UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 

Date of Report (Date of earliest event reported)
April 29, 2011
     
VYSTAR CORPORATION
(Exact name of registrant as specified in its charter)
     
Georgia
000-53754
20-2027731
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
     
3235 Satellite Blvd., Building 400, Suite 290, Duluth GA
30096
(Address of principal executive offices)
(Zip Code)
     
Registrant’s telephone number, including area code
(770) 965-0383
 
    
(Former name or former address, if changed since last report.)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a- 12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 2.03
Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
 
On April 29, 2011, the Company executed and delivered to CMA Investments, LLC, a Georgia limited liability company (“CMA”), a Promissory Grid Note with a principal amount of up to $800,000 (“the “Note”).  Pursuant to the terms of the Note, the Company may draw up to a maximum principal amount of $800,000.  Interest on amounts drawn and fees will be paid by an affiliate of Joseph C. Allegra, M.D., a director of the Company, to CMA.  Pursuant to an agreement between the Company and such affiliate, the Company will issue 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.
 
Other terms of the Note include:
 
 
· 
The Note is unsecured;
 
· 
No payments of principal are due until the second anniversary of the Note, at which time all outstanding principal is due and payable; and
 
· 
The Note is subordinated to the Company’s outstanding $3,000,000 Loan and Security Agreement with Topping Lift Capital LLC.
 
CMA is a limited liability company of which Joseph C. Allegra, M.D., J. Douglas Craft and Michelle Y. Mangum, each a director of the Company, are the members.
 
In connection with the loan transaction, the Company issued warrants to purchase a total of 2.6 million shares of common stock at $.45 per share, the closing price of the common stock on the OTC Bulletin Board on April 29, 2011, to the participating directors. Such warrants vest based on the amount advanced to the Company pursuant to the Note.
 

Item 9.01
Financial Statements and Exhibits
 
 
(d) 
Exhibits
 
 
Exhibit No.
Description
 
 
10.1
Promissory Grid Note dated April 29, 2011, in a principal amount of up to $800,000 from Vystar Corporation to CMA Investments, LLC.
 
 
99.1
Press release dated May 2, 2011, regarding $800,000 line of credit.
 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
     
 
VYSTAR CORPORATION
 
     
       
May 2, 2011
By:
/s/ Jack W. Callicutt  
    Jack W. Callicutt  
    Chief Financial Officer  
       
 
 
 
 
 
 
Anything herein to the contrary notwithstanding, the repayment of the obligations evidenced by this Note, any liens and security interests securing the obligations evidenced by this Note, the exercise of any right or remedy with respect thereto, the rights of the Holder (as hereinafter defined) and the obligations of Vystar Corporation hereunder are subject to the provisions of that certain Subordination Agreement dated as of April [__], 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Subordination Agreement ”), between Topping Lift Capital LLC as Senior Creditor and CMA Investments, LLC as Subordinated Creditor.  In the event of any conflict between the terms of the Subordination Agreement and this Note, the terms of the Subordination Agreement shall govern and control.
 
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
 

 
VYSTAR CORPORATION PROMISSORY GRID NOTE
 
April 29, 2011  (the “ Date of Issuance ”)

FOR VALUE RECEIVED Vystar Corporation, a Georgia corporation (“ Vystar ”) promises to pay to the order of CMA Investments, LLC,  a Georgia limited liability company (“ Holder ”) the aggregate unpaid principal amount of all advances made to Vystar from time to time under this Note as indicated by the Holder and attached hereto on Exhibit A up to a maximum principal amount of EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($800,000.00) in legal tender of the United States, with interest paid in common stock from the date hereof as described in Section 1 below on the unpaid balance until such principal is paid in full.
 
The Holder is hereby authorized to endorse Exhibit A to this Note with an appropriate notation evidencing each loan of principal on this Note; provided that the failure to make any such notation will not limit, expand or otherwise affect the rights of the Holder of this Note or the obligations of Vystar under this Note.
 
1.             Interest and Fees .
 
Interest and fees shall be payable to ITALIA-EIRE LP, a Georgia limited partnership (“ I-E ”) as follows:  upon any payments for interest or fees being made to Atlantic Capital Bank (“ ACB ”) by I-E pursuant to that certain agreement between ACB and I-E of even date herewith, Vystar shall issue shares of its common stock as of the date of such payment to    I-E with a then current value equal to the amount of each such payment.  By way of example, if I-E makes a payment of $10,000 to ACB pursuant to the I-E Agreement, Vystar shall issue shares of Vystar common stock to I-E with a value of $10,000 based upon the closing price of Vystar’s common stock on the OTC Bulletin Board on the date of such issuance.
 
 
 
 
 
2.            Payment of Principal and Interest on Note.
 
(a)            Scheduled Payment . Vystar shall pay the outstanding principal amount of this Note on April 29, 2013 (the “ Maturity Date ”).
 
(b)            Optional Prepayments . Subject to the terms of the Subordination Agreement, Vystar may, at any time and from time to time without premium or penalty, prepay all or any portion of the outstanding principal amount of this Note. In connection with each prepayment of principal hereunder, Vystar shall also pay all accrued and unpaid interest hereunder.
 
(c)            Application of Payments . Cash payments under this Note shall be applied  to the repayment of the principal outstanding hereunder.
 
3.            Events of Default.
 
(a)            Definition . For purposes of this Note, an Event of Default shall be deemed to have occurred if:
 
(i)           Vystar fails to issue common stock with the applicable value to I-E as required by Section 1 above (whether at maturity or otherwise), and such failure to pay is not cured within five business days after the occurrence thereof; or
 
(ii)           Vystar fails to pay when due and payable (whether at maturity or otherwise) the full amount of any principal payment on this Note, and such failure to pay is not cured within five business days after the occurrence thereof; or
 
(iii)           Vystar makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating Vystar bankrupt or insolvent; or any order for relief with respect to Vystar is entered under the Federal Bankruptcy Code; or Vystar petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of Vystar , or of any substantial part of the assets of Vystar , or commences any proceeding relating to Vystar under any bankruptcy reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any such proceeding is commenced, against Vystar and either (A) Vystar by any act indicates its approval thereof, consent thereto or acquiescence therein or (B) such petition, application or proceeding is not dismissed within 60 days;
 
The foregoing shall constitute Events of Default whatever the reason or cause for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
 
 
 
 
 
(b)            Consequences of Events of Default.
 
(i)           If an Event of Default has occurred, the aggregate principal amount of this Note (together with all accrued interest thereon and all other amounts due and payable with respect thereto) may, at the option of the Holder become immediately due and payable, and Vystar shall (subject to the Subordination Agreement) immediately pay to the Holder all amounts due and payable with respect to this Note.
 
(ii)           The Holder shall also have any other rights which the Holder may have been afforded under any contract or agreement relating to this Note at any time and any other rights which the Holder may have pursuant to applicable law.
 
(iii)           Vystar expressly agrees that this Note, or any payment hereunder, may be extended from time to time and that the Holder hereof may accept security for this Note or release security for this Note, all without in any way affecting the liability of Vystar hereunder.
 
4.            Amendment and Waiver . Except as otherwise expressly provided herein, the provisions of this Note may be amended and Vystar may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if Vystar has obtained the written consent of the Holder of this Note.
 
5.            Assignment and Transfer . The Holder may assign at any time this Note to any of its affiliates, any financial institutions or any other person, in which event, the assignee shall have, to the extent of such assignment, the same rights and benefits as it would have if it were the Holder, except as otherwise provided by the terms of such assignment or participation.
 
6.            Cancellation . After all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall be surrendered to Vystar for cancellation and shall not be reissued.
 
7.            Payments . All payments of principal to be made to the Holder shall be made in the lawful money of the United States of America in immediately available funds.
 
8.            Place of Payment . Payments of principal and interest shall be delivered to the Holder at such address as is specified by prior written notice by the Holder.
 
9.            Governing Law . All questions concerning the construction, validity and interpretation of this Note will be governed by and construed in accordance with the domestic laws of the State of Georgia, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Georgia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Georgia.
 
 
 
 
 
10.            Waiver of Presentment, Demand and Dishonor . Vystar hereby waives presentment for payment, protest, demand, notice of protest, notice of nonpayment and diligence with respect to this Note, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, exemption, or homestead now provided or that hereafter may be provided by any federal or applicable state statute, including but not limited to exemptions provided by or allowed under the Federal Bankruptcy Code, both as to itself and as to all of its property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
 
11.            Business Days . If any payment is due, or any time period for giving notice or taking action expires, on a day which is a Saturday, Sunday or legal holiday in the State of Florida, the payment shall be due and payable on, and the time period shall automatically be extended to, the next business day immediately following such Saturday, Sunday or legal holiday, and interest shall continue to accrue at the required rate hereunder until any such payment is made.
 
12.            Usury Laws . It is the intention of Vystar and the Holder to conform strictly to all applicable usury laws now or hereafter in force, and any interest payable under this Note shall be subject to reduction to the amount not in excess of the maximum legal amount allowed under the applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters. If the maturity of this Note is accelerated by reason of an election by the Holder resulting from an Event of Default, voluntary prepayment by Vystar or otherwise, then earned interest may never include more than the maximum amount permitted by law, computed from the date hereof until payment, and any interest in excess of the maximum amount permitted by law shall be canceled automatically and, if theretofore paid, shall at the option of the Holder either be rebated to Vystar or credited on the principal amount of this Note, or if this Note has been paid, then the excess shall be rebated to Vystar . The aggregate of all interest (whether designated as interest, service charges, points or otherwise) contracted for, chargeable, or receivable under this Note shall under no circumstances exceed the maximum legal rate upon the unpaid principal balance of this Note remaining unpaid from time to time. If such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess shall be canceled automatically and, if theretofore paid, rebated to Vystar or credited on the principal amount of this Note, or if this Note has been repaid, then such excess shall be rebated to Vystar .
 
 
 
 
 
IN WITNESS WHEREOF, Vystar has executed and delivered this Note on the Date of Issuance.
 
     
  VYSTAR CORPORATION  
     
       
 
By:
   
  Name: Jack W. Callicutt  
  Title:  Chief Financial Officer  
       

 
Signature Page to Vystar Corporation Promissory Grid Note

 
 
 

EXHIBIT A
 
TO
 
VYSTAR CORPORATION
 
PROMISSORY GRID NOTE

Date Made
 
Principal Amount Loaned
 
Ending Outstanding Principal Balance
 
Name of Person Making Entry
               
               
               
               
               
               
               
 
 
 
 
 
Vystar ® Corporation Secures $800,000 Credit Facility

ATLANTA, May 2, 2011 -- Vystar® Corporation (OTC Bulletin Board:VYST.OB - News), the creator of Vytex® Natural Rubber Latex (NRL), a patented, all-natural raw material that significantly reduces antigenic proteins found in natural rubber latex, has secured an $800,000 line of credit provided by certain of the Company’s directors.  The proceeds from the transaction will be used for working capital to support Vystar’s projections and will fulfill the requirements agreed upon in the Company’s credit arrangement with Topping Lift Capital LLC.

William R. Doyle, Chairman, President and Chief Executive Officer of Vystar, commented: “We are pleased that we closed our second financing within the past two months.  Closing the line of credit provided by certain of our directors meets one of the key obligations under the terms of our line of credit with Topping Lift Capital LLC, which will provide greater flexibility in financing.  We appreciate the confidence shown by our directors in Vystar by making this line of credit available to the Company.  We are moving forward with procuring and fulfilling customer orders and will continue to update our shareholders as we execute on our growth plan.”

About Vystar Corporation
Based in Duluth, GA, Vystar ® Corporation (OTC Bulletin Board:VYST.OB) is the exclusive creator of Vytex Natural Rubber Latex (Vytex NRL), a multi-patented, all-natural, raw material that contains significantly reduced levels of antigenic proteins found in natural rubber latex and can be used in over 40,000 products. Vytex NRL is a 100% renewable resource, environmentally safe, "green" and fully biodegradable. Vystar is working with manufacturers across a broad range of consumer and medical products to bring Vytex NRL to market in adhesives, balloons, surgical and exam gloves, other medical devices and natural rubber latex foam mattresses, pillows and sponges.  For more information, visit www.vytex.com.

Forward-looking Statements: Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances.  Actual results may differ materially from those included in these statements due to a variety of factors.  More information about these factors is contained in Vystar's filings with the Securities and Exchange Commission.

Contact:
The Investor Relations Group
11 Stone St. 3rd Floor
New York, NY
212-825-3210

IR: Adam Holdsworth
PR: Laura Colontrelle/Janet Vasquez

Vystar Corporation
Jack Callicutt, Chief Financial Officer
770-965-0383 x23