GRANTEE:                                                   
 
COMPANY:                                                   VISTAGEN, INC.
 
SECURITY:                                                   COMMON STOCK
 
AMOUNT:                                                   
 
DATE:                                                   
 
In connection with the purchase of the above-listed Securities, the undersigned
Grantee represents to the Company the following:
 
(a) Grantee is aware of the Company’s business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities.  Grantee is acquiring
these Securities for investment for Grantee’s own account only and not with a
view to, or for resale in connection with, any “distribution” thereof within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”).
 
(b) Grantee acknowledges and understands that the Securities constitute
“restricted securities” under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon among other things, the bona fide nature of Grantee’s
investment intent as expressed herein.  Grantee further understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available.  Grantee further acknowledges and understands that the Company is
under no obligation to register the Securities.  Grantee understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company.
 
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of “restricted securities” acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at
the time of the grant of the Option to the Grantee, the exercise will be exempt
from registration under the Securities Act.  In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited “broker’s transaction” or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
 
In the event that the Company does not qualify under Rule 701 at the time of
grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

 
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(d) Grantee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.  Grantee understands that no assurances can be given that any
such other registration exemption will be available in such event.
 
(e)           Grantee represents that he is a resident of the state of
____________________.

Signature of Grantee:
 

 
Date:                                      ,