SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
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Preliminary Proxy
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Definitive Proxy
Statement
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Definitive
Additional Materials
¨
Soliciting Material
Pursuant to Rule 14a-11(c) or Rule 14a-12
SENESCO
TECHNOLOGIES, INC.
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(Name
of Registrant as Specified in Its
Charter)
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(Name of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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SENESCO
TECHNOLOGIES, INC.
303
George Street, Suite 420
New
Brunswick, New Jersey 08901
To Our
Stockholders:
You are
cordially invited to attend the 2010 Annual Meeting of Stockholders of Senesco
Technologies, Inc. at 10:00 A.M., local time, on May [_], 2010, at the offices
of Morgan, Lewis & Bockius LLP at 101 Park Avenue, New York, NY
10178.
The
Notice of Meeting and Proxy Statement on the following pages describe the
matters to be presented at the meeting.
It is
important that your shares be represented at this meeting to assure the presence
of a quorum. Whether or not you plan to attend the meeting, we hope
that you will have your stock represented by voting
as soon as possible,
by
signing, dating and returning your proxy card in the enclosed envelope, which
requires no postage if mailed in the United States. Your stock will
be voted in accordance with the instructions you have given in your
proxy.
Thank you
for your continued support.
Sincerely,
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/s/
Harlan W. Waksal, M.D.
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Harlan
W. Waksal, M.D.
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Chairman
of the Board
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SENESCO
TECHNOLOGIES, INC.
303
George Street, Suite 420
New
Brunswick, New Jersey 08901
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May [__], 2010
The
Annual Meeting of Stockholders (the “Meeting”) of Senesco Technologies, Inc., a
Delaware corporation (the “Company”), will be held at the office of Morgan,
Lewis & Bockius, LLP at 101 Park Avenue, New York, NY 10178
on May [__], 2010,
at 10:00 A.M., local time, for the following purposes. Capitalized
terms are defined in the attached proxy statement.
1.
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To
elect nine (9) Directors to serve until the next Meeting of Stockholders
and until their respective successors shall have been duly elected and
qualified.
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2.
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To
approve an amendment to the Senesco Technologies, Inc. 2008 Incentive
Compensation Plan to increase the number of shares of common stock
reserved for issuance thereunder from 6,137,200 shares to 11,137,200
shares.
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3.
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To
approve an amendment to the Company’s Certificate of Incorporation to
increase the total number of authorized shares of common stock, $0.01 par
value per share, of the Company from 120,000,000 shares to 250,000,000
shares.
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4.
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To
approve, for purposes of section 713 of the NYSE Amex Company
Guide, the issuance of Preferred Stock, Warrants and Placement Agent
Warrants (and the shares of common stock issuable upon exercise of the
Warrants, the Placement Agent Warrants and the conversion of the Preferred
Stock and payment of dividends thereon), which, when converted, in the
aggregate exceed 20% of the Company’s currently outstanding shares of
common stock pursuant to the terms and conditions of the Securities
Purchase Agreements, dated as of March 26, 2010, between certain investors
who are a party thereto and the
Company.
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5.
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To
approve, for purposes of section 711 of the NYSE Amex Company
Guide, the issuance of the Company’s shares of Preferred Stock and
Warrants (and the shares of common stock issuable upon the exercise of the
Warrants and the conversion of the Preferred Stock and payment of
dividends thereon) pursuant to the terms and conditions of the Securities
Purchase Agreement, dated as of March 26, 2010, between each of Harlan W.
Waksal, M.D. and Christopher Forbes and the
Company.
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6.
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To
approve, for purposes of section 711 of the NYSE Amex Company
Guide, the issuance of common stock upon the conversion of certain
convertible debentures held by Christopher Forbes, Rudolf Stalder, Harlan
W. Waksal, M.D., David Rector, John N. Braca, Jack Van Hulst, Warren
Isabelle and the Thomas C. Quick Charitable
Foundation.
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7.
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To
ratify the appointment of McGladrey & Pullen, LLP as the
Company’s independent registered public accounting firm for the fiscal
year ending June 30, 2010.
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8.
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To
transact such other business as may properly come before the Meeting or
any adjournment or adjournments
thereof.
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The
holders of common stock (the “Stockholders”) of record at the close of business
on April [__], 2010 (the “Record Date”), are entitled to notice of and to vote
at the Meeting, or any adjournment or adjournments thereof. A
complete list of such Stockholders will be open to the examination of any
Stockholder at the Company’s principal executive offices at 303 George Street,
Suite 420, New Brunswick, New Jersey 08901 for a period of ten (10) days prior
to the Meeting and at the New York offices of Morgan, Lewis & Bockius on the
day of the Meeting. The Meeting may be adjourned from time to time
without notice other than by announcement at the Meeting;
provided, however
, if the
adjournment is for more than thirty (30) days after the date of the Meeting, or
if after the adjournment a new Record Date is fixed for the adjourned meeting, a
notice of the adjourned meeting is required to be given to each
Stockholder.
IT
IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES
YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL
ENSURE A QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER
SOLICITATION. EACH PROXY GRANTED MAY BE REVOKED BY THE STOCKHOLDER
APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS VOTED. IF YOU RECEIVE
MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES
OR ADDRESSES, EACH PROXY SHOULD BE SIGNED AND RETURNED TO ENSURE THAT ALL OF
YOUR SHARES WILL BE VOTED.
Important
Notice Regarding the Availability of
Proxy
Materials for the Annual Meeting of Stockholders to be held on May [_],
2010
Our
proxy statement is attached. Financial and other information concerning our
company is contained in our Annual Report for the fiscal year ended June 30,
2009 and our Quarterly Report for the quarter ended December 31,
2009. Pursuant to new rules promulgated by the SEC, we have elected
to provide access to our proxy materials both by sending you this full set of
proxy materials, including a proxy card, and by notifying you of the
availability of our proxy materials on the internet. This proxy
statement, our June 30, 2009 Annual Report and our December 31, 2009
Quarterly Report are available on our website at
www.senesco.com
.
By
Order of the Board of Directors
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/s/
Jack Van Hulst
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Jack
Van Hulst
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Secretary
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New
Brunswick, New Jersey
April
[__], 2010
SENESCO
TECHNOLOGIES, INC.
303
George Street, Suite 420
New
Brunswick, New Jersey 08901
This
proxy statement is furnished in connection with the solicitation by the board of
directors, or the board, of Senesco Technologies, Inc., a Delaware corporation,
referred to herein as the Company, Senesco, we, us or our, of proxies to be
voted at our annual meeting of stockholders to be held on May [__], 2010,
referred to herein as the Meeting, at the offices of Morgan Lewis & Bockius,
LLP at 101 Park Avenue, New York, NY 10178, at 10:00 A.M., local time, and at
any adjournment or adjournments thereof. The holders of record of our
common stock, $0.01 par value per share, also referred to herein as common
stock, as of the close of business on April [__], 2010, also referred to
herein as the Record Date, will be entitled to notice of and to vote at the
Meeting and any adjournment or adjournments thereof. As of the Record
Date, there were [________] shares of our common stock issued and outstanding
and entitled to vote. Each share of our common stock is entitled to
one (1) vote on any matter presented at the Meeting.
If
proxies in the accompanying form are properly voted and received, the shares of
our common stock represented thereby will be voted in the manner specified
therein. If not otherwise specified, the shares of our common stock
represented by the proxies will be voted. Capitalized terms are
defined elsewhere in this proxy statement.
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1.
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FOR
the election of the nine (9) nominees named below as
directors;
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2.
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FOR
a proposal to approve an amendment to the Senesco Technologies, Inc.
2008 Incentive Compensation Plan to increase the number of shares of
common stock reserved for issuance thereunder from 6,137,200 shares to
11,137,200 shares;
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3.
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FOR
a proposal to amend our Certificate of Incorporation to increase the total
number of authorized shares of common stock, $0.01 par value per share,
from 120,000,000 shares to 250,000,000
shares;
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4.
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FOR
a proposal to approve for purposes of section 713 of the NYSE
Amex Company Guide, the issuance of Preferred Stock, Warrants and
Placement Agent Warrants (and the shares of common stock issuable upon
exercise of the Warrants, the Placement Agent Warrants and the conversion
of the Preferred Stock and payment of dividends thereon), which, when
converted, in the aggregate exceed 20% of our currently outstanding shares
of common stock pursuant to the terms and conditions of the Securities
Purchase Agreements, dated as of March 26, 2010, between certain investors
who are a party thereto and us;
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5.
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FOR
a proposal to approve, for purposes of section 711 of the NYSE
Amex Company Guide, the issuance of our shares of Preferred Stock and
Warrants (and the shares of common stock issuable upon the exercise of the
Warrants and the conversion of the Preferred Stock and payment of
dividends thereon) pursuant to the terms and conditions of the Securities
Purchase Agreement, dated as of March 26, 2010, between each of Harlan W.
Waksal, M.D. and Christopher Forbes and
us;
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6.
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FOR
a proposal to approve, for purposes of section 711 of the NYSE
Amex Company Guide, the issuance of common stock upon the conversion of
certain convertible debentures held by Christopher Forbes, Rudolf Stalder,
Harlan W. Waksal, M.D., David Rector, John N. Braca, Jack Van Hulst,
Warren Isabelle and the Thomas C. Quick Charitable
Foundation;
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7.
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FOR
the ratification of the appointment of McGladrey & Pullen, LLP as
our independent registered public accounting firm for the fiscal year
ending June 30, 2010; and
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8.
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In
the discretion of the persons named in the enclosed form of proxy, on any
other proposals which may properly come before the Meeting or any
adjournment or adjournments thereof. Any stockholder who has
submitted a proxy may revoke it at any time before it is voted, by written
notice addressed to and received by our Corporate Secretary, by submitting
a duly executed proxy bearing a later date or by electing to vote in
person at the Meeting. The mere presence at the Meeting of the
person appointing a proxy does not, however, revoke the
appointment.
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The
presence, in person or by proxy, of holders of shares of our common stock having
a majority of the votes entitled to be cast at the Meeting shall constitute a
quorum. The affirmative vote by the holders of a plurality of the
shares of our common stock represented at the Meeting is required for the
election of directors (Proposal 1), provided a quorum is present in person or by
proxy. Proposal 3 requires the affirmative vote of our stockholders
possessing a majority of the shares of our common stock issued and outstanding
as of the record date. Proposals 2, 4, 5, 6 and 7 require the affirmative
vote of our stockholders representing a majority of the votes cast by holders of
shares present, or represented by proxy, and entitled to vote
thereon.
Abstentions
are included in the shares present at the Meeting for purposes of determining
whether a quorum is present, and are counted as a vote against for purposes of
determining whether any of the foregoing proposals are
approved. Broker non-votes are when shares are represented at the
Meeting by a proxy specifically conferring only limited authority to vote on
certain matters and no authority to vote on other matters. Therefore,
broker non-votes are included in the determination of the number of shares
represented at the Meeting for purposes of determining whether a quorum is
present but are not counted for purposes of determining whether a proposal has
been approved in matters where the proxy does not confer the authority to vote
on such proposal. In this year’s vote, brokers are entitled to vote
without instructions on Proposals No. 3 and 7, but not on Proposals
No. 1, 2, 4, 5, 6 and 8. Accordingly, broker non-votes are not
counted as a vote against and will not affect the outcome of Proposals
No. 1, 2, 4, 5, 6 and 8.
Your vote
is very important. All properly executed proxy cards delivered
pursuant to this solicitation and not revoked will be voted at the Annual
Meeting in accordance with the directions given. In voting by
proxy with regard to the election of directors, you may vote in favor of all
nominees, withhold your votes as to all nominees or withhold your votes as to
specific nominees. With regard to other proposals, you may vote
in favor of each proposal or against each proposal, or in favor of some
proposals and against others or you may abstain from voting on any or all
proposals. You should specify your respective choices on the proxy
card. If you do not give specific instructions with regard to the
matters to be voted upon, the shares of common stock represented by your signed
proxy card will be voted “FOR” Proposal Nos. 1, 2, 3, 4, 5, 6, 7 and
8. If any other matters properly come before the Annual Meeting, the
persons named as proxies will vote for or against these matters according to
their best judgment. Please note that because of a change in the New
York Stock Exchange rules, unlike at previous annual meetings, your broker will
not be able to vote your shares with respect to the election of directors if you
have not provided directions to your broker. We strongly encourage
you to submit your voting instructions and exercise your right to vote as a
stockholder.
You may
revoke your proxy and reclaim your right to vote up to and including the day of
the Annual Meeting by giving written notice to the Secretary of Senesco, by
delivering a proxy card dated after the date of the proxy or by voting in person
at the Meeting. All written notices of revocation and other communications with
respect to revocations of proxies should be addressed to: Secretary, Senesco
Technologies, Inc., 303 George Street, Suite 420, New Brunswick, New Jersey
08901.
On or
about April [_], 2010, this proxy statement, together with the related
proxy card, is being mailed to our stockholders of record as of the Record
Date. Our annual report to our stockholders for the fiscal year ended
June 30, 2009 and our Quarterly Report for the quarter ended December 31, 2009,
including our financial statements, is being mailed together with this proxy
statement to all of our stockholders of record as of the Record
Date. In addition, we have provided brokers, dealers, banks, voting
trustees and their nominees, at our expense, with additional copies of our
annual report and our quarterly report so that our record holders could supply
these materials to our beneficial owners as of the Record Date.
Our
common stock is listed on the NYSE Amex under the symbol “SNT”. On April [__],
2010, the closing price for the common stock as reported by NYSE Amex was
$[___] per share.
PROPOSAL
1
ELECTION
OF DIRECTORS
At the
Meeting, nine (9) directors are to be elected, which number shall constitute our
entire board, to hold office until the next annual meeting of stockholders and
until their successors shall have been duly elected and qualified.
Unless
otherwise specified in the proxy, it is the intention of the persons named in
the enclosed form of proxy to vote the stock represented thereby for the
election as directors, each of the nominees whose names and biographies appear
below. All of the nominees whose names and biographies appear below
are at present our directors. In the event any of the nominees should
become unavailable or unable to serve as a director, it is intended that votes
will be cast for a substitute nominee designated by our board. Our
board has no reason to believe that the nominees named will be unable to serve
if elected. Each nominee has consented to being named in this proxy
statement and to serve if elected.
The
following are the nominees for election to our board, and all of these nominees
are current members of our board:
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Served
as
a
Director
Since
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Harlan
W. Waksal, M.D.
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57
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2008
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Chairman
of the Board and Director
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David
Rector
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63
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2002
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Lead
Director
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Jack
Van Hulst
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70
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2007
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Director,
Chief Executive Officer and Secretary
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John
N. Braca
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52
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2003
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Director
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Christopher
Forbes
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58
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1999
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Director
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Warren
J. Isabelle
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58
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2009
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Director
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Thomas
C. Quick
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54
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1999
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Director
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Rudolf
Stalder
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69
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1999
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Director
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John
E. Thompson, Ph.D.
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68
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2001
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Executive
Vice President, Chief Scientific Officer and
Director
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The
principal occupations and business experience, for at least the past five (5)
years, of each director and nominee is as follows:
Harlan W. Waksal, M.D.
has
been our chairman of the board of directors since June 2009 and a director since
October 2008. From July 2003 to present, Dr. Waksal has been the
President and Sole Proprietor of Waksal Consulting L.L.C., which provides
strategic business and clinical development counsel to biotechnology companies.
Dr. Waksal co-founded the biotechnology company, ImClone Systems Inc. in
1984. From March, 1987 through July 2003, Dr. Waksal had served in
various senior roles for ImClone Systems Incorporated as follows: March 1987
through April 1994 – President; April 1994 through May 2002 – Executive Vice
President and Chief Operating Officer; May 2002 through July 2003 – President,
Chief Executive Officer and Chief Operating Officer. Dr. Waksal also
served as a director of ImClone Systems Incorporated from March 1987 through
January 2005. Dr. Waksal is currently a member of the Board of
Trustees of Oberlin College. Dr. Waksal received a Bachelor of Arts
in Biology from Oberlin College and an M.D. from Tufts University School of
Medicine. Dr. Waksal is knowledgeable in science, drug development, regulatory
and clinical affairs. In addition, he ran and operated a public
biotechnology company and is familiar with the issues of corporate
governance.
David Rector
has been our
director since February 2002. Mr. Rector also serves as a director
and member of the compensation and audit committee of the Dallas Gold and Silver
Exchange (formerly Superior Galleries, Inc.) From May 2004 through
December 2006, Mr. Rector had served in senior management positions with
Nanoscience Technologies, Inc., a development stage company engaged in the
development of DNA Nanotechnology. Also, since 1985, Mr. Rector has
been the Principal of The David Stephen Group, which provides enterprise
consulting services to emerging and developing companies in a variety of
industries. From 1983 until 1985, Mr. Rector served as President and
General Manager of Sunset Designs, Inc., a domestic and international
manufacturer and marketer of consumer product craft kits, and a wholly-owned
subsidiary of Reckitt & Coleman N.A. From 1980 until 1983, Mr.
Rector served as the Director of Marketing of Sunset Designs. From
1971 until 1980, Mr. Rector served in progressive roles in both the financial
and product marketing departments of Crown Zellerbach Corporation, a
multi-billion dollar pulp and paper industry corporation. Mr. Rector
received a Bachelor of Science degree in Business/Finance from Murray State
University in 1969. As a result of these professional and other
experiences, Mr. Rector has a deep business understanding of developing
companies. Mr. Rector also brings corporate governance experience through his
service on other company boards.
Jack Van Hulst
has been our
director since January 2007. Mr. Van Hulst was appointed as our President and
Chief Executive Officer effective November 16, 2009. Mr. Van Hulst
was further appointed as our Secretary effective February 1,
2010. Mr. Van Hulst also serves as a director and member of the
compensation and audit committees of Napo Pharmaceuticals, Inc. and HiTech
Pharmacal, Inc. He has more than 42 years of international experience
in the pharmaceutical industry. He began his career in 1968 at Organon, which
was subsequently acquired by AKZO, N.V., the multinational human and animal
healthcare company, where he was based in Europe and the US and responsible for
establishing AKZO’s position in the US in the manufacturing and sales and
marketing of fine chemicals. Mr. Van Hulst later became President of AKZO’s US
Pharmaceutical Generic Drug Business and was responsible for establishing AKZO
in the US generic drug industry. From 1989 to 1999, Mr. Van Hulst successively
owned and led two generic pharmaceutical companies, improving their operations
and then selling them to a private equity group and a pharmaceutical company.
From 1999 to 2005, he was Executive Vice President at Puerto Rico-based MOVA
Pharmaceutical Corporation, a contract manufacturer to the pharmaceutical
industry that recently merged with Canadian-based Patheon. Mr. Van
Hulst also serves as Chairman of the Board of The International Center in New
York, a non-profit organization. Mr. Van Hulst received a Masters
degree in law from the University in Utrecht, Netherlands in 1968. Mr. Van Hulst
possesses management experience as a result of his prior positions. Mr Van Hulst
spent years holding a number of management roles at other pharmaceutical
companies and this experience assists the Company in working though the similar
issues that it may face in its own operations.
John N. Braca
has been our
director since October 2003. Mr. Braca has also served as a director
and board observer for other healthcare, technology and biotechnology companies
over the course of his career. From April 2006, Mr. Braca has been
the managing director of Fountainhead Venture Group, a healthcare information
technology venture fund based in the Philadelphia area and has been working with
both investors and developing companies to establish exit and business
development opportunities. From May 2005 through March 2006, Mr.
Braca was a consultant and advisor to GlaxoSmithKline management in their
research operations. From 1997 to April 2005, Mr. Braca was a general
partner and director of business investments for S.R. One, Limited, or S.R. One,
the venture capital subsidiary of GlaxoSmithKline. In addition, from
January 2000 to July
2003, Mr. Braca was a
general partner of Euclid SR Partners Corporation, an independent venture
capital partnership. Prior to joining S.R. One, Mr. Braca held
various finance and operating positions of increasing responsibility within
several subsidiaries and business units of GlaxoSmithKline. Mr. Braca
is a licensed Certified Public Accountant in the state of Pennsylvania and is
affiliated with the American Institute of Certified Public Accountants and the
Pennsylvania Institute of Certified Public Accountants. Mr. Braca
received a Bachelor of Science in Accounting from Villanova University and a
Master of Business Administration in Marketing from Saint Joseph’s
University. Mr. Braca’s financial background, operating experience
with both large pharmaceutical companies and developing biotechnology
companies, provides the board with practical experience for issues facing the
Company. In addition, Mr. Braca also has a strong corporate governance
background through his experience with other company boards.
Christopher Forbes
has been
our director since January 1999. Since 1989, Mr. Forbes has been Vice
Chairman of Forbes, Inc., which publishes Forbes Magazine and
Forbes.com. From 1981 to 1989, Mr. Forbes was Corporate Secretary at
Forbes. Prior to 1981, he held the position of Vice President and Associate
Publisher. Mr. Forbes has been a director of Forbes, Inc. since
1977. Mr. Forbes is the Chairman of the American Friends of the
Louvre, and he also sits on the Boards of The Friends of New Jersey State
Museum, The New York Academy of Art, and the Prince Wales
Foundation. He is also a member of the Board of Advisors of The
Princeton University Art Museum. Mr. Forbes received a Bachelor of Arts degree
in Art History from Princeton University in 1972. In 1986, he was
awarded the honorary degree of Doctor of Humane Letters by New Hampshire College
and in 2003 was appointed a Chevalier of the Legion of Honor by the French
Government. Mr. Forbes knowledge regarding corporate operations as
well as his business acumen, provide the board with experience in running a
corporation and addressing the issues that a growing company, such as ours,
face.
Warren J. Isabelle
has been
our director since June 2009. Mr. Isabelle, is a founder and
principal of Ironwood Investment Management L.L.C., located in Boston,
MA. Mr. Isabelle founded Ironwood Investment management L.L.C in
August, 1997. From 1983 until 1997 Mr. Isabelle was with Pioneer
Management Corporation where he served most recently as Director of Research and
Head of U.S. Equities. Mr. Isabelle has also, since January 2004,
served as a member of the Public Board and Vice-Chairman of the Investment
Committee of the University of Massachusetts Foundation. Mr. Isabelle
is a Chartered Financial Analyst and member of the CFA institute and the
American Chemical Society. Mr. Isabelle received a Bachelor of
Science degree in chemistry from Lowell Technological Institute, a Master of
Science degree in Polymer Science and Engineering from the University of
Massachusetts, and a MBA from the Wharton School, University of
Pennsylvania. Mr. Isabelle’s prior experience and dealings in
financial management provides the Company with valuable insight in its attempts
to raise capital through financings.
Thomas C. Quick
has been our
director since February 1999. Since 2003, Mr. Quick has been the
President of First Palm Beach Properties, Inc. From 2001 through
2003, Mr. Quick was the Vice Chairman of Quick & Reilly/Fleet Securities,
Inc., successor to The Quick & Reilly Group, Inc., a holding company for
four (4) major financial services businesses. From 1996 until 2001,
Mr. Quick was the President and Chief Operating Officer and a director of Quick
& Reilly/Fleet Securities, Inc. From 1985 to 1996, he was
President of Quick & Reilly, Inc., a Quick & Reilly subsidiary and a
national discount brokerage firm. Mr. Quick serves as a member of the
Board of Directors and compensation committee of B.F. Enterprises. He is also a
member of the Board of Directors of Best Buddies, The American Ireland Fund,
Venetian Heritage, Inc. and serves on the Investment Advisory Board for the St.
Jude Children’s Hospital. He is a trustee of the National Corporate
Theater Fund, Cold Spring Harbor Laboratories, the Norton Museum, the Inter-City
Scholarship Foundation of New York City and an advisory board member of
Christie, European. Mr. Quick is a graduate of Fairfield
University. As a result of his professional and other experiences,
Mr. Quick has a deep understanding of corporate operations and strategy, and
operations in both the US and internationally. Mr. Quick also has
significant corporate governance experience through his service on other company
boards.
Rudolf Stalder
has been
our director since
February 1999 and was appointed as our Chairman and Chief Executive Officer on
January 10, 2000. On October 4, 2001, Mr. Stalder resigned as our
Chief Executive Officer. On June 8, 2009 Mr. Stalder resigned as our
Chairman. Mr. Stalder
is a former member of
the Executive Boards of Credit Suisse Group and Credit Suisse First Boston and
former Chief Executive Officer of the Americas Region of Credit Suisse Private
Banking. Mr. Stalder joined Credit Suisse in 1980 as a founding
member and Deputy Head of the Multinational Services Group. In 1986,
he became Executive Vice President. He was named to Credit Suisse’s
Executive Board in 1989. In 1990, he became Head of the Commercial
Banking Division and a Member of the Executive Committee. From 1991
to 1995, Mr. Stalder was Chief Financial Officer of Credit Suisse First Boston
and a Member of the Executive Boards of Credit Suisse Group and Credit Suisse
First Boston. He became head of the Americas Region of Credit Suisse
Private Banking in 1995 and retired in 1998. Prior to moving to the
United States, Mr. Stalder was a member of the Board of Directors for several
Swiss subsidiaries of major corporations including AEG, Bayer, BTR, Hoechst,
Saint Gobain, Solvay and Sony. He is a fellow of the World Economic
Forum. He currently serves on the Board of the Greater Bridgeport
Symphony. He was a member of the Leadership Committee of the
Consolidated Corporate Fund of Lincoln Center for the Performing Arts, Board of
The American Ballet Theatre and a Trustee of Carnegie Hall. From 1991
through 1998, Mr. Stalder was Chairman of the New York Chapter of the
Swiss-American Chamber of Commerce. He continues to serve as an
Advisory Board Member of the American-Swiss Foundation. Mr. Stalder
received a diploma in advanced finance management at the International
Management Development Institute in Lausanne, Switzerland in 1976. He
completed the International Senior Managers Program at Harvard University in
1985. Mr. Stalder is an experienced executive with former CEO
experience, senior executive level experience at large multinational companies.
He also has corporate governance experience through service on other public
company boards.
John E. Thompson, Ph.D.
has
been our director since October 2001. Dr. Thompson was appointed our
President and Chief Executive Officer in January 1999, and he continued in that
capacity until September 1999 when he was appointed Executive Vice President of
Research and Development. In July 2004, Dr. Thompson became our
Executive Vice President and Chief Scientific Officer. Dr. Thompson
is the inventor of the technology that we develop. Since July 2001,
he has been the Associate Vice President, Research and, from July 1990 to June
2001, he was the Dean of Science at the University of Waterloo in Waterloo,
Ontario, Canada. Dr. Thompson has a Ph.D. in Biology from the
University of Alberta, Edmonton, and he is a Fellow of the Royal Society of
Canada. Dr. Thompson is also the recipient of a Lady Davis Visiting
Fellowship, the Sigma Xi Award for Excellence in Research, the CSPP Gold Medal
and the Technion Visiting Fellowship. Dr. Thompson has an in-depth
knowledge and understanding of the science underlying our technology and how it
relates to human health and agricultural applications.
Director Experience,
Qualifications, Attributes and Skills
We
believe that the backgrounds and qualifications of our directors, considered as
a group, should provide a composite mix of experience, knowledge and abilities
that will allow the board to fulfill its responsibilities. The board is composed
of a diverse group of leaders in their respective fields. Many of the current
directors have leadership experience at major domestic and international
companies with operations inside and outside the United States, which provides
an understanding of different business processes, challenges and strategies.
Other directors have prior experience as former executive officers of other
entities, which brings unique perspectives to the board. Further, the Company’s
directors also have other experience that makes them valuable members, such as
prior public policy or regulatory experience that provides insight into issues
faced by companies.
OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF
THE
NOMINEES TO THE BOARD OF DIRECTORS.
Board
Leadership Structure and Role in Risk Oversight
The board
evaluates its leadership structure and role in risk oversight on an ongoing
basis. In March 2010, the Company’s board leadership structure has separated the
Chairman of the Board, the Chief Executive Officer and the Lead Director roles
into three positions. Currently, Harlan W. Waksal, M.D. is the
Chairman of the Board, Jack Van Hulst is the Chief Executive Officer and David
Rector is the Lead Director. The Board determines what leadership
structure it deems appropriate based on factors such as the experience of the
applicable individuals, the current business environment of the Company or other
relevant factors. In his capacity as Lead Director, Mr. Rector consults
independently of the Chairman of the Board with other members of the board in
matters that are presented for the independent board member’s
consideration. After considering these factors, the Board determined
that continuing to separate the positions of Chairman of the Board, Lead
Director and Chief Executive Officer is the appropriate board leadership
structure at this time.
The board
is also responsible for oversight of the Company’s risk management practices
while management is responsible for the day-to-day risk management processes.
This division of responsibilities is the most effective approach for addressing
the risks facing the Company, and the Company’s board leadership structure
supports this approach. The board receives periodic reports from management
regarding the most significant risks facing the Company. In addition, the Audit
Committee assists the board in its oversight role by receiving periodic reports
regarding the Company’s risk and control environment.
Corporate
Governance Guidelines
Our board
has long believed that good corporate governance is important to ensure that we
are managed for the long-term benefit of our stockholders. During the
past year, our board has continued to review our governance practices in light
of the Sarbanes-Oxley Act of 2002, the new rules and regulations of the
Securities and Exchange Commission and the new listing standards, policies and
requirements of NYSE Amex.
Our board
has adopted corporate governance guidelines to assist it in the exercise of its
duties and responsibilities and to serve the best interests of Senesco and its
stockholders. These guidelines, which provide a framework for the
conduct of our board’s business, include that:
|
·
|
the
principal responsibility of the directors is to oversee the management of
Senesco;
|
|
·
|
a
majority of the members of our board shall be independent
directors;
|
|
·
|
the
independent directors met regularly in executive
session;
|
|
·
|
directors
have full and free access to management and, as necessary and appropriate,
independent advisors;
|
|
·
|
new
directors participate in an orientation program and all directors are
expected to participate in continuing director education on an ongoing
basis; and
|
|
·
|
at
least annually, our board and its committees will conduct a
self-evaluation to determine whether they are functioning
effectively.
|
Board
Determination of Independence
Under the
current rules set forth in the NYSE Amex Company Guide, a director will, among
other things, qualify as an “independent director” if, in the determination of
our board, that person does not have a relationship that would interfere with
his or her exercise of independent judgment in carrying out the responsibilities
of a director. Our board currently consists of Rudolf Stalder, John
E. Thompson, Ph.D., John N. Braca, Christopher Forbes, Warren J. Isabelle,
Thomas C. Quick, David Rector, Jack Van Hulst and Harlan W. Waksal,
M.D. We are currently traded on the NYSE Amex, which requires our
board be comprised of a majority of independent directors. Our board
has determined that each of Messrs. Stalder, Braca, Forbes, Isabelle, Quick and
Rector is an “independent director” as defined under Section 803 of the NYSE
Amex Company Guide.
Committees
and Meetings of our Board of Directors
Our board
held (8) eight meetings during Fiscal 2009. Throughout this period,
except for Mr. Quick, each member of our board attended or participated in at
least 75% of the aggregate of the total number of meetings of our board held
during the period for which such person has been a director, and the total
number of meetings held by all committees of our board on which each the
director served during the periods the director served. Our board has
five standing committees: the Compensation Committee, the Audit Committee and
the Nominating and Corporate Governance Committee, a Finance Committee and an
Executive Committee. Except for the Finance Committee and Executive
Committee, each committee operates under a charter that has been approved by our
board. Each of these charters are also posted on our website at
www.senesco.com. Our corporate governance guidelines provide that
directors are expected to attend the annual meeting of
stockholders. All directors except for Dr. Waksal attended the
2008 annual meeting of stockholders.
Compensation
Committee
. Our Compensation Committee was established in July
1999, pursuant to the Compensation Committee Charter. Our
Compensation Committee generally makes recommendations concerning salaries and
incentive compensation for our management and our employees. The primary
responsibilities of our Compensation Committee, as more fully set forth in the
Compensation Committee Charter adopted in July 1999 and amended and restated on
June 27, 2008, include:
|
·
|
annually
reviewing and approving corporate goals and objectives relevant to CEO
compensation;
|
|
·
|
reviewing
and approving, or recommending for approval by our board, the salaries and
incentive compensation of our executive
officers;
|
|
·
|
preparing
the Compensation Committee report, including the Compensation Discussion
and Analysis;
|
|
·
|
administering
our 2008 Incentive Compensation Plan, or similar stock plan adopted by our
stockholders; and
|
|
·
|
reviewing
and making recommendations to our board with respect to director
compensation.
|
Our
Compensation Committee is currently comprised of David Rector and John. N.
Braca
.
Mr.
Rector currently serves as the chairman of the Compensation
Committee. All members of our Compensation Committee are considered
independent pursuant to Section 803 of the NYSE Amex Company
Guide. Our Compensation Committee held four (4) meetings during
Fiscal 2009.
Compensation Committee
Interlocks and Insider Participation
No member
of the Compensation Committee is or has been an officer or employee of our
company or any of our subsidiaries. In addition, no member of the Compensation
Committee had any relationships with us or any other entity that requires
disclosure under the proxy rules and regulations promulgated by the SEC and none
of our executive officers served on the Compensation Committee or board of any
company that employed any member of our board.
Audit
Committee
. Our Audit Committee was established in July
1999. On June 27, 2008, our board adopted an Amended and
Restated Audit Committee Charter. The primary responsibilities of our
Audit Committee include:
|
·
|
appointing,
approving the compensation of, and assessing the independence of our
independent registered public accounting
firm;
|
|
·
|
overseeing
the work of our independent registered public accounting firm, including
through the receipt and consideration of certain reports from our
independent registered public accounting
firm;
|
|
·
|
reviewing
and discussing with management and our independent registered public
accounting firm our annual and quarterly financial statements and related
disclosures;
|
|
·
|
monitoring
our internal control over financial reporting, disclosure controls and
procedures and code of business conduct and
ethics;
|
|
·
|
discussing
our risk management policies;
|
|
·
|
establishing
policies regarding hiring employees from our independent registered public
accounting firm and procedures for the receipt and retention of accounting
related complaints and concerns;
|
|
·
|
meeting
independently with independent registered public accounting firm and
management; and
|
|
·
|
preparing
the audit committee report required by SEC rules, which is included on
page [__] of this proxy statement.
|
Our Audit
Committee is currently comprised of John N. Braca, David Rector and Rudolf
Stalder. Mr. Braca currently serves as the chairman of the Audit
Committee. The NYSE Amex currently requires an Audit Committee
comprised solely of independent directors. Messrs. Braca, Rector and
Stalder are “independent” members of our board as defined in Rule 10A-3 under
the Securities Exchange Act of 1934, as amended, or the Exchange Act, and
Section 803 of the NYSE Amex Company Guide. In addition, our board of
directors has determined that Mr. Braca satisfies the definition of an audit
committee “financial expert” as set forth in Item 401(e) of Regulation S-B
promulgated by the SEC. Our Audit Committee held four (4) meetings
during Fiscal 2009.
Review and Approval of
Related Person Transactions
Our Audit
Committee Charter requires that our Audit Committee review and approve or ratify
transactions involving us and any executive officer, director, director nominee,
5% stockholder and certain of their immediate family members, also referred to
herein as a related person. The policy and procedures cover any transaction
involving a related person, also referred to herein as a related person
transaction, in which the related person has a material interest and which does
not fall under an explicitly stated exception set forth in the applicable
disclosure rules of the SEC.
A related
person transaction will be considered approved or ratified if it is authorized
by the Audit Committee after full disclosure of the related person’s interest in
the transaction. In considering related person transactions, the Audit Committee
will consider any information considered material to investors and the following
factors:
|
·
|
the
related person’s interest in the
transaction;
|
|
·
|
the
approximate dollar value of the
transaction;
|
|
·
|
whether
the transaction was undertaken in the ordinary course of our
business;
|
|
·
|
whether
the terms of the transaction are no less favorable to us than terms that
we could have reached with an unrelated third party;
and
|
|
·
|
the
purpose and potential benefit to us of the
transaction.
|
Nominating and Corporate
Governance Committee
. The primary responsibilities of our
Nominating and Corporate Governance Committee, as more fully set forth in the
Nominating and Corporate Governance Committee Charter and Corporate Governance
Guidelines adopted on October 15, 2004, and amended and restated on
June 27, 2008 include:
|
·
|
identifying
individuals qualified to become our board
members;
|
|
·
|
evaluating
and recommending to our board the persons to be nominated for election as
directors at any meeting of stockholders and to each of our board’s
committees;
|
|
·
|
reviewing
and making recommendations to our board with respect to management
succession planning;
|
|
·
|
developing
and recommending to our board a set of corporate governance principles
applicable to Senesco; and
|
|
·
|
overseeing
the evaluation of our board.
|
Our
Nominating and Corporate Governance Committee was formed on September 29, 2004,
and it is currently comprised of Messrs. Stalder, Forbes and
Quick. Mr. Forbes currently serves as the chairman of the Nominating
and Corporate Governance Committee. All members of our Nominating and
Corporate Governance Committee are independent, as independence for nominating
and corporate governance committee members is defined under Section 803 of the
NYSE Amex Company Guide. The Nominating and Corporate Governance
Committee had two (2) meetings during Fiscal 2009.
The
Nominating and Corporate Governance Committee does not have a specific policy
with regard to the consideration of diversity in identifying director
nominees. The Nominating and Corporate Governance Committee considers
the diversity of the professional experience, education and skill set in
identifying the director nominees.
Code of Business Ethics and
Conduct
. Pursuant to the requirements of Section 406 of the
Sarbanes-Oxley Act of 2002 and Section 807 of the NYSE Amex Company Guide, on
March 17, 2003, our board adopted a Code of Business Ethics and Conduct, which
may also be found on our website at www.senesco.com. Our Code of
Ethics contains written standards designed to deter wrongdoing and to
promote:
|
·
|
honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
|
·
|
full,
fair, accurate, timely, and understandable disclosure in reports and
documents filed with the SEC;
|
|
·
|
compliance
with applicable governmental laws, rules and
regulations;
|
|
·
|
the
prompt internal reporting of violations of our Code of Ethics to an
appropriate person or persons identified in our Code of Ethics;
and
|
|
·
|
accountability
for adherence to our Code of
Ethics.
|
Each of
our employees, officers and directors completed a signed certification to
document his or her understanding of and compliance with our Code of
Ethics.
Director
Candidates
The
process followed by our Nominating and Corporate Governance Committee to
identify and evaluate director candidates includes requests to board members and
others for recommendations, meetings from time to time to evaluate biographical
information and background material relating to potential candidates and
interviews of selected candidates by members of the committee and the
board.
In
considering whether to recommend any particular candidate for inclusion in the
board’s slate of recommended director nominees, our Nominating and Corporate
Governance Committee will apply the criteria contained in the committee’s
charter. These criteria include the candidate’s integrity, business
acumen, knowledge of our business and industry, age, experience, diligence,
conflicts of interest and the ability to act in the interests of all
stockholders. Our Nominating and Corporate Governance Committee does
not assign specific weights to particular criteria and no particular criterion
is a prerequisite for each prospective nominee. In addition, although
we do not have a formal diversity policy, we review diversity as one of the
criteria for nomination. We believe that the backgrounds and
qualifications of our directors, considered as a group, should provide a
composite mix of experience, knowledge and abilities that will allow the board
to fulfill its responsibilities.
Stockholders
may recommend individuals to our Nominating and Corporate Governance Committee
for consideration as potential director candidates by submitting their names,
together with appropriate biographical information and background materials and
a statement as to whether the stockholder or group of stockholders making the
recommendation has beneficially owned more than 5% of our common stock for at
least one (1) year as of the date such recommendation is made, to: Nominating
and Corporate Governance Committee, c/o Corporate Secretary, Senesco
Technologies, Inc., 303 George Street, Suite 420, New Brunswick, New Jersey
08901. Assuming that appropriate biographical and background material
has been provided on a timely basis, the committee will evaluate
stockholder-recommended candidates by following substantially the same process,
and applying substantially the same criteria, as it follows for candidates
submitted by others.
Communicating
with our Independent Directors
Our board
will give appropriate attention to written communications that are submitted by
stockholders, and will respond if and as appropriate. The Chairman of
the Board, with the assistance of our outside counsel, is primarily responsible
for monitoring communications from our stockholders and for providing copies or
summaries to the other directors as he considers
appropriate. Communications are forwarded to all directors if they
relate to important substantive matters and include suggestions or comments that
the Chairman considers to be important for the directors to know. In
general, communications relating to corporate governance and long-term corporate
strategy are more likely to be forwarded than communications relating to
ordinary business affairs, personal grievances and matters as to which we tend
to receive repetitive or duplicative communications.
Stockholders
who wish to send communications on any topic to our board should address such
communications to: Board of Directors, c/o Corporate Secretary, Senesco
Technologies, Inc., 303 George Street, Suite 420, New Brunswick, New Jersey
08901.
Compensation
of Directors
Equity
Grants Fiscal 2009 and Fiscal 2010:
We do not
automatically grant options or other equity to our board. Our
Compensation Committee reviews the equity program each year with its
compensation consultant and determines the appropriate level of the equity
awards as disclosed above. We provide reimbursement to directors for
reasonable and necessary expenses incurred in connection with attendance at
meetings of the board of directors and other Senesco business.
In
accordance with a resolution unanimously approved by our board on November 19,
2008, we granted to our non-employee board members, options to purchase shares
of our common stock, pursuant to and in accordance with our 1998 Stock Plan, as
consideration for their service on our board through June 30, 2008, or Fiscal
2008 as follows:
Director
|
|
Number of Shares
Underlying
Options Granted
|
|
Grant Date
|
|
Exercise Price
Per Share
|
|
Rudolf
Stalder
|
|
|
80,000
|
|
November
19, 2008
|
|
$
|
0.60
|
|
Christopher
Forbes
|
|
|
50,000
|
|
November
19, 2008
|
|
$
|
0.66
|
|
Thomas
C. Quick
|
|
|
40,000
|
|
November
19, 2008
|
|
$
|
0.60
|
|
John
N. Braca
|
|
|
70,000
|
|
November
19, 2008
|
|
$
|
0.60
|
|
David
Rector
|
|
|
70,000
|
|
November
19, 2008
|
|
$
|
0.60
|
|
Director
|
|
Number of Shares
Underlying
Options Granted
|
|
Grant Date
|
|
Exercise Price
Per Share
|
|
Jack
Van Hulst
(1)
|
|
|
40,000
|
|
November
19, 2008
|
|
$
|
0.60
|
|
____________
|
(1)
|
Mr.
Van Hulst became an employee of the Company effective November 16,
2009.
|
Except
for options granted to Christopher Forbes, the options granted to the board have
(i) an exercise price equal to the fair market value of our common stock on the
date of grant, (ii) have a term of ten (10) years, and (iii) are exercisable as
follows: (y) one-half (1/2) of the options were exercisable as of the date of
grant; and (z) one-half (1/2) of the options shall become exercisable on the
first anniversary of the date of grant. The options granted to
Christopher Forbes have an exercise price equal to 110% of the fair market value
of our common stock on the date of grant and have a term of five (5)
years.
Commencing
in Fiscal 2009, after review and consultation with the Compensation Committee’s
compensation consultant, we implemented a new compensation plan for our
directors pursuant to which we pay to each director cash compensation as
consideration for their service on our board as follows:
Annual
(Base) Retainer
|
|
$
|
10,000
|
|
Per
Scheduled Board Meeting Fee
|
|
$
|
1,500
|
(1)
|
Per
Committee Meeting Fee
|
|
$
|
750
|
(2)
|
Additional
Annual Retainer:
|
|
|
|
|
Chairman
of the Board
|
|
$
|
5,000
|
|
Audit
Committee Chair
|
|
$
|
3,500
|
|
Compensation
Committee Chair
|
|
$
|
3,500
|
|
Nominating
and Corporate Governance Committee Chair
|
|
$
|
1,500
|
|
Non-Chair
Committee Member Additional Retainer
(All
Committees)
|
|
$
|
1,000
|
|
Maximum
Per Diem For All Meetings
|
|
$
|
2,000
|
|
____________
|
(1)
|
$750
for telephonic meetings (less than 30 minutes:
$375).
|
|
(2)
|
$375
for telephonic meetings.
|
Such cash
compensation is paid in quarterly increments. A director may elect,
provided such election is made prior to the time the cash award is made, to
receive, in lieu of such cash payments, either (i) restricted stock units, or
RSU’s, in an amount equal to such cash award or (ii) twice the number of options
in an amount equal to such cash award. Such election to receive (y)
cash or (z) equity in the form of RSU’s or options applies for the entire
year. The directors have all elected to receive options in lieu of
cash for Fiscal 2010, except for Messrs. Braca and Rector, who have elected to
receive their retainer fees in cash and their meeting fees in options, and
Mr. Isabelle, who has elected to receive his fees in cash. The
RSU’s or options are granted effective two (2) days following the filing of our
quarterly reports on Form 10-Q. The exercise price will be the
closing price on the day before the grant date.
The board
also approved a plan for Fiscal 2009 whereby the outside directors were granted
the following options which were granted two (2) trading days after we filed our
Form 10-Q for the first quarter of Fiscal 2010, or on November 19,
2009. Except for Christopher Forbes, the exercise price was the
closing price on the day before the grant date, or $0.29. The options
granted to Christopher Forbes have an exercise price equal to 110% of the fair
market value of our common stock on the date of grant, or $0.32, and have a
term of five (5) years.
Director
|
|
Total # of Options
Granted
|
|
Rudolf
Stalder
|
|
|
70,000
|
|
Christopher
Forbes
|
|
|
40,000
|
|
Thomas
C. Quick
|
|
|
25,000
|
|
John
N. Braca
|
|
|
50,000
|
|
David
Rector
|
|
|
50,000
|
|
Jack
Van Hulst(1)
|
|
|
30,000
|
|
Harlan
W. Waksal, M.D.
|
|
|
70,000
|
|
Warren
J. Isabelle
|
|
|
25,000
|
|
____________
|
(1)
|
Mr.
Van Hulst was employed by the Company effective November 16,
2009.
|
Such
grants vested one-half (1/2) upon the date of grant and the remaining one-half
(1/2) will vest one (1) year from the date of grant.
Director
Compensation
The table
below shows the compensation paid or awarded to our independent directors during
the fiscal year ended June 30, 2009.
Name
|
|
Fees
Earned
or Paid in
Cash ($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards (1) ($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Rudolf
Stalder
|
|
|
—
|
|
|
|
—
|
|
|
$
|
66,114
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
66,114
|
|
Christopher
Forbes
|
|
|
—
|
|
|
|
—
|
|
|
$
|
41,946
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
41,946
|
|
Thomas
C. Quick
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40,427
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40,427
|
|
John
N. Braca
|
|
$
|
10,875
|
|
|
|
—
|
|
|
$
|
46,559
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
57,434
|
|
David
Rector
|
|
$
|
10,875
|
|
|
|
—
|
|
|
$
|
46,559
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
57,434
|
|
Jack
Van Hulst
(3)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
43,673
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
43,673
|
|
Harlan
W. Waksal, M.D.
|
|
|
—
|
|
|
|
—
|
|
|
$
|
11,519
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
11,519
|
|
Warren
J. Isabelle
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
____________
|
(1)
|
Represents
the aggregate grant date fair value for stock options granted in the 2009
fiscal year accounted for in accordance with the FASB ASC Topic 718. For
information regarding assumptions underlying the FASB ASC Topic 718
valuation of equity awards, see Note 7 of the Consolidated Financial
Statements in our Annual Report on Form 10-K/A for the fiscal year ended
June 30, 2009.
|
|
(2)
|
Mr.
Isabelle became a member of our board in June
2009.
|
|
(3)
|
Mr.
Van Hulst was employed by the Company effective November 16,
2009.
|
Director
|
|
Option Grant
Date
|
|
Exercise Price
|
|
|
# of Shares Associated
With Charge
|
|
|
Compensation Cost in
Fiscal 2009
|
|
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
23,729
|
|
|
$
|
10,915
|
|
Rudolf
Stalder
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
28,191
|
|
|
$
|
10,149
|
|
|
|
11/19/2008
|
|
$
|
0.60
|
|
|
|
98,334
|
|
|
$
|
45,050
|
|
|
|
5/06/2009
|
|
$
|
0.
65
|
|
|
|
18,077
|
|
|
$
|
6,508
|
|
Christopher
Forbes
|
|
2/20/2009
|
|
$
|
0.52
|
|
|
|
23,404
|
|
|
$
|
7,021
|
|
|
|
11/19/2008
|
|
$
|
0.66
|
|
|
|
64,584
|
|
|
$
|
28,417
|
|
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
16,949
|
|
|
$
|
7,797
|
|
Thomas
C. Quick
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
22,340
|
|
|
$
|
8,042
|
|
|
|
11/19/2008
|
|
$
|
0.60
|
|
|
|
53,750
|
|
|
$
|
24,588
|
|
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
11,441
|
|
|
$
|
5,263
|
|
John
N. Braca
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
12,766
|
|
|
$
|
4,596
|
|
|
|
11/19/2008
|
|
$
|
0.60
|
|
|
|
80,000
|
|
|
$
|
36,700
|
|
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
11,441
|
|
|
$
|
5,263
|
|
David
Rector
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
12,766
|
|
|
$
|
4,596
|
|
|
|
11/19/2008
|
|
$
|
0.60
|
|
|
|
80,000
|
|
|
$
|
36,700
|
|
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
20,763
|
|
|
$
|
9,551
|
|
Jack
Van Hulst
(1)
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
21,277
|
|
|
$
|
7,660
|
|
|
|
11/19/2008
|
|
$
|
0.60
|
|
|
|
57,916
|
|
|
$
|
26,462
|
|
Harlan
W. Waksal, M.D.
|
|
5/06/2009
|
|
$
|
0.59
|
|
|
|
19,492
|
|
|
$
|
8,966
|
|
|
|
2/20/2009
|
|
$
|
0.47
|
|
|
|
7,092
|
|
|
$
|
2,553
|
|
Warren
J. Isabelle
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
____________
|
(1)
|
Mr.
Van Hulst was employed by the Company effective November 16,
2009.
|
As
described above, on November 19, 2008, February 20, 2009, and May 6, 2009, each
of our non-employee directors received options to purchase shares of our common
stock pursuant to the provisions of the 1998 and 2008 Stock
Plans. The options have an exercise price of $0.60 per share, $0.47
per share and $0.59 per share, respectively, the fair market value of the common
stock on the grant dates (except for the grant to Christopher Forbes, which have
an exercise price of $0.66 per share, $0.52 per share and $0.65 per share,
respectively (110% of the fair market value of the common stock on the grant
date).
The
following table shows the total number of shares of our common stock subject to
option awards (vested and unvested) for each non-employee director as of June
30, 2009:
Director
|
|
Total # of Options
Outstanding
|
|
Rudolf
Stalder
|
|
|
750,254
|
|
Christopher
Forbes
|
|
|
356,065
|
|
Thomas
C. Quick
|
|
|
293,039
|
|
John
N. Braca
|
|
|
274,207
|
|
David
Rector
|
|
|
304,207
|
|
Jack
Van Hulst(1)
|
|
|
149,956
|
|
Harlan
W. Waksal, M.D.
|
|
|
26,584
|
|
Warren
J. Isabelle
|
|
|
—
|
|
____________
|
(1)
|
Mr.
Van Hulst was employed by the Company effective November 16,
2009.
|
Dr.
Thompson has received compensation for providing research and development
management services to us. See “Certain Relationships and Related
Transactions” which sets forth the details of the compensation for Dr.
Thompson.
In
October, 2009, the Committee granted the following options to the directors for
their service during Fiscal 2009. Such grants were effective two (2)
trading days after we filed our quarterly report on Form 10-Q for the quarter
ended September 30, 2009, or November 19, 2009:
Director
|
|
Total # of Options Granted
|
|
Rudolf
Stalder
|
|
|
70,000
|
|
Christopher
Forbes
|
|
|
40,000
|
|
Thomas
C. Quick
|
|
|
25,000
|
|
John
N. Braca
|
|
|
50,000
|
|
David
Rector
|
|
|
50,000
|
|
Jack
Van Hulst
|
|
|
30,000
|
|
Harlan
W. Waksal, M.D.
|
|
|
70,000
|
|
Warren
J. Isabelle
|
|
|
25,000
|
|
Such
grants vested one-half (1/2) upon the date of grant and the remaining one-half
(1/2) will vest one (1) year from the date of grant. The exercise
price is the closing price on the day before the grant date, or $0.39 and have a
term of ten (10) years. The options granted to Christopher Forbes
have an exercise price equal to 110% of the fair market value of our common
stock on the date of grant and have a term of five (5) years.
Further,
in consideration for his service on a Finance Committee of the board, Mr. Braca
will receive additional board compensation in the amount of $6,000 a month as
well as 10,000 options per month to purchase shares of the Company’s common
stock. Such options shall vest on the last business day of the fiscal
quarter in accordance with the terms of the Company’s 2008 Incentive
Compensation Plan, but shall not be issued until at least two (2) trading days
after the Company issues its financial results for such quarter. The
Committee further indicated that such compensation shall be in addition to any
other fees received by Mr. Braca for his service on the Board and its other
committees.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires a company’s directors, officers and
stockholders who beneficially own more than 10% of any class of equity
securities of the company registered pursuant to Section 12 of the Exchange Act,
collectively referred to herein as the Reporting Persons, to file initial
statements of beneficial ownership of securities and statements of changes in
beneficial ownership of securities with respect to the company’s equity
securities with the SEC. All Reporting Persons are required by SEC
regulation to furnish us with copies of all reports that such Reporting Persons
file with the SEC pursuant to Section 16(a).
Based
solely on our review of the copies of such forms received by us and upon written
representations of the Reporting Persons received by us, we believe that there
has been compliance with all Section 16(a) filing requirements applicable to our
Reporting Persons except that Forms 4 which were due in connection with May 6,
2009 option grants to our independent directors were filed on November 19, 2010
by each of Harlan W. Waksal, John N. Braca, Jack Van Hulst, Christopher Forbes,
Rudolf Stalder, Thomas C. Quick and David Rector.
EXECUTIVE
OFFICERS
The
following table identifies our current executive officers:
|
|
|
|
Capacities
in
Which
Served
|
|
In
Current
Position
Since
|
Jack
Van Hulst
|
|
70
|
|
President,
Chief Executive Officer, Secretary and Director
|
|
November
2009
|
John
E. Thompson, Ph.D.
|
|
68
|
|
Executive
Vice President and Chief Scientific Officer, Director
|
|
July
2004
|
Joel
P. Brooks
(1)
|
|
51
|
|
Chief
Financial Officer and Treasurer
|
|
December
2000
|
Richard
Dondero
(2)
|
|
60
|
|
Vice
President of Research and Development
|
|
July
2004
|
____________
|
(1)
|
Mr.
Brooks was appointed our Chief Financial Officer and Treasurer in December
2000. From September 1998 until November 2000, Mr. Brooks was the Chief
Financial Officer of Blades Board and Skate, LLC, a retail establishment
specializing in the action sports industry. Mr. Brooks was
Chief Financial Officer from 1997 until 1998 and Controller from 1994
until 1997 of Cable and Company Worldwide, Inc. He also held
the position of Controller at USA Detergents, Inc. from 1992 until 1994,
and held various positions at several public accounting firms from 1983
through 1992. Mr. Brooks received his Bachelor of Science
degree in Commerce with a major in Accounting from Rider University in
February 1983. Mr. Brooks also serves on the board of directors
and is chairman of the audit committee of USA Technologies,
Inc.
|
|
(2)
|
Mr.
Dondero was appointed our Vice President of Research and Development in
July 2004. From July 2002 until July 2004, Mr. Dondero was a
Group Leader in the Proteomics Reagent Manufacturing division of Molecular
Staging, Inc., a biotech firm engaged in the measurement and discovery of
new biomarkers. From 1985 through June 2001, Mr. Dondero served
in several roles of increasing responsibility through Vice President of
Operations and Product Development at Cistron Biotechnology,
Inc. From 1977 through 1985, Mr. Dondero served as a senior
scientist at Johnson and Johnson, and from 1975 through 1977, as a
scientist at Becton Dickinson. Mr. Dondero received his
Bachelor of Arts degree from New Jersey State University in 1972 and his
Master of Science degree from Seton Hall University in
1976.
|
None of
our current executive officers are related to any other executive officer or to
any of our directors. Our executive officers are elected annually by
our board and serve until their successors are duly elected and
qualified.
COMPENSATION
DISCUSSION AND ANALYSIS
This
Compensation Discussion and Analysis explains the principles underlying our
compensation policies and decisions and the principal elements of compensation
paid to our executive officers during Fiscal 2009. Our Chief
Executive Officer, Chief Financial Officer and all of our other executive
officers included in the Summary Compensation Table will be referred to as the
“named executive officers” for purposes of this discussion.
Compensation
Objectives and Philosophy
The
Compensation Committee, also referred to herein as the Committee, of the board
is responsible for the following:
|
·
|
to
discharge the board’s responsibilities relating to compensation of our
directors and named executive
officers;
|
|
·
|
to
have overall responsibility for approving and evaluating our director and
officer compensation plans, policies and
programs;
|
|
·
|
to
have responsibility for producing an annual report on executive
compensation for inclusion in our proxy statement;
and
|
|
·
|
to
review and discuss with Senesco management the Compensation Discussion
& Analysis, which is included in Senesco’s annual proxy
statement.
|
As part
of this process, the Committee seeks to accomplish the following objectives with
respect to our executive compensation programs:
|
·
|
to
motivate, recruit and retain executives capable of meeting our strategic
objectives;
|
|
·
|
to
provide incentives to ensure superior executive performance and successful
financial results for us; and
|
|
·
|
to
align the interests of executives with the long-term interests of our
stockholders.
|
The
Committee seeks to achieve these objectives by:
|
·
|
linking
a substantial portion of compensation to our achievement of long-term and
short-term financial objectives and the individual’s contribution to the
attainment of those objectives;
|
|
·
|
providing
long-term equity-based incentives and encouraging direct share ownership
by executives with the intention of providing incentive-based compensation
to encourage a long-term focus on company profitability and stockholder
value; and
|
|
·
|
understanding
the marketplace and establishing a compensation structure that is adjusted
for our position in the marketplace and our current financial condition
and limited capital resources.
|
Setting
Executive Compensation
In Fiscal
2008 and Fiscal 2009, the Committee engaged J. Richard and Co., also referred to
herein as J. Richard, a nationally recognized compensation consulting firm, to
provide competitive compensation data and general advice on our compensation
programs and policies for our Chief Executive Officer, and J. Richard was
available for consultation with the Committee to discuss the compensation
programs for our other named executive officers. During Fiscal 2008
and Fiscal 2009, J. Richard performed a market analysis of the compensation paid
by comparable companies and provided the Committee with recommended compensation
ranges for the Chief Executive Officer based on the competitive
data. In addition, the former Chief Executive Officer provided
recommendations to the Committee with respect to the compensation packages for
those other named executive officers for Fiscal 2009, and the Committee also
reviewed the former Chief Executive Officer’s recommendation against
compensation paid by comparable companies.
For
Fiscal 2008 and 2009, the Committee’s objective to target each component of
compensation listed below to be competitive with comparable positions at peer
group companies, and to target the total annual compensation of each named
executive officer at the appropriate level for comparable positions at the
competitive peer group companies. For Fiscal 2008, our list of peer
group companies was as follows: Introgen Therapeutics, Inc.; Kosan
BioSciences, Inc.; Avalon Pharmaceuticals, Inc.; Atherogenics, Inc.; Keryx
BioPharaceuticals, Inc.; Targeted Genetics Corporation; Neopharm, Inc.; Genta,
Inc.; and Vion Pharmaceuticals, Inc.
During
the current compensation review process, the Committee elected not to engage an
independent compensation consultant. This decision was based on the
Committee’s belief that prior years analysis did not closely enough parallel the
scope of our business relative to the breadth of operations in general,
executive officers scope of duties and responsibilities, position in the life
cycle, financial responsibilities, capitalization and size of management
staff. The Committee also met with the former Chief Executive
Officer, Bruce C. Galton, who agreed with the approach not to engage an
outside consultant and agreed to provide a review of management’s performance
against objectives for the period to assist in ascertaining equity award
levels.
The
Committee elected to identify various companies in the biotech sector we felt
were somewhat close in scope of operation to the Company. It became
evident, as in prior years, that due to the key banner points listed above (the
breadth of operations in general, executive officers scope of duties and
responsibilities, position in the life cycle, financial responsibilities,
capitalization and size of management staff) it is very difficult to identify
such public entities for comparative purposes. For Fiscal 2009, the
companies we elected to evaluate were as follows: Adolor
Corporation (ADLR); MDRNA Inc. (MRNA); Anesiva Inc. (ANSV); Santarus Inc.
(SNTS); Sequenom, Inc.(SQNM); Cubist (CBST); Lexicon (LXRX); and Targacept, Inc.
(TRGT).
However,
in determining the compensation of each named executive officer, the Committee
also considers a number of other factors, including Senesco’s recent performance
and the named executive officer’s individual performance, the former Chief
Executive Officer’s recommendations and the importance of the executive’s
position and role in relation to execution of the Company’s strategic
plan. There is no pre-established policy for allocation of
compensation between cash and non-cash components or between short-term and
long-term components. Instead, the Committee determines the mix of
compensation for each named executive officer based on its review of the
competitive data, its subjective analysis of that individual’s performance and
contribution to our financial performance, the financial strength and outlook of
the Company and, most of all, what is considered fair and reasonable based on
the scope of operations and responsibilities. For the former Chief
Executive Officer, for Fiscal 2009, the Committee set his performance targets
and compensation levels based upon the input from the Committee’s analysis and
from the former Chief Executive Officer. For other named executive officers, the
Committee sets performance targets and compensation levels after receiving
recommendations from the former Chief Executive Officer and reviewing those
recommendations with the full Committee.
In
selecting companies to survey for such compensation purposes, the Compensation
Committee considered many factors not directly associated with the stock price
performance of those companies, such as geographic location, development stage,
organizational structure and market capitalization. For this reason,
there is not a meaningful correlation between the companies included within the
peer group identified for comparative compensation purposes and the companies
included within the RDG Micro Biotechnology Index.
Components
of Compensation
For
Fiscal 2008, our executive compensation program included the following
components:
|
·
|
annual
short-term equity incentives;
|
|
·
|
long-term
equity incentive awards; and
|
|
·
|
change
in control and other severance
arrangements.
|
For
Fiscal 2009, our executive compensation program included the following
components:
|
·
|
annual
short-term equity incentives;
|
|
·
|
a
continuation of the long-term equity incentive program;
and
|
|
·
|
change
in control and other severance
arrangements.
|
Currently,
for Fiscal 2010, our executive compensation program includes the following
components:
|
·
|
annual
short-term equity incentives; and
|
|
·
|
a
continuation of the long-term equity incentive
program.
|
The
Committee seeks to align the named executive officers’ and stockholders’
interests in a pay for performance environment. On average, a large portion of
an executive officer's total compensation is at risk, with the amount actually
paid tied to achievement of pre-established objectives and individual
goals.
Base
Salary
In General
– It is the
Committee’s objective to set a competitive rate of annual base salary or
consulting fees for each named executive officer. The Committee
believes competitive base salaries are necessary to attract and retain top
quality executives, since it is common practice for public companies to provide
their executive officers with a guaranteed annual component of compensation that
is not subject to performance risk. However, the Committee recognizes
that Senesco is still a development stage company, with little to no revenue
currently and believes that developing too rigid of a compensation structure can
become detrimental to the progress of the company.
When
compared to comparable positions at the competitive peer group companies, it is
the Committee’s objective to target the base compensation level of executive
officers below the 50th percentile because of our current financial
position. Historically the compensation levels for our executive
officers has been below the 25
th
percentile of competitive peer group companies. However, in determining the
compensation of each executive officer, the Committee also considers a number of
other factors, including recent Company and individual performance and the CEO’s
recommendations. There is no pre-established policy for allocation of
compensation between cash and non-cash components or between short-term and
long-term components. Instead, the Committee determines the mix of
compensation for each executive officer based on its review of the competitive
data and its subjective analysis of that individual’s performance and
contribution to the Company’s financial performance.
Base Salary for Fiscal 2009
– For Fiscal 2009, each named executive officer’s salary, except for the
President and Chief Executive Officer and the Executive Vice-President and Chief
Scientific Officer, was increased to cover cost of living
increases. The table below shows annual Fiscal 2009 and Fiscal 2008
base salary or consulting rates for each named executive officer:
|
|
|
|
|
|
|
|
|
|
|
|
Bruce C. Galton
(3)
|
|
President
and Chief Executive Officer
|
|
$
|
255,000
|
|
|
$
|
255,000
|
|
|
|
0.0
|
%
|
John
E. Thompson
|
|
Executive
Vice-President and Chief
Scientific Officer
|
|
$
|
65,000
|
(2)
|
|
$
|
65,000
|
(2)
|
|
|
0.0
|
%
|
Sascha
P. Fedyszyn
(4)
|
|
Vice-President
of Corporate
Development and Secretary
|
|
$
|
101,400
|
|
|
$
|
107,500
|
|
|
|
6.0
|
%
|
Joel
P. Brooks
|
|
Chief
Financial Officer and Treasurer
|
|
$
|
150,800
|
|
|
$
|
160,000
|
|
|
|
6.1
|
%
|
Richard
Dondero
|
|
Vice-President
of Research and
Development
|
|
$
|
130,000
|
|
|
$
|
143,000
|
|
|
|
10.0
|
%
|
|
(1)
|
Annual
salary increase became effective July 1,
2008.
|
|
(2)
|
Represents
consulting fees paid under a consulting
agreement.
|
|
(3)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(4)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
There
were no increases in base salary approved for Bruce C. Galton and John E.
Thompson as the Compensation Committee deemed the scope of their resource
management (i.e. personnel, operating budgets, and outside relationships) were
commensurate, fair and reasonable relative to their current base salary
rate.
Messrs.
Fedyszyn and Brooks received approximately a 6% increase in base salary to (i)
reflect a cost of living adjustment and (ii) their relative
performance. Mr. Dondero also received approximately a 10% increase
in base salary to reflect each of the foregoing plus an additional $5,000 range
adjustment to bring his salary more in line with the other named executive
officers. The Committee wishes to provide additional compensation to
all of the named executive officers, including the chief executive officer,
through the development of incentive programs based on the named executives
performance and attainment of stated objectives that enhance shareholder value
in order to (i) link a substantial portion of their compensation to the
achievement of short-term and long-term objectives and (ii) to save cash given
our limited capital resources.
During
the course of the year, the Committee determined that we could in no manner
financially support the terms of the various employment agreements in
effect. The Committee issued a notice of non-renewal to all named
executive officers in effect not renewing the employment agreements moving
forward following the various upcoming anniversary dates of each
agreement. We anticipate that each of the named executive officers
will, following the expiration of their employment agreements, continue as
employees on an “at will basis”, meaning that either we or the employees may
discontinue their employment with or without notice or cause. The
employees’ respective salaries, duties and titles will remain
unchanged.
Base Salary for
Fiscal 2010
– For Fiscal
2010, after a review of the factors discussed above, each named executive
officer’s salary was not increased.
Effective
November 16, 2009, Jack Van Hulst, a current member of our board of directors,
assumed the role of President and Chief Executive Officer of
Senesco. We have not and do not anticipate entering into a new
employment agreement with Mr. Van Hulst, however, the Compensation
Committee and independent members of the board determined to pay to Mr. Van
Hulst a monthly salary in the amount of $5,000 and to grant to Mr. Van Hulst
options to purchase shares of the our common stock, par value $0.01, in the
amount of 25,000 options per month, pursuant to our 2008 Incentive Compensation
Plan, which such options shall vest immediately upon each
issuance. Such options shall be granted quarterly, two (2) trading
days following the Company’s filing of its quarterly report for the respective
quarterly period.
Annual Bonuses for Fiscal 2009 and
Fiscal 2010
– Bonuses are determined at the discretion of the board based
upon the recommendation of the Committee. There were no cash bonuses
granted during Fiscal 2009. The Committee is currently reviewing whether or not
there will be cash bonuses granted for Fiscal 2010.
Short
Term Incentive Equity Awards
In General
– A portion of each
named officer’s compensation is provided in the form of short-term equity
awards. It is the Committee’s belief that properly structured equity
awards are an effective method of aligning the short-term interests of our named
executive officers with those of our stockholders.
Equity
awards were made in the form of incentive stock options. The
Committee has followed a grant practice of tying equity awards to its annual
calendar year-end review of individual performance, its assessment of our
performance and our operational results.
Restricted Stock Unit and Incentive
Stock Option Short-Term Incentive Plan for Fiscal 2008
– Pursuant to the
Company’s Restricted Stock Unit and Incentive Stock Option Short-Term Incentive
Plan, or STIP, covering Fiscal 2008, equity grants to our named executive
officers were in the form of restricted stock units, also referred to herein as
RSU’s, and incentive stock options, also referred to herein as
ISO’s. Each RSU and ISO entitles the recipient to receive one (1)
share of our common stock upon vesting or upon a designated date or event
following such vesting. Each ISO was granted with an exercise price
of $0.99. Each named executive had the option of receiving their RSU
grant in the form of RSU’s or ISO’s. If a named execute chose to
receive ISO’s in lieu of RSU’s, then such named executive was granted twice as
many ISO’s, due to the $0.99 exercise price of such ISO’s. All RSU’s
and ISO’s were awarded together and were distributed in November 2008 after
evaluation of the performance objectives identified further below under the
heading STIP Performance Objectives, or SPO’s.
The
Committee will follow a grant practice of tying equity awards to its annual
year-end review of individual performance, its assessment of our performance and
our financial results. Accordingly, it is expected that any equity
awards to the named executive officers will be made on an annual basis promptly
after the release of our financial results. The Committee has
established short-term incentive grant guidelines for eligible named executive
officers each year based on competitive annual grant data provided by
management’s compensation consultant and by J. Richard, the Committee’s
compensation consultant.
The total
amount of RSU’s and ISO’s in the STIP pool awarded to our named executive
officers was 237,300 shares, which consisted of 112,700 RSU’s and 124,600 ISO’s,
representing 1.4% of the outstanding shares as of July 1, 2007. The specific
amount of RSU’s and ISO’s awarded to each individually named executive officer
relating to the performance objectives were based on (i) the functional areas
assessed by the underlying detailed objectives of each named executive officer,
(ii) the weight of each of the functions of each named executive officer and
(iii) the contribution to each function by each named executive
officer.
The
amount and percentage of the RSU’s and ISO’s awarded to all the named executive
officers as a whole for their contributions to each of the STIP Performance
Objectives were as follows:
STIP Performance Objective
|
|
Percentage of
STIP RSU and
ISO Award Pool
|
|
|
Total Amount of RSU’s and
ISO’s Awarded As a Whole to
All Named Executive Officers
per SPO
|
|
First
STIP Performance Objective
.
Contributions
Relating to Cancer Target
|
|
|
45
|
%
|
|
|
126,000
|
|
Second
STIP Performance Objective
.
Contributions
Relating to Financing
|
|
|
25
|
%
|
|
|
45,938
|
|
Third
STIP Performance Objective
.
Contributions
Relating to Licensing and Support
|
|
|
15
|
%
|
|
|
32,812
|
|
Fourth
STIP Performance Objective
.
Contributions
Relating to Intellectual Property Administration
|
|
|
4
|
%
|
|
|
11,200
|
|
Fifth
STIP Performance Objective
.
Contributions
Relating to Investor Relations
|
|
|
3
|
%
|
|
|
5,775
|
|
Sixth
STIP Performance Objective
.
Contributions
Relating to Website Administration
|
|
|
1
|
%
|
|
|
1,925
|
|
Seventh
STIP Performance Objective
.
Contributions
Relating to Audits and Securities Filings
|
|
|
5
|
%
|
|
|
9,625
|
|
Eighth
STIP Performance Objective
.
Contributions
Relating to the American Stock Exchange Duties
|
|
|
1
|
%
|
|
|
1,750
|
|
Ninth
STIP Performance Objective
.
Contributions
Relating to the Future Financing Plan
|
|
|
1
|
%
|
|
|
2,275
|
|
Each
named executive officer eligible to receive an award pursuant to the STIP was
required to be employed by the Company upon the vesting date in November 2008,
also referred to herein as the Vesting Date. If a named executive
officer was no longer employed by the Vesting Date, then such named executive
officer’s respective RSU or ISO award tied to such STIP Performance Objective
would be forfeited. All named executive officers were employed on the Vesting
Date. The Committee shall have the sole discretion to reinstate any
eliminated portion or segment of a STIP Performance Objective award or that
portion of a STIP Performance Objective award for an award to a successor to the
STIP Performance Objectives.
Subject
to the preceding paragraph, the approximate individual amounts and percentages
of RSU and ISO awards to the named executive officers were as
follows:
Name
|
|
Bruce C. Galton
|
|
|
Joel P. Brooks
|
|
|
Sascha P. Fedyszyn
|
|
|
John E. Thompson
|
|
|
Richard Dondero
|
|
Title
|
|
President and Chief
Executive Officer
|
|
|
Chief Financial
Officer and
Treasurer
|
|
|
Vice-President of
Corporate
Development and
Secretary
|
|
|
Executive Vice-
President and Chief
Scientific Officer
|
|
|
Vice-President of
Research and
Development
|
|
Type of Award
|
|
RSU
|
|
|
RSU
|
|
|
RSU
|
|
|
RSU
|
|
|
RSU
|
|
Percentage
of 126,000 RSU’s and ISO’s Awarded for First SPO
|
|
|
20
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
25
|
%
|
|
|
35
|
%
|
Number
of RSU’s and ISO’s Awarded for the First SPO
|
|
|
15,750
|
|
|
|
7,875
|
|
|
|
7,875
|
|
|
|
39,376
|
|
|
|
55,124
|
|
Percentage
of 45,938 RSU’s and ISO’s Awarded for the
Second SPO
|
|
|
45
|
%
|
|
|
45
|
%
|
|
|
5
|
%
|
|
|
0
|
%
|
|
|
5
|
%
|
Number
of RSU’s and ISO’s Awarded for the Second SPO
|
|
|
19,687.5
|
|
|
|
19,687.5
|
|
|
|
2,188
|
|
|
|
0
|
|
|
|
4,375
|
|
Percentage
of 32,812 RSU’s and ISO’s Awarded for the Third SPO
|
|
|
35
|
%
|
|
|
5
|
%
|
|
|
35
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
Number
of RSU’s and ISO’s Awarded for the Third SPO
|
|
|
9,187.5
|
|
|
|
1,312.5
|
|
|
|
9,187
|
|
|
|
7,875
|
|
|
|
5,250
|
|
Percentage
of 11,200 RSU’s and ISO’s Awarded for the
Fourth SPO
|
|
|
10
|
%
|
|
|
0
|
%
|
|
|
30
|
%
|
|
|
30
|
%
|
|
|
30
|
%
|
Number
of RSU’s and ISO’s Awarded for the Fourth SPO
|
|
|
700
|
|
|
|
0
|
|
|
|
2,100
|
|
|
|
4,200
|
|
|
|
4,200
|
|
Percentage
of 5,775 RSU’s and ISO’s Awarded for the Fifth SPO
|
|
|
30
|
%
|
|
|
30
|
%
|
|
|
30
|
%
|
|
|
0
|
%
|
|
|
10
|
%
|
Number
of RSU’s and ISO’s Awarded for the Fifth SPO
|
|
|
1,575
|
|
|
|
1,575
|
|
|
|
1,575
|
|
|
|
0
|
|
|
|
1,050
|
|
Percentage
of 1,925 RSU’s and ISO’s Awarded for the Sixth SPO
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
70
|
%
|
|
|
0
|
%
|
|
|
10
|
%
|
Number
of RSU’s and ISO’s Awarded for the Sixth SPO
|
|
|
175
|
|
|
|
175
|
|
|
|
1,225
|
|
|
|
0
|
|
|
|
350
|
|
Percentage
of 9,625 RSU’s and ISO’s Awarded for the Seventh SPO
|
|
|
20
|
%
|
|
|
60
|
%
|
|
|
10
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
Number
of RSU’s and ISO’s Awarded for the Seventh SPO
|
|
|
1,750
|
|
|
|
5,250
|
|
|
|
875
|
|
|
|
875
|
|
|
|
875
|
|
Percentage
of 1,750 RSU’s and ISO’s Awarded for the Eighth SPO
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Number
of RSU’s and ISO’s Awarded for the Eighth SPO
|
|
|
875
|
|
|
|
875
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Percentage
of 2,275 RSU’s and ISO’s Awarded for the Ninth SPO
|
|
|
30
|
%
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
Number
of RSU’s and ISO’s Awarded for the Ninth SPO
|
|
|
525
|
|
|
|
525
|
|
|
|
175
|
|
|
|
350
|
|
|
|
700
|
|
Total
RSU’s and ISO’s Awarded
|
|
|
50,225
|
|
|
|
37,275
|
|
|
|
25,200
|
|
|
|
52,676
|
|
|
|
71,924
|
|
Percentage
of 237,300 RSU’s and ISO’s Awarded for All SPOs
|
|
|
29
|
%
|
|
|
21
|
%
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
21
|
%
|
In
October 2008, the Committee determined that the executive officers had achieved
the previously granted short-term performance milestones, and accordingly,
determined to vest, effective two (2) trading days following the Company’s
filing of its quarterly report on Form 10-Q for the quarter ended
September 30, 2008, the foregoing RSUs/options as follows:
|
·
|
Mr. Galton
received 50,255 RSUs;
|
|
·
|
Mr. Brooks
received 37,275 RSUs;
|
|
·
|
Mr. Fedyszyn
received 25,200 RSU;
|
|
·
|
Dr. Thompson
received 52,676 options; and
|
|
·
|
Mr. Dondero
received 71,924 options.
|
Restricted Stock Unit and Incentive
Stock Option Short-Term Incentive Plan for Fiscal 2009
– Pursuant to the
Company’s Restricted Stock Unit and Incentive Stock Option Short-Term Incentive
Plan, or STIP, covering Fiscal 2009, equity grants to our named executive
officers were in the form of restricted stock units, also referred to
herein as RSU’s, and incentive stock options, also referred to herein as
ISO’s. The RSU’s and options were granted effective two (2) days
following the filing of our quarterly report on Form 10-Q for the quarter ended
September 30, 2008. Each ISO will have an exercise price equal to the
closing price on the day prior to the grant date, or $.60. Each RSU
and ISO entitles the recipient to receive one (1) share of our common stock upon
vesting or upon a designated date or event following such
vesting. Each named executive had the option of receiving their RSU
grant in the form of RSU’s or ISO’s. If a named execute chose to
receive ISO’s in lieu of RSU’s, then such named executive will be granted twice
as many ISO’s. All RSU’s and ISO’s will be awarded together and will
be available for distribution upon evaluation of performance objectives that
have been identified further below under the heading STIP Performance
Objectives, or SPO’s.
The
Committee will follow a grant practice of tying equity awards to its annual
year-end review of individual performance, its assessment of our performance and
our financial results. Accordingly, it is expected that any equity
awards to the named executive officers will be made on an annual basis promptly
after the release of our financial results. The Committee has
established short-term incentive grant guidelines for eligible named executive
officers each year based on competitive annual grant data provided by
management’s compensation consultant and by J. Richard, the Committee’s
compensation consultant.
The total
amount of RSU’s and ISO’s in the STIP pool awarded to our named executive
officers was 264,000 shares, which consisted of 136,000 RSU’s and 128,000
ISO’s, representing 1.4% of the outstanding shares as of July 1, 2008. The
specific amount of RSU’s and ISO’s awarded to each individually named executive
officer relating to the performance objectives are based on (i) the functional
areas assessed by the underlying detailed objectives of each named executive
officer, (ii) the weight of each of the functions of each named executive
officer, and (iii) the contribution to each function by each named executive
officer.
The
amount and percentage of the RSU’s and ISO’s awarded to all the named executive
officers as a whole for their contributions to each of the STIP Performance
Objectives was as follows:
STIP Performance Objective
|
|
Percentage of
STIP RSU and
ISO Award Pool
|
|
|
Total Amount of RSU’s and
ISO’s Awarded As a Whole to
All Named Executive Officers
per SPO
|
|
First STIP Performance
Objective
.
Contributions
Relating to Finance Objectives
|
|
|
15
|
%
|
|
|
30,900
|
|
Second STIP
Performance Objective
.
Contributions
Relating to Agricultural Licensing Objectives
|
|
|
20
|
%
|
|
|
53,600
|
|
Third STIP Performance
Objective
.
Contributions
Relating to Human Health Objectives
|
|
|
25
|
%
|
|
|
82,000
|
|
Fourth STIP
Performance Objective
.
Contributions
Relating to Investor Relations, Intellectual Property and Website
Administration
|
|
|
25
|
%
|
|
|
61,500
|
|
Fifth STIP Performance
Objective
.
Contributions
Relating to Organizational Objectives
|
|
|
15
|
%
|
|
|
36,000
|
|
Each
named executive officer eligible to receive an award pursuant to the STIP is
required to be employed by the Company upon the vesting date in or around
November 2009, also referred to herein as the STIP Vesting
Date. If a named executive officer is no longer employed by the STIP
Vesting Date, then such named executive officer’s respective RSU or ISO award
tied to such STIP Performance Objective will be forfeited. The Committee shall
have the sole discretion to reinstate any eliminated portion or segment of a
STIP Performance Objective award or that portion of a STIP Performance Objective
award for an award to a successor to the STIP Performance
Objectives.
The
amount and percentage of RSU’s and ISO’s awarded to the named executive officers
individually for their contributions to each of the STIP Performance Objectives
may be modified, altered and redistributed by the Chief Executive Officer,
subject to Committee review, to reflect (i) the actual performance of each named
executive officer, (ii) the potential reassignment of duties of each named
executive officer, and (iii) the unanticipated accomplishments by any of the
named executive officers after the outset of the STIP that contribute
significantly to stockholder value during Fiscal 2009.
Subject
to the preceding paragraph, the approximate individual amounts and percentages
of RSU and ISO awards to the named executive officers are as
follows:
Name
|
|
Bruce C. Galton
|
|
|
Joel P. Brooks
|
|
|
Sascha P. Fedyszyn
|
|
|
John E. Thompson
|
|
|
Richard Dondero
|
|
Title
|
|
President and Chief
Executive Officer (1)
|
|
|
Chief Financial
Officer and
Treasurer
|
|
|
Vice-President of
Corporate
Development and
Secretary (2)
|
|
|
Executive Vice-
President and Chief
Scientific Officer
|
|
|
Vice-President of
Research and
Development
|
|
Type of Award
|
|
RSU
|
|
|
RSU
|
|
|
RSU
|
|
|
ISO
|
|
|
ISO
|
|
Percentage
of 30,900 RSU’s and ISO’s Awarded for First SPO
|
|
|
41
|
%
|
|
|
53
|
%
|
|
|
3
|
%
|
|
|
0
|
%
|
|
|
3
|
%
|
Number
of RSU’s and ISO’s Awarded for the First SPO
|
|
|
12,300
|
|
|
|
16,000
|
|
|
|
800
|
|
|
|
0
|
|
|
|
1,800
|
|
Percentage
of 53,600 RSU’s and ISO’s Awarded for the Second SPO
|
|
|
26
|
%
|
|
|
0
|
%
|
|
|
40
|
%
|
|
|
15
|
%
|
|
|
19
|
%
|
Number
of RSU’s and ISO’s Awarded for the Second SPO
|
|
|
10,400
|
|
|
|
0
|
|
|
|
16,000
|
|
|
|
12,000
|
|
|
|
15,200
|
|
Percentage
of 82,000 RSU’s and ISO’s Awarded for the Third SPO
|
|
|
25
|
%
|
|
|
5
|
%
|
|
|
6
|
%
|
|
|
23
|
%
|
|
|
41
|
%
|
Number
of RSU’s and ISO’s Awarded for the Third SPO
|
|
|
12,500
|
|
|
|
2,500
|
|
|
|
3,000
|
|
|
|
23,000
|
|
|
|
41,000
|
|
Percentage
of 61,500 RSU’s and ISO’s Awarded for the
Fourth SPO
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
37
|
%
|
|
|
5
|
%
|
|
|
18
|
%
|
Number
of RSU’s and ISO’s Awarded for the Fourth SPO
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
18,500
|
|
|
|
5,000
|
|
|
|
18,000
|
|
Percentage
of 36,000 RSU’s and ISO’s Awarded for the Fifth SPO
|
|
|
53
|
%
|
|
|
15
|
%
|
|
|
12
|
%
|
|
|
13
|
%
|
|
|
7
|
%
|
Number
of RSU’s and ISO’s Awarded for the Fifth SPO
|
|
|
15,800
|
|
|
|
4,500
|
|
|
|
3,700
|
|
|
|
8,000
|
|
|
|
4,000
|
|
In
October 2009, after a review of each of the factors that compromise the
short-term award program, the Committee determined that the executive officers
had partially achieved the previously granted short-term performance milestones,
and accordingly, determined to vest, effective two (2) trading days following
the Company’s filing of its quarterly report on Form 10-Q for the quarter
ended September 30, 2009, the foregoing RSUs/options as
follows:
|
·
|
Mr. Galton
received shares of common stock underlying his 49,500
RSUs;
|
|
·
|
Mr. Brooks
received shares of common stock underlying his 26,600
RSUs;
|
|
·
|
Mr. Fedyszyn
received shares of common stock underlying his 39,900
RSU;
|
|
·
|
Dr. Thompson
received 48,000 options; and
|
|
·
|
Mr. Dondero
received 76,000 options.
|
Restricted Stock Unit and Incentive
Stock Option Short-Term Incentive Plan for Fiscal 2009—
On February 16,
2010, the Compensation Committee determined to award options to purchase shares
of common stock of the Company, par value $0.01, to each of Joel Brooks and Mr.
Richard Dondero. These option grants are intended to retain such
officers and to motivate such officers in the continued performance of their
respective offices.
Accordingly,
effective February 19, 2010, Mr. Brooks and Mr. Dondero were each granted
options to purchase 300,000 shares of the Company’s common stock pursuant to the
Company’s 2008 Incentive Compensation Plan. Such options shall vest
as follows:
|
·
|
Options
to purchase 60,000 shares of common stock shall immediately vest upon
issuance; and
|
|
·
|
Subject
to the Compensation Committee’s further evaluation, as described below,
options to purchase up to 60,000 shares of common stock shall vest on each
of June 30, 2010, June 30, 2011, June 30, 2012 and June 30,
2013.
|
Notwithstanding
the foregoing, prior to each vesting date, the Compensation Committee shall
evaluate Mr. Brooks’ and Mr. Dondero’s respective performances during the
preceding fiscal year and shall have the right to unilaterally reduce their
unvested options in the Committee’s sole discretion. Further, the
unvested options of a relevant officer shall be forfeited upon the termination
of such officer’s employment. The options were granted at an exercise
price equal to the fair market value of the Company’s common stock on February
19, 2010 or $0.29.
Long-Term
Incentive Equity Awards
In General
– A portion of each
named executive officer’s compensation is provided in the form of long-term
incentive equity awards as set forth in the Long-Term Incentive Plan, also
referred to herein as the LTIP discussed below. It is the Committee’s
belief that properly structured equity awards are an effective method of
aligning the long term interests of our named executive officers with those of
our stockholders.
Beginning
with Fiscal 2008, equity awards have been made in the form of restricted stock
units. The Committee will follow a grant practice of tying equity
awards upon of the completion of certain event milestones, also referred to
herein as the LTIP Event Milestones, discussed below. Accordingly, it
is expected that any equity awards to the named executive officers will be made
promptly after the completion of each LTIP Event Milestone. The
Committee has established long-term incentive grant guidelines for eligible
named executive officers based on competitive annual grant data provided by
management’s compensation consultant and by J. Richard, the Committee’s
compensation consultant.
Long-Term Incentive Plan
–
Beginning on December 13, 2007, also referred to herein as the LTIP Effective
Date, and ending on the earlier of (i) the completion of the Third LTIP Event
Milestone or (ii) three (3) years from the LTIP Effective Date, LTIP equity
grants to our named executive officers are in the form of RSU’s and
ISO’s. Each RSU and ISO entitles the recipient to receive one (1)
share of our common stock upon vesting or upon a designated date or event
following such vesting. Each ISO was granted with an exercise price
of $0.99. Each named executive had the option of receiving their RSU
grant in the form of RSU’s or ISO’s. If a named execute chose to
receive ISO’s in lieu of RSU’s, then such named executive was granted twice as
many ISO’s, due to the $0.99 exercise price of such ISO’s.
The total
RSU’s and ISO’s in the LTIP pool awarded to our named executive officers was
775,000 shares, which consisted of 225,000 RSU’s and 550,000 ISO’s, representing
3.9% of the outstanding shares as of July 1, 2009.
The
amount and percentage of the RSU’s awarded to all the named executive officers
as a whole for the completion of each of the three LTIP Event Milestones are as
follows:
LTIP Event Milestone
|
|
Percentage of
LTIP RSU and
ISO Award Pool
|
|
|
Total Amount of RSUs and ISO’s
Awarded As a Whole to All
Named Executive Officers
|
|
First
LTIP Event Milestone
.
The
Execution of a Research Agreement to Conduct Phase I/II Trials
at a Research Facility
|
|
|
20
|
%
|
|
|
155,000
|
|
Second LTIP Event
Milestone
.
The
Filing and Acceptance by the U.S. FDA of an investigation new drug
application, or IND, by the date set by the Committee
|
|
|
20
|
%
|
|
|
155,000
|
|
Third LTIP Event
Milestone
.
The
Successful Completion of Phase I/II Trials Approved by the FDA by the date
set by the Committee
|
|
|
60
|
%
|
|
|
465,000
|
|
Each
named executive officer eligible to receive an award pursuant to the LTIP is
required to be employed by the Company upon the completion of each individual
LTIP Event Milestone. If a named executive officer is no longer
employed by the Company before the completion of an individual LTIP Event
Milestone, then such named executive officer’s respective RSU or ISO award tied
to such uncompleted LTIP Event Milestone will be forfeited and so will that
total portion of the whole LTIP award pool. The Committee shall have the sole
discretion to reinstate any eliminated portion or segment of a LTIP Event
Milestone award or that portion of a LTIP Event Milestone award for a successor
to the LTIP Event Milestones.
The LTIP
awards for each named executive officer upon the completion of each individual
LTIP Event Milestone shall be as follows:
Name
|
|
Title
|
|
Percentage of
Total RSU’s
Awarded Upon
Completion of a
LTIP Event
Milestone
|
|
|
Number of RSU’s
Awarded upon
Completion of
First LTIP Event
Milestone
|
|
|
Number of RSU’s
Awarded upon
Completion of
Second LTIP
Event Milestone
|
|
|
Number of RSU’s
Awarded upon
Completion of
Third LTIP Event
Milestone
|
|
Bruce C. Galton
(1)
(3)
|
|
President
and Chief Executive Officer
|
|
|
25
|
%
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
75,000
|
|
Joel P. Brooks
(1)
|
|
Chief
Financial Officer and Treasurer
|
|
|
10
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
30,000
|
|
Sascha P.
Fedyszyn
(1)(4)
|
|
Vice-President
of Corporate Development and Secretary
|
|
|
10
|
%
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
30,000
|
|
John E. Thompson
(2)
|
|
Executive
Vice-President and Chief Scientific Officer
|
|
|
25
|
%
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
150,000
|
|
Richard Dondero
(2)
|
|
Vice-President
of Research and Development
|
|
|
30
|
%
|
|
|
60,000
|
|
|
|
60,000
|
|
|
|
180,000
|
|
|
(3)
|
Mr.
Galton resigned from the Company on November 16, 2009 and, thus his
unvested awards were forfeited.
|
|
(4)
|
Mr.
Fedyszyn resigned from the Company on February 1, 2010. and, thus his
unvested awards were forfeited.
|
As of the
date hereof, none of the LTIP Event Milestones have been met.
It is the
Committee’s belief that RSU and ISO awards are essential to the retention of the
named executive officers, crucial to our long-term financial successes and will
help to advance the share ownership guidelines, which may be established by the
Committee for the executive officers. The RSU’s and ISO’s have award
schedules which provide a meaningful incentive for the named executive officer
to remain in our service. These equity awards also serve as an
important vehicle to achieve the Committee’s objective of aligning management
and stockholder interests. Equity awards in the form of RSU’s and
ISO’s promote all of these objectives in a manner which is less dilutive to the
stockholders than traditional option grants and provide a more direct
correlation between our compensation cost that we must record for financial
accounting purposes and the value delivered to the named executive
officers.
Market Timing of Equity
Awards
. The Compensation Committee does not engage in any market timing
of the equity awards made to the executive officers or other award recipients,
and accordingly, there is no established practice of timing our awards in
advance of the release of favorable financial results or adjusting the award
date in connection with the release of unfavorable financial developments
affecting our business. In addition, we will attempt, when
possible, to make equity awards to our executive officers and directors promptly
after the release of our financial results.
Executive
Benefits and Perquisites
In General
– The named
executive officers also are provided with certain market competitive
benefits. They are currently not provided with any
perquisites. It is the Committee’s belief that such benefits are
necessary for us to remain competitive and to attract and retain top caliber
executive officers, since such benefits are typically provided by companies in
the biotechnology industry and with other companies with which we compete for
executive talent.
Retirement Benefits
– The
named executive officers may participate in the company-wide 401(k)
plan. We do not make any contributions to the 401(k) plan and do not
have any additional retirement benefits.
Other Benefits and Perquisites
– All administrative employees, including the named executive officers, are
eligible to receive standard health, disability, and life
insurance. We do not provide any additional benefits and
perquisites.
IRC
Section 162(m) compliance
As a
result of Section 162(m) of the Internal Revenue Code, publicly-traded companies
such as us are not allowed a federal income tax deduction for compensation, paid
to the Chief Executive Officer and the four other highest paid executive
officers, to the extent that such compensation exceeds $1 million per officer in
any one (1) year and does not otherwise qualify as performance-based
compensation. Currently, our stock option compensation packages are structured
so that compensation deemed paid to an executive officer in connection with the
exercise of a stock option should qualify as performance-based compensation that
is not subject to the $1 million limitation. However, other awards, like RSU’s
and ISO’s, made under that Plan may or may not so qualify. In establishing the
cash and equity incentive compensation programs for the executive officers, it
is the Committee’s view that the potential deductibility of the compensation
payable under those programs should be only one (1) of a number of relevant
factors taken into consideration, and not the sole governing factor. For that
reason the Committee may deem it appropriate to continue to provide one (1) or
more executive officers with the opportunity to earn incentive compensation,
including cash bonus programs tied to our financial performance and restricted
stock units awards, which may be in excess of the amount deductible by reason of
Section 162(m) or other provisions of the Internal Revenue Code. It is the
Committee’s belief that cash and equity incentive compensation must be
maintained at the requisite level to attract and retain the executive officers
essential to our financial success, even if part of that compensation may not be
deductible by reason of the Section 162(m) limitation. For Fiscal
2008, none of our executive officer’s compensation reached the $1 million
limitation. The Committee will continue to evaluate such $1 million
limitation in Fiscal 2010.
Report
of the Compensation Committee
The
Compensation Committee has reviewed and discussed the Compensation, Discussion
and Analysis with management, and based on this review and these discussions,
the Compensation Committee recommended to the board that the Compensation,
Discussion and Analysis be included in this proxy statement.
This
report is submitted on behalf of the
|
Compensation
Committee
|
David
Rector, Chairman
|
John
N. Braca
|
Summary
Compensation Table
The
following table sets forth information concerning compensation for services
rendered in all capacities during the fiscal years ended June 30, 2009, June 30,
2008 and June 30, 2007 awarded to, earned by or paid to: (i) each person who
served as our Chief Executive Officer; (ii) our Chief Financial Officer; and
(iii) each of our three other executive officers whose total compensation for
Fiscal 2009 was in excess of $100,000 and who were serving as our executive
officers at the end of Fiscal 2009, collectively referred to herein as the Named
Executives. No other executive officers who would have otherwise been
includable in such table on the basis of total compensation for Fiscal 2009 have
been excluded by reason of their termination of employment or change in
executive status during that year.
Name
and Principal
Position
|
|
Year
(1)
|
|
Salary
($)(2)
|
|
Bonus
($)(3)
|
|
Stock
Awards
($) (5)
|
|
|
Option
Awards
($) (5)
|
|
|
Non-
Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
|
All
Other
Compensation
($) (4)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Bruce
C. Galton
|
|
2009
|
|
$
|
258,348
|
|
—
|
|
$
|
39,600
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
297,948
|
|
(President
and Chief
|
|
2008
|
|
$
|
258,347
|
|
—
|
|
$
|
173,473
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
14,711
|
|
|
$
|
446,531
|
|
Executive Officer)
(6)
|
|
2007
|
|
$
|
244,722
|
|
—
|
|
|
—
|
|
|
$
|
34,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
278,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel
P. Brooks
|
|
2009
|
|
$
|
161,986
|
|
—
|
|
$
|
16,800
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
178,786
|
|
(Chief
Financial Officer and
|
|
2008
|
|
$
|
149,885
|
|
—
|
|
$
|
86,402
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
236,287
|
|
Treasurer)
|
|
2007
|
|
$
|
143,450
|
|
—
|
|
|
—
|
|
|
$
|
21,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
164,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Dondero
|
|
2009
|
|
$
|
145,507
|
|
—
|
|
|
—
|
|
|
$
|
36,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
182,307
|
|
(Vice-President
of
|
|
2008
|
|
$
|
130,008
|
|
—
|
|
|
—
|
|
|
$
|
282,662
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
412,670
|
|
Research)
|
|
2007
|
|
$
|
124,500
|
|
—
|
|
|
—
|
|
|
$
|
21,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
145,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sascha P.
Fedyszyn
|
|
2009
|
|
$
|
108,091
|
|
—
|
|
$
|
25,200
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
133,291
|
|
(Vice-President of
|
|
2008
|
|
$
|
103,634
|
|
—
|
|
$
|
74,448
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,731
|
|
|
$
|
181,813
|
|
Corporate Development
and
|
|
2007
|
|
$
|
95,750
|
|
—
|
|
|
—
|
|
|
$
|
21,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John E. Thompson Ph.D.
(8)
|
|
2009
|
|
$
|
65,000
|
|
—
|
|
|
—
|
|
|
$
|
22,080
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
87,080
|
|
(Executive
Vice-President
|
|
2008
|
|
$
|
65,000
|
|
—
|
|
|
—
|
|
|
$
|
230,034
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
295,034
|
|
and
Chief Scientific Officer)
|
|
2007
|
|
$
|
63,700
|
|
—
|
|
|
—
|
|
|
$
|
21,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
84,950
|
|
|
(1)
|
Senesco’s
fiscal year ends on June 30.
|
|
(2)
|
Such
amount represents actual salary paid, including such amounts deferred in
connection with our 401(k) plan.
|
|
(3)
|
There
were no bonuses earned or paid during the fiscal years ended June 30,
2009, June 30, 2008 and June 30,
2007.
|
|
(4)
|
Such
amount represents unused vacation time paid during the fiscal year ended
June 30, 2008.
|
|
(5)
|
These
columns show the grant date fair value of awards computed in accordance
with stock-based compensation accounting rules (FASB ASC Topic 718). A
discussion of assumptions used in calculating award values may be found in
Note 7 to our 2009 audited financial statements in our
Form 10-K/A.
|
|
(6)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(7)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
|
(8)
|
Effective
November 16, 2009, Jack Van Hulst, assumed the role of President and Chief
Executive Officer of the Company.
|
Executive
Compensation Agreements
On July
1, 2003, Joel P. Brooks entered into an employment agreement with Senesco for a
term of three (3) years. The agreement automatically renewed for successive one
(1) year terms thereafter, unless written notice of termination was provided at
least 120 days prior to the end of the applicable term. Notice of
termination of the agreement was provided on May 18, 2009 and Mr. Brooks’
employment agreement will expire on June 30, 2010. The agreement provides Mr.
Brooks with an annual base salary of $122,000 plus certain benefits, including
potential bonuses, equity awards and other perquisites as determined by the
board. Our board has since approved several increases in Mr. Brooks’
base salary, which is currently $160,000. The agreement also provides
that Mr. Brooks is entitled to a lump sum payment of 1.0 times his annual base
salary plus prior year bonus, if his employment with us is terminated by us,
prior to a change of control, without cause or by him with good reason, as
defined in his employment agreement. If there is a change in control
within one (1) year following Mr. Brooks’ termination by us without cause, he is
entitled to receive the difference between the monies actually received upon
termination and 1.0 times his “base amount” as defined in the employment
agreement. If Mr. Brooks’ employment with us is terminated on or
following a change in control during the term of the employment agreement, he is
entitled to receive a lump sum payment equal to 1.0 times his “base
amount”.
On July
19, 2004, we hired Richard Dondero as our new Vice President of Research and
Development. In conjunction with Mr. Dondero’s appointment, we
entered into a three (3) year employment agreement with Mr. Dondero, effective
July 19, 2004. The agreement automatically renewed for successive one
(1) year terms thereafter, unless written notice of termination was provided at
least 120 days prior to the end of the applicable term. Notice of termination of
the agreement was provided on May 18, 2009 and Mr. Dondero’s employment
agreement will expire on July 18, 2010. The agreement provides Mr.
Dondero with an annual base salary of $110,000 plus certain benefits, including
potential bonuses, equity awards and other perquisites as determined by our
board. Our board has since approved several increases in Mr.
Dondero’s base salary, which is currently $143,000. The agreement
also provides that Mr. Dondero is entitled to a lump sum payment of 1.0 times
his annual base salary plus prior year bonus, if his employment with us is
terminated by us, prior to a change of control, without cause or by him with
good reason, as defined in his employment agreement. If there is a
change in control within one (1) year following Mr. Dondero’s termination by us
without cause, he is entitled to receive the difference between the monies
actually received upon termination and 1.0 times his “base amount” as defined in
the employment agreement. If Mr. Dondero’s employment with us is
terminated on or following a change in control during the term of the employment
agreement, he is entitled to receive a lump sum payment equal to 1.0 times his
“base amount”.
Grants
of Plan-Based Awards
The
following Grants of Plan Based Awards table provides additional information
about stock and option awards and equity incentive plan awards granted to our
named executive officers during the fiscal year ended June 30,
2009.
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
All Other
Stock
Awards:
Number
of
Shares
of Stock
|
|
|
All Other
Option
Awards:
Number of
Securities
Under-
lying
|
|
|
Exercise
or Base
Price of
Option
|
|
|
Grant
Date Fair
Value of
Equity
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#) (1)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
or
Units
(#)
|
|
|
Options
(#)
|
|
|
Awards
($/Sh)
|
|
|
Awards
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
|
|
Bruce C. Galton
(5)
|
|
11/19/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel
P. Brooks
|
|
11/19/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Richard
Dondero
|
|
11/19/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,000
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sascha P.
Fedyszyn
(6)
|
|
11/19/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
E. Thompson Ph.D.
|
|
11/19/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,000
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Senesco’s
fiscal year ends on June 30.
|
|
(2)
|
The
performance-based RSU’s and ISO’s were granted under the 1998 Stock Plan
and vest upon the achievement of certain performance milestones during
Fiscal 2009.
|
|
(3)
|
Represents
performance-based RSU’s.
|
|
(4)
|
Represents
performance-based ISO’s.
|
|
(5)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(6)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
|
(7)
|
Effective
November 16, 2009, Jack Van Hulst, assumed the role of President and Chief
Executive Officer of the Company.
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table summarizes the equity awards we have made to our named executive
officers which are outstanding as of June 30, 2009.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexer-
cisable
|
|
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of Stock
That Have Not
Vested (#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
|
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units of Other
Rights That Have
Not Vested ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j) (6)
|
|
Bruce
C.
Galton
(7)
|
|
|
130,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.10
|
|
|
10/05/2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
300,000
|
(2)
|
|
|
|
|
|
|
-
|
|
|
$
|
2.05
|
|
|
12/01/2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
50,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.16
|
|
|
06/19/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
30,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.15
|
|
|
12/16/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
35,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.45
|
|
|
12/16/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.40
|
|
|
12/14/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.08
|
|
|
12/14/2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191,000
|
(5)
|
|
|
158,530
|
|
Joel
P. Brooks
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.25
|
|
|
12/01/2010
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
15,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.15
|
|
|
11/01/2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
12,500
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.65
|
|
|
10/09/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.16
|
|
|
06/19/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
15,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.15
|
|
|
12/16/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.45
|
|
|
12/16/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.40
|
|
|
12/14/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.08
|
|
|
12/14/2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
78,000
|
(5)
|
|
|
64,740
|
|
Richard
Dondero
|
|
|
10,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.45
|
|
|
12/16/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.40
|
|
|
12/14/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.08
|
|
|
12/14/2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
71,924
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
0.99
|
|
|
12/13/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
(4)
|
|
$
|
0.99
|
|
|
12/13/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(4)
|
|
$
|
0.60
|
|
|
11/19/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Sascha P.
Fedyszyn
(8)
|
|
|
35,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.25
|
|
|
12/01/2010
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.15
|
|
|
11/01/2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.65
|
|
|
10/09/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.16
|
|
|
06/19/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
15,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.15
|
|
|
12/16/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.45
|
|
|
12/16/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.40
|
|
|
12/14/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.08
|
|
|
12/14/2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
92,000
|
(5)
|
|
|
76,360
|
|
John
E. Thompson Ph.D.
|
|
|
80,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.05
|
|
|
12/01/2011
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.35
|
|
|
01/07/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.15
|
|
|
12/16/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
55,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.45
|
|
|
12/16/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
20,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.40
|
|
|
12/14/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.08
|
|
|
12/14/2016
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
52,676
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.99
|
|
|
12/13/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
(4)
|
|
$
|
0.99
|
|
|
12/13/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,000
|
(4)
|
|
$
|
0.60
|
|
|
11/19/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
100,000
of such options vested on the date of grant and an additional 10,000
options vested on each of the one (1) month, two (2) month and three (3)
month anniversary of the date of
grant.
|
|
(2)
|
100,000
of such options vested on each of the first, second and third anniversary
of the date of grant.
|
|
(3)
|
One-third
(1/3) of such options vested on the date of grant and an additional
one-third (1/3) of such options vested or will vest on each of the first
and second anniversary of the date of
grant.
|
|
(4)
|
Such
amounts consist of performance based options which have vested upon the
achievement of certain milestones or will vest if certain milestones are
met under the Company’s Short-Term and Long-Term incentive
plan.
|
|
(5)
|
Such
amounts consist of performance based RSU’s which will vest if certain
milestones are met under the Company’s Short-Term and Long-Term incentive
plan.
|
|
(6)
|
The
amounts in this column are calculated by multiplying the number in column
(i) by the closing price on June 30, 2009 of
$0.83.
|
|
(7)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(8)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
|
(9)
|
Effective
November 16, 2009, Jack Van Hulst, assumed the role of President and Chief
Executive Officer of the Company.
|
Options
Exercised and Stock Vested
The table
below shows option exercise and stock award vesting activity for our named
executive officers during the year ended June 30, 2009.
|
|
Option Awards
Number of Shares
Acquired on Exercise
(#)
(b)
|
|
|
Value Realized on
Exercise
($)
(c)
|
|
|
Stock Awards
Number of Shares
Acquired on Vesting
(#)
(d)
|
|
|
Value Realized on
Vesting
($)
(1)
(e)
|
|
Bruce
C. Galton
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
50,225
|
|
|
$
|
30,135
|
|
Joel
P. Brooks
|
|
|
—
|
|
|
|
—
|
|
|
|
37,275
|
|
|
$
|
22,335
|
|
Sascha
Fedyszyn
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
25,200
|
|
|
$
|
15,120
|
|
Richard
Dondero
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
John
E. Thompson, Ph.D.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Such
amounts in this column were calculated by multiplying the number in column
(d) by the closing price on the date of
vesting.
|
|
(2)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(3)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
|
(4)
|
Effective
November 16, 2009, Jack Van Hulst, assumed the role of President and Chief
Executive Officer of the Company.
|
Employment
Contracts, Termination of Employment, and Change-in-Control
Arrangements
Executive
Severance
. Certain of our named executive officer’s have
employment agreements which contain severance provisions. The
following table shows the potential incremental payments to our named executive
officers in the event of their termination or termination in connection with a
change of control of our company as of June 30, 2009.
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
Change in Control
|
|
|
Without Cause
|
|
|
Change in Control
|
|
Benefit
|
|
$
(2)
|
|
|
$
(3)
|
|
|
$
(2)
|
|
|
$
(3)
|
|
Cash
Severance
(4)
|
|
$
|
160,000
|
|
|
$
|
145,142
|
|
|
$
|
143,000
|
|
|
$
|
125,457
|
|
#
of Months
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested
Restricted Stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Unvested
RSU’s
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Unvested
Options
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Common
Stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other
Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health,
Disability and Life Insurance
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
|
|
$
|
160,000
|
|
|
$
|
145,142
|
|
|
$
|
143,000
|
|
|
$
|
125,457
|
|
|
(1)
|
John
E. Thompson, Ph.D. is not included on this table as he does not have an
employment contract or any termination or change in control
arrangements.
|
|
(2)
|
Such
amounts are calculated using the named executive’s base salary in effect
as of April 6, 2010 multiplied by the number of months of severance the
named executive is entitled to.
|
|
(3)
|
Such
amounts are calculated using the named executive’s average compensation
paid during the past five (5) years multiplied by the number of months of
severance the named executive is entitled
to.
|
|
(4)
|
Such
amounts are payable as a lump sum.
|
|
(5)
|
Mr.
Brooks’ employment agreement will terminate on June 30,
2010.
|
|
(6)
|
Mr.
Dondero’s employment agreement will terminate on July 19,
2010.
|
Appointment of Mr. Van
Hulst
. Effective November 16, 2009, Jack Van Hulst, a current
member of our board of directors, assumed the role of President and Chief
Executive Officer of Senesco. We have not and do not anticipate
entering into an employment agreement with Mr. Van Hulst.
Resignation of Mr.
Galton
. As previously reported, Bruce C. Galton resigned from
his positions as President, Chief Executive Officer and member of the Board of
Directors of the Company. In connection therewith, on November 23,
2009, the Company entered into a Confidential Separation Agreement and General
Release with Mr. Galton.
The
material terms of the Confidential Separation Agreement and General Release are
as follows:
|
·
|
The
Company paid Mr. Galton severance in an amount equal to four (4)
months of his current annual base salary, less all applicable federal and
state withholdings and deductions which are authorized or required by law,
with such amount paid in accordance with the Company’s normal payroll
schedule;
|
|
·
|
In
the event Mr. Galton elects continuation of coverage under COBRA, the
Company will pay the COBRA premiums for continuation of his group health
insurance coverage for a period of four (4)
months;
|
|
·
|
All
currently outstanding equity awards made to Mr. Galton during his course
of employment, to the extent any of the awards are stock options, shall
remain exercisable for the underlying shares of common stock until the
expiration date of such options as set forth in the applicable stock
option agreement. In addition, Mr. Galton shall receive 49,500
shares of common stock which represent shares underlying RSUs which were
awarded to Mr. Galton under the Company’s 2009 Short Term Incentive
Plan. Aside from the foregoing RSUs, Mr. Galton shall not
receive any additional RSUs under either the Short Term Incentive Plan or
Long Term Incentive Plan; and
|
|
·
|
The
Company paid Mr. Galton for all of his accrued but unused vacation
days.
|
Mr.
Galton did not revoke his acceptance of the Agreement.
Resignation of Mr.
Fedyszyn
. As previously reported, on February 1, 2010, Sascha P. Fedyszyn
resigned from his positions as Vice President of Corporate Development and
Secretary of the Company. As a result of such resignation, effective
as of February 1, 2010, Mr. Fedyszyn is no longer employed by the Company or any
of its affiliated entities.
In
connection with the foregoing, on February 2, 2010, the Company entered into a
Confidential Separation Agreement and General Release with Mr.
Fedyszyn.
The
material terms of the Confidential Separation Agreement and General Release are
as follows:
|
·
|
The
Company paid Mr. Fedyszyn severance in an amount equal to four (4)
months of his current annual base salary, less all applicable federal and
state withholdings and deductions which are authorized or required by law,
with such amount paid in accordance with the Company’s normal payroll
schedule;
|
|
·
|
In
the event Mr. Fedyszyn elects continuation of coverage under COBRA, the
Company will pay the COBRA premiums for continuation of his group health
insurance coverage for a period of four (4) months;
and
|
|
·
|
All
currently outstanding equity awards made to Mr. Fedyszyn during his course
of employment, to the extent any of the awards are stock options, shall
remain exercisable for the underlying shares of common stock until the
expiration date of such options as set forth in the applicable stock
option agreement. Mr. Fedyszyn shall not receive any additional
RSUs under either the Short Term Incentive Plan or Long Term Incentive
Plan.
|
In
consideration of the foregoing, the Company and Mr. Fedyszyn executed a general
release of the other party.
Equity
Compensation Plans
The
following table reflects information relating to equity compensation plans as of
June 30, 2009.
|
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities remaining
available for future issuance
under equity compensation plans
|
|
Stock
Option plans approved
by
security holders
|
|
|
4,550,472
|
(1)
|
|
$
|
1.70
|
|
|
|
5,887,472
|
(2)
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
4,550,472
|
(1)
|
|
$
|
1.70
|
|
|
|
5,887,472
|
(2)
|
|
(1)
|
Issued
pursuant to our 1998 Stock Plan and 2008 Stock
Plan.
|
|
(2)
|
Available
for future issuance pursuant to our 2008 Stock
Plan.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Our
common stock is the only class of stock entitled to vote at the
Meeting. Only our stockholders of record as of the close of business
on the Record Date are entitled to receive notice of and to vote at the
Meeting. As of the Record Date, there were [___] holders of record of
our common stock, and we had outstanding [33,584,121] shares of our common stock
and each outstanding share is entitled to one (1) vote at the
Meeting. The following table sets forth certain information, as of
the Record Date, with respect to holdings of our common stock by (i) each person
known by us to be the beneficial owner of more than 5% of the total number of
shares of our common stock outstanding as of such date; (ii) each of our
directors, which includes all nominees, and our Named Executives; and (iii) all
of our directors and our current executive officers as a group.
Name and Address of Beneficial Owner
(1)
|
|
Amount and Nature of
Beneficial Ownership
(2)
|
|
|
Percent
of Class
(3)
|
|
(i) Certain
Beneficial Owners:
|
|
|
|
|
|
|
Partlet
Holdings Ltd.
Jabotinsky
7, Moshe Aviv Tower,
POB
138, Ramat Gan, 52520, Israel
|
|
|
[4,492,657
|
]
(4)
|
|
|
[12.5
|
]%
|
Stanford
International
|
|
|
|
|
|
|
|
|
c
/o Ralph S.
Janrey
5051 Westheimer
Houston, Texas 77056
|
|
|
[1,714,287
|
]
|
|
|
[5.1
|
]%
|
(ii) Directors
(which includes all nominees), Named Executives and
Chief
Executive Officer:
|
|
|
|
|
|
|
|
|
Harlan
W. Waksal
|
|
|
[1,530,327
|
]
(5)
|
|
|
[4.4
|
]%
|
John
N. Braca
|
|
|
[607,041
|
]
(6)
|
|
|
[1.8
|
]%
|
Jack
Van Hulst
|
|
|
[353,083
|
]
(7)
|
|
|
[1.0
|
]%
|
Christopher
Forbes
|
|
|
[11,581,406
|
]
(8)
|
|
|
[27.51
|
]
|
Warren
J. Isabelle
|
|
|
[176,838
|
]
(9)
|
|
|
[*
|
]
|
Thomas
C. Quick
|
|
|
[1,543,000
|
]
(10)
|
|
|
[4.5
|
]%
|
David
Rector
|
|
|
[775,053
|
]
(11)
|
|
|
[2.3
|
]%
|
Rudolf
Stalder
|
|
|
[2,457,689
|
]
(12)
|
|
|
[6.9
|
]%
|
John
E. Thompson, Ph.D..
|
|
|
[892,676
|
]
(13)
|
|
|
[2.6
|
]%
|
Joel
P. Brooks
|
|
|
[258,375
|
]
(14)
|
|
|
[*
|
]
|
Richard
Dondero
|
|
|
[267,924
|
]
(15)
|
|
|
[*
|
]
|
(iii)
All Directors and current executive officers as a group (11
persons)
|
|
|
[20,443,412
|
]
(16)
|
|
|
[41.6
|
]%
|
* Less
than 1%
|
(1)
|
Unless
otherwise provided, all addresses should be care of Senesco Technologies,
Inc., 303 George Street, Suite 420, New Brunswick, New Jersey
08901.
|
|
(2)
|
Except
as otherwise indicated, all shares of common stock are beneficially owned
and sole investment and voting power is held by the persons
named.
|
|
(3)
|
Applicable
percentage of ownership is based on [33,584,121] shares of our common
stock outstanding as of the Record Date, plus any common stock equivalents
and options or warrants held by such holder which are presently or will
become exercisable within sixty (60) days after the Record
Date.
|
|
(4)
|
Includes
2,055,556 shares of common stock issuable pursuant to presently
exercisable warrants and 325,991 shares of common stock issuable pursuant
to the potential conversion of preferred stock and warrants issued in
connection with the preferred
stock.
|
|
(5)
|
Includes
748,340 shares of common stock issuable pursuant to presently exercisable
warrants and options or options which will become exercisable within sixty
(60) days after the Record Date. Also includes 631,176 shares of common
stock issuable pursuant to the conversion of convertible debentures at a
conversion rate of $0.83.
|
|
(6)
|
Includes
476,062 shares of common stock issuable pursuant to presently exercisable
warrants and options or options which will become exercisable within sixty
(60) days after the Record Date. Also includes 77,840 shares of common
stock issuable pursuant to the conversion of convertible debentures at a
conversion rate of $0.83.
|
|
(7)
|
Includes
314,904 and shares of common stock issuable pursuant to presently
exercisable warrants and options or options which will become exercisable
within sixty (60) days after the Record Date. Also includes
30,459 shares of common stock issuable pursuant to the conversion of
convertible debentures at a conversion rate of
$0.83.
|
|
(8)
|
Includes
4,405,426 shares of common stock issuable pursuant to presently
exercisable warrants and options or options which will become exercisable
within sixty (60) days after the Record Date. Also includes
4,101,800 shares of common stock issuable pursuant to the conversion of
convertible debentures at a conversion rate of
$0.83.
|
|
(9)
|
Includes
80,059 shares of common stock issuable pursuant to presently exercisable
warrants and options or options which will become exercisable within sixty
(60) days after the Record Date. Also includes 77,840 shares of common
stock issuable pursuant to the conversion of convertible debentures at a
conversion rate of $0.83.
|
|
(10)
|
Represents
340,325 shares of common stock and 403,428 shares of common stock issuable
pursuant to warrants issued to Thomas C. Quick Charitable
Foundation. Also includes 314,742 shares of common stock
issuable pursuant to the conversion of convertible debentures at a
conversion rate of $0.83 issued to Thomas C. Quick Charitable Foundation.
Represents 139,734 shares of common stock and 344,771 shares of common
stock issuable pursuant to presently exercisable options or options which
will become exercisable within sixty (60) days after the Record Date
issued to Thomas C. Quick.
|
|
(11)
|
Includes
554,445 shares of common stock issuable pursuant to presently exercisable
warrants and options or options which will become exercisable within sixty
(60) days after the Record Date. Also includes 159,063 shares of common
stock issuable pursuant to the conversion of convertible debentures at a
conversion rate of $0.83.
|
|
(12)
|
Includes
1,443,931 shares of common stock issuable pursuant to presently
exercisable warrants and options or options which will become exercisable
within sixty (60) days after the Record Date. Also includes
631,176 shares of common stock issuable pursuant to the conversion of
convertible debentures at a conversion rate of
$0.83.
|
|
(13)
|
Represents
572,000 shares of common stock held by 2091794 Ontario Ltd. and 320,676
shares of common stock issuable pursuant to presently exercisable options
or options which will become exercisable within sixty (60) days after the
Record Date issued to John E. Thompson, Ph.D. Excludes 250,000
shares of common stock underlying options which become exercisable upon
the achievement of certain performance
milestones.
|
|
(14)
|
Includes
217,500 shares of common stock issuable pursuant to presently exercisable
options or options which will become exercisable within sixty (60) days
after the Record Date. Excludes 240,000 shares of common stock
underlying options which become exercisable upon the achievement of
certain performance milestones.
|
|
(15)
|
Includes
267,924 shares of common stock issuable pursuant to presently exercisable
options or options which will become exercisable within sixty (60) days
after the Record Date. Excludes 540,000 shares of common stock
underlying options which become exercisable upon the achievement of
certain performance milestones.
|
|
(16)
|
See
Notes 4 through 15.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Contractual
Relationships
Service
Agreements
Christopher
Forbes, our director, is also Vice Chairman of Forbes, Inc., which publishes
Forbes Magazine. Forbes, Inc. has provided and will continue to
provide us with introductions to strategic alliance partners and, from time to
time, use of its office space. In recognition of these services,
during the last two (2) fiscal years, we granted to Forbes, Inc., warrants to
purchase shares of our common stock as follows:
|
|
|
|
|
|
|
|
Value of Services on
Date
of Grant
|
|
|
# of Warrant Shares
Vested
|
|
November
19, 2008
|
|
|
500
|
|
|
$
|
0.60
|
|
|
$
|
230
|
|
|
|
167
|
|
December
13, 2007
|
|
|
1,000
|
|
|
$
|
0.99
|
|
|
$
|
740
|
|
|
|
666
|
|
The
exercise price of the warrants granted to Forbes, Inc. represented the fair
market value of our common stock on the dates of grant.
Verge
180, Inc., a marketing communications firm, is 50% owned by Alan Brooks, a
brother of Joel Brooks, our Chief Financial Officer and
Treasurer. Verge 180, Inc. has provided and will continue to provide
various services to us. We paid Verge 180, Inc. $43,910 and $58,273
in Fiscal 2009 and Fiscal 2008, respectively, for services in connection with
the design and printing of our annual report and proxy for Fiscal 2008 and
Fiscal 2007, respectively. Neither we nor Joel Brooks receives any
remuneration from these services, and we believe that such services were
provided on terms at least as favorable as we would have received from a third
party.
Research and Development
Agreements
Effective
September 1, 1998, we entered into a three (3) year research and development
agreement, which has been extended for successive periods through August 31,
2010, with John E. Thompson, Ph.D. and the University of Waterloo in Waterloo,
Ontario, Canada, referred to as the University. Dr. Thompson is our
director and officer and beneficially owns approximately 2.6% of our common
stock. Dr. Thompson is the Associate Vice President, Research and
former Dean of Science of the University. Dr. Thompson and the
University will provide research and development under our
direction. Research and development expenses under this agreement for
the years ended June 30, 2009 and 2008 aggregated US $653,104 and US $730,960,
respectively. Effective September 1, 2009, we, Dr. Thompson and the
University extended the agreement for an additional one (1) year period through
August 31, 2010 in the amount of CAN $656,820. As of April 1, 2010,
such amount represented approximately US $650,000.
Consulting
Agreement
Effective
May 1, 1999, we entered into a three (3) year consulting agreement, which has
been extended for successive periods through June 30, 2011, for
research and development with Dr. Thompson. This agreement provided
for monthly payments of $3,000 through June 2004. However, effective
January 1, 2003, 2006 and 2007, the agreement was amended to increase the
monthly payments from $3,000 to $5,000, from $5,000 to $5,200, and from $5,200
to $5,417, respectively.
Debt
/ Equity Transactions
2006 Private
Placement
In
connection with a private placement in October 2006, we sold shares of our
common stock and warrants to purchase our common stock to certain institutions,
accredited investors and certain directors as follows:
|
|
|
|
|
|
|
|
|
|
Christopher
Forbes
|
|
$
|
1,000,000
|
|
|
|
883,002
|
|
|
|
441,501
|
|
Thomas
C. Quick Charitable Foundation
|
|
$
|
300,000
|
|
|
|
264,901
|
|
|
|
132,450
|
|
Rudolf
Stalder
|
|
$
|
105,841
|
|
|
|
93,458
|
|
|
|
46,729
|
|
Bruce
C. Galton
|
|
$
|
75,000
|
|
|
|
66,225
|
|
|
|
33,113
|
|
John
N. Braca
|
|
$
|
11,325
|
|
|
|
10,000
|
|
|
|
5,000
|
|
David
Rector
|
|
$
|
11,325
|
|
|
|
10,000
|
|
|
|
5,000
|
|
All of
such warrants became exercisable six (6) months from the closing date at an
exercise price equal to $1.18 and have a term of five (5) years.
2009 Private
Placements
Transaction with Insiders
and Affiliates
On July
29, 2009, we entered into a Securities Purchase Agreement with each of Harlan W.
Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca,
Jack Van Hulst, Warren Isabelle, and the Thomas C. Quick Charitable Foundation
each of whom is an accredited investor, pursuant to which we issued and sold an
aggregate of 144,444 shares of our common stock at $0.90 per share and each of a
Series A warrant and a Series B warrant. Each of Harlan W. Waksal,
M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van
Hulst and Warren Isabelle serve on the Company’s board. The Thomas C. Quick
Charitable Foundation is an affiliate of our board member Thomas C.
Quick.
The Series
A Warrants entitle the holders to purchase in the aggregate, up to 130,000
shares of our common stock at $0.01 per warrant share. The Series A
Warrants have a term of seven (7) years and were exercisable immediately after
the date of grant.
The
Series B Warrants entitle the holders to purchase, in the aggregate, up to
131,807 shares of our common stock at $0.60 per warrant share. The
Series B Warrants have a term of seven (7) years and were not exercisable until
after the six (6) month anniversary after the date of grant.
The
following table sets forth the transaction in greater detail.
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|
|
|
|
|
|
|
# of Series A
Warrants
(1)
|
|
|
# of Series B
Warrants
(2)
|
|
Christopher
Forbes
(3)
|
|
$
|
88,000
|
|
|
|
97,778
|
|
|
|
88,000
|
|
|
|
177,222
|
|
Harlan
W. Waksal, M.D.
(3)
|
|
$
|
13,500
|
|
|
|
15,000
|
|
|
|
13,500
|
|
|
|
13,688
|
|
Rudolf
Stalder
(3)
|
|
$
|
13,500
|
|
|
|
15,000
|
|
|
|
13,500
|
|
|
|
13,688
|
|
Thomas
C. Quick Charitable Foundation
(4)
|
|
$
|
7,000
|
|
|
|
7,778
|
|
|
|
7,000
|
|
|
|
7,097
|
|
David
Rector
(3)
|
|
$
|
3,000
|
|
|
|
3,333
|
|
|
|
3,000
|
|
|
|
3,042
|
|
Warren
Isabelle
(3)
|
|
$
|
2,000
|
|
|
|
2,222
|
|
|
|
2,000
|
|
|
|
2,028
|
|
John
N. Braca
(3)
|
|
$
|
2,000
|
|
|
|
2,222
|
|
|
|
2,000
|
|
|
|
2,028
|
|
Jack
Van Hulst
(3)
|
|
$
|
1,000
|
|
|
|
1,111
|
|
|
|
1,000
|
|
|
|
1,014
|
|
|
(1)
|
All
of such warrants were immediately exercisable at closing date at an
exercise price equal to $0.01 and have a term of seven (7)
years.
|
|
(2)
|
All
of such warrants became exercisable six (6) months from the closing date
at an exercise price equal to $0.60 and have a term of seven (7)
years.
|
|
(3)
|
Such
person is a director of the
Company.
|
|
(4)
|
The
Thomas C. Quick Charitable foundation is an affiliate of our director,
Thomas C. Quick.
|
Transaction with each of
Robert and Tim Forbes
On July
29, 2009, we entered into a Securities Purchase Agreement with each of Robert
Forbes and Timothy Forbes, each of whom is an accredited investor, pursuant to
which we issued and sold an aggregate of 444,444 shares of common stock at $0.90
per share and each of a Series A warrant and a Series B warrant. Each
of Robert Forbes and Timothy Forbes are the brothers of Christopher Forbes who
is a director of Senesco. Mr. Christopher Forbes will not be deemed
to be the beneficial owner of, nor will he have a pecuniary interest in the
shares or warrants issued to his brothers.
The
Series A Warrants entitle the holders to purchase in the aggregate, up to
400,000 shares of our common stock at $0.01 per warrant share. The
Series A Warrants have a term of seven (7) years and were exercisable
immediately after the date of grant.
The
Series B Warrants entitle the holders to purchase in the aggregate, up to
405,556 shares of our common stock at $0.60 per warrant share. The
Series B Warrants have a term of seven (7) years and were not exercisable until
after the six (6) month anniversary after the date of grant.
The
following table sets forth the transaction in greater detail.
|
|
|
|
|
|
|
|
# of Series A Warrants
(1)
|
|
|
# of Series B
Warrants
(2)
|
|
Robert
Forbes
(3)
|
|
$
|
300,000
|
|
|
|
333,333
|
|
|
|
300,000
|
|
|
|
304,167
|
|
Timothy
Forbes
(3)
|
|
$
|
100,000
|
|
|
|
111,111
|
|
|
|
100,000
|
|
|
|
101,389
|
|
|
(1)
|
All
of such warrants were immediately exercisable at closing date at an
exercise price equal to $0.01 and have a term of seven (7)
years.
|
|
(2)
|
All
of such warrants became exercisable six (6) months from the closing date
at an exercise price equal to $0.60 and have a term of seven (7)
years.
|
|
(3)
|
Such
person is the brother of a member of our board of directors, Christopher
Forbes.
|
Transaction With Stanford
Entities
As
previously disclosed in a Form 8-K filed on November 9, 2009, on November 6,
2009, each of Stanford Venture Capital Holdings, Inc., or SVCH, and Stanford
International Bank, Ltd., or SIBL (collectively SVCH and SIBL are referred to
herein as Stanford), who are the beneficial owners of a significant interest in
Senesco Technologies, Inc., simultaneously entered into definitive agreements
with certain members of the Company’s Board of Directors to sell all of their
respective interests in the Company, including shares of common stock,
convertible debentures and warrants, (the “Securities”) held by each of the
Stanford entities to each of Harlan W. Waksal, M.D., Rudolf Stalder, Christopher
Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the
Thomas C. Quick Charitable Foundation. Each of Harlan W. Waksal,
M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van
Hulst and Warren Isabelle are members of the Company’s Board of Directors, also
referred to herein as the Insiders. The Thomas C. Quick Charitable Foundation is
an affiliate of Mr. Thomas C. Quick who is also a member of the Company’s Board
of Directors. Such transaction was negotiated privately between
Stanford and the foregoing persons and their affiliates and was subject to
certain closing conditions.
On
February 19, 2010, SVCH and the Insiders closed on their definitive agreement to
sell all of their Securities for an aggregate purchase price of
$890,000. As a result of the transaction, the members of the
Company’s Board of Directors, as a group, will beneficially own a controlling
interest of approximately 40.9% of the Company’s common stock. In
addition, Mr. Christopher Forbes, who was the main investor in the transaction,
will, individually, beneficially own approximately 27.5% of the Company’s common
stock. The Insiders have not closed on the agreement between them and
SIBL as certain closing conditions to that agreement have not been met as of
yet.
On March
4, 2010, the insiders of Senesco Technologies, Inc. who had previously purchased
all of the convertible debentures, warrants and common stock of Senesco which
were previously held by Stanford Venture Capital Holdings, Inc., notified the
Company that they have elected, subject to stockholder approval, to convert
their convertible debentures at a conversion price of $0.83. Under
the terms of the convertible debentures, such convertible debentures could have
converted at a floating conversion rate equal to the lower of $0.83, or 80
percent of the lowest daily Volume-Weighted Average Price (VWAP) for the
five-day period immediately preceding the conversion date, which equated to
$0.22. The conversion of the debentures is subject to stockholder
approval as further described in this proxy statement.
Transaction with JMP
Securities
On
February 17, 2010, the Company entered into a credit agreement with JMP
Securities LLC, also referred to herein as the Credit Agreement. The
agreement provides the Company with, subject to certain restrictions, including
the existence of suitable collateral, up to a $3.0 million line of credit upon
which the Company may draw at any time, also referred to herein as the Line of
Credit. Any draws upon the Line of Credit accrue at a monthly
interest rate of (i) the broker rate in effect at the time of the draw (which is
currently 2.0%), plus (ii) 2.75%. There are no other conditions or
fees or expenses associated with the Line of Credit. The Line of
Credit is not secured by any assets of the Company, but it is secured by certain
assets of the Chairman of our Board of Directors, Harlan W. Waksal, M.D., which
are currently held by JMP Securities.
March 2010 Transaction with
Christopher Forbes and Harlan W. Waksal, M.D.
As
further described below, on March 26, 2010, certain investors, including,
Christopher Forbes and Harlan W. Waksal, M.D., entered into a Securities
Purchase Agreement with the Company pursuant to which the Company agreed to
issue to Christopher Forbes and Harlan W. Waksal, M.D.,, in a private placement,
an aggregate of approximately 1,200 shares of the Company’s 10% Series B
Convertible Preferred Stock, par value $0.01 per share initially convertible
into approximately 3,750,000 shares of Common Stock, and (ii) immediately
exercisable warrants to purchase up to approximately 3,750,000 shares of Common
Stock for an aggregate offering price of approximately
$1,200,000. The Series B Preferred Stock will only be issued after
the Company receives stockholder approval as further described in this proxy
statement.
All of
the foregoing transactions were approved, or have been approved, by our Audit
Committee.
PROPOSAL 2
APPROVAL
OF AN AMENDMENT TO THE SENESCO TECHNOLOGIES, INC. 2008 INCENTIVE
COMPENSATION PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE THEREUNDER FROM 6,137,200 SHARES TO 11,137,200 SHARES
We are
asking our stockholders to vote on a proposal to approve an amendment to the
2008 Incentive Compensation Plan, also referred to herein as the 2008 Plan that
will increase the maximum number of shares of our common stock reserved for
issuance over the term of the 2008 Plan by an additional 5,000,000 shares to a
total of 11,137,200 shares. Under the amendment, the maximum number
of shares of common stock which may be issued pursuant to options intended to be
incentive stock options under the federal tax laws will also be increased by
5,000,000 shares.
As of
April 1, 2010, 1,998,127 shares of common stock were subject to outstanding
options under the 2008 Plan, no shares of common stock were subject to
outstanding restricted stock units under the 2008 Plan, no shares had been
issued under the 2008 Plan and 4,139,173 shares of common stock remained
available for future equity awards.
Incentive
compensation programs play a pivotal role in our efforts to attract and retain
key personnel essential to our long-term growth and financial
success. The 2008 Plan is structured to provide us with more
flexibility in designing cash and equity incentive programs in an environment
where a number of companies have moved from traditional option grants to other
stock or stock-based awards such as restricted stock and restricted stock units
and performance-based compensation. The proposed share increase will
assure that a sufficient reserve of common stock is available under the 2008
Plan to allow the Company to remain competitive for executive talent and other
key employees.
The 2008
Plan was originally approved by our stockholders at the 2008 Annual
Meeting. On March 25, 2010, our board approved the amendment to the
2008 Plan that is the subject of this Proposal 2, subject to the approval of the
stockholders at the Meeting.
Summary
Description of 2008 Incentive Compensation Plan
The
principal terms and provisions of the 2008 Plan, as amended,
below. The summary, however, is not intended to be a complete
description of all the terms of the 2008 Plan and is qualified in its entirety
by reference to the complete text of the 2008 Plan, as amended, filed with this
Proxy Statement as Appendix A. Any stockholder who wishes to obtain a
copy of the actual plan documents may do so upon written request to our
Corporate Secretary at our principal offices at 303 George Street, Suite 420,
New Brunswick, New Jersey 08901.
Types of
Awards.
The following types of awards may be granted under the
2008 Plan: options, stock appreciation rights, stock awards, restricted stock
units, cash awards, performance units and dividend equivalent rights. The
principal features of each type of award are described below.
Administration
.
The Compensation
Committee of our board has the exclusive authority to administer the 2008 Plan
with respect to awards made to our executive officers and non-employee Board
members and has the authority to make awards under the 2008 Plan to all other
eligible individuals. However, our board may at any time appoint a
secondary committee of one (1) or more board members to have separate but
concurrent authority with the Compensation Committee to make awards under the
2008 Plan to individuals other than executive officers and non-employee board
members. In addition, our board may delegate to one (1) or more
executive officers the power to grant awards under the 2008 Plan to one (1) or
more employees (other than executive officers) and to exercise such other powers
under the 2008 Plan as the board may determine. However, either the
board or the Compensation Committee will fix the terms of the awards granted by
such officers and the maximum number of shares for which the executive officers
may grant such awards.
The term
“plan administrator,” as used in this summary, will mean our compensation
committee, any secondary committee and any executive officers to whom
administrative authority is delegated, to the extent each such entity or
individual is acting within the scope of its administrative authority under the
2008 Plan.
Eligibility
.
Officers and
employees, non-employee members of our board of directors (or the board of our
parent or subsidiary), as well as independent consultants and contractors, in
our employ or service or in the employ or service of our parent or subsidiary
companies (whether now existing or subsequently established) are eligible to
participate in the 2008 Plan. As of April [__], 2010, approximately
[11] persons (including [3] executive officers) and [8] non-employee board
members were eligible to participate in the 2008 Plan.
1.
Securities
Subject to 2008 Plan
.
10,137,200
shares of our common stock will initially be reserved for issuance over the term
of the 2008 Plan, including the 5,000,000 share increase subject to approval
under this proposal. To the extent any options or restricted stock
units outstanding under the predecessor 1998 Stock Incentive Plan, also referred
to herein as the 1998 Plan, on the effective date of the 2008 Plan subsequently
terminate unexercised or without the issuance of shares, the number of shares of
common stock subject to those terminated options and restricted stock units will
be added to the share reserve available for issuance under the 2008 Plan, up to
an additional 1,000,000 shares.
2. The
maximum number of shares of common stock which may be issued pursuant to options
intended to qualify as incentive stock options under the federal tax laws may
not exceed 9,139,073 shares, increased by up to 1,000,000 shares for any
increase in the share reserve by reason of the termination of awards under the
1998 Plan.
Awards
made under the 2008 Plan will be subject to the following per-participant
limitations in order to provide the plan administrator with the opportunity to
structure one (1) or more of those awards as performance-based compensation
under Section 162(m) of the Internal Revenue Code (“Section
162(m)”):
|
·
|
For
awards measured in terms of shares of our common stock (whether payable in
our common stock, cash or a combination of both), no participant in the
2008 Plan may receive awards for more than 1,000,000 shares of our common
stock in any single calendar year, subject to adjustment for subsequent
stock splits, stock dividends and similar
transactions. Stockholder approval of this proposal will also
constitute approval of that 1,000,000-share limitation for purposes
Section 162(m). Accordingly, such limitation will assure that
any deductions to which we would otherwise be entitled upon the exercise
of stock options or stock appreciation rights granted under the 2008 Plan
will not be subject to the $1 million limitation on the income tax
deductibility of compensation paid per executive officer imposed under
Section 162(m). In addition, one (1) or more shares issued
under stock awards or restricted stock units may also qualify as
performance-based compensation that is not subject to the Section 162(m)
limitation, if the vesting of those shares is tied to the attainment of
the corporate performance milestones discussed in the summary description
below.
|
|
·
|
For
awards measured in terms of cash dollars at the time of grant (whether
payable in cash, shares of our common stock, or both), no participant in
the 2008 Plan may receive awards with an aggregate dollar value in excess
of $1,000,000 in any one (1) calendar year, with such limitation to be
measured at the time the award is made. Stockholder approval of
this proposal will also constitute approval of that $1,000,000 limitation
for purposes of Section 162(m). Accordingly, such limitation
will assure that any deductions to which we would otherwise be entitled
upon the payment of cash bonuses or the settlement of performance units
will not be subject to the $1 million limitation on the income tax
deductibility of compensation paid per executive officer imposed under
Section 162(m), to the extent the vesting of those awards is tied to the
attainment of one (1) or more of the corporate performance milestones
discussed below.
|
The
shares of common stock issuable under the 2008 Plan may be drawn from shares of
our authorized but unissued common stock or from shares of our common stock that
we acquire, including shares purchased on the open market or in private
transactions.
Shares
subject to outstanding awards under the 2008 Plan that expire or otherwise
terminate prior to the issuance of the shares subject to those awards will be
available for subsequent issuance under the 2008 Plan. Any unvested
shares issued under the 2008 Plan that are subsequently forfeited or that we
repurchase, at a price not greater than the original issue price paid per share,
pursuant to our repurchase rights under the 2008 Plan will be added back to the
number of shares reserved for issuance under the 2008 Plan and will accordingly
be available for subsequent issuance.
In
addition, the following share counting procedures will apply in determining the
number of shares of common stock available from time to time for issuance under
the 2008 Plan:
|
·
|
Should
the exercise price of an option be paid in shares of our common stock,
then the number of shares reserved for issuance under the 2008 Plan will
be reduced by the net number of shares issued under the exercised
option.
|
|
·
|
Should
shares of common stock otherwise issuable under the 2008 Plan be withheld
by us in satisfaction of the withholding taxes incurred in connection with
the issuance, exercise or settlement of an award under the plan, then the
number of shares of common stock available for issuance under the 2008
Plan will be reduced by the net number of shares actually issued after any
such share withholding.
|
|
·
|
Upon
the exercise of any stock appreciation right granted under the 2008 Plan,
the share reserve will be reduced by the net number of shares actually
issued upon such exercise.
|
Awards.
The
plan administrator has complete discretion to determine which eligible
individuals are to receive awards, the time or times when those awards are to be
granted, the number of shares or amount of payment subject to each such award,
the vesting and exercise schedule (if any) to be in effect for the award, the
cash consideration (if any) payable per share subject to the award and the form
of payment in which the award is to be settled, the maximum term for which the
award is to remain outstanding, the status of any granted option as either an
incentive stock option or a non-statutory option under the federal tax laws, and
with respect to performance-based awards, the amount payable at one or more
levels of attained performance, the payout schedule and the form of
payment.
Stock
Options.
Each granted option will have an exercise price per
share determined by the plan administrator, but the exercise price will not be
less than one hundred percent (100%) of the fair market value of the option
shares on the grant date. No granted option will have a term in
excess of ten (10) years. The shares subject to each option will
generally vest in one or more installments over a specified period of service
measured from the grant date or upon the achievement of pre-established
performance objectives. However, one or more options may be
structured so that they will be immediately exercisable for any or all of the
option shares. The shares acquired under such immediately exercisable
options will be subject to repurchase by us, at the lower of the exercise price
paid per share or the fair market value per share, if the optionee ceases
service prior to vesting in those shares.
Upon
cessation of service, the optionee will have a limited period of time in which
to exercise his or her outstanding options to the extent exercisable for vested
shares. The plan administrator will have complete discretion to
extend the period following the optionee’s cessation of service during which his
or her outstanding options may be exercised, provide for continued vesting
during the applicable post-service exercise period and/or accelerate the
exercisability or vesting of options in whole or in part. Such
discretion may be exercised at any time while the options remain
outstanding,
Stock
Appreciation Rights
.
The 2008 Plan
allows the issuance of two types of stock appreciation rights:
|
·
|
Tandem
stock appreciation rights granted in conjunction with options which
provide the holders with the right to surrender the related option grant
for an appreciation distribution from us in an amount equal to the excess
of (i) the fair market value of the vested shares of our common stock
subject to the surrendered option over (ii) the aggregate exercise price
payable for those shares.
|
|
·
|
Stand-alone
stock appreciation rights which allow the holders to exercise those rights
as to a specific number of shares of our common stock and receive in
exchange an appreciation distribution from us in an amount equal to the
excess of (i) the fair market value of the shares of common stock as to
which those rights are exercised over (ii) the aggregate exercise price in
effect for those shares. The exercise price per share may not
be less than the fair market value per share of our common stock on the
date the stand-alone stock appreciation right is granted, and the right
may not have a term in excess of ten (10)
years.
|
The
appreciation distribution on any exercised stock appreciation right will be paid
in (i) cash, (ii) shares of our common stock or (iii) a combination of cash and
shares of our common stock. Upon cessation of service with us, the
holder of a stock appreciation right will have a limited period of time in which
to exercise that right to the extent exercisable at that time. The
plan administrator has complete discretion to extend the period following the
holder’s cessation of service during which his or her outstanding stock
appreciation rights may be exercised, provide for continued vesting during the
applicable post-service exercise period and/or accelerate the exercisability or
vesting of stock appreciation rights in whole or in part. Such
discretion may be exercised at any time while the stock appreciation rights
remain outstanding.
Repricing
Prohibition.
The plan administrator may not implement any of
the following repricing programs without obtaining stockholder
approval: (i) the cancellation of outstanding options or stock
appreciation rights in return for new options or stock appreciation rights with
a lower exercise price per share, (ii) the cancellation of outstanding options
or stock appreciation rights with exercise prices per share in excess of the
then current fair market value per share of our common stock for consideration
payable in our equity securities or (iii) the direct reduction of the exercise
price in effect for outstanding options or stock appreciation
rights.
Stock Awards and
Restricted Stock Units.
Shares of our common stock may be
issued under the 2008 Plan subject to performance or service vesting
requirements established by the plan administrator or as a fully-vested bonus
for past services without any cash outlay required of the
recipient. Shares of our common stock may also be issued under the
2008 Plan pursuant to restricted stock units which entitle the recipients to
receive those shares upon the attainment of designated performance goals or the
completion of a prescribed service period or upon the expiration of a designated
time period following the vesting of those units, including (without
limitation), a deferred distribution date following the termination of the
recipient’s service with us.
In order
to assure that the compensation attributable to one or more stock awards or
restricted stock units will qualify as performance-based compensation which will
not be subject to the $1 million limitation on the income tax deductibility of
the compensation paid per executive officer which is imposed under Internal
Revenue Code Section 162(m), the plan administrator will have the discretionary
authority to structure one or more such awards so that the shares of common
stock subject to those awards will vest only upon the achievement of certain
pre-established corporate performance goals based on one or more of the
following criteria: (i) pre-tax or after-tax earnings, profit or net
income, (ii) revenue or revenue growth, (iii) earnings per share, (iv) return on
assets, capital or stockholder equity, (v) total stockholder return, (vi) gross
or net profit margin, (vii) cash flow, (viii) earnings or operating income
before interest, taxes, depreciation, amortization and/or charges for
stock-based compensation, (ix) market share, (x) increases in customer base,
(xi) operating income, net operating income or net operating income after
recorded tax expense; (xii) operating profit, net operating profit or net
operating profit after recorded tax expense, (xiii) operating margin, (xiv) cost
reductions or other expense control objectives, (xv) market price of our common
stock, whether measured in absolute terms or in relationship to earnings or
operating income, (xvi) budget objectives, (xvii) working capital, (xviii)
mergers, acquisitions or divestitures or (xix) measures of customer
satisfaction. Each performance criteria may be based upon the attainment of
specified levels of our performance under one or more of the measures described
above relative to the performance of other entities and may also be based on the
performance of any of our business units or divisions or any parent or
subsidiary. Each applicable performance goal may include a minimum
threshold level of performance below which no award will be earned, levels of
performance at which specified portions of an award will be earned and a maximum
level of performance at which an award will be fully earned. Each
applicable performance goal may be structured at the time of the award to
provide for appropriate adjustment for one or more of the following items: (A)
asset impairments or write-downs; (B) litigation judgments or claim settlements;
(C) the effect of changes in tax law, accounting principles or other such laws
or provisions affecting reported results; (D) accruals for reorganization and
restructuring programs; (E) any extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in our
annual report to stockholders for the applicable year; (F) the operations of any
business acquired by us or any parent or subsidiary or of any joint venture in
which we or any parent or subsidiary participate; (G) the divestiture of one or
more business operations or the assets thereof; or (H) the costs incurred in
connection with such acquisitions or divestitures.
Stockholder
approval of this proposal will also constitute approval of the foregoing
performance goals for purposes of establishing the vesting targets for one or
more awards under the 2008 Plan that are intended to qualify as
performance-based compensation under Section 162(m).
Should
the participant cease to remain in service while holding one or more unvested
shares or should the performance objectives not be attained with respect to one
or more such unvested shares, then those shares will be immediately susceptible
for cancellation. Outstanding restricted stock units will
automatically terminate, and no shares of our common stock will actually be
issued in satisfaction of those awards, if the performance goals or service
requirements established for such awards are not attained. The plan
administrator, however, will have the discretionary authority to issue shares of
our common stock in satisfaction of one or more outstanding awards as to which
the designated performance goals or service requirements are not
attained. However, no vesting requirements tied to the attainment of
performance objectives may be waived with respect to awards which were intended
at the time of issuance to qualify as performance-based compensation under
Section 162(m), except in the event of a change in control, as described under
the heading “General Provisions –
Vesting
Acceleration
.”
Cash
Awards.
Cash awards vest over an eligible individual’s
designated service period or upon the attainment of pre-established performance
goals. Cash awards which become due and payable following the
attainment of the applicable performance goal and satisfaction of any service
period may be paid in cash and/or shares of our common stock.
In order
to assure that the compensation attributable to one or more cash awards will
qualify as performance-based compensation which will not be subject to the $1
million limitation on the income tax deductibility of the compensation paid per
executive officer which is imposed under Internal Revenue Code Section 162(m),
the plan administrator has the discretionary authority to structure one or more
awards so that cash or shares of common stock subject to those awards will vest
only upon the achievement of certain pre-established corporate performance goals
based on one or more of the performance goals described above in the summary of
“Stock Awards and Restricted Stock Units”.
The plan
administrator has the discretionary authority at any time to accelerate the
vesting of any and all cash awards. However, no vesting requirements
tied to the attainment of performance objectives may be waived with respect to
awards which were intended at the time of issuance to qualify as
performance-based compensation under Section 162(m), except in the event of a
change in control as described under the heading “General Provisions – Vesting
Acceleration.”
Performance
Units.
A performance unit represents a participating interest
in a special bonus pool tied to the attainment of pre-established corporate
performance objectives based on one or more performance goals described above in
the summary of “Stock Awards and Restricted Stock Units”. The amount
of the bonus pool may vary with the level at which the applicable performance
objectives are attained, and the value of each performance unit which becomes
due and payable upon the attained level of performance will be determined by
dividing the amount of the resulting bonus pool (if any) by the total number of
performance units issued and outstanding at the completion of the applicable
performance period.
Performance
units may also be structured to include a service-vesting requirement which the
participant must satisfy following the completion of the performance period in
order to vest in the performance units awarded with respect to that performance
period.
Performance
units which become due and payable following the attainment of the applicable
performance objectives and the satisfaction of any applicable service-vesting
requirement may be paid in cash and/or shares of our common stock valued at fair
market value on the payment date.
The plan
administrator will have the discretionary authority at any time to accelerate
the vesting of any and all performance units. However, no vesting
requirements tied to the attainment of performance objectives may be waived with
respect to awards which were intended at the time of issuance to qualify as
performance-based compensation under Section 162(m), except in the event of a
change in control as described under the heading “General Provisions –
Vesting
Acceleration
.”
Dividend
Equivalent Rights.
Dividend equivalent rights may be issued as
stand-alone awards or in tandem with other awards made under the 2008
Plan. Each dividend equivalent right award will represent the right
to receive the economic equivalent of each dividend or distribution, whether in
cash, securities or other property (other than shares of our common stock) which
is made per issued and outstanding share of common stock during the term the
dividend equivalent right remains outstanding. Payment of the amounts
attributable to such dividend equivalent rights may be made either concurrently
with the actual dividend or distribution made per issued and outstanding share
of our common stock or may be deferred to a later date. Payment may
be made in cash or shares of our common stock.
Stock
Awards
The
following table sets forth, as to our Chief Executive Officer, our Chief
Financial Officer, our three other most highly compensated executive officers
and the other individuals and groups indicated, the number of shares of our
common stock subject to option grants made under the 2008 Plan from January 1,
2009 through April 1, 2010, together with the weighted average exercise price
per share in effect for such option grants.
|
|
Number of Shares
Underlying Options
Granted (#)
|
|
|
Weighted Average
Exercise Price Per
Share ($)
|
|
Jack
Van Hulst
|
|
|
253,032
|
|
|
$
|
0.44
|
|
Joel
Brooks
|
|
|
300,000
|
|
|
$
|
0.29
|
|
Richard
Dondero
|
|
|
380,000
|
|
|
$
|
0.36
|
|
John
E. Thompson
|
|
|
48,000
|
|
|
$
|
0.60
|
|
All
current executive officers as a group (4 persons)
|
|
|
981,032
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
|
|
|
Harlan
W. Waksal, M.D.
|
|
|
241,007
|
|
|
$
|
0.38
|
|
Rudolf
Stalder
|
|
|
329,869
|
|
|
$
|
0.46
|
|
Christopher
Forbes
|
|
|
248,949
|
|
|
$
|
0.49
|
|
Thomas
Quick
|
|
|
197,271
|
|
|
$
|
0.45
|
|
John
Braca
|
|
|
258,503
|
|
|
$
|
0.44
|
|
David
Rector
|
|
|
241,580
|
|
|
$
|
0.45
|
|
Warren
Isabelle
|
|
|
25,000
|
|
|
$
|
0.39
|
|
All
current non-employee directors as a group (7 persons)
|
|
|
1,542,179
|
|
|
$
|
0.45
|
|
All
employees, including current officers who are not executive officers, as a
group (1 person)
|
|
|
7,500
|
|
|
$
|
0.29
|
|
New
Plan Benefits
No awards
have been made under the 2008 Plan on the basis of the share increase subject to
stockholder approval under this proposal.
General
Provisions
Vesting
Acceleration
. In the event we should experience a change in
control, the following special vesting acceleration provisions is in effect for
all outstanding awards under the 2008 Plan:
|
(i)
|
Each
outstanding option, stock appreciation right, stock award and restricted
stock unit award will automatically accelerate in full upon a change in
control, if that award is not assumed, substituted, replaced with a cash
retention program that preserves the intrinsic value of the award and
provides for subsequent payout in accordance with the same vesting
schedule applicable to the award or otherwise continued in effect by the
successor corporation.
|
|
(ii)
|
The
plan administrator has complete discretion to grant one or more awards
which will vest in the event the individual’s service with us or the
successor entity is terminated within a designated period following a
change in control transaction in which those awards are assumed or
otherwise continued in effect.
|
|
(iii)
|
The
plan administrator has the discretion to structure one or more awards so
that those awards will immediately vest upon a change in control, whether
or not they are to be assumed or otherwise continued in
effect.
|
|
(iv)
|
Unless
the plan administrator establishes a different definition for one or more
awards, a change in control will be deemed to occur for purposes of the
2008 Plan in the event (a) we are acquired by merger or asset sale or (b)
there occurs any transaction (or series of related transactions within the
twelve (12)-month period ending with the most recent acquisition) pursuant
to which any person or group of related persons becomes directly or
indirectly the beneficial owner of securities possessing (or convertible
into or exercisable for securities possessing) fifty percent (50%) or more
of the total combined voting power of our outstanding securities or (c)
there is a change in the majority of the Board effected through one or
more contested elections for Board
membership.
|
The plan
administrator’s authority above extends to any awards intended to qualify as
performance-based compensation under Section 162(m), even though the accelerated
vesting of those awards may result in their loss of performance-based status
under Section 162(m).
Changes in
Capitalization
.
In the event any
change is made to the outstanding shares of our common stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares, spin-off transaction or other change in corporate structure effected
without our receipt of consideration or should the value of our outstanding
shares of common stock be substantially reduced by reason of a spin-off
transaction or extraordinary dividend or distribution or should there occur any
merger, consolidation or other reorganization,
equitable adjustments
will be made to: (i) the maximum number and/or class of securities issuable
under the 2008 Plan; (ii) the maximum number and/or class of securities by which
the share reserve may increase by reason of the expiration or termination of
unexercised options or restricted stock units under the Predecessor Plan, (iii)
the maximum number and/or class of securities for which incentive stock options
may be granted under the 2008 Plan; (iv) the maximum number and/or
class of securities for which any one (1) person may be granted common
stock-denominated awards under the 2008 Plan per calendar year; (v) the number
and/or class of securities and the exercise price per share in effect for
outstanding options and stock appreciation rights and (v) the number and/or
class of securities subject to each outstanding stock award, restricted stock
unit, performance unit, dividend equivalent right and any other award
denominated in shares of our common stock and the cash consideration (if any)
payable per share. Such adjustments will be made in such manner as
the plan administrator deems appropriate in order to preclude any dilution or
enlargement of benefits under the 2008 Plan or the outstanding awards
thereunder.
Valuation.
The
fair market value per share of our common stock on any relevant date under the
2008 Plan is deemed to be equal to the closing selling price per share on that
date on the NYSE AMEX market. As of April [__], 2010, the fair market
value of our common stock determined on such basis was $[__] per
share.
Stockholder
Rights and Transferability
.
No optionee has
any stockholder rights with respect to the option shares until such optionee has
exercised the option and paid the exercise price for the purchased
shares. The holder of a stock appreciation right will not have any
stockholder rights with respect to the shares subject to that right unless and
until such person exercises the right and becomes the holder of record of any
shares of our common stock distributed upon such exercise. Options
are not assignable or transferable other than by will or the laws of inheritance
following optionee’s death, and during the optionee’s lifetime, the option may
only be exercised by the optionee. However, the plan administrator
may structure one or more non-statutory options under the 2008 Plan so that
those options will be transferable during optionee’s lifetime to one or more
members of the optionee’s family or to a trust established for the optionee
and/or one or more such family members or to the optionee’s former spouse, to
the extent such transfer is in connection with the optionee’s estate plan or
pursuant to a domestic relations order. Stand alone stock
appreciation rights will be subject to the same transferability restrictions
applicable to non-statutory options.
A
participant will have full stockholder rights with respect to any shares of
common stock issued to him or her under the 2008 Plan, whether or not his or her
interest in those shares is vested. A participant will not have any
stockholder rights with respect to the shares of common stock subject to
restricted stock units until that award vests and the shares of common stock are
actually issued thereunder. However, dividend-equivalent units may be
paid or credited, either in cash or in actual or phantom shares of common stock,
on outstanding restricted stock units, subject to such terms and conditions as
the plan administrator may deem appropriate.
Special Tax
Election.
The plan administrator may provide one or more
holders of awards under the 2008 Plan with the right to have us withhold a
portion of the shares otherwise issuable to such individuals in satisfaction of
the withholding taxes to which they become subject in connection with the
issuance, exercise or settlement of those awards. Alternatively, the
plan administrator may allow such individuals to deliver previously acquired
shares of our common stock in payment of such withholding tax
liability.
Amendment and
Termination
.
Our board of
directors may amend or modify the 2008 Plan at any time subject to stockholder
approval to the extent required under applicable law or regulation or pursuant
to the listing standards of the stock exchange on which our common stock is at
the time primarily traded. Unless sooner terminated by our board of
directors, the 2008 Plan will terminate on the earliest of (i) September 22,
2018, (ii) the date on which all shares available for issuance under the 2008
Plan have been issued as fully-vested shares or (iii) the termination of all
outstanding awards in connection with certain changes in control or
ownership.
Summary
of Federal Income Tax Consequences
The
following is a summary of the Federal income taxation treatment applicable to us
and the participants who receive awards under the 2008 Plan.
Option
Grants.
Options granted under the discretionary grant program
may be either incentive stock options which satisfy the requirements of Section
422 of the Internal Revenue Code or non-statutory options which are not intended
to meet such requirements. The Federal income tax treatment for the
two types of options differs as follows:
Incentive
Options.
No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is recognized for regular
tax purposes at the time the option is exercised, although taxable income may
arise at that time for alternative minimum tax purposes. The optionee
will recognize taxable income in the year in which the purchased shares are sold
or otherwise made the subject of certain other dispositions. For
Federal tax purposes, dispositions are divided into two categories: (i)
qualifying, and (ii) disqualifying. A qualifying disposition occurs
if the sale or other disposition is made more than two (2) years after the date
the option for the shares involved in such sale or disposition is granted and
more than one (1) year after the date the option is exercised for those
shares. If the sale or disposition occurs before these two periods
are satisfied, then a disqualifying disposition will result.
Upon a
qualifying disposition, the optionee will recognize long-term capital gain in an
amount equal to the excess of (i) the amount realized upon the sale or other
disposition of the purchased shares over (ii) the exercise price paid for the
shares. If there is a disqualifying disposition of the shares, then
the excess of (i) the fair market value of those shares on the exercise date or
(if less) the amount realized upon such sale or disposition over (ii) the
exercise price paid for the shares will be taxable as ordinary income to the
optionee. Any additional gain recognized upon the disposition will be
a capital gain.
If the
optionee makes a disqualifying disposition of the purchased shares, then we will
be entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal to the amount of ordinary income recognized by the
optionee as a result of the disposition. We will not be entitled to
any income tax deduction if the optionee makes a qualifying disposition of the
shares.
Non-Statutory
Options.
No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general
recognize ordinary income, in the year in which the option is exercised, equal
to the excess of the fair market value of the purchased shares on the exercise
date over the exercise price paid for the shares, and the optionee will be
required to satisfy the tax withholding requirements applicable to such
income. We will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be
allowed for our taxable year in which such ordinary income is recognized by the
optionee.
Stock Appreciation
Rights
. No taxable income is recognized upon receipt of a
stock appreciation right. The holder will recognize ordinary income
in the year in which the stock appreciation right is exercised, in an amount
equal to the excess of the fair market value of the underlying shares of common
stock on the exercise date over the base price in effect for the exercised
right, and the holder will be required to satisfy the tax withholding
requirements applicable to such income. We will be entitled to an
income tax deduction equal to the amount of ordinary income recognized by the
holder in connection with the exercise of the stock appreciation
right. The deduction will be allowed for the taxable year in which
such ordinary income is recognized.
Stock Awards.
The
recipient of unvested shares of common stock issued under the 2008 Plan will not
recognize any taxable income at the time those shares are issued but will have
to report as ordinary income, as and when those shares subsequently vest, an
amount equal to the excess of (i) the fair market value of the shares on the
vesting date over (ii) the cash consideration (if any) paid for the
shares. The recipient may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year the unvested
shares are issued an amount equal to the excess of (i) the fair market value of
those shares on the issue date over (ii) the cash consideration (if any) paid
for such shares. If the Section 83(b) election is made, the recipient
will not recognize any additional income as and when the shares subsequently
vest. We will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the recipient with respect to the
unvested shares. The deduction will in general be allowed for our
taxable year in which such ordinary income is recognized by the
recipient.
Restricted Stock
Units.
No taxable income is recognized upon receipt of
restricted stock units. The holder will recognize ordinary income in
the year in which the shares subject to the units are actually issued to the
holder. The amount of that income will be equal to the fair market
value of the shares on the date of issuance, and the holder will be required to
satisfy the tax withholding requirements applicable to such
income. We will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the holder at the time the shares are
issued. The deduction will be allowed for the taxable year in which
such ordinary income is recognized.
Cash Awards
. The
payment of a cash award will result in the recipient’s recognition of ordinary
income equal to the dollar amount received. The recipient will be
required to satisfy the tax withholding requirements applicable to such
income. We will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the holder at the time the cash award is
paid. The deduction will be allowed for the taxable year in which
such ordinary income is recognized.
Performance
Units.
No taxable income is recognized upon receipt of
performance units. The holder will recognize ordinary income in the
year in which the performance units are settled. The amount of that
income will be equal to the fair market value of the shares of common stock or
cash received in settlement of the performance units, and the holder will be
required to satisfy the tax withholding requirements applicable to such
income. We will be entitled to an income tax deduction equal to the
amount of the ordinary income recognized by the holder of the performance units
at the time those units are settled. That deduction will be allowed
for the taxable year in which such ordinary income is recognized.
Dividend Equivalent
Rights
. No taxable income is recognized upon receipt of a
dividend equivalent right award. The holder will recognize ordinary
income in the year in which a dividend or distribution, whether in cash,
securities or other property, is paid to the holder. The amount of
that income will be equal to the fair market value of the cash, securities or
other property received, and the holder will be required to satisfy the tax
withholding requirements applicable to such income. We will be
entitled to an income tax deduction equal to the amount of the ordinary income
recognized by the holder of the dividend equivalent right award at the time the
dividend or distribution is paid to such holder. That deduction will
be allowed for the taxable year in which such ordinary income is
recognized.
Deductibility of Executive
Compensation.
We anticipate that any compensation deemed paid
by us in connection with the exercise of non-statutory options or stock
appreciation rights will qualify as performance-based compensation for purposes
of Section 162(m) and will not have to be taken into account for purposes of the
$1 million limitation per covered individual on the deductibility of the
compensation paid to certain of our executive officers. Accordingly,
the compensation deemed paid with respect to options and stock appreciation
rights granted under the 2008 Plan will remain deductible by us without
limitation under Section 162(m). However, any compensation deemed
paid by us in connection with shares issued under stock awards or restricted
stock units or shares or cash issued under the incentive bonus program will be
subject to the $1 million limitation, unless the issuance of the shares or cash
is tied to one or more of the performance milestones described
above.
Accounting
Treatment.
Pursuant to the accounting standards established by
Statement of Financial Accounting Standards No. 123R,
Share-Based Payment
, or SFAS
123R, we will be required to expense all share-based payments, including grants
of stock options, stock appreciation rights, restricted stock, restricted stock
units and all other stock-based awards under the 2008
Plan. Accordingly, stock options and stock appreciation rights which
are granted to our employees and non-employee Board members and payable in
shares of our common stock will have to be valued at fair value as of the grant
date under an appropriate valuation formula, and that value will then have to be
charged as a direct compensation expense against our reported earnings over the
designated vesting period of the award. For shares issuable upon the
vesting of restricted stock units awarded under the 2008 Plan, we will be
required to amortize over the vesting period a compensation cost equal to the
fair market value of the underlying shares on the date of the
award. If any other shares are unvested at the time of their direct
issuance, then the fair market value of those shares at that time will be
charged to our reported earnings ratably over the vesting
period. Such accounting treatment for restricted stock units and
direct stock issuances will be applicable whether vesting is tied to service
periods or performance goals. The issuance of a fully-vested stock
bonus will result in an immediate charge to our earnings equal to the fair
market value of the bonus shares on the issuance date.
For
performance units awarded under the 2008 Plan and payable in stock, we will be
required to amortize, over the applicable performance period and any subsequent
service vesting period, a compensation cost equal to the fair market value of
the underlying shares on the date of the award. For performance units
awarded under the 2008 Plan and payable in cash, we will amortize the potential
cash expense over the applicable performance period and any subsequent service
vesting period. Dividends or dividend equivalents paid on the portion
of an award that vests will be charged against our retained
earnings. If the award holder is not required to return the dividends
or dividend equivalents if they forfeit their awards, dividends or dividend
equivalents paid on instruments that do not vest will be recognized by us as
additional compensation cost.
Required
Vote and Board Recommendation
The
affirmative vote of the holders of a majority of the shares present in person or
represented by proxy and voting on the Proposal 2, provided that affirmative
vote also represents at least a majority of the voting power required to
constitute a quorum at the annual meeting, is required for approval of the
amendment to the 2008 Plan. Should such approval not be obtained,
then the share reserve will not be increased. However, awards will
continue to be made under the 2008 Plan until the date all the shares of our
common stock currently reserved for issuance under the 2008 Plan have been
issued or any earlier termination of the 2008 Plan.
Recommendation
of the Board of Directors
The
Board believes that Proposal 2 is in the Company’s best interests and in the
best interests
of
our stockholders and recommends a vote “FOR” the amendment to the 2008 Incentive
Compensation Plan.
PROPOSAL
3
PROPOSAL
TO AMEND OUR CERTIFICATE OF INCORPORATION TO INCREASE THE TOTAL
NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE,
FROM
120,000,000
TO 250,000,000
BACKGROUND
INFORMATION
Background
of the Transaction
As
disclosed in our filings with the Securities and Exchange Commission, since
consummating our last financing with certain investors in the first quarter of
Fiscal 2010, we have been seeking additional sources of capital in order to fund
our operations and research and development projects. While we
have been utilizing funds raised in this previous financing to fund our
operations, through the present time, our board and management have been
focusing their efforts on ascertaining sources of financing.
Since our
last financing, our board engaged in formal internal discussions as to the best
course of action which would present the most opportunity for us to ascertain
funding. Our board, along with our management, at that time,
attempted to reach out to several of our current investors as well as engage in
discussions with several investment banks in the hopes that the then current
investors and/or the investment banks could provide us with funding, or at least
sources through which we could raise funds.
In
addition, during our first quarter of Fiscal 2010, our management and certain of
our board members engaged in one-on-one discussions with investors in the hopes
that such investors would be interested in getting to better know and understand
our operations. The members of our board also reached out to various
contacts that they had around the country in an attempt to ascertain if such
contacts, or any who they knew of, had an interest in investing in
us.
Further,
during this time, management and the board also engaged in informal discussions
on a routine basis regarding our financial position. While we
remained focused on moving towards our proposed clinical trial, the board and
management were well aware that such trials would not succeed, or even occur, if
we were unable to secure additional funding.
At a
meeting of our board, on March 23, 2009, we formally retained two investment
banks to assist us in consummating a financing. Formal engagement
letters were signed with each of the banks. Over the course of the
next two (2) months, we worked closely with such banks, and continued to pursue
additional contacts. In addition a third investment bank was retained
by the board on November 16, 2009 and a forth investment bank was retained
by the board on December 15, 2009. An extensive search for
potential investors was undertaken, including a significant effort on the part
of the retained investment banks.
Ultimately,
after reviewing all opportunities, in March 2010, we learned that certain
investors were potentially interested in engaging in a financing with us so long
as certain of our insiders also participated in the financing. During
the days that ensued, certain members of our board as well as management
discussed the structure of such a financing.
Finally,
at a board meeting which was held on March 25, 2010, management presented the
board with certain terms that they had negotiated with certain
investors. Certain members of the board, at that time, also informed
the board that they desired to participate in the financing on the terms set
forth by the investors. Accordingly, on that date, management and
certain members of the board approved the transactions with the investors, also
referred to herein as the Non-Affiliated Investors, and Harlan W. Waksal, M.D.
and Christopher Forbes, also referred to herein as the Affiliate Investors,
subject to the final negotiation and execution of definitive
agreements. The terms of such financing had been previously heavily
negotiated with each investor over the course of several of the preceding weeks
and management and the board agreed at such meeting, that the terms of such
deal, were the best that could be ascertained. In addition, the Audit
Committee of the board approved any related party transaction.
Description
of the Transaction
Purchase
Agreement and Warrants
The
following summary of the transaction, including the Purchase Agreements and the
Warrants is qualified in its entirety by reference to, and should be read in
conjunction with, the forms of Purchase Agreement (which includes forms of the
Warrant, a copies of which were filed as exhibits to Current Report on Form 8-K
filed on March 29, 2010 and are incorporated herein by reference.
Summary of the
Offering
On March
26, 2010, the Company entered into two Purchase Agreements, referred to herein
as the Non-Affiliate Purchase Agreements, between the Company and certain
non-affiliated investors who are a party thereto, referred to herein as the
Non-Affiliated Investors. On March 26, 2010, the Company also entered
into a third Purchase Agreement, referred to herein as the Affiliate Purchase
Agreement, between the Company and certain affiliated investors who are a party
thereto, referred to herein as the Affiliated Investors. Collectively
the Non-Affiliate Purchase Agreements and Affiliate Purchase Agreement shall be
referred to herein as the Purchase Agreements and collectively the
Non-Affiliated Investors and Affiliated Investors shall be referred to herein as
the Investors. The respective Purchase Agreements contain
substantially similar terms. It is anticipated that the offering will
bring gross proceeds to the Company in the amount of approximately $11,497,000
and net proceeds to the Company in the amount of approximately
$10,800,000.
Pursuant
to the Non-Affiliate Purchase Agreements, the Company agreed to issue to the
Non-Affiliated Purchasers, in a private placement, an aggregate of approximately
10,297 shares of the Company’s 10% Series A Convertible Preferred Stock, par
value $0.01 per share, referred to herein as the Series A Preferred Stock,
initially convertible into approximately 32,178,125 shares of the Company’s
common stock, par value $0.01 per share, referred to herein as the Common Stock,
and (ii) immediately exercisable warrants to purchase up to approximately
32,178,125 shares of Common Stock for an aggregate offering price of
approximately $10,297,000.
Pursuant
to the Affiliate Purchase Agreement, the Company agreed to issue to the
Affiliate Purchasers, in a private placement, an aggregate of approximately
1,200 shares of the Company’s 10% Series B Convertible Preferred Stock, par
value $0.01 per share, referred to herein as the Series B Preferred Stock,
initially convertible into approximately 3,750,000 shares of Common Stock, and
(ii) immediately exercisable warrants to purchase up to approximately 3,750,000
shares of Common Stock for an aggregate offering price of approximately
$1,200,000. The Series B Preferred Stock will only be issued after
the Company receives stockholder approval. Collectively, the Series A
Preferred Stock and Series B Preferred Stock shall be referred to herein as the
Preferred Stock.
We expect
to use the net proceeds from the transaction for general corporate
purposes.
In
connection with the offering, the Company has agreed to solicit shareholder
approval of (i) the ability of the Investors to convert the securities into
common stock, which in the aggregate exceed 20% of our currently outstanding
shares of common stock and (ii) the issuance of the securities to the Affiliated
Investors pursuant to the terms and conditions of the Affiliate Purchase
Agreement at a stockholders’ meeting to be held as soon as possible, referred to
herein as the Shareholders’ Meeting.
The
Company closed on the offering with the Non-Affiliate Purchasers on
April 1, 2010 and, further, will close the offering with the Affiliate
Purchasers as soon as reasonably possible after the receipt of stockholder
approval at the Shareholders’ Meeting.
Warrants
Pursuant
to the Purchase Agreements, the Company agreed to deliver each of a Series A
Warrant to the Non-Affiliate Investors and a Series B Warrant to the Affiliate
Investors as well as certain Placement Agent Warrants, referred to herein as the
Warrants. Each Warrant has an initial exercise price of $0.35 per
share of Common Stock. The Warrants are immediately exercisable and have a five
(5) year term. The Series A Warrants are subject to a 19.99% blocker provision
to comply with NYSE Amex Rules, which provisions will expire if the stockholders
approve the Offering at the Stockholders’ Meeting. The Series B Warrants do not
contain a blocker, as they will be issued only after the Company receives
stockholder approval to issue such warrants. The Series A Warrants
also contain an provision which limits the holders beneficial ownership to a
maximum of 4.99% (which percentage may be increased to 9.99% upon sixty (60)
days notice to the Company). Upon the occurrence of certain dilutive events the
number of shares underlying the Warrants may be increased.
Registration Rights
Agreement
The
Company also entered into a Registration Rights Agreement dated as of March 26,
2010, by and among the Company and the Non-Affiliate Investors only, referred to
herein as the Registration Rights Agreement. The Affiliate Investors
are not a party to the Registration Rights Agreement. Pursuant to the
Registration Rights Agreement, the Company has agreed to file a registration
statement, also referred to herein as the Registration Statement, with the
Securities and Exchange Commission within, except for certain limited
exceptions, thirty (30) days of closing the offering, also referred to herein as
the Filing Deadline, to register the shares of Common Stock issuable upon
conversion or exercise of the shares of Series A Preferred Stock and the
Warrants, as the case may be, also referred to herein as the Underlying Shares.
In the event the Company does not file the Registration Statement on or before
the Filing Deadline, the Company will be required to pay liquidated damages in
an amount equal to 1% of the aggregate amount purchase price paid by the holder
for any unregistered securities then held by such Investor up to a maximum of
3%. The Company must file additional registration statements until all of the
securities may be sold pursuant to an effective registration statement or the
securities become eligible for sale under Rule 144 of the Securities
Act.
Placement Agent
Warrants
As
partial compensation for its placement agent services related to such
Non-Affiliate Purchase Agreement, the Company has issued to Ladenburg Thalmann
& Co. (which acted as exclusive placement agent for a portion of this
offering represented by such Non-Affiliate Purchase Agreement) a warrant
initially exercisable to purchase up to approximately 929,688 shares of Common
Stock at an exercise price of $0.35 per share of Common Stock. The
Company issued a warrant initially exercisable to purchase up to approximately
103,125 shares of Common Stock at an exercise price of $0.35 per share of Common
Stock to Midtown Partners & Co. LLC as part of a tail coverage fee in
connection with the offering, collectively such warrants issued to each of
Ladenburg and Midtown shall be referred to herein as the Placement Agent
Warrants. The Placement Agent Warrants have the same terms as the Series A
Warrant.
Certificates of
Designations
On March
31, 2010 the Company filed each of the Certificate of Designations designating
10% Series A Convertible Preferred Stock and the Certificate of Designations
designating 10% Series B Convertible Preferred Stock, referred to herein as the
Certificate of Designations, to its Amended and Restated Articles of
Incorporation, as amended, referred to herein as the Articles of Incorporation,
with the Secretary of State of the State of Delaware, establishing the Preferred
Stock. The Preferred Stock does not have any voting rights. Each
share of Preferred Stock has a stated value of $1,000, referred to herein as the
Stated Value. Each holder of shares of Preferred Stock is entitled to receive
semi-annually dividends at the rate of 10% per annum of the Stated Value for
each share of Preferred Stock held by such holder. Except in limited
circumstances, the Company can elect to pay the dividends in cash or shares of
Common Stock. Each share of Preferred Stock is entitled to a
liquidation preference equal to the Stated Value plus any accrued and unpaid
dividends. The shares of Preferred Stock are convertible into shares of Common
Stock at an initial conversion price of $0.32 per share, which price may be
adjusted upon the occurrence of certain dilutive events, and are convertible at
any time, provided that in the conversion of shares of Series A Preferred Stock
into shares of Common Stock is subject to a 19.99% blocker provision, which
provision will expire if the stockholders approve the offering at the
Stockholders’ Meeting. The Series A Preferred Stock is also subject
to a provision which limits the holders’ beneficial ownership to a maximum of
4.99% (which percentage may be increased to 9.99% upon sixty (60) days notice to
the Company). In addition, until the earlier of (i) the earlier of (A)
seventy-five (75) days after the date the Company’s registration statement is
declared effective or (B) nine (9) months after the closing date, or (ii) as
long as less than twenty percent (20%) of the shares of Series A Preferred Stock
originally issued hereunder are outstanding, unless otherwise agreed to by a
certain percentage of the holders of Series A Preferred Stock, the Company may
not (1) except in limited circumstances, enter into, create, incur assume,
guarantee or suffer to exist any indebtedness for borrowed money, (2) except in
limited circumstances, enter into, create, incur assume, guarantee or suffer to
exist any liens, (3) except in connection with the issuance of the Preferred
Stock, amend its charter documents in a manner that materially adversely effects
the rights of any holder of Preferred Stock, (4) except in limited circumstances
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
de
minimis
number of
shares of its common stock, (5) pay cash dividends or distributions on
securities which are junior to the Series A Preferred Stock or (5) enter into
any transaction with an affiliate of the Company which is not at an arms-length
basis or approved by a disinterested majority of the board. In
addition, upon the occurrence of certain events, the holders of Series A
Preferred Stock may redeem all of their Series A Preferred
Stock. Such events include (1) if the Company fails to deliver
certificates representing issuable upon a conversion hereunder prior to the
tenth business day after such shares are required to be delivered, (2) the
Company fails to pay in full the amount of cash due pursuant to a buy-in or
other event within ten (10) business days, (3) the Company fails to have
available a sufficient number of authorized and unreserved shares of Common
Stock to issue to an Investor upon a conversion of the Series A Preferred Stock,
(4) the Company materially breaches a term in a document underlying the
transaction which is not cured within thirty (30) days, (4) the Company redeems
more than a
de
minimis
number
of securities which are junior to the Series A Preferred Stock , (5) there
occurs a change in control transaction or bankruptcy event or (6) the Common
Stock shall fail to be listed or quoted for trading on a stock market for more
than five (5) trading days. Each holder of Preferred Stock also has
the right to participate in future financings of the Company.
As
described above, we have already consummated the transaction with the
Non-Affiliated Investors, however, in order to consummate the remaining aspects
of the transaction and to consummate the transactions with the Affiliated
Investors, certain conditions must be satisfied, including the receipt of
approvals from our stockholders, as described in this proxy
statement;
We have
already received gross proceeds of $10,297,000 (and net proceeds of
approximately $9,600,000 after deducting estimated expenses), in connection with
our sale of securities to the Non-Affiliated Investors. We expect to
receive additional net proceeds of approximately $1,200,000 if we are able to
consummate the transaction with the Affiliated Investors. We
expect the transaction with the Affiliated Investors to close as soon as
possible after receipt of any required approvals from our stockholders. We
expect to use the net proceeds for general corporate purposes.
Representations and
Warranties.
Except for its status as the contractual document between the
parties with respect to the agreements described therein, it is not intended to
provide factual information about the parties. The representations and
warranties contained in the Purchase Agreements were made only for purposes of
such agreement and as of specific dates, were solely for the benefit of the
parties to such agreement, and are subject to limitations agreed to by the
contracting parties, including being qualified by disclosures between the
parties. These representations and warranties have been made for the purposes of
allocating contractual risk between the parties to the agreement instead of
establishing these matters as facts, and may be subject to standards of
materiality applicable to the contracting parties that differ from those
applicable to investors. Accordingly, they should not be relied upon by
investors as statements of factual information.
Need for Additional Capital
.
We will need to raise substantial additional funds, to continue our operations
and fund clinical studies. Our plan is to continue to finance our operations
with a combination of equity issuances (including the possible closings of the
transaction) and other financings. Any future issuance of convertible
debt securities, preferred stock or common stock may be at a discount from the
then-current trading price of our common stock. If we issue additional common or
preferred stock or securities convertible into common stock, our stockholders
will experience additional dilution, which may be significant. If we are unable
to raise substantial additional capital through the possible additional closings
of the transactions covered by Proposals 4 and 5, and otherwise, we may not be
able to continue to operate as a going concern. To the extent the additional
closings of the transactions covered by Proposals 4 and 5 do not occur as a
result of the failure to obtain requisite approval of our stockholders, we do
not know whether additional funding will be available to us on acceptable terms,
or at all, to continue to operate as a going concern.
Interest
of Certain Persons in Matters to be Acted Upon
Each of Messrs. Harlan W. Waksal, M.D.
and Christopher Forbes are members of our board. It is anticipated
that if Proposals 3, 4 and 5 are approved, each of Harlan W. Waksal, M.D. and
Christopher Forbes will participate in the offering and purchase the securities
on the terms and conditions as set forth in the Affiliate Purchase
Agreement. For additional information regarding the number of
Preferred Stock and Warrants (and shares underlying the Warrants) to be
purchased by the Affiliated Investors, assuming the transaction is consummated,
please refer to the chart contained in Proposal 5.
Overview
and Reasons for Amendment
Stockholders
are being asked to approve an amendment to our Amended and Restated Certificate
of Incorporation, as amended to date, referred to herein as our Certificate of
Incorporation, to increase the number of authorized shares of our common stock
from 120,000,000 to 250,000,000. On March 25, 2010, our board adopted
resolutions approving and authorizing the amendment and directing that the
amendment be submitted to a vote of the stockholders at the
Meeting.
The board
determined that the amendment is in the best interests of Senesco and its
stockholders and unanimously recommends approval by the stockholders. If the
proposed amendment is approved by the stockholders, the board currently intends
to file, with the Secretary of State of the State of Delaware, a Certificate of
Amendment to the Certificate of Incorporation, referred to herein as the
Certificate of Amendment, reflecting such amendment as soon as practicable
following stockholder approval. The following summary is qualified in its
entirety by reference to the Certificate of Incorporation. Attached hereto as
Appendix B
to this
proxy statement is the proposed Certificate of Amendment.
Our board
has proposed this increase in authorized shares of common stock to ensure that
we have sufficient shares of common stock available for general corporate
purposes including, without limitation, sufficient shares available underlying
the securities issued in the financings, equity financings, acquisitions,
establishing strategic relationships with corporate and other partners,
providing equity incentives to employees, and payments of stock dividends, stock
splits or other recapitalizations. We also need to reserve for
issuance additional shares of common stock in connection with the financing
described in the section entitled “Background Information” above beginning on
page [__] as we currently do not have enough shares authorized to meet the
requirements set forth in the respective Purchase Agreements.
Our
Certificate of Incorporation currently authorizes the issuance of up to
120,000,000 shares of common stock and 5,000,000 shares of preferred stock, par
value $0.01 per share, referred to herein as the preferred stock. 10,297 shares
of preferred stock are currently issued and outstanding. The proposed amendment
will not, if adopted, result in an increase in the number of authorized shares
of preferred stock.
Of the
120,000,000 shares of common stock currently authorized, as of the close of
business on the record date, there were [33,584,121] shares of common stock
issued and outstanding. Furthermore, we have reserved for future
issuance:
a. [4,125,684]
shares of common stock upon the exercise of outstanding options and restricted
stock units granted under the 1998 Stock Plan;
b. [6,137,200]
shares of common stock upon the exercise of options and restricted stock units,
of which [1,998,127] have been granted and [4,139,073] may be granted in the
future, under the 2008 Incentive Compensation Plan;
c. [19,330,793]
shares of common stock upon the exercise of warrants issued and
outstanding.
d. [6,024,096]
shares of common stock upon conversion of the convertible debentures issued
pursuant to the previously disclosed financing which we entered into with and
Stanford Venture Capital Holdings, Inc. in 2007/2008, as subsequently purchased
by certain member of our board; and
e. [268,527]
shares of common stock, which may be issued as interest shares pursuant to the
previously disclosed financing which we entered into with Stanford Venture
Capital Holdings, Inc. in 2007/2008, as subsequently sold by Stanford to certain
members of our board.
If the
proposed amendment is approved, then after the meeting, there will be
[182,900,642] shares of common stock issued and outstanding and reserved for
issuance, which includes the shares which we are obligated to reserve for
issuance under the respective Purchase Agreements.
Reason
For Request For Stockholder Approval
In
accordance with Delaware law, approval and adoption of an amendment to our
Certificate of Incorporation to increase the authorized shares of our common
stock and preferred stock requires stockholder approval.
Consequences
if Stockholders Approve this Proposal
Dilution
As is the case
with the current authorized but unissued shares of common stock, the additional
shares of common stock authorized by this proposed amendment could be issued
upon approval by our board without further vote of our stockholders except as
may be required in particular cases by our Certificate of Incorporation,
applicable law, regulatory agencies or the NYSE Amex rules. Under our
Certificate of Incorporation, except for holders of Preferred Stock and as
provided for under the outstanding convertible debenture held by certain of our
insiders, stockholders do not have preemptive rights to subscribe to additional
securities that may be issued by Senesco, which means that current stockholders
do not have a prior right to purchase any new issue of common stock in order to
maintain their proportionate ownership interest in Senesco. In
addition, if we issue additional shares of common stock or securities
convertible into or exercisable for common stock, such issuance would have a
dilutive effect on the voting power and could have a dilutive effect on the
earnings per share of Senesco’s currently outstanding shares of common
stock.
The
following table sets forth the total number of: (1) authorized shares of our
common stock, (2) outstanding shares of our common stock, (3) reserved shares of
our common stock, (4) shares of our common stock available for issuance, (5)
proposed shares authorized by this Proposal 3 and (6) common stock available for
issuance if this Proposal 3 is approved by the stockholders.
Currently
Authorized
Shares
(1)
|
|
|
Currently
Outstanding
Shares
|
|
|
Shares
Currently
Reserved
for
Issuance
|
|
|
Shares
Currently
Available
for
Issuance
|
|
|
Proposed
Authorized
Shares
(2)
|
|
|
Shares
Potentially
Available
for
Issuance
(3)
|
|
|
120,000,000
|
|
|
|
[33,584,121
|
]
|
|
|
[149,316,527
|
]
|
|
|
[0
|
]
|
|
|
[250,000,000
|
]
|
|
|
[67,099,352
|
]
|
|
(1)
|
As
of April [__], 2010.
|
|
(2)
|
The
number of authorized shares of our common stock, if this Proposal 3 is
approved by the stockholders.
|
|
(3)
|
The
number of shares of our common stock available for issuance, if this
Proposal 3 is approved by the
stockholders.
|
Anti-takeover
Effects.
The proposed Certificate of Amendment could also,
under certain circumstances, have an anti-takeover effect. The proposed increase
in the number of authorized shares of common stock may discourage or make it
more difficult to effect a change in control of Senesco. For example, we could
issue additional shares to dilute the voting power of, create voting impediments
for, or otherwise frustrate the efforts of persons seeking to take over or gain
control of Senesco, whether or not the change in control is favored by a
majority of our unaffiliated stockholders. We could also privately place shares
of common stock with purchasers who would side with our board in opposing a
hostile takeover bid. The board is not aware of any plans for or attempt to take
control of Senesco.
If
approved, the amendment would amend and restate the first section of the fourth
paragraph of the Certificate of Incorporation, as follows:
FOURTH
:
“The total number
of shares of all classes of stock which the Corporation shall have authority to
issue is Two Hundred Fifty Five Million (255,000,000) shares. The
Corporation is authorized to issue two classes of stock designated “Common
Stock” and “Preferred Stock,” respectively. The total number of
shares of Common Stock authorized to be issued by the Corporation is Two Hundred
Fifty Million (250,000,000), each such share of Common Stock having a $0.01 par
value. The total number of shares of Preferred Stock authorized to be
issued by the Corporation is Five Million (5,000,000), each such share of
Preferred Stock having a $0.01 par value.”
The
Certificate of Amendment, which contains the above amendment, is attached to
this proxy statement as
Appendix B
. The affirmative
vote of a majority of the outstanding shares of common stock is required for
approval of the proposed amendment. Therefore, abstentions and broker non-votes
will have the same effect as votes against this proposal.
Consequences
if Stockholders Do Not Approve this Proposal
We have
no shares available for issuance. Typically capital is raised by
issuing shares in exchange for financing. If our stockholders do not
approve this proposed amendment, it is possible that we will be unable to fully
consummate the transactions described in the section entitled “Background
Information” beginning on page [__]. Accordingly, because we could
not consummate the transactions described, we would fall short of the working
capital necessary to complete our corporate objectives and, thus, we would be
required to pursue other strategic alternatives. We may not be able
to realize such alternatives on commercially reasonable terms, if at all, given
the current economic climate.
We have
no additional plans to issue the common stock authorized pursuant to Proposal 3
other than in connection with the transactions described in the section entitled
“Background Information” beginning on page [__].
Under
Delaware law, stockholders are not entitled to appraisal rights with respect to
the actions contemplated by Proposal 3.
Required
Stockholder Approvals
The
following table sets forth the stockholder approvals which are necessary to
consummate the transactions set forth in the section entitled “Background
Information” beginning on page [__].
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE
PROPOSAL
TO
AMEND OUR CERTIFICATE OF INCORPORATION TO INCREASE THE TOTAL NUMBER OF
AUTHORIZED SHARES OF COMMON
STOCK, $0.01 PAR VALUE PER
SHARE,
FROM 120,000,000 TO 250,000,000
PROPOSAL
4
PROPOSAL
TO APPROVE FOR PURPOSES OF SECTION 713 OF THE NYSE AMEX COMPANY
GUIDE, THE ISSUANCE OF PREFERRED STOCK, WARRANTS AND PLACEMENT AGENT WARRANTS
(AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS, THE
PLACEMENT AGENT WARRANTS AND THE CONVERSION OF THE PREFERRED STOCK AND PAYMENT
OF DIVIDENDS THEREON), WHICH, WHEN CONVERTED, IN THE AGGREGATE EXCEED 20% OF OUR
CURRENTLY OUTSTANDING SHARES OF COMMON STOCK PURSUANT TO THE TERMS AND
CONDITIONS OF THE SECURITIES PURCHASE AGREEMENTS, DATED AS OF MARCH 26, 2010,
BETWEEN CERTAIN INVESTORS WHO ARE A PARTY THERETO AND US.
We are
seeking approval of the issuance of the securities in connection with the
transactions contemplated pursuant to the terms and conditions of the Securities
Purchase Agreements, dated as of March 26, 2010, between certain investors
and us. For information regarding our proposed issuance of the
securities and the terms of the Purchase Agreement and Warrants, see “Background
Information” beginning on page [__].
Reason
For Request For Stockholder Approval
As of
April [__], 2010, the record date for the Special Meeting, we had 120,000,000
authorized shares of common stock and approximately [___] shares of common stock
outstanding. If successfully completed, the transaction, in the
aggregate, will result in the potential issuance of more than 20% of our
currently outstanding shares of common stock pre-transaction. Section
713 of the NYSE Amex Company Guide requires stockholder approval prior to the
issuance of common stock, or securities convertible into or exercisable for
common stock, in any transaction or series of transactions if (i) the sale,
issuance, or potential issuance by the issuer of common stock (or securities
convertible into common stock) at a price less than the greater of book or
market value which together with sales by officers, directors or principal
stockholders of the issuer equals 20% or more of presently outstanding common
stock; or (ii) the sale, issuance, or potential issuance by the issuer of common
stock (or securities convertible into common stock) equal to 20% or more of
presently outstanding stock for less than the greater of book or market value of
the stock.
Our
issuance of the Preferred Stock (and payment of potential dividends thereon) and
the Warrants issuable under the Purchase Agreements as well as the Placement
Agent Warrants will result in the potential issuance of common stock, or
securities convertible into common stock, equal to 20% or more of our common
stock outstanding immediately before we entered into the Purchase
Agreements. The per share market price of our common stock (which was
greater than book value) was less than the consolidated closing bid price of
$0.40 on March 26, 2010 and immediately preceding entering into the Purchase
Agreements, which occurred after the close of market on that date. Accordingly,
we are seeking stockholder approval of this proposal in order to ensure
compliance with Section 713(a) of the NYSE Amex Company Guide.
We have
already received gross proceeds of $10,297,000 (and net proceeds of
approximately $9,600,000 after deducting estimated expenses), in connection with
our sale of securities to the Non-Affiliated Investors. We expect to
receive additional net proceeds of approximately $1,200,000 if we are able
to consummate the transaction with the Affiliated Investors. We
expect the transaction with the Affiliated Investors to close as soon as
practicable after receipt of any required approvals from our stockholders. We
expect to use the net proceeds for general corporate purposes.
Consequences
if Stockholders Approve this Proposal 4
Ability to Complete the
Transaction
. Should stockholders not approve this
Proposal 4 then we are obligated to continue to see stockholder approval until
the earlier of (i) such time as the Preferred Stock is no longer outstanding or
(ii) stockholder approval is obtained.
Dilution
. The
issuance of our shares of common stock in connection with the Non-Affiliate
Purchase Agreements as well as the transaction with the Affiliated Investors
would have a dilutive effect on our earnings per share and on each stockholder’s
percentage voting power. In addition, such issuance could, under certain
circumstances, have the effect of delaying or preventing a change in control by
increasing the number of outstanding shares entitled to vote and by increasing
the number of votes required to approve a change in control or remove incumbent
directors from office. Moreover, any dividends paid per common share could be
lower, as the funds available to pay dividends would be spread among a greater
number of shares upon completion of the transaction with the Non-Affiliated
Investors as well as the transaction with the Affiliated Investors.
The
following table summarizes (1) the total number of shares which will be issued
and outstanding pursuant to the Purchase Agreements (not including the Warrants)
and assuming the Preferred Stock is converted and the payment of dividends
thereon, (2) the number of shares each investor will be issued pursuant to the
transaction with the Non-Affiliated Purchasers as well as the transaction with
the Affiliated Investors assuming the Warrants are fully exercised at the
current applicable exercise price and the Placement Agent Warrants are exercised
at the current applicable exercise price and (3) the percentage of outstanding
shares that the investors could potentially own after all securities anticipated
by the Non-Affiliated Purchase Agreement as well as the transaction with the
Affiliated Purchasers are issued and converted.
|
|
Total
Number of Shares
of
Common
Stock to be
issued
under
the
Purchase
Agreements
Assuming
the
Preferred
Stock
is
Converted
(1)
|
|
|
Total
Number of
Shares
Underlying
Warrants
(2)
|
|
|
Underlying
Shares as a Percent of
Outstanding
Shares Post
Transaction
(3)
|
|
Non-Affiliated
Investors
|
|
|
41,831,562
|
|
|
|
32,178,125
|
|
|
|
66.4
|
%
|
Harlan
W. Waksal, M.D.
|
|
|
812,500
|
|
|
|
625,000
|
|
|
|
2.5
|
%
|
Christopher
Forbes
|
|
|
4,062,500
|
|
|
|
3,125,000
|
|
|
|
14.8
|
%
|
Placement
Agent Warrants
|
|
|
-
|
|
|
|
1,032,813
|
|
|
|
0.7
|
%
|
|
(1)
|
Represents
the total number of shares outstanding assuming all shares are issued
under the terms of the Purchase Agreements (not including the Warrants)
assuming the Preferred Stock is converted and the payment of dividends
thereon.
|
|
(2)
|
Represents
the total number of shares which will be issued and upon the full exercise
of the Warrants at the current applicable exercise
price.
|
|
(3)
|
Represents
the percentage of outstanding shares that the Investors could potentially
own, calculated on a post-transaction basis, after all securities
anticipated by the Purchase Agreements are issued and
converted.
|
Consequences
if Stockholders Fail to Approve this Proposal 4
Should
stockholders not approve this Proposal 4 then we are obligated to continue to
see stockholder approval until the earlier of (i) such time as the Preferred
Stock is no longer outstanding or (ii) stockholder approval is
obtained.
Financial
and other information concerning our company is incorporated herein by reference
and contained in our Annual Report for the year ended June 30, 2009 and our
Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 which are
being mailed with this proxy statement.
Under
Delaware law, stockholders are not entitled to appraisal rights with respect to
the actions contemplated by Proposal 4.
Required
Stockholder Approvals
The NYSE
Amex Company Guide requires that this proposal be approved by our stockholders
representing a majority of the votes cast on the proposal (provided that a
quorum is present).
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE FOR
PURPOSES OF SECTION 713 OF THE NYSE AMEX COMPANY GUIDE, THE ISSUANCE
OF PREFERRED STOCK, WARRANTS AND PLACEMENT AGENT WARRANTS (AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS, THE PLACEMENT AGENT
WARRANTS AND THE CONVERSION OF THE PREFERRED STOCK AND PAYMENT OF DIVIDENDS
THEREON), WHICH, WHEN CONVERTED, IN THE AGGREGATE EXCEED 20% OF OUR CURRENTLY
OUTSTANDING SHARES OF COMMON STOCK PURSUANT TO THE TERMS AND CONDITIONS OF THE
SECURITIES PURCHASE AGREEMENTS, DATED AS OF MARCH 26, 2010, BETWEEN CERTAIN
INVESTORS WHO ARE A PARTY THERETO AND US.
PROPOSAL
5
PROPOSAL
TO APPROVE, FOR PURPOSES OF SECTION 711 OF THE NYSE AMEX COMPANY
GUIDE, THE ISSUANCE OF OUR SHARES OF PREFERRED STOCK AND WARRANTS (AND THE
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS AND THE
CONVERSION OF THE PREFERRED STOCK AND PAYMENT OF DIVIDENDS THEREON) PURSUANT TO
THE TERMS AND CONDITIONS OF THE SECURITIES PURCHASE AGREEMENT, DATED AS OF MARCH
26, 2010, BETWEEN EACH OF HARLAN W. WAKSAL, M.D. AND CHRISTOPHER FORBES AND
US.
We are
seeking approval of the issuance of the Securities to the Affiliated
Investors. For information regarding our proposed issuance of the
Preferred Stock and the terms of the Affiliates Purchase Agreement and Warrant,
see “Background Information” beginning on page [__].
Reason
For Request For Stockholder Approval
Pursuant
to Section 711 of the NYSE Amex Company Guide, we are required to obtain
stockholder approval when an equity compensation arrangement is made, pursuant
to which stock may be acquired by officers, directors, employees, or
consultants. NYSE Amex guidance indicates that the issuance of common stock or
securities convertible into or exercisable for common stock by a company to
affiliated entities of the company’s officers, directors, employees or
consultants other than in a public offering at a price less than the greater of
the book or market value of the common stock may be deemed to be equity
compensation requiring stockholder approval under Section 711. The
per share market price of our common stock (which was greater than book value)
was less than the consolidated closing bid price of $0.40 on March 26, 2010 and
immediately preceding entering into the Affiliate Purchase Agreement, which
occurred after the close of market on that date. Because each of
Harlan W. Waksal, M.D. and Christopher Forbes serve as directors of Senesco, we
need to seek approval of this proposal in order to ensure compliance with
Section 711 of the NYSE Amex Company Guide.
Consequences
to Stockholders Under this Proposal
Ability to Complete the
Transaction
. Should stockholders not approve this
Proposal 5 then we are obligated to continue to see stockholder approval until
the earlier of (i) such time as the Preferred Stock is no longer outstanding or
(ii) stockholder approval is obtained.
Dilution
. The
issuance of our shares of common stock assuming the preferred stock is converted
into shares of common stock in connection with the transaction with the
Affiliated Investors would have a dilutive effect on our earnings per share and
on each stockholder’s percentage voting power. In addition, such issuance could,
under certain circumstances, have the effect of delaying or preventing a change
in control by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control or
remove incumbent directors from office. Moreover, any dividends paid per common
share could be lower, as the funds available to pay dividends would be spread
among a greater number of shares upon completion of the transaction with the
Affiliated Investors.
The
following table summarizes (1) the total number of shares which will be issued
and outstanding pursuant to the Purchase Agreement (not including the Warrants)
assuming the preferred stock is converted and the payment of dividends thereon,
(2) the number of shares each Affiliated Investor will be issued pursuant to the
transaction with the Affiliated Investors assuming the Warrants are fully
exercised at the current applicable exercise price and (3) the
percentage of outstanding shares that the Affiliated Investors could potentially
own after all securities anticipated by the transaction with the Affiliated
Investors are issued and converted.
|
|
Total
Number of Shares
of
Common
Stock to be
issued
under
the
Purchase
Agreement
Assuming
the
Preferred
Stock
is
Converted
(1)
|
|
|
Total
Number of
Shares
Underlying
Warrants(2)
|
|
|
Underlying
Shares as a Percent of
Outstanding
Shares (3)
|
|
Harlan
W. Waksal, M.D.
|
|
|
812,500
|
|
|
|
625,000
|
|
|
|
2.5
|
%
|
Christopher
Forbes
|
|
|
4,062,500
|
|
|
|
3,125,000
|
|
|
|
14.8
|
%
|
|
(1)
|
Represents
the total number of shares outstanding assuming all shares are issued
under the terms of the Purchase Agreements (not including the Warrants)
assuming the Preferred Stock is converted and payment of dividends
thereon.
|
|
(2)
|
Represents
the total number of shares which will be issued and upon the full exercise
of the Warrants at the current applicable exercise
price.
|
|
(3)
|
Represents
the percentage of outstanding shares, calculated on a post-transaction
basis, that the Affiliated Investors could potentially own after all
securities anticipated by the Purchase Agreements with the Affiliated
Investors and Non-Affiliate Investors are issued and
converted.
|
Consequences
if Stockholders Fail to Approve this Proposal 5
If our
stockholders do not approve the issuance of our shares of preferred stock and
warrants (including the shares of common stock issuable upon exercise of the
Warrants and conversion of the preferred stock) pursuant to the Purchase
Agreement with the Affiliated Investors, then we are obligated to continue to
see stockholder approval until the earlier of (i) such time as the Preferred
Stock is no longer outstanding or (ii) stockholder approval is
obtained. Because stockholder approval is needed to consummate the
transaction with the Affiliated Investors in its entirety, the Company, pursuant
to the terms of the Purchase Agreement with the Affiliated Investors would not
be able to close on the sale of any of securities and we would not be able to
close on the remaining $1,200,000 in gross proceeds. Accordingly,
because we could not consummate the transaction with the Affiliated Investors in
its entirety, we would fall short of the working capital necessary to further
our immediate corporate objectives and, thus, we may be required to pursue other
strategic alternatives. We may not be able to realize such
alternatives on commercially reasonable terms, if at all, given the current
economic climate.
We have
already received gross proceeds of $10,297,000 (and net proceeds of
approximately $9,600,000 after deducting estimated expenses), in connection with
our sale of Securities to the Non-Affiliated Investors. We expect to
receive additional net proceeds of approximately $1,200,000 if we are able to
consummate the transaction with the Affiliated Investors. We
expect the transaction with the Affiliated Investors to close within five (5)
business days after receipt of any required approvals from our stockholders. We
expect to use the net proceeds for general corporate purposes.
Financial
and other information concerning our company is incorporated herein by reference
and contained in our Annual Report for the fiscal year ended June 30, 2009 and
our Quarterly Report for the quarter ended December 31, 2009.
Under
Delaware law, stockholders are not entitled to appraisal rights with respect to
the actions contemplated by Proposal 5.
Required
Stockholder Approvals.
The NYSE
Amex Company Guide requires that this proposal be approved by our stockholders
representing a majority of the votes cast on the proposal (provided that a
quorum is present).
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE FOR
PURPOSES OF SECTION 711 OF THE NYSE AMEX COMPANY GUIDE, THE ISSUANCE
OF OUR SHARES OF PREFERRED STOCK AND WARRANTS (AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE WARRANTS AND THE CONVERSION OF THE PREFERRED
STOCK AND PAYMENT OF DIVIDENDS THEREON) PURSUANT TO THE TERMS AND CONDITIONS OF
THE SECURITIES PURCHASE AGREEMENT, DATED AS OF MARCH 26, 2010, BETWEEN EACH OF
HARLAN W. WAKSAL, M.D. AND CHRISTOPHER FORBES AND US.
PROPOSAL
6
PROPOSAL
TO APPROVE, FOR PURPOSES OF SECTION 711 OF THE NYSE AMEX COMPANY GUIDE, THE
ISSUANCE OF COMMON STOCK UPON THE CONVERSION OF CERTAIN CONVERTIBLE DEBENTURES
HELD BY CHRISTOPHER FORBES, RUDOLF STALDER, HARLAN W. WAKSAL, M.D., DAVID
RECTOR, JOHN N. BRACA, JACK VAN HULST, WARREN ISABELLE AND THE THOMAS C. QUICK
CHARITABLE FOUNDATION.
Background
Certain
of our insiders, namely Christopher Forbes, Rudolf Stalder, Harlan W. Waksal,
M.D., David Rector, John Braca, Jack Van Hulst, Warren Isabelle and the Thomas
Quick Charitable Foundation which is an affiliated entity of Thomas C. Quick,
previously purchased our convertible debentures, warrants and common stock held
by Stanford Venture Capital Holdings, Inc., pursuant to that certain Purchase
and Sale Agreement, dated November 6, 2009. This transaction was disclosed in
our report on Form 8-K, filed November 11, 2009. On March 4, 2010,
such insiders notified us that they had elected, subject to stockholder
approval, to convert their convertible debentures at a conversion price of
$0.83. Under the terms of the convertible debentures, such
convertible debentures could have converted at a floating conversion rate equal
to the lower of $0.83, or 80 percent of the lowest daily Volume-Weighted Average
Price (VWAP) for the five-day period immediately preceding the conversion date,
which equated to $0.22. Immediately following such conversion, the
convertible debentures will be cancelled and we will have no further obligations
with respect to the convertible debentures.
We are
seeking stockholder approval of the issuance of common stock upon the conversion
of the convertible debentures pursuant to the foregoing terms.
Reason
For Request For Stockholder Approval
Pursuant
to Section 711 of the NYSE Amex Company Guide, we are required to obtain
stockholder approval when an equity compensation arrangement is made, pursuant
to which stock may be acquired by officers, directors, employees, or
consultants. NYSE Amex guidance indicates that the issuance of common stock or
securities convertible into or exercisable for common stock by a company to
affiliated entities of the company’s officers, directors, employees or
consultants other than in a public offering at a price less than the greater of
the book or market value of the common stock may be deemed to be equity
compensation requiring stockholder approval under Section 711.
Because
each of Christopher Forbes, Rudolf Stalder, Harlan W. Waksal, M.D., David
Rector, John Braca, Jack Van Hulst, Warren Isabelle and Thomas C. Quick serve as
directors of Senesco, we are seeking approval of this proposal in order to
ensure compliance with Section 711 of the NYSE Amex Company Guide.
Consequences
if Stockholders Approve this Proposal 6
Dilution
. The
issuance of our shares of common stock upon the conversion of the convertible
debentures would have a dilutive effect on our earnings per share and on each
stockholder’s percentage voting power. In addition, such issuance could, under
certain circumstances, have the effect of delaying or preventing a change in
control by increasing the number of outstanding shares entitled to vote and by
increasing the number of votes required to approve a change in control or remove
incumbent directors from office. Moreover, any dividends paid per common share
could be lower, as the funds available to pay dividends would be spread among a
greater number of shares upon the conversion of the convertible
debentures.
The
following table summarizes the total number of shares which will be issued to
each applicable insider upon the conversion of the convertible
debentures:
|
|
Total
Number of Shares of
Common
Stock to be issued
upon
Conversion of
Convertible
Debentures
|
|
|
Total
Beneficial Ownership
assuming
the Convertible
Debentures
are Converted
(1)
|
|
Harlan
W. Waksal, M.D.
|
|
|
631,176
|
|
|
|
2.5
|
%
|
Rudolf
Stalder
|
|
|
631,176
|
|
|
|
2.0
|
%
|
Christopher
Forbes
|
|
|
4,101,800
|
|
|
|
14.7
|
%
|
David
Rector
|
|
|
159,063
|
|
|
|
0.6
|
%
|
John
N. Braca
|
|
|
77,840
|
|
|
|
0.5
|
%
|
Jack
Van Hulst
|
|
|
30,459
|
|
|
|
0.3
|
%
|
Warren
Isabelle
|
|
|
77,840
|
|
|
|
0.1
|
%
|
Thomas
C. Quick Charitable Foundation
|
|
|
314,742
|
|
|
|
1.3
|
%
|
|
(1)
|
Assumes
the proposals set forth in this proxy statement are
approved.
|
Excluding
the transactions contemplated by this proxy statement, Christopher Forbes is
deemed to be the beneficial owner of 27.5% of our outstanding
shares. In the event that stockholders approve the transactions
contemplated by this proxy statement, including this Proposal 6, Christopher
Forbes will be deemed the beneficial owner of 14.7% of our outstanding
shares.
Consequences
if Stockholders Fail to Approve this Proposal 6
If our
stockholders do not approve the issuance of common stock upon the conversion of
the convertible debentures the insiders could potentially convert the debentures
at the contractual lower rate which would be even more dilutive to our
stockholders. Further, if we fail to satisfy one of our obligations
contained in the convertible debentures, we may be in breach of such convertible
debentures.
Financial
and other information concerning our company is incorporated herein by reference
and contained in our Annual Report for the fiscal year ended June 30, 2009 and
our Quarterly Report for the quarter ended December 31, 2009.
Under
Delaware law, stockholders are not entitled to appraisal rights with respect to
the actions contemplated by Proposal 6.
Required
Stockholder Approvals
The NYSE
Amex Company Guide requires that this proposal be approved by our stockholders
representing a majority of the votes cast on the proposal (provided that a
quorum is present).
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE, FOR
PURPOSES OF SECTION 711 OF THE NYSE AMEX COMPANY GUIDE, THE
ISSUANCE OF
COMMON STOCK UPON THE CONVERSION OF CERTAIN CONVERTIBLE DEBENTURES HELD BY
CHRISTOPHER FORBES, RUDOLF STALDER, HARLAN W. WAKSAL, M.D., DAVID RECTOR, JOHN
N. BRACA, JACK VAN HULST, WARREN ISABELLE AND THE THOMAS C. QUICK CHARITABLE
FOUNDATION.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The audit
committee of our board of directors intends to, subject to stockholder
ratification, retain McGladrey & Pullen, LLP as our independent registered
public accounting firm for the fiscal year ending June 30,
2010. Neither the firm nor any of its directors has any direct or
indirect financial interest in or any connection with us in any capacity other
than as auditors.
Although
stockholder ratification of the selection of McGladrey & Pullen, LLP, is not
required by law, our board of directors believes that it is desirable to give
our stockholders the opportunity to ratify this selection. If this
proposal is not approved at the Meeting, our board of directors will reconsider
the selection of McGladrey & Pullen, LLP.
OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT
OF MCGLADREY & PULLEN, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2010.
Principal
Accountant Fees and Services
As we
have previously disclosed, in October 2007, certain partners of Goldstein Golub
Kessler LLP, or GGK, became partners of McGladrey & Pullen, LLP, or
M&P. As a consequence, GGK resigned as our auditors October 22,
2007 and M&P was appointed as our new independent registered public
accounting firm for the year ending June 30, 2008.
GGK had a
continuing relationship with RSM McGladrey, Inc., or RSM’, from which it leased
auditing staff who were full time, permanent employees of RSM and through which
its partners provided non-audit services. GGK has no full time employees and,
therefore, none of the audit services performed were provided by permanent
full-time employees of GGK. GGK manages and supervises the audit and audit
staff, and is exclusively responsible for the opinion rendered in connection
with its examination.
The
aggregate fees billed by M&P, RSM and GGK for services performed for the
years ended June 30, 2009 and 2008 are as follows:
|
|
2009
|
|
|
2008
|
|
Audit
Fees – McGladrey & Pullen, LLP
|
|
$
|
105,000
|
|
|
$
|
90,015
|
|
Audit
Fees – Goldstein Golub Kessler LLP
|
|
|
-
|
|
|
|
16,374
|
|
Audit
Related Fees – McGladrey & Pullen, LLP
|
|
|
8,000
|
|
|
|
4,926
|
|
Audit
Related Fees – Goldstein Golub Kessler LLP
|
|
|
-
|
|
|
|
24,566
|
|
Tax
Fees – RSM McGladrey, Inc.
|
|
|
5,815
|
|
|
|
6,418
|
|
All
Other Fees
|
|
|
1,715
|
|
|
|
-
|
|
Total
Fees
|
|
$
|
120,530
|
|
|
$
|
142,299
|
|
AUDIT
FEES
The
aggregate audit fees for the years ended June 30, 2009 and 2008 were primarily
related to the audit of the our annual financial statements and review of those
financial statements included in our quarterly reports on Form 10-Q and fees for
professional services rendered in connection with documents filed with the
Securities and Exchange Commission.
AUDIT
RELATED FEES
Audit
related fees for the years ended June 30, 2009 and 2008 were primarily incurred
in connection with our equity offerings, fees in connection with correspondence
with the SEC and the AMEX, fees in connection with the implementation of SOX
404, and fees in connection with attending the annual shareholders
meeting.
TAX
FEES
Tax fees
for the years ended June 30, 2009 and 2008 related to the review of our tax
returns provided by RSM.
ALL
OTHER FEES
We did
not engage M&P, GGK or RSM to provide any other services during the last
three fiscal years other than reported above.
Pre-Approval
Policies and Procedures
In
accordance with its charter, the Audit Committee is required to approve all
audit and non-audit services provided by the independent auditors and shall not
engage the independent auditors to perform the specific non-audit services
prescribed by law or regulation.
The Audit
Committee has adopted policies and procedures relating to the pre-approval of
all audit and non-audit services that are to be performed by our independent
registered public accounting firm. This policy generally provides
that we will not engage our independent registered public accounting firm to
render audit or non-audit services unless the service is specifically approved
in advance by the Audit Committee or the engagement is entered into pursuant to
one of the pre-approval procedures described below.
From time
to time, the Audit Committee may pre-approve specified types of services that
are expected to be provided to us by our independent registered public
accounting firm during the next twelve (12) months. Any such
pre-approval is detailed as to the particular service or type of services to be
provided and is also generally subject to a maximum dollar amount.
The Audit
Committee has also delegated to the chairman of the Audit Committee the
authority to approve any audit or non-audit services to be provided to us by our
independent registered public accounting firm. Any approval of
services by a member of the Audit Committee pursuant to this delegated authority
is reported on at the next meeting of the Audit Committee.
A
representative of McGladrey & Pullen, LLP is expected to be present at the
annual meeting. The representative will have an opportunity to make a statement
and will be available to respond to appropriate questions.
Audit
Committee Report
The Audit
Committee oversees our financial reporting process on behalf of the
board. The Audit Committee consists of three members of the board who
meet the independence and experience requirements of the AMEX.
On June
27, 2008, we amended and restated our Audit Committee Charter, which was
originally adopted on July 26, 1999.
The Audit
Committee held four (4) meetings during Fiscal 2009.
Management
is responsible for our financial reporting process including its system of
internal controls and for the preparation of consolidated financial statements
in accordance with generally accepted accounting principles. Our independent
registered public accounting firm is responsible for auditing those financial
statements. The Audit Committee’s responsibility is to monitor and review these
processes. As appropriate, the Audit Committee reviews and evaluates,
and discusses with our management and our independent registered public
accounting firm, the following:
|
·
|
the
plan for, and the independent registered public accounting firm’s report
on, each audit of our financial
statements;
|
|
·
|
the
independent registered public accounting firm’s review of our unaudited
interim financial statements;
|
|
·
|
our
financial disclosure documents, including all financial statements and
reports filed with the Securities and Exchange Commission or sent to
stockholders;
|
|
·
|
our
management’s selection, application and disclosure of critical accounting
policies;
|
|
·
|
changes
in our accounting practices, principles, controls or
methodologies;
|
|
·
|
significant
developments or changes in accounting rules applicable to us;
and
|
|
·
|
the
adequacy of our internal controls and accounting and financial
personnel.
|
The Audit
Committee reviewed and discussed with our management our audited financial
statements for the year ended June 30, 2009. The Audit Committee also
reviewed and discussed the audited financial statements and the matters required
by Statement on Auditing Standards No. 61, titled Communication with Audit
Committees, with our independent registered public accounting firm. These
standards require our independent registered public accounting firm to discuss
with our Audit Committee, among other things, the following:
|
·
|
methods
used to account for significant unusual
transactions;
|
|
·
|
the
effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus;
|
|
·
|
the
process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors’ conclusions regarding
the reasonableness of those estimates;
and
|
|
·
|
disagreements
with management over the application of accounting principles, the basis
for management’s accounting estimates and the disclosures in the financial
statements.
|
The Audit
Committee has received the written disclosures from the independent registered
public accounting firm required by the applicable requirements of the Public
Company Accounting Oversight Board regarding the independent accountants’
communications with the audit committee concerning independence, as currently in
effect, and has considered whether the provision of non-audit services by the
independent registered public accounting firm to us is compatible with
maintaining the auditor’s independence and has discussed with the auditors the
auditors’ independence.
Based on
our discussions with management and our independent registered public accounting
firm, and our review of the representations and information provided by our
management and our independent registered public accounting firm, the Audit
Committee recommended to our board that the audited financial statements be
included in our annual report on Form 10-K/A for the year ended June 30,
2009.
|
By
the Audit Committee of the Board of Directors of
|
|
Senesco
Technologies, Inc.
|
|
|
|
John
N. Braca, Chairman
|
|
Jack
Van Hulst
|
|
David
Rector
|
The above
Audit Committee report is not deemed to be “soliciting material,” is not “filed”
with the SEC and is not incorporated by reference in any filings including Form
S-3 that we file with the SEC.
STOCKHOLDERS’
PROPOSALS
Stockholders
may submit proposals on matters appropriate for stockholder action at annual
meetings in accordance with the rules and regulations adopted by the Securities
and Exchange Commission. Any proposal that an eligible stockholder
wishes to submit for inclusion in our proxy statement must advise our Secretary
of such proposals in writing by [_______], 2010 (120 calendar days prior to the
anniversary of the mailing date of this Proxy Statement). Such
proposal will be included if it complies with Securities and Exchange Commission
rules regarding inclusion of proposals in proxy statements.
If we do
not receive notice of a stockholder proposal within this timeframe, our
management will use its discretionary authority to vote the shares they
represent, as our board of directors may recommend. We reserve the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these
requirements.
FINANCIAL
INFORMATION
Financial
and other information concerning our company is contained in our Annual Report
for the fiscal year ended June 30, 2009 and our Quarterly Report for the quarter
ended December 31, 2009 which have been mailed to you along with this proxy
statement. This proxy statement, our June 30, 2009 Annual Report and
our December 31, 2009 Quarterly Report are also available on our website at
www.senesco.com
.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
Some
banks, brokers and other nominee record holders may be participating in the
practice of “householding” proxy statements and annual reports. This
means that only one (1) copy of our proxy statement or annual report may have
been sent to multiple stockholders in your household. We will
promptly deliver a separate copy of either document to you if you call or write
us at the following address or phone number: Senesco Technologies,
Inc., 303 George Street, Suite 420, New Brunswick, New Jersey 08901, (732)
296-8400. If you want to receive separate copies of the annual report
and proxy statement in the future or if you are receiving multiple copies and
would like to receive only one (1) copy for your household, you should contact
your bank, broker, or other nominee record holders, or you may contact us at the
above address and phone number.
OTHER
MATTERS
Our board
is not aware of any matter to be presented for action at the Meeting other than
the matters referred to above and does not intend to bring any other matters
before the Meeting. However, if other matters should come before the
Meeting, it is intended that holders of the proxies will vote thereon in their
discretion.
GENERAL
The
accompanying proxy is solicited by and on behalf of our board, whose notice of
meeting is attached to this proxy statement, and the entire cost of such
solicitation will be borne by us. Our officers and selected employees
may solicit proxies from stockholders.
In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by our directors, officers and other employees
who will not be specially compensated for these services. We will also request
that brokers, nominees, custodians and other fiduciaries forward soliciting
materials to the beneficial owners of shares held of record by such brokers,
nominees, custodians and other fiduciaries. We will reimburse such
persons for their reasonable expenses in connection therewith.
Certain
information contained in this proxy statement relating to the occupations and
security holdings of our directors and officers is based upon information
received from the individual directors and officers.
WE
WILL FURNISH, WITHOUT CHARGE, A COPY OF OUR REPORT ON FORM 10-K/A FOR THE YEAR
ENDED JUNE 30, 2009, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, BUT
NOT INCLUDING EXHIBITS, AND A COPY OF OUR REPORT ON FORM 10-Q FOR THE CALENDAR
QUARTER ENDED DECEMBER 31, 2009, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, BUT NOT INCLUDING EXHIBITS, TO EACH OF OUR STOCKHOLDERS OF RECORD ON
APRIL [____], 2010 AND TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE UPON WRITTEN
REQUEST MADE TO OUR SECRETARY. A REASONABLE FEE WILL BE CHARGED FOR
COPIES OF REQUESTED EXHIBITS.
PLEASE
DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
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By
Order of the Board of Directors
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/s/
Jack Van Hulst
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Jack
Van Hulst
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Secretary
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New
Brunswick, New Jersey
April
[___], 2010
APPENDIX
A
SENESCO
TECHNOLOGIES, INC.
2008 INCENTIVE COMPENSATION
PLAN
(As
Amended and Restated April __, 2010)
ARTICLE
ONE
GENERAL
PROVISIONS
This 2008
Incentive Compensation Plan (the “Plan”) is intended to promote the interests of
Senesco Technologies, Inc., a Delaware corporation, by providing eligible
persons in the Corporation’s service with the opportunity to participate in one
or more cash or equity incentive compensation programs designed to encourage
them to continue their service relationship with the Corporation.
The Plan
serves as the successor to the Corporation’s 1998 Stock Incentive Plan (the
“Predecessor Plan”), and no further awards shall be granted under the
Predecessor Plan after the Plan Effective Date. All awards outstanding under the
Predecessor Plan on the Plan Effective Date shall continue to be governed solely
by the terms of the documents evidencing such award, and no provision of the
Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holders of such transferred awards.
Capitalized
terms shall have the meanings assigned to such terms in the attached
Appendix.
Awards
may be made under the Plan in the form of (i) options, (ii) stock
appreciation rights, (iii) stock awards, (iv) restricted stock units,
(v) cash awards, (vi) performance units, and (vii) dividend equivalent
rights.
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III.
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ADMINISTRATION OF THE
PLAN
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A. The
Compensation Committee shall have sole and exclusive authority to administer the
Plan with respect to Section 16 Insiders. Administration of the Plan with
respect to all other persons eligible to participate in the Plan may, at the
Board’s discretion, be vested in the Compensation Committee or a Secondary Board
Committee, or the Board may retain the power to administer those programs with
respect to such persons.
B. Members
of the Compensation Committee or any Secondary Board Committee shall serve for
such period of time as the Board may determine and may be removed by the Board
at any time. The Board may also at any time terminate the functions of any
Secondary Board Committee and reassume all powers and authority previously
delegated to such committee.
C. To
the extent permitted by and consistent with applicable law, the Board may
delegate to one or more executive officers the power to grant awards to
employees other than Section 16 Insiders.
D. Each
Plan Administrator shall, within the scope of its administrative functions under
the Plan, have full power and authority (subject to the provisions of the Plan)
to establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding Awards
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any Award thereunder.
E. Service
as a Plan Administrator by the members of the Compensation Committee or the
Secondary Board Committee shall constitute service as Board members, and the
members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Compensation Committee or the Secondary Board
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any Award thereunder.
A. The
persons eligible to participate in the Plan are as follows:
(i) Employees,
(ii) non-employee
members of the Board or the board of directors of any Parent or Subsidiary,
and
(iii) consultants
and other independent advisors who provide services to the Corporation (or any
Parent or Subsidiary).
B. The
Plan Administrator shall have full authority to determine which eligible persons
are to receive Awards under the Plan, the time or times when those Awards are to
be made, the number of shares to be covered by each such Award, the time or
times when the Award is to become exercisable, the status of an option for
federal tax purposes, the maximum term for which an option or stock appreciation
right is to remain outstanding, the vesting and issuance schedules applicable to
the shares which are the subject of the Award, the cash consideration (if any)
payable for those shares and the form (cash or shares of Common Stock) in which
the Award is to be settled and, with respect to performance–based Awards, the
performance objectives for each such Award, the amounts payable at designated
levels of attained performance, any applicable service vesting requirements, and
the payout schedule for each such Award.
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V.
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STOCK SUBJECT TO THE
PLAN
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A. The
stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market. The number of shares of Common Stock initially reserved for
issuance over the term of the Plan shall be limited to Eleven Million One
Hundred and Thirty Seven Thousand Two Hundred (11,137,200)
shares. Such reserve shall consist of (i) the number of shares
of Common Stock estimated to remain available for issuance, as of the Plan
Effective Date, under the Predecessor Plan as last approved by the Corporation’s
stockholders (excluding shares subject to outstanding awards under the
Predecessor Plan), plus (ii) an additional increase of four million
(4,000,000) shares plus (iii) an additional increase of five million (5,000,000)
shares approved by the Board on March 25, 2010, subject to stockholder approval
at the 2010 Annual Meeting. To the extent any options or restricted stock units
outstanding under the Predecessor Plan on the Plan Effective Date expire or
terminate unexercised or without the issuance of shares thereunder, the number
of shares of Common Stock subject to those expired or terminated options and
restricted stock units at the time of expiration or termination shall be added
to the share reserve under this Plan and shall accordingly be available for
issuance hereunder, up to a maximum of an additional one million (1,000,000)
shares.
B. The
maximum number of shares of Common Stock which may be issued pursuant to
Incentive Options granted under the Plan shall not exceed nine million one
hundred and thirty nine thousand seventy three (9,139,073) shares increased by
up to one million (1,000,000) shares for any increase in the share reserve by
reason of the termination of awards under the Predecessor Plan.
C. Each
person participating in the Plan shall be subject the following
limitations:
(i) for
Awards denominated in shares of Common Stock (whether payable in Common Stock,
cash or a combination of both), the maximum number of shares of Common Stock for
which such Awards may be made to such person in any calendar year shall not
exceed one million (1,000,000) shares of Common Stock in the aggregate,
and
(ii) for
Awards denominated in dollars (whether payable in cash, Common Stock or a
combination of both), the maximum dollar amount for which such Awards may be
made in the aggregate to such person shall not exceed one million Dollars
($1,000,000) per calendar year within the applicable service or performance
measurement period.
D. Shares
of Common Stock subject to outstanding Awards made under the Plan (including
Awards transferred to this Plan from the Predecessor Plan) shall be available
for subsequent issuance under the Plan to the extent those Awards expire or
terminate for any reason prior to the issuance of the shares of Common Stock
subject to those Awards. Unvested shares issued under the Plan and subsequently
forfeited or repurchased by the Corporation, at a price per share not greater
than the original issue price paid per share, pursuant to the Corporation’s
repurchase rights under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be
available for subsequent reissuance. Should the exercise price of an option
under the Plan be paid with shares of Common Stock, then the authorized reserve
of Common Stock under the Plan shall be reduced only by the net number of shares
issued under the exercised stock option and not by the gross number of shares
for which that option is exercised. Upon the exercise of any stock appreciation
right under the Plan, the share reserve shall be reduced only by the net number
of shares actually issued by the Corporation upon such exercise and not by the
gross number of shares as to which such right is exercised. If shares of Common
Stock otherwise issuable under the Plan are withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise,
vesting or settlement of an Award, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the net number of
shares issued after such share withholding.
E. Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares, spin-off
transaction or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, or should the value of
outstanding shares of Common Stock be substantially reduced as a result of a
spin-off transaction or an extraordinary dividend or distribution, or should
there occur any merger, consolidation or other reorganization, then equitable
adjustments shall be made by the Plan Administrator to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities by which the share reserve under the Plan may
increase by reason of the expiration or termination of options or restricted
stock units under the Predecessor Plan, (iii) the maximum number and/or
class of securities that may be issued under the Plan pursuant to Incentive
Options, (iv) the maximum number and/or class of securities for which any one
person may be granted Common Stock-denominated Awards under the Plan per
calendar year, (v) the number and/or class of securities and the exercise
or base price per share in effect under each outstanding award under the Plan
and the cash consideration (if any) payable per share, and (vi) the number
and/or class of securities subject to the Corporation’s outstanding repurchase
rights under the Plan and the repurchase price payable per share. The
adjustments shall be made in such manner as the Plan Administrator deems
appropriate in order to prevent the dilution or enlargement of benefits under
the Plan and the outstanding Awards thereunder, and such adjustments shall be
final, binding and conclusive. In the event of a Change in Control, however, the
adjustments (if any) shall be made solely in accordance with the applicable
provisions of the Plan governing Change in Control transactions.
F. Outstanding
Awards granted pursuant to the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
ARTICLE
TWO
AWARDS
I.
OPTIONS
A.
Authority
.
The Plan Administrator shall have full power and authority, exercisable in its
sole discretion, to grant Incentive Options and Nonstatutory Options evidenced
by one or more Award Agreements in the form approved by the Plan Administrator;
provided, however, that each such agreement shall comply with the terms
specified below. Each agreement evidencing an Incentive Option shall, in
addition, be subject to the provisions of Section H below.
B.
Exercise
Price
.
(i) The
exercise price per share shall be fixed by the Plan Administrator;
provided,
however,
that such exercise price shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the grant
date.
(ii) The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of the documents evidencing the option, be
payable in one or more of the forms specified below:
(1) cash
or check made payable to the Corporation,
(2) shares
of Common Stock (whether delivered in the form of actual stock certificates or
through attestation of ownership) held for the requisite period (if any)
necessary to avoid any resulting charge to the Corporation’s earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date, or
(3) to
the extent the option is exercised for vested shares of Common Stock, through a
special sale and remittance procedure pursuant to which the Participant shall
concurrently provide instructions to (a) a brokerage firm (reasonably
satisfactory to the Corporation for purposes of administering such procedure in
compliance with the Corporation’s pre-clearance/pre-notification policies) to
effect the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm
on such settlement date in order to complete the sale.
Except to
the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise
Date.
C.
Exercise
and Term of Options
.
Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
Award Agreements evidencing the option. However, no option shall have a term in
excess of ten (10) years measured from the option grant
date.
D.
Effect of
Termination of Service
.
(i) The
following provisions shall govern the exercise of any options that are
outstanding at the time of the Participant’s cessation of Service or
death:
(1) Any
option outstanding at the time of the Participant’s cessation of Service for any
reason shall remain exercisable for such period of time thereafter as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option, but no such option shall be exercisable after the expiration of the
option term.
(2) Any
option held by the Participant at the time of the Participant’s death and
exercisable in whole or in part at that time may be subsequently exercised by
the personal representative of the Participant’s estate or by the person or
persons to whom the option is transferred pursuant to the Participant’s will or
the laws of inheritance or by the Participant’s designated beneficiary or
beneficiaries of that option.
(3) Should
the Participant’s Service be terminated for Misconduct or should the Participant
otherwise engage in Misconduct while holding one or more outstanding options
granted under this Article Two, then all of those options shall terminate
immediately and cease to be outstanding.
(4) During
the applicable post-Service exercise period, the option may not be exercised for
more than the number of vested shares for which the option is at the time
exercisable;
provided,
however,
that one or more options may be structured so that those options
continue to vest in whole or part during the applicable post-Service exercise
period. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any shares for which the option has not been
exercised.
(ii) The
Plan Administrator shall have complete discretion, exercisable either at the
time an option is granted or at any time while the option remains outstanding,
to:
(1) extend
the period of time for which the option is to remain exercisable following the
Participant’s cessation of Service from the limited exercise period otherwise in
effect for that option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of the option
term;
(2) include
an automatic extension provision whereby the specified post-Service exercise
period in effect for any option shall
automatically be
extended by an additional period of time equal in duration to any interval
within the specified post-Service exercise period during which the exercise of
that option or the immediate sale of the shares acquired under such option could
not be effected in compliance with applicable federal and state securities laws,
but in no event shall such an extension result in the continuation of such
option beyond the expiration date of the term of that option;
and/or
(3) permit
the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for which
such option is exercisable at the time of the Participant’s cessation of Service
but also with respect to one or more additional installments in which the
Participant would have vested had the Participant continued in
Service.
E.
Stockholder
Rights
.
The
holder of an option shall have no stockholder rights with respect to the shares
subject to the option until such person shall have exercised the option, paid
the exercise price and become a holder of record of the purchased
shares.
F.
Repurchase
Rights
.
The Plan
Administrator shall have the discretion to grant options which are exercisable
for unvested shares of Common Stock. Should the Participant cease Service while
such shares are unvested, the Corporation shall have the right to repurchase any
or all of those unvested shares at a price per share equal to the
lower
of
(i) the exercise price paid per share or (ii) the Fair Market Value
per share of Common Stock at the time of repurchase. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right.
G.
Transferability
of Options
. The transferability of options granted under the Plan shall
be governed by the following provisions:
(i)
Incentive
Options
: During the lifetime of the Participant, Incentive Options shall
be exercisable only by the Participant and shall not be assignable or
transferable other than by will or the laws of inheritance following the
Participant’s death.
(ii)
Non-Statutory
Options
. Non-Statutory Options shall be subject to the same limitation on
transfer as Incentive Options, except that the Plan Administrator may structure
one or more Non-Statutory Options so that the option may be assigned in whole or
in part during the Participant’s lifetime. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
(iii)
Beneficiary
Designation
.
Notwithstanding the foregoing, the Participant may designate one or more persons
as the beneficiary or beneficiaries of his or her outstanding options, and those
options shall, in accordance with such designation, automatically
be transferred to such beneficiary or beneficiaries upon the
Participant’s death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Participant’s death.
H.
Incentive
Options
. The terms specified below shall be applicable to all Incentive
Options.
(i)
Eligibility
.
Incentive Options may only be granted to Employees.
(ii)
Dollar
Limitation
. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000).
To the
extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, then for purposes of
the foregoing limitations on the exercisability of those options as Incentive
Options, such options shall be deemed to become first exercisable in that
calendar year on the basis of the chronological order in which they were
granted, except to the extent otherwise provided under applicable law or
regulation.
(iii)
10%
Stockholder
. If any Employee to whom an Incentive Option is granted is a
10% Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date, and the option term shall not exceed five (5) years
measured from the option grant date.
I.
Prohibition
on Repricing Programs
. The Plan Administrator shall not (i)
implement any cancellation/regrant program pursuant to which outstanding options
or stock appreciation rights under the Plan are cancelled and new options or
stock appreciation rights are granted in replacement with a lower exercise price
per share, (ii) cancel outstanding options or stock appreciation rights under
the Plan with exercise or base prices per share in excess of the then current
Fair Market Value per share of Common Stock for consideration payable in equity
securities of the Corporation, or (iii) otherwise directly reduce the exercise
price in effect for outstanding options or stock appreciation rights under the
Plan, without in each such instance obtaining stockholder
approval.
II.
STOCK APPRECIATION
RIGHTS
A.
Authority
.
The Plan Administrator shall have full power and authority, exercisable in its
sole discretion, to grant stock appreciation rights evidenced by one or more
Award Agreements in the form approved by the Plan Administrator which complies
with the terms specified below.
B.
Types
.
Two types of stock appreciation rights shall be authorized for issuance under
this Section II: (i) tandem stock appreciation rights (“Tandem
Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone
Rights”).
C.
Tandem
Rights
. The following terms and conditions shall govern the grant and
exercise of Tandem Rights.
(i) One
or more Participants may be granted a Tandem Right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to elect between the
exercise of the underlying option for shares of Common Stock or the surrender of
that option in exchange for a distribution from the Corporation in an amount
equal to the excess
of (i) the Fair Market Value (on the
option surrender date) of the number of shares in which the Participant is at
the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate exercise price payable for such vested
shares.
(ii) Any
distribution to which the Participant becomes entitled upon the exercise of a
Tandem Right may be made in (i) shares of Common Stock valued at Fair
Market Value on the option surrender date, (ii) cash or (iii) a
combination of cash and shares of Common Stock, as specified in the applicable
Award agreement.
D.
Stand-Alone
Rights
. The following terms and conditions shall govern the grant and
exercise of Stand-alone Rights:
(i)
One or more Participants may be granted a Stand-alone Right
not tied to any underlying option. The Stand-alone Right shall relate to a
specified number of shares of Common Stock and shall be exercisable upon such
terms and conditions as the Plan Administrator may establish. In no event,
however, may the Stand-alone Right have a maximum term in excess of ten
(10) years measured from the grant date.
(ii) Upon
exercise of the Stand-alone Right, the holder shall be entitled to receive a
distribution from the Corporation in an amount equal to the excess of
(i) the aggregate Fair Market Value (on the exercise date) of the shares of
Common Stock underlying the exercised right over (ii) the aggregate base
price in effect for those shares.
(iii) The
number of shares of Common Stock underlying each Stand-alone Right and the base
price in effect for those shares shall be determined by the Plan Administrator
in its sole discretion at the time the Stand-alone Right is granted. In no
event, however, may the base price per share be less than the Fair Market Value
per underlying share of Common Stock on the grant date.
(iv) Stand-alone
Rights shall be subject to the same transferability restrictions applicable to
Non-Statutory Options and may not be transferred during the holder’s lifetime,
except to the extent otherwise provided in the applicable Award Agreement. In
addition, one or more beneficiaries may be designated for an outstanding
Stand-alone Right in accordance with substantially the same terms and provisions
as set forth in Section I.F of this Article Two.
(v) The
distribution with respect to an exercised Stand-alone Right may be made in
(i) shares of Common Stock valued at Fair Market Value on the exercise
date, (ii) cash or (iii) a combination of cash and shares of Common
Stock, as specified in the applicable Award agreement.
(vi) The
holder of a Stand-alone Right shall have no stockholder rights with respect to
the shares subject to the Stand-alone Right unless and until such person shall
have exercised the Stand-alone Right and become a holder of record of the shares
of Common Stock issued upon the exercise of such Stand-alone Right.
E.
Post-Service
Exercise
. The provisions governing the exercise of Tandem and Stand-alone
Rights following the cessation of the Participant’s Service shall be
substantially the same as those set forth in Section I.C. of this Article
Two for the options granted under the
Plan, and the Plan
Administrator’s discretionary authority under Section I.C.(ii) of this
Article Two shall also extend to any outstanding Tandem or Stand-alone
Appreciation Rights.
III.
STOCK AWARDS
A.
Authority
.
The Plan Administrator shall have full power and authority, exercisable in its
sole discretion, to grant stock awards either as vested or unvested shares of
Common Stock, through direct and immediate issuances. Each stock
award shall be evidenced by one or more Award Agreements in the form approved by
the Plan Administrator; provided, however, that each such agreement shall comply
with the terms specified below.
B.
Issue
Price/Consideration
.
(i) Shares
of Common Stock may be issued under a stock award for a price per share fixed by
the Plan Administrator at the time of the Award, but in no event shall such
issue price be less than one hundred percent (100%) of the Fair Market Value per
share of Common Stock on the Award date.
(ii) Shares
of Common Stock may be issued under a stock award for any of the following items
of consideration which the Plan Administrator may deem appropriate in each
individual instance:
(1) cash;
(2) past
services rendered or to be rendered the Corporation (or any Parent or
Subsidiary); or
(3) any
other valid consideration under the State in which the Corporation is at the
time incorporated.
C.
Vesting
Provisions
.
(i) Stock
awards may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance as a bonus for Service rendered or may vest in
one or more installments over the Participant’s period of Service and/or upon
the attainment of specified performance objectives. The elements of the vesting
schedule applicable to any stock award shall be determined by the Plan
Administrator and incorporated into the Award Agreement.
(ii) The
Plan Administrator shall also have the discretionary authority, consistent with
Code Section 162(m), to structure one or more stock awards so that the
shares of Common Stock subject to those Awards shall vest upon the achievement
of pre-established performance objectives based on one or more Performance Goals
and measured over the performance period specified by the Plan Administrator at
the time of the grant of the Award.
(iii) Should
the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock issued under a stock award or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for
cancellation, and the Participant shall have
no further stockholder rights with respect to those shares. To the extent the
surrendered shares were previously issued to the Participant for consideration
paid in cash or cash equivalent, the Corporation shall repay to the Participant
the
lower
of
(i) the cash consideration paid for the surrendered shares or (ii) the
Fair Market Value of those shares at the time of cancellation.
(iv) The
Plan Administrator may in its discretion waive the surrender and cancellation of
one or more unvested shares of Common Stock which would otherwise occur upon the
cessation of the Participant’s Service or the non-attainment of the performance
objectives applicable to those shares. Any such waiver shall result in the
immediate vesting of the Participant’s interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives. However, no vesting
requirements tied to the attainment of performance objectives may be waived with
respect to shares which were intended at the time of issuance to qualify as
performance-based compensation under Code Section 162(m), except in the
event of the Participant’s Involuntary Termination with respect to Awards made
prior to January 1, 2009 or as otherwise provided in Section VIII of
this Article Two.
(v) Any
new, substituted or additional securities or other property (including money
paid other than as a regular cash dividend) which the Participant may have the
right to receive with respect to the Participant’s unvested shares of Common
Stock by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares, spin-off transaction, extraordinary
dividend or distribution
or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant’s unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem
appropriate, unless and to the extent the Plan Administrator determines at the
time to vest and distribute such securities or other property. Equitable
adjustments to reflect each such transaction shall also be made by the Plan
Administrator to the repurchase price payable per share by the Corporation for
any unvested securities subject to its existing repurchase rights under the
Plan; provided the aggregate repurchase price shall in each instance remain the
same.
D.
Stockholder
Rights
. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under a stock award,
whether or not the Participant’s interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any dividends paid on such shares, subject to any applicable vesting
requirements.
IV.
RESTRICTED STOCK
UNITS
A.
Authority
.
The Plan Administrator shall have the full power and authority, exercisable in
its sole discretion, to grant restricted stock units which entitle the
Participants to receive the shares underlying those Awards upon vesting or upon
the expiration of a designated time period following the vesting of those
Awards. Each award of restricted stock units shall be evidenced by
one or more Award Agreements in the form approved by the Plan Administrator;
provided, however, that each such agreement shall comply with the terms
specified below.
B.
Vesting
Provisions
.
(i) Restricted
stock units may, in the discretion of the Plan Administrator, vest in one or
more installments over the Participant’s period of Service or upon the
attainment of specified performance objectives.
(ii) The
Plan Administrator shall also have the discretionary authority, consistent with
Code Section 162(m), to structure one or more restricted stock unit awards
so that the shares of Common Stock subject to those Awards shall vest (or vest
and become issuable) upon the achievement of pre-established performance
objectives based on one or more Performance Goals and measured over the
performance period specified by the Plan Administrator at the time of the grant
of the Award.
(iii) Outstanding
restricted stock units shall automatically terminate, and no shares of Common
Stock shall actually be issued in satisfaction of those Awards, if the
performance goals or Service requirements established for those Awards are not
attained or satisfied. The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or more
outstanding Awards of restricted stock units as to which the designated
performance goals or Service requirements have not been attained or satisfied.
However, no vesting requirements tied to the attainment of performance goals may
be waived with respect to Awards which were intended, at the time those Awards
were granted, to qualify as performance-based compensation under Code
Section 162(m), except in the event of the Participant’s Involuntary
Termination with respect to Awards made prior to January 1, 2009 or as
otherwise provided in Section VIII of this Article Two.
C.
Stockholder
Rights
. The Participant shall not have any stockholder rights with
respect to the shares of Common Stock subject to a restricted stock unit award
until that award vests and the shares of Common Stock are actually issued
thereunder. However, dividend-equivalent units may be paid or credited, either
in cash or in actual or phantom shares of Common Stock, on outstanding
restricted stock unit awards, subject to such terms and conditions as the Plan
Administrator may deem appropriate.
V.
CASH
AWARDS
A.
Authority
.
The Plan Administrator shall have the full power and authority, exercisable in
its sole discretion, to make cash incentive awards which are to vest in one or
more installments over the Participant’s continued Service with the Corporation
or upon the attainment of specified performance goals. Each such cash award
shall be evidenced by one or more Award Agreements in the form approved by the
Plan Administrator;
provided
however,
that each such agreement shall comply with the terms specified
below.
B.
Vesting
Provisions
.
(i) The
elements of the vesting schedule applicable to each cash award shall be
determined by the Plan Administrator and incorporated into the Award
Agreement.
(ii) The
Plan Administrator shall also have the discretionary authority, consistent with
Code Section 162(m), to structure one or more cash awards so that those
Awards
shall vest upon the achievement of pre-established
corporate performance objectives based upon one or more Performance Goals and
measured over the performance period specified by the Plan Administrator at the
time of grant of the Award.
(iii) Outstanding
cash awards shall automatically terminate, and no cash payment or other
consideration shall be due the holders of those Awards, if the performance goals
or Service requirements established for the Awards are not attained or
satisfied. The Plan Administrator may, however, in its discretion waive the
termination of one or more unvested cash awards which would otherwise occur upon
the cessation of the Participant’s Service or the non-attainment of the
performance objectives applicable to those Awards. Any such waiver shall result
in the immediate vesting of the Participant’s interest in the cash award as to
which the waiver applies. Such wavier may be effected at any time, whether
before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives. However, no vesting
requirements tied to the attainment of performance goals may be waived with
respect to awards which were intended, at the time those awards were granted, to
qualify as performance-based compensation under Code Section 162(m), except
in the event of the Participant’s Involuntary Termination with respect to Awards
made prior to January 1, 2009 or as otherwise provided in Section VIII
of this Article Two.
C.
Payment
.
Cash awards which become due and payable following the attainment of the
applicable performance goals or satisfaction of the applicable Service
requirement (or the waiver of such goals or Service requirement) may be paid in
(i) cash, (ii) shares of Common Stock valued at Fair Market Value on
the payment date or (iii) a combination of cash and shares of Common Stock
as the Plan Administrator shall determine.
VI.
PERFORMANCE UNIT
AWARDS
A.
Authority
.
The Plan Administrator shall have full power and authority, exercisable in its
sole discretion, to grant performance unit awards in accordance with the terms
of this Section VI. Each performance unit award shall be evidenced by one
or more Award Agreements in the form approved by the Plan Administrator;
provided
however,
that each such agreement shall comply with the terms specified
below.
B.
Bonus
Pool
. A performance unit shall represent a participating interest in a
special bonus pool tied to the attainment of pre-established performance
objectives based on one or more Performance Goals. The amount of the bonus pool
may vary with the level at which the applicable performance objectives are
attained, and the value of each Performance Unit which becomes due and payable
upon the attained level of performance shall be determined by dividing the
amount of the resulting bonus pool (if any) by the total number of Performance
Units issued and outstanding at the completion of the applicable performance
period.
C.
Service
Requirement
. Performance units may also be structured to include a
Service requirement which the Participant must satisfy following the completion
of the performance period in order to vest in the performance units awarded with
respect to that performance period.
D.
Payment
.
Performance units which become due and payable following the attainment of the
applicable performance objectives and the satisfaction of any applicable
Service requirement may be paid in (i) cash,
(ii) shares of Common Stock valued at Fair Market Value on the payment date
or (iii) a combination of cash and shares of Common Stock, as determined by
the Plan Administrator in its sole discretion and set forth in the Award
Agreement.
VII.
DIVIDEND EQUIVALENT
RIGHTS
A.
Authority
.
The Plan Administrator shall have the discretionary authority to grant dividend
equivalent rights in accordance with the terms of this Section VII. Each
such Award shall be evidenced by one or more Award Agreements in the form
approved by the Plan Administrator; provided however, that each such agreement
shall comply with the terms specified below.
B.
Terms
.
The dividend equivalent rights may be granted as stand-alone awards or in tandem
with other Awards made under the Plan. The term of each dividend equivalent
right award shall be established by the Plan Administrator at the time of grant,
but no such Award shall have a term in excess of ten
(10) years.
C.
Entitlement
. Each
dividend equivalent right shall represent the right to receive the economic
equivalent of each dividend or distribution, whether in cash, securities or
other property (other than shares of Common Stock), which is made per issued and
outstanding share of Common Stock during the term the dividend equivalent right
remains outstanding. A special account on the books of the
Corporation shall be maintained for each Participant to whom a dividend
equivalent right is granted, and that account shall be credited per dividend
equivalent right with each such dividend or distribution made per issued and
outstanding share of Common Stock during the term of that dividend equivalent
right remains outstanding.
D.
Timing of
Payment
. Payment of the amounts credited to such book account
may be made to the Participant either concurrently with the actual dividend or
distribution made per issued and outstanding share of Common Stock or may be
deferred for a period specified by the Plan Administrator at the time the
dividend equivalent right is initially granted or (to the extent permitted by
the Plan Administrator) designated by the Participant pursuant to a timely
deferral election made in accordance with the requirements of Code
Section 409A.
E.
Form of
Payment
. Payment of the amounts due with respect to dividend
equivalent rights may be made in (i) cash, (ii) shares of Common Stock
or (iii) a combination of cash and shares of Common Stock, as determined by
the Plan Administrator in its sole discretion and set forth in the Award
Agreement. If payment is to be made in the form of Common Stock, the
number of shares of Common Stock into which the cash dividend or distribution
amounts are to be converted for purposes of the Participant’s book account may
be based on the Fair Market Value per share of Common Stock on the date of
conversion, a prior date or an average of the Fair Market Value per share of
Common Stock over a designated period, as determined by the Plan Administrator
in its sole discretion.
VIII.
EFFECT OF CHANGE IN
CONTROL
A. In
the event of an actual Change in Control transaction, each option, stock
appreciation right and restricted stock unit award outstanding at that time
under the Plan but not otherwise fully vested shall automatically accelerate,
immediately prior to the effective date of that Change in Control, as to all the
shares of Common Stock at the time subject to such Award, unless (i) such
Award is to be assumed or substituted with an equivalent award by the
successor corporation (or parent thereof) or is otherwise to continue in full
force and effect pursuant to the terms of the Change in Control transaction or
(ii) such Award is replaced with a cash retention program of the successor
corporation that preserves the spread existing at the time of the Change in
Control on the shares of Common Stock as to which the Award is not otherwise at
that time vested and exercisable and provides for the subsequent vesting and
payout of that spread in accordance with the same exercise/vesting schedule
applicable to those shares but only if such replacement cash program does not
result in the treatment of the Award as an item of deferred compensation subject
to Code Section 409A, or (iii) the acceleration of such Award is subject to
other limitations imposed by the Plan Administrator.
B. All
outstanding repurchase rights shall automatically terminate, and the shares of
Common Stock subject to those terminated rights shall vest in full,
immediately prior to the effective date of an actual Change in
Control transaction, except to the extent (i) those repurchase rights are
to be assigned to the successor corporation (or parent thereof) or are otherwise
to continue in full force and effect pursuant to the terms of the Change in
Control transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator.
C. Immediately
following the consummation of the Change in Control, all outstanding options,
stock appreciation rights and restricted stock unit awards shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction.
D. Each
Award denominated in shares of Common Stock which is assumed in connection with
a Change in Control or otherwise continued in effect shall be appropriately
adjusted, immediately after such Change in Control, to apply to the number and
class of securities into which the shares of Common Stock subject to that Award
would have been converted in consummation of such Change in Control had those
shares actually been outstanding at that time. Appropriate adjustments to
reflect such Change in Control shall also be made to (i) the exercise or
base price or cash consideration payable per share in effect under each
outstanding Award,
provided
the
aggregate exercise or base price or cash consideration in effect for such
securities shall remain the same, (ii) the maximum number and/or class of
securities available for issuance over the remaining term of the Plan,
(iii) the maximum number and/or class of securities for which any one
person may be granted Common Stock-denominated Awards under the Plan per
calendar year and (iv) the number and/or class of securities subject to the
Corporation’s outstanding repurchase rights under the Plan and the repurchase
price payable per share. To the extent the actual holders of the Corporation’s
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation may, in
connection with the assumption or continuation of the outstanding Awards under
the Plan and subject to the Plan Administrator’s approval, substitute, for the
securities underlying those assumed Awards, one or more shares of its own common
stock with a fair market value equivalent to the cash consideration paid per
share of Common Stock in such Change in Control transaction, provided such
common stock is readily traded on an established U.S. securities exchange or
market.
E. The
Plan Administrator shall have the discretionary authority to structure one or
more outstanding Awards so that those Awards shall, immediately prior to the
effective date of an actual Change in Control transaction, vest as to all the
shares of Common Stock at the time subject to those Awards, whether or not those
Awards are to be assumed in the Change in Control transaction or otherwise
continued in effect. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase
rights so that those rights shall terminate immediately prior to the effective
date of an actual Change in Control transaction, and the shares subject to those
terminated rights shall thereupon vest in full.
F. The
Plan Administrator shall have full power and authority to structure one or more
outstanding Awards so that those Awards shall vest as to all the shares of
Common Stock at the time subject to those Awards in the event the Participant’s
Service is subsequently terminated by reason of an Involuntary Termination
within a designated period following the
effective date of any
Change in Control transaction in which those Awards do not otherwise vest on an
accelerated basis. In addition, the Plan Administrator may structure one or more
of the Corporation’s repurchase rights so that those rights shall immediately
terminate with respect to any shares held by the Participant at the time of such
Involuntary Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.
G. The
portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To
the extent such dollar limitation is exceeded, the accelerated portion of such
option shall be exercisable as a Non-statutory Option under the Federal tax
laws.
H. The
Plan Administrator shall have the discretionary authority to structure one or
more cash, performance unit and dividend equivalent right awards so that such
Awards shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the subsequent
termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period following the effective date of such Change in
Control.
I.
The Plan Administrator’s authority under Paragraphs E, F and H of
this Section VIII shall also extend to any Awards intended to qualify as
performance-based compensation under Code Section 162(m), even though the
automatic vesting of those Awards pursuant to Paragraphs E, F and H of this
Section VIII may result in their loss of performance-based status under
Code Section 162(m).
ARTICLE
THREE
MISCELLANEOUS
I.
DEFERRED
COMPENSATION
A. The
Plan Administrator may, in its sole discretion, structure one or more Awards
(other than options and stock appreciation rights) so that the Participants may
be provided with an election to defer the compensation associated with those
Awards for federal income tax purposes. Any such deferral opportunity shall
comply with all applicable requirements of Code Section 409A.
B. To
the extent the Corporation maintains one or more separate non-qualified deferred
compensation arrangements which allow the participants the opportunity to make
notional investments of their deferred account balances in shares of Common
Stock, the Plan Administrator may authorize the share reserve under the Plan to
serve as the source of any shares of Common Stock that become payable under
those deferred compensation arrangements. In such event, the share reserve under
the Plan shall be reduced on a share-for-one share basis for each share of
Common Stock issued under the Plan in settlement of the deferred compensation
owed under those separate arrangements.
II.
TAX
WITHHOLDING
A. The
Corporation’s obligation to deliver shares of Common Stock upon the exercise,
issuance or vesting of an Award under the Plan shall be subject to the
satisfaction of all applicable income and employment tax withholding
requirements.
B. The
Plan Administrator may, in its discretion, provide Participants to whom Awards
are made under the Plan with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such holders may
become subject in connection with the exercise, issuance or vesting of those
Awards or the issuance of shares of Common Stock thereunder. Such right may be
provided to any such holder in either or both of the following
formats:
(i)
Stock
Withholding
: The election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the issuance, exercise or vesting
of such Award or the issuance of shares of Common Stock thereunder, a portion of
those shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by such
individual. The shares of Common Stock so withheld shall not reduce the number
of shares of Common Stock authorized for issuance under the Plan.
(ii)
Stock
Delivery
: The election to deliver to the Corporation, at the time of the
issuance, exercise or vesting of such Award or the issuance of shares of Common
Stock thereunder, one or more shares of Common Stock previously acquired by such
individual (other than in connection with the exercise, share issuance or share
vesting triggering the Withholding Taxes) with an aggregate Fair Market Value
equal to the percentage of the Withholding Taxes (not to exceed one hundred
percent (100%)) designated by the individual. The shares of Common Stock so
delivered shall neither reduce the number of shares of Common Stock authorized
for issuance under the Plan nor be added to the number of shares of Common Stock
authorized for issuance under the Plan.
III.
SHARE
ESCROW/LEGENDS
Unvested
shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be
issued directly to the Participant with restrictive legends on the certificates
evidencing those unvested shares.
IV.
EFFECTIVE DATE AND TERM OF THE
PLAN
A. The
Plan shall become effective on the Plan Effective Date.
B. The
Plan shall terminate upon the
earliest
to occur of (i) September 22, 2018, (ii) the date on which all shares
available for issuance under the Plan shall have been issued as
fully vested shares or (iii) the termination of all
outstanding Awards in connection with a Change in Control. Should the Plan
terminate on September 22, 2018, then all Awards outstanding at that time shall
continue to have force and effect in accordance with the provisions of the
documents evidencing those Awards.
V.
AMENDMENT OF THE
PLAN
A. The
Board shall have complete and exclusive power and authority to amend or modify
the Plan in any or all respects, subject to stockholder approval to the extent
required under applicable law or regulation or pursuant to the listing standards
of the Stock Exchange on which the Common Stock is at the time primarily traded.
However, no such amendment or modification shall adversely affect the rights and
obligations with respect to Awards at the time outstanding under the Plan unless
the Participant consents to such amendment or modification.
B. The
Compensation Committee shall have the discretionary authority to adopt and
implement from time to time such addenda or subplans to the Plan as it may deem
necessary in order to bring the Plan into compliance with applicable laws and
regulations of any foreign jurisdictions in which Awards are to be made under
the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions
for the individuals to whom the Awards are made.
C. Awards
may be made under the Plan that involve shares of Common Stock in excess of the
number of shares then available for issuance under the Plan, provided no shares
shall actually be issued pursuant to those Awards until the number of shares of
Common Stock available for issuance under the Plan is sufficiently increased by
stockholder approval of an amendment of the Plan authorizing such increase. If
such stockholder approval is not obtained within twelve (12) months after
the date the first excess Award is made, then all Awards granted on the basis of
such excess shares shall terminate and cease to be outstanding.
VI.
USE OF PROCEEDS
Any cash
proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.
VII.
REGULATORY
APPROVALS
A. The
implementation of the Plan, the granting of any Award under the Plan and the
issuance of any shares of Common Stock in connection with the issuance, exercise
or vesting of any Award under the Plan shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Awards made under the Plan and the shares
of Common Stock issuable pursuant to those Awards.
B. No
shares of Common Stock or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all applicable
requirements of applicable securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of any
Stock Exchange on which Common Stock is then listed for trading.
VIII.
NO EMPLOYMENT/SERVICE
RIGHTS
Nothing
in the Plan shall confer upon the Participant any right to continue in Service
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining such person) or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person’s Service at any time for any reason,
with or without cause.
APPENDIX
The
following definitions shall be in effect under the Plan:
A.
Award
shall mean any of the following awards authorized for issuance or grant under
the Plan: options, stock appreciation rights, stock awards, restricted stock
units, performance units, dividend equivalent rights and cash incentive
awards.
B.
Award
Agreement
shall mean the written agreement(s) between the Corporation and
the Participant evidencing a particular Award made to that individual under the
Plan, as such agreement(s) may be in effect from time to time.
C.
Board
shall mean the Corporation’s Board of Directors.
D.
Change in
Control
shall, with respect to each Award made under the Plan, be defined
in accordance with the following provisions:
(i)
Change in Control shall have the
meaning assigned to such term in the Award Agreement for the particular Award or
in any other agreement incorporated by reference into the Award Agreement for
purposes of defining such term.
(ii) In
the absence of any other Change in Control definition in the Award Agreement (or
in any other agreement incorporated by reference into the Award Agreement),
Change in Control shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:
a. a
merger, consolidation or other reorganization approved by the Corporation’s
stockholders,
unless
securities
representing more than fifty percent (50%) of the total combined voting power of
the voting securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the same
proportion, by the persons who beneficially owned the Corporation’s outstanding
voting securities immediately prior to such transaction,
b. a
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets, or
c. the
closing of any transaction or series of related transactions pursuant to which
any person or any group of persons comprising a “group” within the meaning of
Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person
that, prior to such transaction or series of related transactions, directly or
indirectly controls, is controlled by or is under common control with, the
Corporation) becomes directly or indirectly (whether as a result of a single
acquisition or by reason of one or more acquisitions within the twelve
(12)-month period ending with the most recent acquisition) the beneficial owner
(within the
meaning of Rule 13d-3 of the 1934 Act) of
securities possessing (or convertible into or exercisable for securities
possessing) fifty percent (50%) or more of the total combined voting power of
the Corporation’s securities (as measured in terms of the power to vote with
respect to the election of Board members) outstanding immediately after the
consummation of such transaction or series of related transactions, whether such
transaction involves a direct issuance from the Corporation or the acquisition
of outstanding securities held by one or more of the Corporation’s existing
stockholders.
d. a
change in the composition of the Board over a period of twelve (12) consecutive
months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board approved
such election or nomination.
E.
Code
shall mean the Internal Revenue Code of 1986, as amended.
F.
Common
Stock
shall mean the Corporation’s Common Stock.
G.
Compensation
Committee
shall mean the Compensation Committee of the Board comprised of
two (2) or more non-employee Board members.
H.
Corporation
shall mean Senesco Technologies, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Senesco
Technologies, Inc. which has by appropriate action assumed the
Plan.
I.
Employee
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary, whether now existing or subsequently established), subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.
J.
Exercise
Date
shall mean the date on which the Corporation shall have received
written notice of the option exercise.
K.
Fair
Market Value
per share of Common Stock on any relevant date shall be the
closing selling price per share of Common Stock at the close of regular hours
trading (i.e., before after-hours trading begins) on date on question on the
Stock Exchange serving as the primary market for the Common Stock, as such price
is reported by the National Association of Securities Dealers (if primarily
traded on the Nasdaq Global or Global Select Market) or as officially quoted in
the composite tape of transactions on any other Stock Exchange on which the
Common Stock is then primarily traded. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such quotation
exists.
L.
Good
Reason
shall, with respect to each Award made under the Plan, be defined
in accordance with the following provisions:
(i)
Good Reason shall have the meaning assigned to such term in the Award
Agreement for the particular Award or in any other agreement incorporated by
reference into the Award Agreement for purposes of defining such
term.
(ii) In
the absence of any other Good Reason definition in the Award Agreement (or in
any other agreement incorporated by reference into the Award Agreement), Good
Reason shall mean an individual’s voluntary resignation following (A) a
change in his or her position with the Corporation (or any Parent or Subsidiary)
which materially reduces his or her duties, responsibilities or authority,
(B) a material diminution in the duties, responsibilities or authority of
the person to whom such individual reports, (C) a material reduction in
such individual’s level of base compensation, with a reduction of more than
fifteen percent (15%) to be deemed material for such purpose, or (D) a
material relocation of such individual’s place of employment, with a relocation
of more than fifty (50) miles to be deemed material for such purpose,
provided,
however,
that a resignation for Good Reason may be effected only after
(i) the individual provides written notice to the Corporation of the event
or transaction constituting grounds for such resignation within sixty
(60) days after the occurrence of that event or transaction and
(ii) the Corporation fails to take the requisite remedial action with
respect to such event or transaction within thirty (30) days after receipt
of such notice.
M.
Incentive
Option
shall mean an option which satisfies the requirements of Code
Section 422.
N.
Involuntary
Termination
shall, with respect to each Award made under the Plan, be
defined in accordance with the following provisions:
(i) Involuntary
Termination shall have the meaning assigned to such term in the Award Agreement
for the particular Award or in any other agreement incorporated by reference
into the Award Agreement for purposes of defining such term.
(ii) In
the absence of any other Involuntary Termination definition in the Award
Agreement (or in any other agreement incorporated by reference into the Award
Agreement), Involuntary Termination shall mean such individual’s involuntary
dismissal or discharge by the Corporation (or any Parent or Subsidiary) for
reasons other than Misconduct, or such individual’s voluntary resignation for
Good Reason.
O.
Misconduct
shall, with respect to each Award made under the Plan, be defined in accordance
with the following provisions:
(i) Misconduct
shall have the meaning assigned to such term in the Award Agreement for the
particular Award or in any other agreement incorporated by reference into the
Award Agreement for purposes of defining such term.
(ii) In
the absence of any other Misconduct definition in the Award Agreement for a
particular Award (or in any other agreement incorporated by reference into the
Award Agreement), Misconduct shall mean the commission
of any
act of fraud, embezzlement or dishonesty by the Participant, any unauthorized
use or disclosure by such person of confidential information or trade secrets of
the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not in any way preclude or restrict the right of the
Corporation (or any Parent or Subsidiary) to discharge or dismiss any
Participant or other person in the Service of the Corporation (or any Parent or
Subsidiary) for any other acts or omissions, but such other acts or omissions
shall not be deemed, for purposes of the Plan, to constitute grounds for
termination for Misconduct.
P.
1934
Act
shall mean the Securities Exchange Act of 1934, as
amended.
Q.
Non-Statutory
Option
shall mean an option not intended to satisfy the requirements of
Code Section 422.
R.
Parent
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S.
Participant
shall mean any person who is granted an Award under the Plan.
T.
Performance
Goals
shall
mean any of the following performance criteria upon which the vesting of one or
more Awards under the Plan may be based: (i) pre-tax or after-tax earnings,
profit or net income, (ii) revenue or revenue growth, (iii) earnings
per share, (iv) return on assets, capital or stockholder equity,
(v) total stockholder return, (vi) gross or net profit margin,
(vii) cash flow, (viii) earnings or operating income before interest,
taxes, depreciation, amortization and/or charges for stock-based compensation,
(ix) market share, (x) increases in customer base, (xi) operating
income, net operating income or net operating income after recorded tax expense;
(xii) operating profit, net operating profit or net operating profit after
recorded tax expense, (xiii) operating margin, (xiv) cost reductions
or other expense control objectives, (xv) market price of the Common Stock,
whether measured in absolute terms or in relationship to earnings or operating
income, (xvi) budget objectives and research and development milestones,
(xvii) working capital, (xviii) mergers, acquisitions or divestitures
or (xix) measures of customer satisfaction. Each performance criteria may
be based upon the attainment of specified levels of the Corporation’s
performance under one or more of the measures described above relative to the
performance of other entities and may also be based on the performance of any of
the Corporation’s business units or divisions or any Parent or Subsidiary. Each
applicable Performance Goal may include a minimum threshold level of performance
below which no Award will be earned, levels of performance at which specified
portions of an Award will be earned and a maximum level of performance at which
an Award will be fully earned. Each applicable Performance Goal may be
structured at the time of the Award to provide for appropriate adjustment for
one or more of the following items: (A) asset impairments or write-downs;
(B) litigation judgments or claim settlements; (C) the effect of changes in
tax law, accounting principles or other such laws or
provisions affecting reported results; (D) accruals for
reorganization and restructuring programs; (E) any extraordinary
nonrecurring items as described in Accounting Principles Board Opinion
No. 30 and/or in management’s discussion and analysis of financial
condition and results of operations appearing in the Corporation’s annual report
to shareholders for the applicable year; (F) the operations of any business
acquired by the Corporation or any Parent or Subsidiary or of any joint venture
in which the Corporation or any Parent or Subsidiary participates; (G) the
divestiture of one or more business operations or the assets thereof; or
(H) the costs incurred in connection with such acquisitions or
divestitures.
U.
Permanent
Disability or Permanently Disabled
shall, with respect to each Award made
under the Plan, be defined in accordance with the following
provisions:
(i) Permanent
Disability or Permanently Disabled shall have the meaning assigned to such term
in the Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining such
term.
(ii) In
the absence of any other definition of Permanent Disability or Permanently
Disabled in the Award Agreement for a particular Award (or in any other
agreement incorporated by reference into the Award Agreement), Permanent
Disability or Permanently Disabled shall mean the inability of the Participant
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.
V.
Plan
shall mean the Corporation’s 2008 Incentive Compensation Plan, as set forth in
this document.
W.
Plan
Administrator
shall mean the particular entity or individual, whether the
Compensation Committee (or subcommittee thereof), the Board, the Secondary Board
Committee or executive officer authorized to administer the Plan with respect to
one or more classes of eligible persons, to the extent such entity or individual
is carrying out its administrative functions under the Plan with respect to the
persons under the jurisdiction of such entity or individual.
X.
Plan
Effective Date
shall mean the date upon which the Plan shall be approved
by the Corporation’s stockholders.
Y.
Predecessor
Plan
shall mean the Corporation’s 1998 Stock Incentive Plan in effect
immediately prior to the Plan Effective Date hereunder.
Z.
Secondary
Board Committee
shall mean a committee of one or more Board members
appointed by the Board to administer the Plan with respect to eligible persons
other than Section 16 Insiders.
AA.
Section 16
Insider
shall mean an officer or director of the Corporation subject to
the short-swing profit liabilities of Section 16 of the 1934
Act.
BB.
Service
shall, with respect to each Award made under the Plan, be defined in accordance
with the following provisions:
(i)
Service shall have the meaning assigned to such
term in the Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining such
term.
(ii) In
the absence of any other definition of Service in the Award Agreement for a
particular Award (or in any other agreement incorporated by reference into the
Award Agreement), Service shall mean the performance of services for the
Corporation (or any Parent or Subsidiary, whether now existing or subsequently
established) by a person in the capacity of an Employee, a non-employee member
of the board of directors or a consultant or independent advisor, except to the
extent otherwise specifically provided in the documents evidencing the option
grant or stock issuance. For purposes of this particular definition of Service,
a Participant shall be deemed to cease Service immediately upon the occurrence
of the either of the following events: (i) the Participant no longer
performs services in any of the foregoing capacities for the Corporation or any
Parent or Subsidiary or (ii) the entity for which the Participant is
performing such services ceases to remain a Parent or Subsidiary of the
Corporation, even though the Participant may subsequently continue to perform
services for that entity.
(iii) Service
shall not be deemed to cease during a period of military leave, sick leave or
other personal leave approved by the Corporation;
provided,
however,
that should such leave of absence exceed three (3) months,
then for purposes of determining the period within which an Incentive Option may
be exercised as such under the federal tax laws, the Participant’s Service shall
be deemed to cease on the first day immediately following the expiration of such
three (3)-month period, unless Participant is provided with the right to return
to Service following such leave either by statute or by written contract. Except
to the extent otherwise required by law or expressly authorized by the Plan
Administrator or by the Corporation’s written policy on leaves of absence, no
Service credit shall be given for vesting purposes for any period the
Participant is on a leave of absence.
CC.
Stock
Exchange
shall mean the American Stock Exchange, the Nasdaq Global or
Global Select Market or the New York Stock Exchange.
DD.
Subsidiary
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
EE.
10%
Stockholder
shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
FF.
Withholding
Taxes
shall mean the applicable federal, state and foreign income and
employment withholding taxes and other payments to which the holder of an Award
under the Plan may become subject in connection with the issuance, exercise or
vesting of that Award or the issuance of shares of Common Stock
thereunder.
Appendix
B
CERTIFICATE
OF AMENDMENT
OF
THE
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
SENESCO
TECHNOLOGIES, INC.
Pursuant
to Sections 228 and 242
of
the
Delaware
General Corporation Law
Senesco
Technologies, Inc. (the “Corporation”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
“DGCL”);
DOES
HEREBY CERTIFY THAT:
FIRST: The
name of the corporation (hereinafter, the “Corporation”) is:
Senesco
Technologies, Inc.
SECOND: The
Amended and Restated Certificate of Incorporation of the Corporation was filed
with the office of the Secretary of State of Delaware on January 22, 2007 (the
“Restated Certificate”), a Certificate of Amendment of the Restated Certificate
was filed with the office of the Secretary of State of Delaware on each of
December 13, 2007 and September 22, 2009 and two Certificates of Designations
were filed with the office of the Secretary of State of Delaware on March 31,
2010 (the “Amendment” together with the Restated Certificate, the
“Charter”).
THIRD: The
Charter is hereby amended as follows:
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(a)
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The
first section of Article FOURTH of the Charter is hereby deleted in its
entirety and replaced by the following new
paragraph:
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“The
total number of shares of all classes of stock which the Corporation shall have
authority to issue is Two Hundred Fifty Five Million (255,000,000)
shares. The Corporation is authorized to issue two classes of stock
designated “Common Stock” and “Preferred Stock,” respectively. The
total number of shares of Common Stock authorized to be issued by the
Corporation is Two Hundred Fifty Million (250,000,000), each such share of
Common Stock having a $0.01 par value. The total number of shares of
Preferred Stock authorized to be issued by the Corporation is Five Million
(5,000,000), each such share of Preferred Stock having a $0.01 par
value.”
FOURTH: That
the foregoing amendments have been duly adopted in accordance with the
provisions of Sections 228 and 242 of the DGCL.
FIFTH: This
Certificate of Amendment shall be deemed effective upon its filing with the
Secretary of State of the State of Delaware.
IN
WITNESS WHEREOF, this Certificate of Amendment of the Certificate of
Incorporation has been duly executed by the undersigned officer of the
Corporation this ___ day of ______, 2010.
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SENESCO
TECHNOLOGIES, INC.
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By:
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Name: Jack
Van Hulst
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Title: President
and Chief Executive
Officer
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ANNUAL
MEETING OF STOCKHOLDERS OF
SENESCO
TECHNOLOGIES, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
The
undersigned hereby constitutes and appoints Jack Van Hulst and Joel Brooks, and
each of them, his or her true and lawful agent and proxy with full power of
substitution in each, to represent and to vote on behalf of the undersigned all
of the shares of Senesco Technologies, Inc. (the “Company”) which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the New York offices of Morgan, Lewis & Bockius LLP at
101 Park Avenue, New York, NY 10178 on May [__], 2010, at 10:00 A.M, and at any
adjournment or adjournments thereof, upon the following proposals more fully
described in the Notice of Annual Meeting of Stockholders and Proxy Statement
for the Meeting (receipt of which is hereby acknowledged).
This
proxy when properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
proposals 1, 2, 3, 4, 5, 6, and 7.
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF
SENESCO
TECHNOLOGIES, INC.
May
[__], 2010
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
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Please
detach along perforated line and mail in the envelope
provided.
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↓
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PLEASE SIGN,
DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE
x
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1.
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o
FOR ALL
NOMINEES
o
WITHHOLD AUTHORITY
FOR
ALL NOMINEES
o
FOR
ALL EXCEPT
(see
instructions below)
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NOMINEES
:
¨
Harlan W. Waksal, M.D.
¨
John N. Braca
¨
Jack Van Hulst
¨
Christopher Forbes
¨
Warren J. Isabelle
¨
Thomas C. Quick
¨
David Rector
¨
Rudolf Stalder
¨
John E. Thompson
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INSTRUCTION:
To
withhold authority to vote for any
individual
nominee(s), mark “
FOR
ALL EXCEPT”
and fill in
the circle
next
to each nominee you wish to
withhold,
as shown here:
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FOR
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AGAINST
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ABSTAIN
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2.
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To
approve an amendment to the Senesco Technologies, Inc. 2008 Incentive
Compensation Plan to increase the number of shares of common stock
reserved for issuance thereunder from 6,137,200 shares to 11,137,200
shares.
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o
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o
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o
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3.
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To
approve an amendment to our Certificate of Incorporation to increase the
total number of authorized shares of common stock, $0.01 par value per
share, from 120,000,000 to 250,000,000.
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o
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o
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o
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4.
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To approve,
for purposes of
section 713 of the NYSE Amex
Company
guide
,
the issuance of P
referred
S
tock,
Warrants and Placement Agent
W
arrants (and the
shares of common stock issuable upon exercise of the
W
arrants, the
Placement Agent W
arr
ants and the conversion of the
P
referred
S
tock and payment of dividends
thereon)
which, when converted, in the
aggregate exceed 20% of our currently outstanding shares of common stock
pursuant to the terms and conditions of the Securities Purchase
Agreements, dated as of March 26, 2010, between certain investors who are
a party thereto and us.
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o
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o
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o
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5.
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To
approve, for purposes of section 711 of the NYSE Amex Company
Guide, the issuance of our shares of Preferred Stock and Warrants (and the
shares of common stock issuable upon the exercise of the Warrants and the
conversion of the Preferred Stock and the payment of dividends thereon)
pursuant to the terms and conditions of the Securities Purchase Agreement,
dated as of March 26, 2010, between each of Harlan W. Waksal, M.D. and
Christopher Forbes and us.
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o
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o
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o
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6.
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To
approve, for purposes of section 711 of the NYSE Amex Company Guide, the
issuance of common stock upon the conversion of certain convertible
debentures held by Christopher Forbes, Rudolf Stalder, Harlan W. Waksal,
M.D., David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the
Thomas C. Quick Charitable Foundation.
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o
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o
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o
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7.
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To
ratify the appointment of McGladrey & Pullen, LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
June 30, 2010.
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o
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o
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o
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8.
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In
his discretion, the proxy is authorized to vote upon other matters as may
properly come before the Meeting.
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MARK “X” HERE IF YOU PLAN TO
ATTEND THE MEETING
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Date:
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Note:
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Please sign exactly
as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized
person.
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