SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934 (Amendment
No.__________)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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Vystar
Corporation
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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2480 Briarcliff
Rd NE, #6
Suite 159
Atlanta, GA 30329
TO MY FELLOW
SHAREHOLDERS:
It is my pleasure
to invite you to attend our 2017 Annual Meeting of Shareholders on August 11, 2017, at 9:00 a.m., Eastern Time. The meeting will
be held at the office of our legal counsel, Greenberg Traurig, LLP in Atlanta, Georgia.
The enclosed
notice of meeting and proxy statement contain important information, including a description of the business that will be acted
upon at the meeting, as well as the voting procedures for the meeting. At the meeting, we will also report on the Company’s
performance and operations and respond to your questions.
The first and
second versions of a video featuring Vystar on Fox Business News’ “New to the Street” is posted on
vytex.com
’s
front page under Press Releases section and Latest Blogs. We will show a longer version at the meeting that includes footage shot
on location at Rotman’s, Gold Bond and King Coil (Bluebell facility).
Also we have
a Twitter page for Vystar Corporation maintained by an expert in the field. Seek it out and “like” it as we add followers
daily.
Your vote is
important. Whether or not you plan to attend the meeting, we urge you to vote and submit your proxy over the Internet, by telephone
or by mail.
I hope you
will be able to join us, and I look forward to seeing you.
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Sincerely,
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William R. Doyle
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Chairman, CEO and President
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July 20, 2017
Atlanta, GA
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held
August 11, 2017
TIME:
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9:00 a.m., Eastern Time, on August
11, 2017
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PLACE:
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The offices of:
Greenberg Traurig, LLP
Suite 2500
Terminus 200
3333 Piedmont Road N.E.
Atlanta, Georgia 30305
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ITEMS OF BUSINESS:
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(1)
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To elect as directors of the Company the three persons
named in the accompanying Proxy Statement for terms expiring at the 2019 annual meeting;
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(2)
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To ratify the appointment of Porter Keadle Moore, LLC as the Company’s
independent registered public accounting firm for the fiscal year ending December 31, 2017; and
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(3)
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To transact any other business properly brought before the meeting.
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WHO MAY VOTE:
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You may vote if you were a shareholder
of record as of the close of business on June 28, 2017.
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ANNUAL MEETING
MATERIALS:
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A copy of this Proxy Statement
and our 2016 Annual Report are available at
www.vytex.com
(Vystar, Our Company, Company SEC Filings).
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DATE OF MAILING:
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The Proxy Materials are first being
mailed to shareholders on or about July 20, 2017.
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VYSTAR CORPORATION
Proxy Statement
for the
Annual Meeting
of Shareholders
To Be Held
August 11, 2017
TABLE
OF CONTENTS
VYSTAR CORPORATION
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND
VOTING
Our Board of Directors (the “Board”)
is soliciting proxies for our 2017 Annual Meeting of Shareholders to be held on Friday, August 11, 2017 at 9:00 a.m. local time
at the offices of Greenberg Traurig, LLP, Terminus 200, 3333 Piedmont Rd, N.E., Suite 2500, Atlanta, GA. Our office
mailing address is 2480 Briarcliff Rd NE, #6, Suite 159, Atlanta, GA 30329, and our telephone number is (866) 674-5238 x1.
IMPORTANT NOTICE
REGARDING AVAILABILITY
OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, AUGUST 11, 2017
Vystar Corporation is providing its proxy
materials by mail and is also providing access to such materials on the Internet. You may access the following proxy materials
as of the date they are first mailed to our shareholders by visiting
www.vytex.com
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Notice of 2017 Annual Meeting of Shareholders to be held on Friday, August 11, 2017;
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Proxy Statement and Proxy Card for 2017 Annual Meeting of Shareholders to be held on Friday, August 11, 2017;
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Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
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These proxy materials are available free
of charge and will remain available through the conclusion of the Annual Meeting. In accordance with SEC rules, the proxy materials
on the site are searchable, readable and printable and the site does not have “cookies” or other tracking devices which
identify visitors.
We will bear the expense of soliciting
proxies. In addition to these proxy materials, our directors and employees (who will receive no compensation in addition to their
regular salaries) may solicit proxies in person, by telephone or email. We will reimburse banks, brokers and other custodians,
nominees and fiduciaries for reasonable charges and expenses incurred in forwarding soliciting materials to their clients.
QUESTIONS AND ANSWERS
Q:
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Who may vote at the meeting?
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A:
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Our Board set June 28, 2017, as the record date for the meeting. If you owned our common stock at the close of business on June 28, 2017, you may attend and vote at the meeting. Each shareholder is entitled to one vote for each share of common stock held on all matters to be voted on. As of June 28, 2017, there were 122,231,109 shares of our common stock outstanding and entitled to vote at the meeting.
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Q:
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What is the quorum requirement for the meeting?
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A majority of our outstanding shares as of the record date must be present at the meeting in order to hold the meeting and conduct business. This is called a quorum.
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Your shares will be counted as present
at the meeting if you:
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are present and entitled to vote in person at the meeting; or
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have properly submitted a proxy card or voting instruction card; or
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have voted by telephone or over the internet prior to the meeting
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Both abstentions and broker non-votes (as
described below) are counted for the purpose of determining the presence of a quorum.
Each proposal identifies the votes needed
to approve or ratify the proposed action.
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How do I vote before the meeting?
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A:
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If you are a registered shareholder, which means you hold your shares in certificate form or through an account with our transfer agent, Island Stock Transfer, you have three options for voting before the Meeting:
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Over the Internet, at www.islandstocktransfer.com, by following the instructions on the proxy card;
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By telephone, by dialing 1-877-502-0550;
By fax at 1-727-289-0069;
By email at akotlova@islandstocktransfer,com; or
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By completing, dating, signing and returning a proxy card by mail.
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If you are a beneficial holder,
meaning you hold your shares in “street name” through an account with a bank or broker, your ability to vote over the
Internet or by telephone depends on the voting procedures of your bank or broker. Please follow the directions on the voting instruction
form that your bank or broker provides
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Q:
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What proposals will be voted on at the meeting?
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A:
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There are two proposals scheduled to be voted on at the meeting:
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Election of the three members of our Board named herein;
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Ratification of Porter Keadle Moore, LLC as our independent registered public accounting firm for the year ended December 31, 2017.
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We will also consider any other business
that properly comes before the meeting. As of the record date, we are not aware of any other matters to be submitted for consideration
at the meeting. If any other matters are properly brought before the meeting, the persons named in the enclosed proxy card or voter
instruction card will vote the shares they represent using their best judgment.
Q:
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How may I vote my shares in person at the meeting?
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A:
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If your shares are registered directly in your name with our transfer agent, Island Stock Transfer, you are considered, with respect to those shares, the shareholder of record. As the shareholder of record, you have the right to vote in person at the meeting. If your shares are held in a brokerage account or by another nominee or trustee, you are considered the beneficial owner of shares held in street name. As the beneficial owner, you are also invited to attend the meeting. Since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from your broker, nominee, or trustee that holds your shares, giving you the right to vote the shares at the meeting. The meeting will be held at the offices of Greenberg Traurig LLP, Terminus 200, 3333 Piedmont Rd, N.E., Suite 2500, Atlanta, GA. If you need directions to the meeting, please visit
http://www.gtlaw.com/Locations/Atlanta?wosView=directions
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Q:
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What happens if I do not give specific voting instructions?
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Registered Shareholder of Record
. If you are a registered shareholder of record and you sign and return a proxy card without giving specific voting instructions then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.
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Beneficial Owners of Shares
Held in Street Name.
If you are a beneficial owner of shares held in street name and do not provide the organization
that holds your shares with specific voting instructions, the organization that holds your shares may generally vote at its discretion
on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions
from you on how to vote your shares on a non-routine matter, the organization will inform the inspector of election that it does
not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered entitled
to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming
that a quorum is obtained.
Q.
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Which ballot measures are considered “routine” or “non-routine?”
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A.
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The ratification of the appointment of Porter Keadle Moore, LLC as the Company’s independent registered public accounting firm for 2017 (Proposal No. 2) is considered routine under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal No. 2. The election of directors is considered non-routine under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposal No. 1.
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Q:
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How can I revoke my proxy and change my vote after I return my proxy card or vote over the internet or by telephone?
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A:
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You may revoke your proxy and change your vote at any time before the final vote at the meeting. If you are a shareholder of record, you may do this by signing and submitting a new proxy card with a later date or by attending the meeting and voting in person. Attending the meeting alone will not revoke your proxy unless you specifically request your proxy to be revoked. If you hold shares through a bank or brokerage firm, you must contact that bank or firm directly to revoke any prior voting instructions.
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Q:
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Where can I find the voting results of the meeting?
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A:
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The preliminary voting results will be announced at the meeting. The final voting results will be reported in a current report on Form 8-K, which will be filed with the SEC within four business days after the meeting. If our final voting results are not available within four business days after the meeting, we will file a current report on Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the current report on Form 8-K within four business days after the final voting results are known to us.
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PROPOSAL 1
ELECTION OF DIRECTORS
We currently have six members on our Board. In
2016, the Company amended and restated its Articles of Incorporation to create a staggered Board of Directors. William R. Doyle,
Chairman of the Board, President and Chief Executive Officer of the Company, Mitsy Y. Mangum, a director, and Michael X. Ianacone,
Secretary and a director of the Company, are standing for reelection to the Board. Shareholders will vote for these three nominees
to serve until our 2019 Annual Meeting of Shareholders and until such directors’ successors have been elected and qualified,
or until such director’s death, resignation or removal.
Mr. Doyle, Ms. Mangum, and Mr. Ianacone
are currently directors of Vystar and have previously been elected by our shareholders.
There are no family relationships among
our directors, director nominees or executive officers. If any nominee is unable or declines to serve as a director, the Board
may designate another nominee to fill the vacancy and the proxy will be voted for that nominee.
Vote Required and Board Recommendation
Our Bylaws require that each director be
elected by the majority of votes cast with respect to such director. Abstentions and broker non-votes will not have
any effect on the outcome of this proposal. In tabulating the voting results for the election of directors, only “FOR”
and “AGAINST” votes are counted.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
“FOR” ALL NOMINEES
Our Board of Directors
The following tables set forth the name
and age of each nominee and director of Vystar whose term of office will continue after the meeting, the principal occupation of
each during the past five years, and the year each began serving as a director of Vystar:
Nominees for Election as Directors for
a Term Expiring in 2019
Name
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Principal
Occupation During Last Five Years
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Age
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Director
Since
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William R. Doyle
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Mr. Doyle, the Chairman of the
Board, President and Chief Executive Officer, joined Vystar in 2004 as Vice President Sales & Marketing. He became
President and Chief Operating Officer in December 2005. He became Chairman of the Board, President and Chief Executive
Officer of Vystar in March 2008. Prior to that, Mr. Doyle served as Vice President of Marketing, Women’s Health,
for Matria Healthcare, Inc., a disease management company, from 1999 to 2004. Mr. Doyle spearheaded the initial branding
efforts at Matria as well as held responsibility for sales development, training, public relations, and marketing. He has worked
in many aspects of healthcare industry for over twenty years encompassing manufacturing, sales, marketing and advertising. In
addition to Matria, he has experience with such companies as Isolyser Company, Inc., McGaw, Inc., Lederle Laboratories (now Wyeth),
and in an advertising capacity for Novartis Ophthalmics. Mr. Doyle has previously been a member of the Board of Directors of the
Georgia Chapter of the March of Dimes. He holds a Bachelor of Science in Biochemistry from Penn State University and Master of
Business Administration from Pepperdine University.
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59
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2005
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Mitsy Y. Mangum
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Ms Mangum is currently a managing
director/partner of Lakeview Capital Partners, LLC. From July 2009 to September 2015, Ms. Mangum was Vice President, Investments,
WMS, RPC at American Capital Partners LLC., an independent investment banking firm in Atlanta, GA. From July 2004 to July 2009,
Ms. Mangum was a Vice President-Investments, Financial Advisor WMS, RPC with Raymond James & Associates in the Atlanta area.
Ms. Mangum is an accomplished investment professional with over 24 years of financial service and industry experience both from
the retail side as well as the institutional side. Ms. Mangum maintains an in-depth knowledge of the financial markets, professional
money management and managing portfolios. Ms. Mangum has a Bachelor of Science in Business Administration/ Management from College
of Charleston.
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53
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2008
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Michael Ianacone
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Mr. Ianacone has over forty years of successful experience in leading large organizations and improving performance of operating units across the US. Mr. Ianacone has a proven track record of growing revenue and profit, forming executive teams and working cross organizationally to deliver results. Mr. Ianacone recently retired from Xerox Corporation where during his 38 year tenure he held senior executive management positions in sales, marketing, operations and strategy in the US. These positions included both headquarters and field locations. Mr. Ianacone was a key member of the US senior team during Xerox’s turnaround in the early 2000s. Mr. Ianacone holds an A.B. degree from Georgetown University in Washington, D.C. and currently resides in Atlanta, GA
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69
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2014
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Ranjit K. Matthan
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Directors With a Term Expiring in 2018
On March 12, 2015, Dr. Ranjit K. Matthan,
Ph.D., an internationally renowned latex and rubber expert, joined the Company’s Board of Directors. Dr. Matthan has
been a consultant to Vystar Corporation since 2008 and has played a significant role in the manufacturing scale up of reduced-protein
Vytex® natural rubber latex (NRL) in Malaysia and refining the research and development of manufacturing processes for applications
using Vytex NRL, such as latex foam, condoms, adhesives, medical devices, etc.
Dr. Matthan has been associated with the development of natural rubber and rubber based industries manufacturing in South Asia
since the 1970s and introduced technically specified natural rubber into India. Dr. Matthan has advised national and international
companies and research bodies including the Government of India, the Malaysian Rubber Research and Development Board, Asian Development
Bank, Industrial Development Bank of India, Revertex (Malaysia) as well as many private companies engaged in latex production and
manufacturing. A founding Director of the Bangkok-based Asia Pacific Elastomer Science and Technology (APEST), he has played
a key role in sustainability initiatives for natural rubber. He has also been associated with the development and commercial introduction
of several eco-friendly natural rubber grades, including Vytex NRL.
Dr. Matthan has received numerous industry awards, including: the prestigious 2014 Institute of Materials, Minerals and Mining,
U.K.’s Hancock Medal for his contributions to the development of the environmentally friendly sustainable growth of the global
natural rubber industry, and the 2006 KMPhilip Award from the All India Rubber Industries Association for significant contributions
toward the development of the Indian Rubber Industry. Dr. Matthan has published over 50 scientific and technical papers on natural
rubber and lattices and is an invited speaker at several international conferences including the International Latex Conference.
Dr. Matthan holds an undergraduate
degree from St. Stephens College, Delhi University, India and he earned his Ph.D. in Polymer Chemistry from the National College
of Rubber Technology, London, England, where he was the first Ph.D. student of Dr. D.C. Blackley whose books and high polymer
lattices and emulsion polymerization are the industry standard references.
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74
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2015
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Jason Meggs
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Jason Meggs, based in Raleigh, North Carolina,
is currently EVP, Oncology Clinical development and formerly Senior Vice President, Business Finance for INC Research Holdings,
Inc., and leads a global team with responsibility for all business unit financial reporting and analysis, budgeting and forecasting
and global customer pricing and contracting. Previously he was Global Vice President, Internal Audit for Quintiles Transnational
Corp. after holding other senior global financial roles within the company. Prior to that, he was an Audit Manager and Senior Auditor
for Deloitte and Arthur Andersen LLP. Mr. Meggs received his bachelor of Business Administration, Accounting from Western Carolina
University.
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41
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2016
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Keith Osborn
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Dr. Osborn is a board-certified
Orthopaedic Spine Surgeon with 30 years of experience after completing his Spine Fellowship at Harvard University. He received
his medical degree from the University of Maryland School of Medicine and performed his residency at Harvard University and Johns
Hopkins Hospital. Dr. Osborn currently specializes in Spinal Surgery at Resurgens Orthopaedics in Atlanta with a focus on adult
spinal disorders and total disc arthroplasty.
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60
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2016
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Director Independence
Under Rule 5605(b)(1) of the Nasdaq
Marketplace Rules, independent directors must comprise a majority of a listed company’s board of directors within one year
of listing. In addition, Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s
audit, compensation and nominating and governance committees be independent. While Vystar does not currently qualify for listing
on Nasdaq and will likely not qualify for some time after the date of this proxy statement, it does intend to seek such listing
as soon as possible and complies with its Marketplace Rules. Audit committee members must also satisfy the independence criteria
set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under Nasdaq Marketplace Rule 5605(a)(2),
a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors,
that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a
public company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other
board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the public company
or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.
In March 2017, our Board undertook a review
of its composition, the composition of its committees and the independence of each director and director nominee. Based upon information
requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships,
our Board has determined that neither of Ms. Mangum or Mr. Ianacone, representing two of three of our proposed three directors
standing for relection, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and that each of these directors is “independent” as that term is defined under Nasdaq Marketplace Rule 5605(a)(2).
Audit Committee
The Board member serving on our Audit Committee
is Ms. Mangum. Ms. Mangum chairs and is the sole member of the Audit Committee. Our Board has determined that Ms. Mangum satisfies
the requirements for financial literacy under the current requirements of the Nasdaq Marketplace Rules. Ms. Mangum is an “audit
committee financial expert,” as defined by SEC rules and satisfies the financial sophistication requirements of The NASDAQ
Global Market. Our Audit Committee assists our Board in its oversight of our accounting and financial reporting process and the
audits of our financial statements. The Audit Committee’s responsibilities include:
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appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
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overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from such firm;
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reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
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monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;
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discussing our risk management policies;
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establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt and resolution of accounting related complaints and concerns;
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meeting independently with our independent registered public accounting firm and management;
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reviewing and approving or ratifying any related person transactions; and
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preparing the audit committee report required by SEC rules.
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All audit and non-audit services, other
than de minimus non-audit services, to be provided to us by our independent registered public accounting firm must be approved
in advance by our Audit Committee.
Audit Committee Charter
We have adopted an Audit Committee Charter
which sets out the duties and responsibilities of our Audit Committee. The Audit Committee Charter is available on our website
at
www.vytex.com
. Any amendments to the Charter, or any waivers of its requirements, will be disclosed on our website.
Meetings of the Board and Committees
During fiscal year 2016 our Board held
eleven meetings, and its Audit Committee held four meetings with our auditors. Each director attended at least 75% of the meetings
of the Board in fiscal year 2016. Members of our Board are encouraged to attend our annual meetings of shareholders.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
We believe in sound corporate governance
practices and have adopted formal Corporate Governance Guidelines to enhance our effectiveness. Our Board adopted these Corporate
Governance Guidelines in order to ensure that it has the necessary practices in place to review and evaluate our business operations
as needed and to make decisions that are independent of our management. The Corporate Governance Guidelines are also intended to
align the interests of directors and management with those of our shareholders. The Corporate Governance Guidelines set forth the
practices our Board follows with respect to Board and committee composition and selection, Board meetings, chief executive officer
performance evaluation and management development and succession planning for senior management, including the chief executive
officer position. A copy of our Corporate Governance Guidelines is available on our website at
www.vytex.com.
Code of Business Conduct and Ethics
We adopted a Code of Business Conduct and
Ethics applicable to all officers, directors and employees of Vystar that comply with NASDAQ listing standards. The Code of
Business Conduct and Ethics includes an enforcement mechanism, and any waivers for directors or executive officers must be approved
by our Board and disclosed in a current report on Form 8-K with the SEC. This Code of Business Conduct is publicly available
on our website at
www.vytex.com
. There were no waivers of the Code of Business Conduct and Ethics for any of our directors
or executive officers during fiscal year 2016.
Communications with the Board
Any shareholder who desires to contact
our Board, or specific members of our Board, may do so electronically by sending an email to the following address:
info@vytex.com
.
Alternatively, a shareholder may contact our Board, or specific members of our Board, by writing to: Shareholder Communications,
Vystar Corporation, 2480 Briarcliff Rd NE, #6, Suite 159, Atlanta, GA 30329. All such communications will be initially received
and processed by the office of our Secretary. Accounting, audit, internal accounting controls and other financial matters will
be referred to the Chair of the Audit Committee; other matters will be referred to the Board, the non-employee directors or individual
directors as appropriate.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial
ownership of our common stock as of December 31, 2016 by each entity or person who is known to beneficially own 5% or more of our
common stock, each of our directors, each Executive Officer identified in “Executive Compensation—Summary Compensation
Table” contained in this proxy statement and all of our directors and current executive officers as a group. This
table is based upon information supplied by executive officers, directors and principal shareholders. Unless otherwise indicated
in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this
table has sole voting and investment power with respect to the shares indicated as beneficially owned. None of the shares beneficially
owned by our executive officers and directors are pledged as security. Applicable percentages are based on 114,951,594 shares outstanding
on December 31, 2016, adjusted as required by rules promulgated by the SEC.
5% Stockholders
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Joseph C Allegra, M.D.
Atlanta, GA
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14,951,831
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12.812
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%
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Lam Ngoc Minh
Vietnam
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10,000,000
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8.699
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%
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Officers & Directors
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|
|
|
|
|
|
|
|
|
|
William R Doyle
Atlanta, GA
|
|
|
11,618,167
|
|
|
|
9.196
|
%
|
|
|
|
|
|
|
|
|
|
Keith Osborn
Atlanta, GA
|
|
|
22,984,273
|
|
|
|
18.285
|
%
|
|
|
|
|
|
|
|
|
|
Michelle Mangum
Atlanta, GA
|
|
|
2,315,000
|
|
|
|
1.979
|
%
|
|
|
|
|
|
|
|
|
|
Michael X. Ianacone
Atlanta, GA
|
|
|
1,028,589
|
|
|
|
0.893
|
%
|
|
|
|
|
|
|
|
|
|
Ranjit K. Matthan
India
|
|
|
205,000
|
|
|
|
0.178
|
%
|
|
|
|
|
|
|
|
|
|
Jason M. Meggs
Raleigh, NC
|
|
|
100,000
|
|
|
|
0.087
|
%
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group
|
|
|
38,251,029
|
|
|
|
33.276
|
%
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
114,951,594
|
|
|
|
|
|
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act
requires our executive officers and directors, and any person or entity who owns more than ten percent of a registered class of
our common stock or other equity securities, to file with the SEC certain reports of ownership and changes in ownership of our
securities. Executive officers, directors and shareholders who hold more than ten percent of our outstanding common stock are required
by the SEC to furnish us with copies of all required forms filed under Section 16(a). We prepare Section 16(a) forms
on behalf of our executive officers and directors based on the information provided by them.
Based solely on review of this information
and written representations by our executive officers and directors that no other reports were required, we believe that, during
fiscal year 2016, Mr. Doyle and Dr. Allegra failed to file the forms required by Section 16(a) of the Exchange Act on a timely
basis at least once. All such reports are now current.
EQUITY COMPENSATION PLAN INFORMATION
The following table shows information related
to our common stock which may be issued under our 2004 Long-Term Incentive Compensation Plan, as amended, as of December 31, 2016:
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options by Executive Officers
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
|
|
2004 Long-Term Incentive Compensation Plan, as amended, approved by shareholders
|
|
|
9,381,573
|
|
|
|
618,427
|
|
|
|
|
|
|
|
|
|
|
2014 Long Term Incentive Compensation Plan
|
|
|
0
|
|
|
|
5,000,000
|
|
Total
|
|
|
9,381,573
|
|
|
|
5,618,427
|
|
Our 2004 Long-Term Incentive Compensation
Plan, as amended, which we refer to as the 2004 Plan, was adopted by our Board in 2004, and amended and approved by our shareholders
in 2009. A maximum of 10,000,000 shares of common stock were authorized for issuance under the 2004 Plan.
The 2004 Plan provides for the grant of
incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Our officers, employees, consultants
and directors are eligible to receive awards under the 2004 Plan; however, incentive stock options may only be granted to our employees.
In accordance with the terms of the 2004 Plan, our Board administers the 2004 Plan and, subject to any limitations in the 2004
Plan, selects the recipients of awards and determines:
|
•
|
the number of shares of common stock covered by options and the dates upon which those options become exercisable;
|
|
|
|
|
•
|
the exercise prices of options;
|
|
|
|
|
•
|
the duration of options;
|
|
|
|
|
•
|
the methods of payment of the exercise price; and
|
|
|
|
|
•
|
the number of shares of common stock subject to any restricted stock or other stock-based awards and the terms and conditions of those awards, including the conditions for repurchase, issue price and repurchase price.
|
Pursuant to the terms of the 2004 Plan,
in the event of a change in control of our company, each outstanding option under the 2004 Plan will vest, but the holders shall
have the right, assuming the holder still maintains a continuous service relationship with us, immediately prior to such dissolution
or liquidation, to exercise the option to the extent exercisable on the date of such dissolution or liquidation.
In the event of a merger or other reorganization
event, our Board shall have the discretion to provide for any or all of the following: (a) the acceleration of vesting or
the termination of our repurchase rights of any or all of the outstanding awards, (b) the assumption or substitution of all
options by the acquitting or succeeding entity or (c) the termination of all options that remain outstanding at the time of
the merger or other reorganization event.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
Our Compensation Committee has previously
overseen our executive compensation program. Beginning for the 2013 fiscal year, the Board carried out that function. In this role,
the Board reviewed and approved annually all compensation decisions relating to our executive officers. Our historical executive
compensation programs were developed and implemented by our Board consistent with practices of other venture-backed, privately-held
companies. Prior to becoming a publicly reporting company in August 2009, our compensation programs, and the process by which they
were developed, were less formal than those typically employed by a public company. During that time, our Board generally benchmarked
our executive compensation on an informal basis by comparing our executives’ compensation to our estimates of executive compensation
paid by companies in our industry and region that are also comparable to us in size, revenue, financial condition and capital investment.
We have referred to this group as our company peer group. The Board continues to formalize their approach to the development and
implementation of our executive compensation programs based on the continued progress of the Company.
Objectives and Philosophy of Our Executive
Compensation Programs
Our primary objectives with respect to
executive compensation are to:
|
●
|
attract, retain and motivate talented executives;
|
|
|
|
|
●
|
promote the achievement of key financial and strategic performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable corporate and, in some cases, individual performance goals; and
|
|
|
|
|
●
|
align the incentives of our executives with the creation of value for our shareholders.
|
To achieve these objectives, the Board
evaluated our executive compensation program with the goal of setting compensation at levels the committee believes are competitive
with those of our company peer group. In addition, our executive compensation program will tie a substantial portion of each executive’s
overall compensation to key strategic, financial and operational goals such as our financial and operational performance, the growth
of our customer base, new development initiatives and the establishment and maintenance of key strategic relationships. We will
also provide a portion of our executive compensation in the form of stock options that vest over time, which we believe helps to
retain our executives and aligns their interests with those of our shareholders by allowing them to participate in the longer term
success of our company as reflected in stock price appreciation.
At our early stage of development, we believe
that equity-based compensation (which to date, has been in the form of non-qualified stock options) is the most appropriate form
of compensation to align the interests of our executive officers with those of our shareholders. As a result, the base
salaries of our executive officers are modest. Cash bonus plans are based on the attainment of specific financial milestones
or the passage of time as executive officers of the Company.
We compete with many other companies for
executive personnel. Accordingly, the Board will generally target overall compensation for executives to be competitive with that
of our company peer group. Variations to this targeted compensation may occur depending on the experience level of the individual
and market factors, such as the demand for executives with similar skills and experience.
Components of Our Executive Compensation
Program
The primary elements of our executive compensation
program will be:
|
●
|
cash incentive bonuses;
|
|
|
|
|
●
|
equity incentive awards;
|
|
|
|
|
●
|
termination benefits upon termination without cause; and
|
|
|
|
|
●
|
insurance and other employee benefits and compensation.
|
We do not have any formal or informal policy
or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation or
among the different forms of non-cash compensation. Instead, our Board will establish these allocations for each executive officer
on an annual basis. Our Board will establish cash compensation targets based primarily upon informal benchmarking data, such as
comparing the compensation of our executives to companies in our company peer group, as well as the performance of our company
as a whole and of the individual executive and executive team as a whole. Our Board will establish non-cash compensation based
upon this informal benchmarking data, the performance of our company as a whole and of the individual executive and executive team
as a whole, the executives’ equity ownership percentage and the amount of their equity ownership that is vested equity. Particularly
at our stage of development, we believe that the long-term performance of our business is improved through the grant of stock-based
awards so that the interests of our executives are aligned with the creation of value for our shareholders.
BOARD COMPENSATION REPORT
The Board has reviewed and discussed with
management the “Compensation Discussion and Analysis” contained in this proxy statement. Based on this review and discussion,
the Board approved the Compensation Discussion and Analysis included in this proxy statement.
*
The material in this report
is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference
into any filing of Vystar under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after
the date hereof and irrespective of any general incorporation language in any such filing.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information
regarding compensation earned by our Chairman, Chief Executive Officer and President during 2016 and 2015.
Name and Principal Position
|
|
Salary
|
|
|
Option
Awards
(1)
|
|
|
All Other
Compensation
(2)
|
|
|
Total
|
|
William R. Doyle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman, Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
$
|
150,000
|
|
|
$
|
100,291
|
|
|
$
|
2,000
|
|
|
$
|
252,291
|
|
2015
|
|
|
112,000
|
|
|
|
66,294
|
|
|
|
39,000
|
|
|
|
218,694
|
|
(1)
|
These amounts do not reflect the actual economic value realized by the executive officers. In accordance with SEC rules, the amounts in this column for 2016 and 2015 represent the dollar amount recognized as compensation expense by Vystar for financial statement reporting purposes for fiscal years 2016 and 2015 for stock options granted to each of the executive officers in each such fiscal year in accordance with applicable accounting guidance related to stock-based compensation.
|
|
|
(2)
|
Amounts consist of medical, dental, vision, life insurance and disability insurance premiums and 401(K) contributions paid by us on behalf of the named executive officer.
|
In 2015, the Company
issued to Mr. Doyle a convertible promissory note with a face value of $37,500 (the “Note”) in lieu of compensation.
The Note is (i) unsecured, (ii) bears interest at an annual rate of ten percent (10%) per annum from date of issuance, and (iii)
is convertible at any time until maturity at the holder’s option into shares of the Company’s common stock at a weighted
average conversion rate of $0.08 of principal and interest for each such share. No payments of interest or principal are payable
until December 30, 2018.
Employment Agreements
On November 11, 2008,
Vystar entered into an employment agreement with William R. Doyle to continue to serve as Vystar’s President, Chief Executive
Officer and Chairman of the Board. The term of the agreement is effective until terminated by either party in accordance with the
terms of the agreement. Under the agreement, Mr. Doyle receives a base salary of $185,000 per year, as such base salary may be
adjusted by the Board, and an annual bonus equal to a maximum of 125% of Mr. Doyle’s base salary based on the success of
the Company in meeting its objectives, as determined by the Board; provided, that no cash bonus is payable to Mr. Doyle on any
date unless he is employed by the Company on that date. The amount of the annual bonus is determined by the Board based on the
percentage of achievement of the stated company objectives. The effective date of the annual bonus calculation is the Company’s
fiscal year-end and is payable in one or more installments as determined by the Board beginning in the first quarter of the following
fiscal year. Mr. Doyle’s employment agreement is terminable at will by the Company for cause or without cause as defined
in the agreement. However, if Mr. Doyle’s employment is terminated by Vystar without cause, Vystar is obligated to pay Mr.
Doyle compensation earned through the date of termination plus a severance payment equal to six (6) months base salary from the
date of termination payable as if he had remained an employee of the Company, plus, assuming Mr. Doyle complies with non-compete
and non-solicitation covenants contained in the employment agreement, an amount equal to 75% of Mr. Doyle’s base salary amount
for the one (1) year period after the date of termination. If Mr. Doyle is terminated for cause or he terminates the employment
agreement without cause, he is only entitled to compensation accrued through the date of termination.
On January 13, 2015,
the Board approved a change in Mr. Doyle’s compensation package that included a base annual salary of $150,000 paid monthly
and an immediate award of $50,000 in warrants that vest at the end of each month of employment through the end of 2015.
On January 15, 2016,
the Board approved a change in Mr. Doyle’s compensation package that included a base annual salary of $150,000 paid monthly
and an immediate award of $50,000 in warrants that vest at the end of each month of employment through the end of 2016.
On February 15, 2017,
the Board approved a change in Mr. Doyle’s compensation package that included a base annual salary of $150,000 paid monthly
and an immediate award of $50,000 in warrants that vest at the end of each month of employment through the end of 2017.
Outstanding Equity Awards at Fiscal
Year-End
The following table
sets forth certain information with respect to the value of all unexercised options previously awarded to our executive officer
as of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities Underlying Unexercised Options
Exercisable (#)
|
|
Number of
Securities
Underlying
Unexercised
Options Unexercisable (#)
|
|
Equity
Incentive
Plan Awards:
Number of Securities Underlying Unexercised Unearned
Options (#)
|
|
Options Exercise
Price
($)
|
|
Option Expiration Date
|
|
William R. Doyle
|
|
|
1,750,000
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
2/11/2018
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
3/14/2021
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
7/9/2024
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
$
|
0.05
|
|
|
6/30/2020
|
|
Risk Analysis of Performance-Based Compensation Programs
The Board of Directors
believes that our executive compensation programs do not encourage or result in excessive risk taking. Such programs consist of
base salaries, cash bonuses (none of which have been paid to date), and stock option grants and the vesting of stock option grants
for Mr. Doyle, our Chief Executive Officer, Chairman and President. We anticipate that such bonuses and stock options will be based
on attaining specified percentages of the company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”).
As a result, such bonuses will likely be focused on increasing revenue and managing expenses, all of which is consistent with the
interests of our shareholders. Further, the cash bonuses will likely be capped at a percentage of his base salary. We believe this
cap will limit the incentive for excessive risk-taking.
No other officers of
the Company have employment agreements that specify compensation programs.
Retirement and Deferred Compensation
Plan Benefits
We do not provide our
employees, including the executive officers, with a defined benefit pension plan, any supplemental executive retirement plans,
or retiree health benefits.
Potential Payments upon Termination
Without Cause
The following table
sets forth the estimated potential payments and benefits payable to our one (1) executive officer in the event of a termination
of employment without cause.
Executive Officer
|
|
Monthly
Severance
Programs (1)
|
|
|
Additional
Monthly Severance
Payments (2)
|
|
|
Continuing
Benefits (3)
|
|
|
TOTALS
|
|
William R. Doyle
|
|
$
|
92,500
|
|
|
$
|
138,750
|
|
|
$
|
962
|
|
|
$
|
232,212
|
|
(1)
|
The amounts represent the aggregate of monthly payments for six (6) months for Mr. Doyle.
|
(2)
|
In the event that Mr. Doyle complies with certain restrictive covenants in his employment agreement, after termination without cause, he is additionally entitled to this amount (75% of his base salary) payable in monthly installments over a one (1) year period following the initial six (6) month period of monthly severance payments.
|
(3)
|
Consists of health insurance premiums.
|
DIRECTOR COMPENSATION
The following table
sets forth certain information with respect to compensation awarded to, paid to or earned by each of Vystar’s non-employee
directors during fiscal year 2016.
Name
|
|
Fees
Earned
or Paid in
Cash ($)
|
|
Stock Awards ($)
|
|
Option Awards ($) (1)
|
|
Total ($) (2)
|
Mitsy Y. Mangum
|
|
|
|
|
|
|
|
|
10,702
|
|
|
10,702
|
Michael X. Ianacone
|
|
|
|
|
|
|
|
|
9,640
|
|
|
9,640
|
Ranjit K. Matthan
|
|
|
|
|
|
|
|
|
7,837
|
|
|
7,837
|
Jason M. Meggs
|
|
|
|
|
|
|
|
|
2,943
|
|
|
2,943
|
Keith D. Osborn
|
|
|
|
|
|
|
|
|
3,678
|
|
|
3,678
|
(1)
|
In 2014, Ms. Mangum as a non-employee director
was granted 500,000 options at $0.11 per share which vest 25,000 options at the end of each fiscal quarter for five (5) years beginning
September 30, 2014.
On September 15, 2014, Mr. Ianacone as
non-employee directors were granted 500,000 options at $0.10 per share which vest 25,000 options at the end of each fiscal quarter
for five (5) years beginning September 30, 2014.
On March 12, 2015, Dr. Matthan as a non-employee
director was granted 500,000 options at $0.08 per share which vest 25,000 options at the end of each fiscal quarter for five (5)
years beginning March 30, 2015.
On December 2, 2015, Mr. Meggs as a non-employee
director was granted 500,000 options at $0.03 per share which vest 25,000 options at the end of each fiscal quarter for five (5)
years beginning December 31, 2015.
On May, 18, 2016, Dr. Osborn as a non-employee
director was granted 500,000 options at $0.05 per share which vest 25,000 options at the end of each fiscal quarter for five (5)
years beginning September 30, 2016.
The amounts included represent the portion
of the original total grant date fair value of options that vested in 2016 together with the dollar amount recognized as compensation
expense by Vystar for financial statement reporting purposes for fiscal year 2016 in accordance with applicable accounting guidance
related to stock-based compensation.
|
(2)
|
These amounts do not reflect the actual economic value realized by the directors. In accordance with SEC rules, this column represents the dollar amount recognized as compensation expense by Vystar for financial statement reporting purposes for fiscal year 2016 for stock options granted to each of the non-employee directors during fiscal years 2015 and 2016, in accordance with applicable accounting guidance related to stock-based compensation. Pursuant to SEC rules, the amounts shown disregard the impact of estimated forfeitures related to service-based vesting conditions.
|
DIRECTOR
COMPENSATION
The
following table sets forth certain information with respect to compensation awarded to, paid to or earned by each of Vystar’s
non-employee directors during fiscal year 2014.
Name
|
|
Fees Earned
or
Paid in Cash($)
|
|
|
|
Stock
Awards ($)
|
|
|
|
Option
Awards ($)
(1)
|
|
|
Total ($)
(2)
|
Mitsy Y. Mangum
|
|
|
|
|
|
|
|
|
|
10,702
|
|
|
10,702
|
Michael X. Ianacone
|
|
|
|
|
|
|
|
|
|
9,640
|
|
|
9,640
|
Ranjit K.Matthan
|
|
|
|
|
|
|
|
|
|
7,837
|
|
|
7,837
|
Jason Meggs
|
|
|
|
|
|
|
|
|
|
2,943
|
|
|
2,943
|
Keith D. Osborn
|
|
|
|
|
|
|
|
|
|
3,678
|
|
|
3,678
|
(1)
|
In
2014, Ms. Mangum as a non-employee director was granted 500,000 options at $0.11 per share which vest 25,000 options at
the end of each fiscal quarter for five (5) years beginning September 30, 2014.
On
September 15, 2014, Mr. Ianacone as non-employee directors were granted 500,000 options at $0.10 per share which vest
25,000 options at the end of each fiscal quarter for five (5) years beginning September 30, 2014.
On
March 12, 2015, Dr. Matthan as a non-employee director was granted 500,000 options at $0.08 per share which vest 25,000
options at the end of each fiscal quarter for five (5) years beginning March 30, 2015.
On
December 2, 2015, Mr. Meggs as a non-employee director was granted 500,000 options at $0.03 per share which vest 25,000
options at the end of each fiscal quarter for five (5) years beginning March 30, 2016.
On
May, 18, 2016, Dr. Osborn as a non-employee director was granted 500,000 options at $0.05 per share which vest 25,000
options at the end of each fiscal quarter for five (5) years beginning September 30, 2016.
The
amounts included represent the portion of the original total grant date fair value of options that vested in 2016 together
with the dollar amount recognized as compensation expense by Vystar for financial statement reporting purposes for fiscal
year 2016 in accordance with applicable accounting guidance related to stock-based compensation
In
2009, all non-employee directors were granted 400,000 options at $1.63 per share which vest 20,000 options at the end
of each fiscal quarter for five (5) years beginning June 30, 2009, for Messrs. Craft and Waters, and Ms. Mangum, and beginning
September 30, 2009 for Dr. Allegra. Such vesting is based on each director’s continued service as a director at
each quarterly vesting date. The amounts included represent the portion of the original total grant date fair value of
options that vested in 2013 together with the dollar amount recognized as compensation expense by Vystar for financial
statement reporting purposes for fiscal year 2013 as a result of all outstanding options held by the Company’s directors
being repriced to exercise prices of $0.35 per share in such fiscal year in accordance with applicable accounting guidance
related to stock-based compensation.
|
(2)
|
These
amounts do not reflect the actual economic value realized by the directors. In accordance with SEC rules, this column represents
the dollar amount recognized as compensation expense by Vystar for financial statement reporting purposes for fiscal years
2016 and 2016 for stock options granted to each of the non-employee directors during fiscal year 2009, in accordance with
applicable accounting guidance related to stock-based compensation. Pursuant to SEC rules, the amounts shown disregard the
impact of estimated forfeitures related to service-based vesting conditions.
|
Compensation
Philosophy
The
current policy of our Board is that compensation for non-employee directors should be equity-based compensation to reward directors
for quarterly periods of service in fulfilling their oversight responsibilities.
Expenses
We
reimburse our directors for their travel and related expenses in connection with attending Board and committee meetings, as well
as costs and expenses incurred in attending director education programs and other Vystar-related seminars and conferences.
PROPOSAL
2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee appointed Porter Keadle Moore, LLC (“PKM”) as our independent registered public accounting firm for
the fiscal year ending on December 31, 2017, and urges you to vote for ratification of PKM’s appointment. Although
we are not required to seek your approval of this appointment, we believe it is good corporate governance to do so. No determination
has been made as to what action our Audit Committee would take if you fail to ratify the appointment. Even if the appointment
is ratified, the Audit Committee retains discretion to appoint a new independent registered public accounting firm if the Audit
Committee concludes such a change would be in the best interests of Vystar and its shareholders.
We
expect representatives of PKM to be present at the meeting and available to respond to appropriate questions by shareholders.
Additionally, the representatives of PKM will have the opportunity to make a statement if they so desire.
Vote
Required and Board Recommendation
Shareholder
ratification of PKM as our independent registered public accounting firm requires the affirmative vote of holders of a majority
of the shares present or represented by proxy and entitled to vote at the annual meeting. Abstentions will have the same effect
as a negative vote.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
During
fiscal year 2014 and 2013, we retained the firm of Porter Keadle Moore, LLC (“PKM”) to provide services in the following
categories and amounts:
Fee
Category
|
|
|
2016($)
|
|
|
|
2015($)
|
|
Audit
Fees
|
|
|
68,750
|
|
|
|
63,215
|
|
Audit-Related Fees
|
|
|
0
|
|
|
|
0
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
All
Other Fees
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
68,750
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63,215
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Audit
fees
include the audit of Vystar’s annual financial statements, review of financial statements included in each of our
Quarterly Reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings
or engagements for those fiscal years.
Audit-related
fees
consist of fees for assurance and related services that are reasonably related to the performance of the audit or review
of our financial statements. This category includes fees related to accounting-related consulting services.
Tax
fees
consist of fees for professional services for tax compliance, tax advice and tax planning. This category includes fees
primarily related to the preparation and review of federal, state and international tax returns and assistance with tax audits.
All
other fees
include assurance services not related to the audit or review of our financial statements.
Our
Audit Committee determined that the rendering of non-audit services by PKM was compatible with maintaining the independence of
each firm.
AUDIT
COMMITTEE PRE-APPROVAL OF SERVICES PERFORMED
BY
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
It
is the policy of our Audit Committee to pre-approve all audit and permissible non-audit services to be performed by PKM. Our Audit
Committee pre-approves services by authorizing specific projects within the categories outlined above, subject to a budget for
each category. Our Audit Committee’s charter delegates to one or more members of the Audit Committee the authority to address
any requests for pre-approval of services between Audit Committee meetings, and the subcommittee or such member or members must
report any pre-approval decisions to our Audit Committee at its next scheduled meeting.
All
services related to audit fees, audit-related fees, tax fees and all other fees provided by PKM during fiscal year 2016 and 2013
were pre-approved by the Audit Committee in accordance with the pre-approval policy described above.
REPORT
OF THE AUDIT COMMITTEE
The
Audit Committee’s role includes the oversight of our financial, accounting and reporting processes; our system of internal
accounting and financial controls; our enterprise risk management program; and our compliance with related legal, regulatory and
ethical requirements. The Audit Committee oversees the appointment, compensation, engagement, retention, termination and services
of our independent registered public accounting firm, including conducting a review of its independence; reviewing and approving
the planned scope of our annual audit; overseeing our independent registered public accounting firm’s audit work; reviewing
and pre-approving any audit and non-audit services that may be performed by it; reviewing with management and our independent
registered public accounting firm the adequacy of our internal financial and disclosure controls; reviewing our critical accounting
policies and the application of accounting principles; and monitoring the rotation of partners of our independent registered public
accounting firm on our audit engagement team as required by regulation. The Audit Committee establishes procedures, as required
under applicable regulation, for the receipt, retention and treatment of complaints received by us regarding accounting, internal
accounting controls or auditing matters and the submission by employees of concerns regarding questionable accounting or auditing
matters. The Audit Committee’s role also includes meeting to review our annual audited financial statements and quarterly
financial statements with management and our independent registered public accounting firm. The Audit Committee held four
meetings during fiscal year 2016.
The
sole member of the Audit Committee meets the independence criteria prescribed by applicable regulation and the rules of the SEC
for audit committee membership and is an “independent director” within the meaning of NASDAQ listing standards. The
Audit Committee member meets NASDAQ’s financial literacy requirements, and the Board further determined that Ms. Mangum
is a “audit committee financial expert” is a “ as such term is defined in Item 407(d) of Regulation S-K
promulgated by the SEC also meets NASDAQ’s financial sophistication requirements. The Audit Committee acts pursuant
to a written charter, which complies with the applicable provisions of the Sarbanes-Oxley Act of 2002 and related rules of the
SEC and NASDAQ, a copy of which can be found on our website at
www.vytex.com.
We
have reviewed and discussed with management and PKM Vystar’s audited financial statements. We discussed with PKM and Vystar’s
Chief Financial Officer the overall scope and plans of PKM’s audits. We met with PKM, with and without management present,
to discuss results of its examinations, its evaluation of Vystar’s internal controls, and the overall quality of Vystar’s
financial reporting.
We
have reviewed and discussed with management and PKM matters required to be discussed pursuant to Statement on Auditing Standards
No. 61, as amended (AICPA,
Professional Standards
, Vol. 1. AU section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. We have received from PKM the written disclosures and letter required by the applicable
requirements of the Public Company Accounting Oversight Board regarding PKM’s communications with the Audit Committee concerning
independence. We have discussed with PKM matters relating to its independence, including a review of both audit and non-audit
fees, and considered the compatibility of non-audit services with PKM’s independence.
Based
on the reviews and discussions referred to above and our review of Vystar’s audited financial statements for fiscal year
2016, we recommended to the Board that Vystar’s audited financial statements be included in the Annual Report on Form 10-K
for the fiscal year ended December 31, 2016, for filing with the SEC.
Respectfully
submitted,
AUDIT
COMMITTEE
Mitsy
Y. Mangum, Chair
TRANSACTIONS
WITH RELATED PERSONS
Review,
Approval or Ratification of Transactions with Related Persons
Vystar’s
Code of Business Conduct requires that all employees and directors avoid conflicts of interests that interfere with the performance
of their duties or are not in the best interests of Vystar.
In
addition, pursuant to its written charter, the Audit Committee considers and approves or disapproves any related person transaction
as defined under Item 404 of Regulation S-K promulgated by the SEC, after examining each such transaction for potential
conflicts of interest and other improprieties. The Audit Committee has not adopted any specific written procedures for conducting
such reviews and considers each transaction in light of the specific facts and circumstances presented.
Transactions
with Related Persons
On
April 29, 2011, the Company executed with CMA Investments, LLC, a Georgia limited liability company (“CMA”) a line
of credit with a principal amount of up to $800,000 (the “CMA Note”). CMA is a limited liability company of which
three of the directors of the Company were the members at such date. Proceeds under the line were drawn for general working capital
purposes. Under the terms of the CMA Note, the Company may draw up to a maximum principal amount of $800,000. Interest on amounts
drawn and fees were paid by an affiliate of Joseph C. Allegra, M.D., a director of the Company, to CMA, until February 6, 2012,
at which time the Company took over responsibility for the payment of such interest and fees. Pursuant to an agreement between
the Company and such affiliate, the Company issued common stock to such affiliate with a value equal to such interest and fees
paid based on the closing price of the common stock on the OTC Bulletin Board on the date of such payments. The maturity date
of the Note is April 29, 2013 and was subsequently renewed for one year. The CMA Note is unsecured and no payments of principal
are due until the second anniversary of the Note, at which time all outstanding principal is due and payable. As compensation
to the directors for providing the CMA Note, the Company issued warrants to purchase 2,600,000 shares of the Company’s common
stock to the directors at $.45 per share which was the closing price of the Company’s common stock on that day, later adjusted
to $.27 per share, which was the closing price of the Company’s common stock on the day it was adjusted.
CMA
is a limited liability company of which Joseph C. Allegra, M.D., J. Douglas Craft and Michelle Y. Mangum, each a director or former
director of the Company, are the members. Effective year ending December 31, 2014, Joseph C. Allegra, M.D. and J. Douglas Craft
are no longer members of Vystar’s board of directors.
On
September 14, 2011, the Company’s Board of Directors approved increasing the line of credit to $1,000,000 and William R.
Doyle, the Company’s Chairman and Chief Executive Officer became a member of CMA. As compensation for increasing the line
and for Mr. Doyle joining CMA, the directors approved issuing warrants to purchase an additional 1,600,000 shares of the Company’s
common stock at $.27 per share, which was the closing price of the Company’s common stock on that day.
On
November 2, 2012, the Board of Directors approved an increase in the CMA line of credit from $1,000,000 to $1,500,000. On January
10, 2013, as compensation to the CMA members for providing the increased CMA Note, the Company issued warrants to purchase 2,100,000
shares of the Company’s common stock to the CMA members at $0.35 per share and recorded as deferred financing cost to be
amortized through interest expense over the remaining term of the CMA Note.
On
April 29, 2013, the maturity date of the CMA Note was extended to April 29, 2014. As compensation to the CMA Directors for extending
the maturity date of the CMA Note, the Board of Directors approved modifying the exercise price for the 6,300,000 compensatory
stock purchase warrants previously issued to the Directors to $0.10 per share and the CMA Directors forfeited 630,000 of the warrants.
Amortization of the financing costs associated with extending the CMA Note was amortized through interest expense.
On
April 29, 2014, the maturity date of the CMA Note was extended to April 29, 2015 with no compensation being paid to the CMA Directors
for this extension. The Note is currently due on demand.
Director
Independence
Under
Rule 5605(b)(1) of the Nasdaq Marketplace Rules, independent directors must comprise a majority of a listed company’s
board of directors within one year of listing. In addition, Nasdaq Marketplace Rules require that, subject to specified exceptions,
each member of a listed company’s audit, compensation and nominating and governance committees be independent. While Vystar
does not currently qualify for listing on Nasdaq and will likely not qualify for some time after the date of this proxy statement,
it does intend to seek such listing as soon as possible and complies with its Marketplace Rules. Audit committee members must
also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under
Nasdaq Marketplace Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion
of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. In order to be considered to be independent for purposes
of Rule 10A-3, a member of an audit committee of a public company may not, other than in his or her capacity as a member
of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting,
advisory, or other compensatory fee from the public company or any of its subsidiaries; or (2) be an affiliated person of
the listed company or any of its subsidiaries.
ANNUAL
REPORT
Copies
of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC, is available free of
charge on our website at
www.vytex.com
.
SHAREHOLDER
PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Shareholder
proposals may be included in our proxy statement for an annual meeting so long as they are provided to us on a timely basis and
satisfy the other conditions set forth in SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals
in company-sponsored proxy materials. For a shareholder proposal to be considered for inclusion in our proxy statement for the
annual meeting to be held in 2016, we must receive the proposal at our principal executive offices, addressed to the Secretary,
no later than May 25, 2018.
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VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vystar
Corporation, c/o Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760.
VOTE
BY FAX
Mark,
sign and date your proxy card and return it via fax to 1-727-289-0069
VOTE
ONLINE
Visit
www.islandstocktransfer.com
Click
on Vote Your Proxy
Enter
your control number _______________________
Enter
your vote
VOTE
BY TELEPHONE
Call
1-877-502-0550 and follow the instructions
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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VYSTAR
CORPORATION
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The
Board of Directors recommends a vote “FOR” Proposals 1 and 2.
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1.
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Election
of the three (3) Directors proposed in the accompanying Proxy Statement to serve for a one-year term.
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For
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Against
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Abstain
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For
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Against
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Abstain
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1a.
1b.
1c.
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William
R. Doyle
Mitsy
Y. Mangum
Michael
X. Ianacone
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☐
☐
☐
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☐
☐
☐
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☐
☐
☐
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2.
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To
ratify the appointment of Porter Keadle Moore, LLC as the Company’s auditors for the year ended December 31, 2017.
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☐
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☐
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☐
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Sign
exactly as your name(s) appear(s) on the stock certificate. If shares of stock stand of record in the names of two or more
persons, or in the name of husband and wife, whether as joint tenants or otherwise, both or all of such persons should sign
the proxy card. If shares of stock are held of record by a corporation, the proxy card should be executed by the President
or Vice President and the Secretary or Assistant Secretary. Executors or administrators or other fiduciaries who execute the
proxy card for a deceased shareholder should give their full title. Please date the proxy card.
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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VYSTAR
CORPORATION
PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The
undersigned hereby appoints William R. Doyle and Mitsy Y. Mangum, and each of them, with full power of substitution, to
represent the undersigned and to vote all of the shares of stock in Vystar Corporation (the “Company”) which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company, to be held at the offices of
Greenberg Traurig LLP, Terminus 200, 3333 Piedmont Rd, N.E., Suite 2500, Atlanta, GA on Friday, August 11, 2017 at 9:00
am local time, and at any adjournment or postponement thereof: (1) as hereinafter specified upon the proposals listed
on the reverse side and as more particularly described in the Company’s Proxy Statement, receipt of which is hereby
acknowledged, and (2) in their discretion upon such other matters as may properly come before the meeting.
The
shares represented hereby shall be voted as specified.
If no specification is made, such shares shall be voted FOR
the election of the nominees listed on the reverse side for the Board of Directors and for the proposal.
Whether or
not you are able to attend the meeting, you are urged to sign and mail the proxy card in the return envelope so that the
stock may be represented at the meeting.
IF
YOU ELECT TO VOTE BY MAIL, PLEASE MARK, SIGN, DATE AND RETURN
THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE)
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Grafico Azioni Vystar (CE) (USOTC:VYST)
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