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. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| 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)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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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 2001 Annual Meeting of Stockholders
of Senesco Technologies, Inc. at 10:00 A.M., local time, on November 29, 2001,
at The Hyatt Regency at 2 Albany Street, New Brunswick, New Jersey 08901.
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 signing, dating and returning your
proxy card in the enclosed envelope, which requires no postage if mailed in the
United States as soon as possible. Your stock will be voted in accordance with
the instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
/s/ Ruedi Stalder
Ruedi Stalder
Chairman of the Board
SENESCO TECHNOLOGIES, INC.
303 GEORGE STREET, SUITE 420
NEW BRUNSWICK, NEW JERSEY 08901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 29, 2001
The Annual Meeting of Stockholders (the "Meeting") of Senesco Technologies,
Inc., a Delaware corporation (the "Company"), will be held at The Hyatt Regency
at 2 Albany Street, New Brunswick, New Jersey 08901 on November 29, 2001, at
10:00 A.M., local time, for the following purposes:
(1) To elect five (5) Directors to serve until the next Annual Meeting of
Stockholders and until their respective successors shall have been duly
elected and qualified;
(2) To approve an amendment to the Company's 1998 Stock Incentive Plan, as
amended (the "1998 Stock Plan"), to increase the maximum number of shares
of the Company's common stock available for issuance under the 1998 Stock
Plan from one million (1,000,000) shares to two million (2,000,000) shares;
(3) To ratify the appointment of Goldstein Golub Kessler LLP as the independent
auditors for the year ending June 30, 2002; and
(4) To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
Holders of the Company's common stock, $0.01 par value, of record at the
close of business on October 19, 2001 (the "Stockholders"), 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 Hyatt Regency in New Brunswick 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, 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 SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED
TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors,
/s/ Sascha Fedyszyn
New Brunswick, New Jersey Sascha Fedyszyn, Secretary
October 29, 2001
THE COMPANY'S 2001 ANNUAL REPORT ACCOMPANIES THE PROXY STATEMENT.
2
SENESCO TECHNOLOGIES, INC.
303 George Street, Suite 420
New Brunswick, New Jersey 08901
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PROXY STATEMENT
-----------------------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Senesco Technologies, Inc., a Delaware corporation
(the "Company"), of proxies to be voted at the Annual Meeting of Stockholders of
the Company to be held on November 29, 2001 (the "Meeting"), at The Hyatt
Regency at 2 Albany Street, New Brunswick, New Jersey 08901, at 10:00 A.M.,
local time, and at any adjournment or adjournments thereof. Holders of record of
the Company's common stock, $0.01 par value (the "Common Stock"), as of the
close of business on October 19, 2001 (the "Stockholders"), will be entitled to
notice of and to vote at the Meeting and any adjournment or adjournments
thereof. As of that date, there were 7,872,626 shares of Common Stock issued and
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote on any matter presented at the Meeting.
If proxies in the accompanying form are properly executed and returned, the
shares of Common Stock represented thereby will be voted in the manner specified
therein. If not otherwise specified, the shares of Common Stock represented by
the proxies will be voted: (i) FOR the election of the five (5) nominees named
below as Directors; (ii) FOR the approval of an amendment to the Company's 1998
Stock Incentive Plan, as amended (the "1998 Stock Plan") to increase the maximum
number of shares of Common Stock available for issuance under the 1998 Stock
Plan from one million (1,000,000) shares to two million (2,000,000) shares;
(iii) FOR the ratification of the appointment of Goldstein Golub Kessler LLP, as
independent auditors for the year ending June 30, 2002; and (iv) 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 the
Secretary of the Company, 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.
The presence, in person or by proxy, of holders of shares of 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 Common Stock represented at the Meeting is required for the election
of Directors, provided a quorum is present in person or by proxy. Provided a
quorum is present in person or by proxy, all actions proposed herein, other than
the election of Directors, may be taken upon the affirmative vote of
Stockholders possessing a majority of the voting power represented at the
Meeting.
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 a proposal is approved. Broker non-votes
(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) 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, and thus have no effect on its outcome.
On or about October 29, 2001, this Proxy Statement, together with the
related proxy card, is being mailed to the Stockholders of the Company of record
as of October 19, 2001. The Annual Report to Stockholders of the Company for the
fiscal year ended June 30, 2001 ("Fiscal 2001"), including financial statements
(the "Annual Report"), is being mailed together with this Proxy Statement to all
Stockholders of record as of October 19, 2001. In addition, the Company has
provided brokers, dealers, banks, voting trustees and their nominees, at the
Company's expense, with additional copies of the Annual Report so that such
record holders could supply such materials to beneficial owners as of October
19, 2001.
3
ELECTION OF DIRECTORS
At the Meeting, five (5) Directors are to be elected (which number shall
constitute the entire Board of Directors of the Company) 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. Except for Mr. Galton, all of the nominees whose names and
biographies appear below are at present Directors of the Company. 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
the Board of Directors. The Board of Directors 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 the Board of Directors and,
except for Mr. Galton, all are current members of the Board of Directors:
SERVED AS A POSITION WITH
NAME AGE DIRECTOR SINCE THE COMPANY
---- --- -------------- -----------
Ruedi Stalder 60 1999 Chairman of the Board
and Director
Bruce C. Galton 49 -- President and Chief
Executive Officer
John E. Thompson, Ph.D. 60 2001 Executive Vice President
of Research and
Development and Director
Christopher Forbes 50 1999 Director
Thomas C. Quick 46 1999 Director
The following Director declined to run for re-election and will no longer
be a Director of the Company at the conclusion of the Meeting, as his term as a
Director of the Company will end contemporaneously with the election of
Directors at the Meeting:
SERVED AS A POSITION WITH
NAME AGE DIRECTOR SINCE THE COMPANY
---- --- -------------- -----------
Steven Katz 53 1999 Director
The principal occupations and business experience, for at least the past
five (5) years, of each Director and nominee is as follows:
RUEDI STALDER has been a Director of the Company since February 1999 and
was appointed as Chairman and Chief Executive Officer of the Company on January
10, 2000. On October 4, 2001, Mr. Stalder resigned as the Company's Chief
Executive Officer. 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 and a Member of the Executive
4
Boards of Credit Suisse Group and Credit Suisse First Boston. He became head 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 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. 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.
BRUCE C. GALTON is a nominee for election to the Board of Directors and was
appointed President and Chief Executive Officer of the Company on October 4,
2001. From April 2000 until June 2001, when it was acquired by Transgenomic,
Inc., Mr. Galton was President and Chief Operating Officer and a director of
Annovis, Inc., a manufacturer of specialty chemicals for DNA synthesis with
operations in Pennsylvania and Glasgow, United Kingdom. From January 1985 to May
1999, Mr. Galton held various senior management positions at Cistron
Biotechnology, Inc., including President and Chief Operating Officer from 1988
to 1997 and Chairman and Chief Executive Officer from 1997 to 1999. Cistron
Biotechnology, Inc. was engaged in the research and development of certain
cytokines, which act as key immune regulators. Mr. Galton is a member of the
Borough of Madison, New Jersey Downtown Development Commission and a trustee of
the Museum of Early Trades and Crafts. Mr. Galton had also served as a
Councilman from 1996 through 1998 and a member of Madison's Planning Board from
1994 through 1998. Mr. Galton received a Bachelor of Science in Commerce with a
major in accounting from the University of Virginia in 1974 and an M.B.A. in
finance from Fairleigh Dickinson University in 1977.
JOHN E. THOMPSON, PH.D. has been a Director of the Company since October
2001. Dr. Thompson was appointed the Company's 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. Dr.
Thompson is the inventor of the technology that is being developed by the
Company. 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.
CHRISTOPHER FORBES has been a Director of the Company since January 1999.
Mr. Forbes is Vice Chairman of Forbes, Inc., which publishes Forbes Magazine, a
leading business publication. He is responsible for Forbes' advertising and
promotion departments. 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
sits on the Boards of The New York Historical Society, The Newark Museum, The
Business Committee for the Arts, The Brooklyn Museum, The Friends of New Jersey
State Museum, The New York Academy of Art, The Victorian Society in America, The
Princess Margarita Foundation and the Prince Wales Foundation. He is also a
member of the Board of Advisors of The Princeton University Art Museum, a
National Trustee of the Baltimore Museum of Art, and serves on the Advisory
Committee of the Department of European Decorative Arts of the Museum of Fine
Arts in Boston. In 1987, he was appointed to the Board of Regents of the
Cathedral of St. John the Divine in New York City. Mr. Forbes is also a member
of the Board of Directors of Raffles Holdings, Ltd., a publicly held company.
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. Mr. Forbes is the father-in-law of
Phillip O. Escaravage, a former Director and former executive officer of the
Company who resigned on October 4, 2001.
THOMAS C. QUICK has been a Director of the Company since February 1999. Mr.
Quick was the President and Chief Operating Officer and a director of Quick &
Reilly/ Fleet Securities, Inc., successor to The Quick & Reilly Group, Inc.
("Quick & Reilly"), a holding company for four (4) major financial services
businesses, from 1996 until he was appointed Vice Chairman in 2001. 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 trustee for the
Securities Industry Foundation for Economic Education. He is also a member of
the Board of Directors of Best Buddies and a member of the Board of Trustees,
the Investment Advisory Board and the Endowment Committee for the St. Jude
Children's Hospital. He is a trustee and treasurer of the National Corporate
Theater Fund, the United World Colleges and the
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Alcoholism Council of New York, and a Trustee of Fairfield University, Cold
Spring Harbor Laboratories and the Inter-City Scholarship Foundation of New York
City. Mr. Quick is a graduate of Fairfield University.
STEVEN KATZ has been a Director of the Company since January 1999 and was
appointed as the President and Chief Operating Officer of the Company on January
10, 2000. On October 4, 2001, Mr. Katz resigned as the Company's President and
Chief Operating Officer. From July 1998 to January 2000, Mr. Katz served as a
consultant to the Company and its wholly-owned subsidiary, Senesco, Inc., a New
Jersey corporation ("Senesco"). Since 1981, Mr. Katz has been the President of
Steven Katz and Associates, Inc., a management consulting firm specializing in
strategic planning, corporate development, new product planning, technology
licensing, and structuring and securing various forms of financing. From 1983 to
1984, he was the co-founder and Executive Vice President of S.K.Y. Polymers,
Inc. ("SKY"), a bio-materials company. Prior to SKY, Mr. Katz was Vice President
and General Manager of a non-banking division of Citicorp, N.A. From 1976 to
1980, Mr. Katz held various senior management positions at National Patent
Development Corporation, including President of three (3) subsidiaries. Prior
positions were with Revlon, Inc. (1975) and Price Waterhouse & Co. (1969 to
1974). Mr. Katz received a Bachelor of Business Administration degree in
Accounting from the City College of New York in 1969. He is presently a member
of the Board of Directors and serves on the compensation committees of each of
USA Technologies, Inc. and Biophan Technologies, Inc., both of which are
publicly-held corporations. He also serves on the Board of Directors of several
private companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR THE BOARD OF DIRECTORS.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors currently consists of Ruedi Stalder, Steven Katz,
John E. Thompson, Ph.D., Christopher Forbes and Thomas C. Quick. Phillip O.
Escaravage was also a member of the Board of Directors from January 1999 until
October 4, 2001, when he resigned. On October 4, 2001, the Board of Directors
appointed Dr. Thompson to fill the vacant seat created by Mr. Escaravage's
resignation.
The Board of Directors held one (1) meeting in Fiscal 2001. In addition,
the Board of Directors often acted by unanimous written consent during Fiscal
2001. Throughout this period, each member of the Board of Directors attended or
participated in at least 75% of the aggregate of: (i) the total number of
meetings of the Board of Directors (held during the period for which such person
has been a Director); and (ii) the total number of meetings held by all
committees of the Board of Directors on which each such Director served (during
the periods such Director served). The Board of Directors has two (2) standing
committees: the Compensation Committee and the Audit Committee.
Compensation Committee. The Compensation Committee was established in July
----------------------
1999. The Compensation Committee makes recommendations concerning salaries and
incentive compensation for management and employees of the Company. The
Compensation Committee is currently comprised of Christopher Forbes and Thomas
C. Quick. The Compensation Committee held one (1) meeting during Fiscal 2001.
Audit Committee. The Audit Committee was established in July 1999. The
----------------
primary responsibilities of the Audit Committee, as more fully set forth in the
Audit Committee Charter adopted by the Company on July 26, 1999, as amended and
restated as of the date hereof and attached hereto as Appendix A, include: (i)
evaluating and recommending to the Board of Directors the engagement of the
Company's independent auditors; (ii) reviewing and reporting on the results of
their audit findings; (iii) reviewing the Company's periodic reports filed with
the Securities and Exchange Commission; and (iv) monitoring on a periodic basis
the internal controls of the Company. The Audit Committee is currently comprised
of Christopher Forbes and Thomas C. Quick. The Audit Committee held one (1)
meeting during Fiscal 2001.
6
Certain Directors of the Company have recently provided the Company with
short-term loans. See "Certain Relationships and Related Transactions." Although
Mr. Quick has provided the Company with short-term loans in the aggregate
principal amount of $175,000, the Company believes that Mr. Quick is an
independent member of the Board of Directors as defined in Rule 4200(a)(14) of
the National Association of Securities Dealers' listing standards. As an
independent Director of the Board of Directors of the Company, Mr. Quick is not
an officer or employee of the Company or its subsidiary, nor does he have a
relationship which, in the opinion of the Company's Board of Directors, would
interfere with the exercise of independent judgement in carrying out the
responsibilities of a Director. Mr. Forbes is not an independent director as
defined in Rule 4200(a)(14) of the National Association of Securities Dealers'
listing standards because he is the father-in-law of Mr. Escaravage, a former
Director and former executive officer of the Company. The Company is currently
traded on the NASD OTC Bulletin Board which does not require an Audit Committee
with independent directors.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has furnished the following report:
October 10, 2001
To the Board of Directors of Senesco Technologies, Inc.:
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended June 30, 2001. The Audit Committee also reviewed and
discussed the audited financial statements and the matters required by Statement
on Auditing Standards 61 (Communication with Audit Committees) with Goldstein
Golub Kessler LLP, the Company's independent auditors.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No.1 (Independence Discussions with Audit Committees). In addition, the
Audit Committee discussed with the independent auditors their independence from
the Company.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the year ended June 30, 2001.
By the Audit Committee of the Board of Directors of
Senesco Technologies, Inc.
Christopher Forbes
Thomas C. Quick
7
COMPENSATION OF DIRECTORS
In accordance with a resolution unanimously approved by the Board of
Directors on October 4, 2001, the Company shall grant to each of Phillip O.
Escaravage, Christopher Forbes, Steven Katz, Thomas C. Quick and Ruedi Stalder,
effective as of December 1, 2001, options to purchase forty thousand (40,000)
shares of the Company's Common Stock (the "Options"), pursuant to and in
accordance with the 1998 Stock Plan, as consideration for their service on the
Board of Directors through Fiscal 2001. Options granted to Messrs. Forbes, Katz,
Quick and Stalder shall have an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant which is determined to be the
closing price of the Company's Common Stock as quoted on the NASD OTC Bulletin
Board on November 30, 2001. In addition, Options granted to Messrs. Forbes,
Katz, Quick and Stalder shall have a term of ten (10) years. Options granted to
Mr. Escaravage shall have an exercise price equal to 110% of the fair market
value of the Company's Common Stock on the date of grant which is determined to
be 110% of the closing price of the Company's Common Stock as quoted on the NASD
OTC Bulletin Board on November 30, 2001. Options granted to Mr. Escaravage shall
have a term of five (5) years. Options granted to all of the Directors shall
vest as follows: (i) one-half (1/2) of the Options shall vest on the date of
grant; and (ii) one-half (1/2) of the Options shall vest on December 1, 2002. No
Director has received cash compensation for his services on the Board of
Directors. The Company provides reimbursement to Directors for reasonable and
necessary expenses incurred in connection with attendance at meetings of the
Board of Directors and other Company business.
Messrs. Stalder and Katz have received compensation for providing
management services. Dr. Thompson has also received compensation for providing
research and development management services to the Company. See "Executive
Compensation" which sets forth the details of the compensation for each of
Messrs. Stalder, Katz and Thompson.
SCIENTIFIC ADVISORY BOARD
Through October 31, 2001, the Company's Scientific Advisory Board was made
up of Alan B. Bennett, Ph.D., A. Carl Leopold, Ph.D. and William R. Woodson,
Ph.D., each a prominent leader in the field of transgenic plants. Dr. Bennett is
the Associate Dean of the College of Agricultural and Environmental Sciences at
the University of California, Davis. His research interests include: the
molecular biology of tomato fruit development and ripening; the molecular basis
of membrane transport; and cell wall disassembly. Dr. Leopold served as Chairman
of the Scientific Advisory Board. He is currently a member and a W.H. Crocker
Scientist Emeritus of the Boyce Thompson Institute for Plant Research at Cornell
University. Dr. Leopold has held numerous academic appointments and memberships,
including staff member of the Science and Technology Policy Office during the
Nixon and Ford Administrations, and positions with the National Science
Foundation and the National Aeronautics and Space Administration. Dr. Woodson is
the Associate Dean of Agriculture and Director of Agricultural Research Programs
at Purdue University. He has been a visiting professor at many universities
worldwide including the John Innis Institute in England and the Weizmann
Institute of Science in Israel. Dr. Woodson has extensive knowledge in the field
of horticultural science and serves on numerous international and national
committees and professional societies. On October 31, 2001, Drs. Leopold and
Woodson will step down as members of the Company's Scientific Advisory Board.
The Company is in the process of recruiting scientists with a more relevant
field of expertise in order to more closely coincide with the Company's
expanding research and development objectives. Dr. Bennett will remain a member
of the Company's Scientific Advisory Board.
8
COMPENSATION OF THE SCIENTIFIC ADVISORY BOARD
During Fiscal 2001, Dr. Bennett received $10,000 and Drs. Leopold and
Woodson each received $7,500 as compensation for serving on the Company's
Scientific Advisory Board. In addition, Dr. Bennett has received compensation as
a consultant experienced in plant transformation. See "Certain Relationships and
Related Transactions."
In accordance with a resolution unanimously approved by the Board of
Directors on October 4, 2001, the Company shall grant to Dr. Bennett, effective
as of November 1, 2001, options to purchase ten thousand (10,000) shares of the
Company's Common Stock in accordance with the Company's 1998 Stock Plan, for
services rendered as a member of the Company's Scientific Advisory Board for the
period beginning February 1, 2000 through January 31, 2001. Such options shall
have an exercise price equal to the fair market value of the Company's Common
Stock on the date of grant as determined by the closing price of the Company's
Common Stock as quoted on the NASD OTC Bulletin Board on October 31, 2001. These
options will be immediately exercisable and have a ten (10) year term.
In accordance with a resolution unanimously approved by the Board of
Directors on October 4, 2001, the Company shall grant to each of Drs. Leopold
and Woodson, effective as of November 1, 2001, options to purchase twelve
thousand five hundred (12,500) shares of the Company's Common Stock in
accordance with the Company's 1998 Stock Plan, for services rendered as members
of the Company's Scientific Advisory Board for the period beginning February 1,
2000 through October 31, 2001. Such options shall have an exercise price equal
to the fair market value of the Company's Common Stock on the date of grant as
determined by the closing price of the Company's Common Stock as quoted on the
NASD OTC Bulletin Board on October 31, 2001. All of these options will be
immediately exercisable and have a two (2) year term.
In September 1999, the Company granted to each of Drs. Bennett, Leopold and
Woodson, options to purchase ten thousand (10,000) shares of the Company's
Common Stock at an exercise price equal to $3.50 per share, which vested fully
on January 31, 2000. The Company has extended the expiration date of these
options granted to Drs. Leopold and Woodson from ninety (90) days to two (2)
years following the date that Drs. Leopold and Woodson step down from the
Company's Scientific Advisory Board.
9
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the
Company:
CAPACITIES IN IN CURRENT
NAME AGE WHICH SERVED POSITION SINCE
---- --- ------------ --------------
Bruce C. Galton(1)......... 49 President and Chief October 2001
Executive Officer
John E. Thompson, Ph.D..... 60 Executive Vice President October 1999
of Research and
Development
Sascha P. Fedyszyn (2)..... 26 Vice President of January 2000
Corporate Development and
Secretary
Joel P. Brooks (3)......... 42 Chief Financial Officer December 2000
and Treasurer
-----------
(1) Upon the resignations of Ruedi Stalder as the Company's Chief Executive
Officer and Steven Katz as the Company's President and Chief Operating Officer
on October 4, 2001, Mr. Galton was duly appointed by the Company's Board of
Directors as the President and Chief Executive Officer of the Company.
(2) Mr. Fedyszyn was appointed the Company's Vice President of Corporate
Development in January 1999 and was appointed Secretary of the Company in
January 2000. Mr. Fedyszyn has been the Vice President of Senesco since its
inception in June 1998. Mr. Fedyszyn was also a Research Associate at the
Logistics Management Institute from May 1995 to September 1995. Mr. Fedyszyn
received a Bachelor of Arts degree in Biology from Princeton University in June
1997.
(3) Mr. Brooks was appointed Chief Financial Officer and Treasurer of the
Company 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.
None of the Company's current executive officers are related to any other
executive officer or to any Director of the Company. On October 4, 2001, Phillip
O. Escaravage resigned as a Director and an executive officer of the Company.
Mr. Escaravage is the son-in-law of Christopher Forbes, a Director of the
Company. Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
10
EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 2001, 2000 and 1999
The following Summary Compensation Table sets forth information concerning
compensation during Fiscal 2001, the year ended June 30, 2000 ("Fiscal 2000")
and the year ended June 30, 1999 ("Fiscal 1999") for services in all capacities
awarded to, earned by or paid to each person who served as the Company's Chief
Executive Officer at any time during Fiscal 2001 and those executive officers of
the Company other than the Chief Executive Officer who were serving as executive
officers at the end of Fiscal 2001 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------
Long-Term
Compensation
------------
Annual Compensation Awards
---------------------------------------------------------
Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options
($) ($) ($) (#)
(a) (b) (c) (d) (e) (g)
--------------------------------------------------------------------------------------------------
Ruedi Stalder(1)..................... 2001 -- -- 82,500(2) 265,000(3)
Chairman and former Chief
Executive Officer 2000 -- -- 30,000(2) 40,000(3)
1999 -- -- -- --
--------------------------------------------------------------------------------------------------
Steven Katz (4)...................... 2001 -- -- 277,225(5) 115,000(6)
former President and
Chief Operating Officer 2000 -- -- 238,995(5) 40,000(6)
1999 -- -- 177,151(5) --
--------------------------------------------------------------------------------------------------
John E. Thompson, Ph.D.(7)........... 2001 -- -- 36,000(8) 80,000(9)
Executive Vice President
of Research and Development 2000 -- -- 36,000(8) 40,000(9)
1999 -- -- 6,000(8) --
--------------------------------------------------------------------------------------------------
Sascha P. Fedyszyn(10)............... 2001 68,059 -- -- 45,000(11)
Vice President of
Corporate Development and 2000 55,000 -- -- 30,000(11)
Secretary
1999 29,577 -- -- --
--------------------------------------------------------------------------------------------------
Joel P. Brooks(12)................... 2001 67,765 -- -- 40,000(13)
Chief Financial Officer
and Treasurer 2000 -- -- -- --
1999 -- -- -- --
--------------------------------------------------------------------------------------------------
(1) Upon the resignation of Phillip O. Escaravage as the Company's Chairman,
President and Chief Executive Officer on January 10, 2000, Mr. Stalder was duly
appointed by the Company's Board of Directors as the Chairman and Chief
Executive Officer of the Company. On October 4, 2001, Mr. Stalder resigned as
the Company's Chief Executive Officer.
(2) The Company has accrued a total of $112,500 for services provided by Mr.
Stalder as the Company's Chief Executive Officer during Fiscal 2000 and 2001. In
accordance with a resolution unanimously approved by the Board of Directors on
October 4, 2001, the Company shall grant to Mr. Stalder, effective December 1,
2001, options to
11
purchase sixty-five thousand (65,000) shares of the Company's Common Stock, with
an exercise price equal to the fair market value of the Company's Common Stock
as defined in the 1998 Stock Plan, and with all such options vesting on the date
of grant (options shall be granted in lieu of receiving $112,500 in cash
compensation for services provided as the Company's Chief Executive Officer
during the period from January 1, 2000 through September 30, 2001).
(3) For services provided in Fiscal 2001, the following options shall be granted
in accordance with a resolution unanimously approved by the Board of Directors
on October 4, 2001: (i) options to purchase forty thousand (40,000) shares of
the Company's Common Stock shall be granted effective December 1, 2001, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-half (1/2) of such options vesting on
the date of grant and one-half (1/2) of such options vesting on December 1,
2002, for services performed by Mr. Stalder as of June 30, 2001 in his capacity
as a Director of the Company; (ii) options to purchase seventy-five thousand
(75,000) shares of the Company's Common Stock were granted effective October 2,
2001, with an exercise price equal to $1.50 per share and with all such options
vesting on the date of grant, for services provided to the Company in connection
with closing material financial transactions; and (iii) options to purchase one
hundred fifty thousand (150,000) shares of the Company's Common Stock shall be
granted effective November 1, 2001, with an exercise price equal to $4.00 per
share, with one-third (1/3) of such options vesting on the date of grant,
one-third (1/3) of such options vesting on January 15, 2002 and one-third (1/3)
of such options vesting on January 15, 2003, for services provided to the
Company as Chairman and Chief Executive Officer. For services provided in Fiscal
2000, options to purchase forty thousand (40,000) shares of the Company's Common
Stock were granted on September 7, 1999, with an exercise price equal to the
fair market value of the Company's Common Stock as defined in the 1998 Stock
Plan, for services performed by Mr. Stalder in his capacity as a Director of the
Company, and all such options are fully vested.
(4) Upon the resignation of Phillip O. Escaravage as the Company's Chairman,
President and Chief Executive Officer on January 10, 2000, Mr. Katz was duly
appointed by the Company's Board of Directors as the President and Chief
Operating Officer of the Company. On October 4, 2001, Mr. Katz resigned as the
Company's President and Chief Operating Officer.
(5) Mr. Katz received $177,151, $238,995, and $277,225 pursuant to an informal
arrangement with the Company to provide management services for the Company in
Fiscal 1999, Fiscal 2000 and Fiscal 2001, respectively. Mr. Katz was appointed
as an executive officer of the Company in January 2000. Payments he received for
services before such date were not in the capacity as an executive officer, but
were for general consulting services. Amounts received by Mr. Katz for Fiscal
1999 and Fiscal 2000 were shown as "All Other Compensation" in last year's proxy
statement and have been reclassified to "Other Annual Compensation" in this
proxy statement.
(6) For services provided in Fiscal 2001, the following options shall be granted
in accordance with a resolution unanimously approved by the Board of Directors
on October 4, 2001: (i) options to purchase forty thousand (40,000) shares of
the Company's Common Stock shall be granted effective December 1, 2001, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-half (1/2) of such options vesting on
the date of grant and one-half (1/2) of such options vesting on December 1,
2002, for services performed by Mr. Katz, as of June 30, 2001, in his capacity
as a Director of the Company; (ii) options to purchase twenty-five thousand
(25,000) shares of the Company's Common Stock were granted effective October 2,
2001, with an exercise price equal to $1.50 per share and with all such options
vesting on the date of grant, for services provided to the Company in connection
with closing material financial transactions; and (iii) options to purchase
fifty thousand (50,000) shares of the Company's Common Stock shall be granted
effective November 1, 2001, with an exercise price equal to $4.00 per share,
with one-third (1/3) of such options vesting on the date of grant, one-third
(1/3) of such options vesting on January 15, 2002 and one-third (1/3) of such
options vesting on January 15, 2003, for services provided to the Company as
President and Chief Operating Officer. For services provided in Fiscal 2000,
options to purchase forty thousand (40,000) shares of the Company's Common Stock
were granted on September 7, 1999, with an exercise price equal to the fair
market value of the Company's Common Stock as defined in the 1998 Stock Plan,
for services performed by Mr. Katz in his capacity as a Director of the Company,
and such options are fully vested.
12
(7) Dr. Thompson was duly appointed by the Company's Board of Directors as the
Executive Vice President of Research and Development in October 1999. Dr.
Thompson was also elected to the Board of Directors on October 4, 2001.
(8) Dr. Thompson received $6,000, $36,000 and $36,000 for consulting services
provided to the Company in Fiscal 1999, Fiscal 2000 and Fiscal 2001,
respectively. Amounts received by Dr. Thompson for Fiscal 1999 and Fiscal 2000
were shown as "All Other Compensation" in last year's proxy statement and have
been reclassified to "Other Annual Compensation" in this proxy statement.
(9) For services provided in Fiscal 2001, in accordance with a resolution
unanimously approved by the Board of Directors on October 4, 2001, the Company
shall grant to Dr. Thompson, effective December 1, 2001, options to purchase
eighty thousand (80,000) shares of the Company's Common Stock, with an exercise
price equal to 110% of the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-third (1/3) of such options vesting on
the date of grant and one-third (1/3) of such options vesting on each of the
first and second anniversaries of the date of grant. For services provided in
Fiscal 2000, options to purchase forty thousand (40,000) shares of the Company's
Common Stock were granted on September 7, 1999, with an exercise price equal to
110% of the fair market value of the Company's Common Stock as defined in the
1998 Stock Plan, for services performed by Dr. Thompson in his capacity as an
officer of the Company, and such options are fully vested
(10) Mr. Fedyszyn was appointed Secretary of the Company in January 2000.
(11) The Company granted, or shall grant, the following options for services
provided in Fiscal 2001: (i) options to purchase thirty-five thousand (35,000)
shares of the Company's Common Stock were granted on December 1, 2000, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-third (1/3) of such options vesting on
the date of grant, one-third (1/3) of such options vesting on May 14, 2001 and
one-third (1/3) of such options vesting on May 14, 2002; and (ii) in accordance
with a resolution unanimously approved by the Board of Directors on October 4,
2001, options to purchase ten thousand (10,000) shares of the Company's Common
Stock shall be granted effective December 1, 2001, with an exercise price equal
to the fair market value of the Company's Common Stock as defined in the 1998
Stock Plan, with one-third (1/3) of such options vesting on the date of grant
and one-third (1/3) of such options vesting on each of the first and second
anniversaries of the date of grant. For services provided in Fiscal 2000,
options to purchase thirty thousand (30,000) shares of the Company's Common
Stock were granted on September 7, 1999, with an exercise price equal to the
fair market value of the Company's Common Stock as defined in the 1998 Stock
Plan, with one-third (1/3) of such options vesting on the date of grant and
one-third (1/3) of such options vesting on each of the first and second
anniversaries of the date of grant.
(12) Upon the resignation of Richard J. Sirkin as the Company's Chief Financial
Officer and Treasurer on December 1, 2000, Mr. Brooks was appointed Chief
Financial Officer and Treasurer of the Company.
(13) The Company granted, or shall grant, the following options for services
provided in Fiscal 2001: (i) options to purchase twenty-five thousand (25,000)
shares of the Company's Common Stock were granted on December 1, 2000, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-sixth (1/6) of such options vesting on
the date of grant, one-sixth (1/6) of such options vesting on the six-month
anniversary of the date of grant and one-third (1/3) of such options vesting on
each of the first and second anniversaries of the date of grant; and (ii) in
accordance with a resolution unanimously approved by the Board of Directors on
October 4, 2001, options to purchase fifteen thousand (15,000) shares of the
Company's Common Stock shall be granted effective December 1, 2001, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-third (1/3) of such options vesting on
the date of grant and one-third (1/3) of such options vesting on each of the
first and second anniversaries of the date of grant.
13
Option Grants in Fiscal 2001
The following table sets forth information concerning individual grants of
stock options made pursuant to the 1998 Stock Plan during Fiscal 2001 to each of
the Named Executives. The Company has never granted any stock appreciation
rights.
OPTION GRANTS IN LAST FISCAL YEAR
------------------------------------------------------------------------------------------------
Individual Grants
------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise or
Name Granted Fiscal Year Base Price Expiration
(#) (%) ($/Sh) Date
(a) (b)(1) (c)(1) (d) (e)
------------------------------------------------------------------------------------------------
Ruedi Stalder............... -- -- -- --
John E. Thompson, Ph.D...... -- -- -- --
Steven Katz................. -- -- -- --
Sascha P. Fedyszyn.......... 35,000(2) 58.3 2.25 December 1, 2010
Joel P. Brooks.............. 25,000(3) 41.7 2.25 December 1, 2010
------------------------------------------------------------------------------------------------
--------
(1) An aggregate of 60,000 options were granted pursuant to and in accordance
with the Company's 1998 Stock Plan during Fiscal 2001. Options are not
assignable or otherwise transferable except by will or the laws of descent
and distribution.
(2) Options were granted on December 1, 2000. One-third of such options became
exercisable on the date of grant, one-third of such options became
exercisable on May 14, 2001, and one-third of such options shall become
exercisable on May 14, 2002.
(3) Options were granted on December 1, 2000. One-sixth of such options became
exercisable on the date of grant, one-sixth became exercisable on May 1,
2001, and one-third shall become exercisable on each of the first and
second anniversaries of the date of grant.
14
Aggregated Option Exercises in Fiscal 2001 and Fiscal Year-End Option Values
The following table sets forth information concerning each exercise of
options during Fiscal 2001 by each of the Named Executives and the fiscal
year-end value of unexercised in-the-money options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
------------------------------------------------------------------------------------------
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at Fiscal
Shares Fiscal Year-End Year-End
Acquired on Value (#) ($)(1)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable unexercisable
(a) (b) (c) (d) (e)
------------------------------------------------------------------------------------------
Ruedi Stalder........... -- -- 40,000/0 0/0
John E. Thompson, Ph.D.. -- -- 40,000/0 0/0
Steven Katz............. -- -- 40,000/0 0/0
Sascha P. Fedyszyn...... -- -- 43,334/21,666 16,334/8,166
Joel P. Brooks.......... -- -- 8,334/16,666 5,834/11,666
------------------------------------------------------------------------------------------
-----------
(1) Based on a fiscal year-end fair market value of the underlying securities
equal to $2.95 per share.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS
On January 21, 1999, Sascha P. Fedyszyn entered into an employment contract
with Senesco for a term of two (2) years, whereby the Company agreed to pay Mr.
Fedyszyn a base salary of $36,000 per annum. On July 20, 1999, the Company's
Board of Directors approved an increase in Mr. Fedyszyn's base salary to $55,000
and on December 1, 2000, the Company's Board of Directors approved another
increase in Mr. Fedyszyn's base salary, retroactive to May 14, 2000, to $66,000.
In September 2000 and again in September 2001, the Company renewed the contract
for an additional one-year period. The term of Mr. Fedyszyn's employment
contract currently runs through January 21, 2003. The contract also provides for
bonus payments at the sole discretion of the Board of Directors, four (4) weeks
paid vacation, life and health insurance, employee benefits on the same basis as
made available to senior executives, and, under certain circumstances, a lump
sum payment of 2.99 times his annual base salary if there is a change in control
(as defined in his employment agreement).
The Company is currently finalizing the terms of an employment agreement
with Mr. Galton.
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the 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, 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 Securities and Exchange
Commission (the "SEC"). All Reporting Persons are required by SEC regulation to
furnish the Company with copies of all reports that such Reporting Persons file
with the SEC pursuant to Section 16(a).
Joel Brooks was appointed an officer of the Company on December 1, 2000 and
he was late in filing with the SEC his Initial Statement of Beneficial Ownership
on Form 3 reporting this event. On December 1, 2000, the Company also granted to
Mr. Brooks options to purchase twenty-five thousand (25,000) shares of the
Company's Common Stock, and Mr. Brooks voluntarily reported such options on his
Form 3.
Based solely on the Company's review of the copies of such forms received
by the Company and upon written representations of the Company's Reporting
Persons received by the Company, the Company believes that, except as described
above, there has been compliance with all Section 16(a) filing requirements
applicable to such Reporting Persons.
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's Common Stock is the only class of stock entitled to vote at
the Meeting. Only Stockholders of record as of the close of business on October
19, 2001 (the "Record Date") are entitled to receive notice of and to vote at
the Meeting. As of the Record Date, there were approximately 304 holders of
record of the Company's Common Stock, and the Company had outstanding 7,872,626
shares of its 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 the Company's Common Stock by (i)
each person known by the Company to be the beneficial owner of more than 5% of
the total number of shares of Common Stock outstanding as of such date; (ii)
each of the Company's Directors (which includes all nominees) and Named
Executives; and (iii) all Directors and current executive officers as a group.
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) OF CLASS(3)
--------------------------------------- ----------------------- -----------
(i) Certain Beneficial Owners:
Phillip O. Escaravage.................. 1,211,089(4) 15.3
(ii) Directors (which includes all
nominees), Named Executives and
Chief Executive Officer:
Ruedi Stalder.......................... 181,667(5) 2.3
Bruce C. Galton........................ 130,000(6) 1.6
John E. Thompson, Ph.D................. 890,000(7) 11.2
Christopher Forbes..................... 384,374(8) 4.9
Thomas C. Quick........................ 77,960(9) 1.0
Steven Katz............................ 116,040(10) 1.5
Sascha P. Fedyszyn .................... 90,694(11) 1.1
Joel P. Brooks......................... 16,667(12) *
(iii) All Directors and current
executive officers as a
group (8 persons)................ 1,887,402 22.5
-----------
* 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 are beneficially owned and
sole investment and voting power is held by the persons named.
(3) Applicable percentage of ownership is based on 7,872,626 shares of
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.
17
(4) Includes 40,000 shares issuable pursuant to presently exercisable
options and which are directly owned by Mr. Escaravage. Includes 1,171,089
shares held by The Umbrella Project, LLC, of which Mr. Escaravage is the
sole member, and therefore, he is the indirect beneficial owner of such
shares.
(5) Includes 115,000 shares issuable pursuant to presently exercisable
options.
(6) Represents 130,000 shares issuable pursuant to presently exercisable
options.
(7) Includes 40,000 shares issuable pursuant to presently exercisable
options.
(8) Includes 40,000 shares issuable pursuant to presently exercisable
options.
(9) Includes 40,000 shares issuable pursuant to presently exercisable
options.
(10) Includes 65,000 shares issuable pursuant to presently exercisable
options.
(11) Includes 53,334 shares issuable pursuant to presently exercisable
options or options which will become exercisable within sixty (60) days
after the Record Date. Excludes 11,666 shares underlying options which
become exercisable over time more than sixty (60) days after the Record
Date.
(12) Includes 16,667 shares issuable pursuant to presently exercisable
options or options which will become exercisable within sixty (60) days
after the Record Date. Excludes 8,333 shares underlying options which
become exercisable over time more than sixty (60) days after the Record
Date.
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1999, the Company entered into an arrangement to sublease office
space from The Umbrella Project, LLC, a company controlled by Phillip O.
Escaravage, who at the time of executing the agreement was a Director of the
Company and a beneficial owner of more than 5% of the Company's Common Stock.
The sublease was for a monthly rental of approximately $5,500 and was terminated
on May 31, 2001. The Company believes that this arrangement was on terms at
least as favorable as the Company would have received from a third party. Mr.
Escaravage is currently the beneficial owner of approximately 15.3% of the
Company's Common Stock.
Effective September 1, 1998, the Company entered into a three-year research
and development agreement with John E. Thompson, Ph.D. and the University of
Waterloo in Waterloo, Ontario, Canada (the "University"). Dr. Thompson is a
Director and officer of the Company and beneficially owns approximately 11.2% of
the Company's 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 the direction of the
Company. Total amounts due under the agreement for the three-year period were
limited to CAN $1,250,000. As of June 30, 2001, such amount represented US
$783,000. Research and development expenses under this agreement for the years
ended June 30, 1999, 2000 and 2001 aggregated US $169,140, US $300,492 and US
$348,985, respectively. Effective September 1, 2001, the Company, Dr. Thompson
and the University extended the agreement for an additional one-year period
through September 1, 2002, in the amount of CAN $433,700. As of September 1,
2001, such amount represented approximately US $280,000.
Effective May 1, 1999, the Company entered into a consulting agreement for
research and development with Dr. Thompson. On July 1, 2001, the Company and Dr.
Thompson renewed the consulting agreement for an additional three-year term, as
provided for under the terms and conditions of the agreement. This agreement
provides for monthly payments of $3,000 through June 2004. The agreement is
automatically renewable for an additional three-year term, unless either of the
parties provides the other with written notice within six (6) months of the end
of the term.
Christopher Forbes, a Director of the Company, is Vice Chairman of Forbes,
Inc., which publishes Forbes Magazine. Forbes, Inc. has provided and will
continue to provide the Company with advertising, introductions to strategic
alliance partners and, from time to time, use of its office space, entertainment
facilities and various other support services. In recognition of these past
services and services to be provided in the future, the Board of Directors
approved and granted to Forbes, Inc., a warrant to purchase 80,000 shares of
Common Stock at an exercise price of $3.50 per share, which was the fair market
value of the Company's Common Stock on the date of grant. The warrant was dated
September 7, 1999 and vests as follows: one-fourth (1/4) on the date of grant
and one-fourth (1/4) on each of the first, second and third anniversaries of the
date of grant. At the time of grant, the value of the past and future services
was approximately $205,000.
In accordance with a resolution unanimously approved by the Board of
Directors on October 4, 2001, the Company shall grant to Forbes, Inc., effective
as of November 1, 2001, an additional warrant to purchase 80,000 shares of the
Company's Common Stock for services rendered, including providing the Company
with advertising, introductions to strategic alliance partners and, from time to
time, use of its office space, entertainment facilities and various other
support services, at an exercise price equal to the closing price of the
Company's Common Stock as quoted on the NASD OTC Bulletin Board on October 31,
2001. The warrant shall vest as follows: one-third (1/3) on the date of grant
and one-third (1/3) on each of the first and second anniversaries of the date of
grant. As of October 19, 2001, the value of these services was approximately
$178,000.
Steven Katz, a Director and former officer of the Company, has an informal
arrangement to perform management services for the Company. Mr. Katz received
$177,151, $238,995 and $277,225 for such services in Fiscal 1999, Fiscal 2000
and Fiscal 2001, respectively.
Alan B. Bennett, Ph.D., a member of the Company's Scientific Advisory
Board, entered into a consulting agreement with the Company, dated July 16,
1999, whereby Dr. Bennett provided consulting services in consideration for
$5,400 per month. Dr. Bennett's consulting agreement with the Company expired on
July 15,
19
2000. Dr. Bennett has continued to provide services to the Company since July
15, 2000 and is currently negotiating a new agreement with the Company.
Christopher Forbes, a Director of the Company, participated in a private
placement of the Company's Common Stock consummated on January 26, 2000. In
connection with such private placement, Mr. Forbes purchased 17,436 shares of
the Company's Common Stock at the same price per share and on the same terms and
conditions as all other shares sold pursuant to the private placement to
unrelated third parties. Mr. Forbes has certain registration rights with respect
to such shares.
Phillip O. Escaravage, a former officer and former Director of the Company,
participated in a private placement of the Company's Common Stock consummated on
January 31, 2000. In connection with such private placement, Mr. Escaravage
purchased 34,737 shares of the Company's Common Stock at the same price per
share and on the same terms and conditions as all other shares sold pursuant to
the private placement to unrelated third parties. Mr. Escaravage has certain
registration rights with respect to such shares. At the time of the transaction,
Mr. Escaravage was an executive officer and Director of the Company. On October
4, 2001, Mr. Escaravage resigned as an executive officer and Director of the
Company, but retained the title of Vice Chairman. Mr. Escaravage is currently
the beneficial owner of approximately 15.3% of the Company's Common Stock.
Ruedi Stalder, a current Director and former officer of the Company,
participated in a private placement of the Company's Common Stock consummated on
June 22, 2000. In connection with such private placement, Mr. Stalder, purchased
66,667 shares of the Company's Common Stock at the same price per share and on
the same term and conditions as all other shares sold pursuant to the private
placement to unrelated third parties. Mr. Stalder has certain registration
rights with respect to such shares. At the time of the transaction, Mr. Stalder
was an executive officer and Director of the Company. On October 4, 2001, Mr.
Stalder resigned as an executive officer, but he remains a Director.
Certain Directors of the Company provided the Company with short-term loans
(the "Loans") with the proceeds being used for operating expenses. On each of
July 10, 2001, August 16, 2001 and September 5, 2001, the Company issued a
promissory note made payable to Mr. Forbes in the amounts of $200,000, $50,000
and $50,000, respectively, in connection with the Loans. The notes bear interest
at an annual rate equal to the prime rate on the date that the notes were issued
(6.50% to 6.75%), and such interest is payable upon maturity of the notes. The
notes and accrued interest are due on January 15, 2002.
Also in connection with the Loans, the Company issued a promissory note on
each of September 5, 2001 and October 9, 2001, made payable to Mr. Quick in the
amounts of $100,000 and $75,000, respectively. The notes bear interest at an
annual rate equal to the prime rate on the date that the notes were issued
(5.50% to 6.50%), and such interest is payable upon maturity of the notes. The
notes and accrued interest are due on January 15, 2002.
20
PROPOSAL TO AMEND THE 1998 STOCK PLAN
SUMMARY OF THE PLAN
The 1998 Stock Plan was adopted by the Company's Board of Directors on
December 31, 1998 and approved by the Stockholders of the Company on January 22,
1999. Those eligible to receive stock options or stock purchase rights under the
1998 Stock Plan include the Company's employees, Directors and consultants. The
1998 Stock Plan was adopted to: (i) attract and retain the best available
personnel for positions of substantial responsibility; (ii) provide additional
incentives to employees, members of the Board of Directors, members of the
Scientific Advisory Board and consultants of the Company and its subsidiary;
(iii) provide key employees, Directors and consultants with an interest in the
Company that is parallel to that of the Stockholders; and (iv) promote the
success of the Company's business. Currently, there are one million (1,000,000)
shares of the Company's Common Stock reserved for issuance upon the exercise of
options and/or stock purchase rights granted under the 1998 Stock Plan. As of
October 19, 2001, there were approximately nine (9) employees and non-employee
Directors who have received stock options. Because future participation in the
1998 Stock Plan and the level of participation will vary, it is not possible to
determine the value of benefits which may be obtained by those eligible to
participate in the 1998 Stock Plan.
The Board of Directors administers the 1998 Stock Plan and may grant
options to eligible employees, consultants and Directors recommended by the
Compensation Committee. The 1998 Stock Plan provides for the granting of options
intended to qualify as incentive stock options, or ISOs, as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), to employees
of the Company. The 1998 Stock Plan also provides for the granting of
non-qualified stock options, or NQSOs, to employees, non-employee Directors and
consultants who perform services for the Company or its subsidiary. The exercise
price of all ISOs granted under the 1998 Stock Plan may not be less than the
fair market value of the shares at the time the option is granted. In addition,
no ISO may be granted to an employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company unless the exercise
price as to that employee is at least 110% of the fair market value of the stock
at the time of the grant. To the extent that options designated as ISOs become
exercisable for the first time during any calendar year for Common Stock having
a fair market value greater than one-hundred thousand dollars ($100,000)
(determined for each share as of the date of grant of the options covering such
share), the portion of such options which exceeds such amount shall be treated
as NQSOs. Options may be exercisable for a period of not more than ten (10)
years from the date of grant; provided, however, that the term of an ISO granted
to an employee who owns more than 10% of the total combined voting power of all
classes of stock of the Company may not exceed five (5) years. The exercise
price of NQSOs granted under the 1998 Stock Plan may not be less than 85% of the
fair market value per share of the Common Stock on the date of grant. No NQSO
may be granted to a person who owns more than 10% of the total combined voting
power of all classes of stock of the Company unless the exercise price to that
person is at least 110% of the fair market value of the stock at the time of the
grant. The exercise price must be paid in full at the time an option is
exercised, and at the discretion of the Board of Directors, all or part of the
exercise price may be paid with previously owned shares or other approved
methods of payment. An option is exercisable as determined by the Board of
Directors. The 1998 Stock Plan will terminate on December 30, 2008.
Subject to the terms as specified in any option agreement, if a Grantee's
employment or consulting relationship terminates on account of disability, the
Grantee may exercise any outstanding option for one (1) year following the
termination. If a Grantee dies while in the employ of the Company or during the
period of the consulting arrangement, the Grantee's estate may exercise any
outstanding option for one (1) year following the Grantee's death. If
termination is for any other reason, the Grantee may exercise any outstanding
option for ninety (90) days following such termination. Options may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner except
by will or the laws of descent and distribution.
The 1998 Stock Plan also permits the awarding of stock purchase rights at
not less than 50% of the fair market value of the shares as of the date offered.
The 1998 Stock Plan requires the execution of a restricted stock purchase
agreement in a form determined by the Board of Directors. Once a stock purchase
right is exercised, the purchaser will have the rights of a shareholder and will
be a shareholder when the purchase is entered on the Company's records.
21
The 1998 Stock Plan provides that, in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of or
reclassification of shares, or any other change in the corporate structure or
shares of the Company, the Board of Directors shall make adjustments with
respect to the shares that may be issued under the 1998 Stock Plan or that are
covered by outstanding options, or in the option price per share.
In the event of a dissolution or liquidation of the Company, the Board
shall notify the Grantee at least fifteen (15) days prior to such proposed
action. To the extent not previously exercised, the outstanding options will
terminate immediately prior to the consummation of such proposed action. In the
event of a merger or consolidation of the Company with or into another
corporation or the sale of all or substantially all of the Company's assets
(hereinafter, a "merger"), the outstanding options may be assumed or an
equivalent option may be substituted by such successor corporation or a parent
or subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the outstanding options or to substitute
equivalent options, the Board of Directors will, in lieu of such assumption or
substitution, provide for the Grantee to have the right to exercise all of his
outstanding options. If the Board of Directors makes an option fully exercisable
in lieu of assumption or substitution, in the event of a merger, the Board of
Directors shall notify the Grantee that the option will be fully exercisable for
a period of fifteen (15) days from the date of such notice, and the option will
terminate upon the expiration of such period. The option will be considered
assumed if, following the merger, the option confers the right to purchase, for
each share of Common Stock subject to the option immediately prior to the
merger, the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of Common Stock for each share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares). If such consideration received in the merger was not
solely common stock of the successor corporation or its parent, the Board of
Directors may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
an option for each share of stock subject to the option to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
Income realized upon exercise of options granted under the 1998 Stock Plan
subsequent to stockholder approval on January 22, 1999 may qualify as
performance-based compensation under Section 162(m) of the Code. The Company is
seeking stockholder approval for the amendment to the 1998 Stock Plan so that
all income attributable to the exercise of such additional options will qualify
as performance-based compensation under Section 162(m) of the Code. Accordingly,
the Company may be able to deduct ordinary income realized by the Covered
Employees (as defined in the Code) in excess of one million dollars
($1,000,000). For purposes of this limit, all ordinary income realized upon
exercise of options previously granted under the 1998 Stock Plan will be
counted.
The Board of Directors may at any time amend, alter, suspend or discontinue
the 1998 Stock Plan, but no amendment, alteration, suspension or discontinuation
will be made which would impair the rights of any Grantee under any grant
theretofore made, without such Grantee's consent. In addition, to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act, or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the National Association of Securities Dealers or
an established stock exchange), the Company shall obtain shareholder approval of
any 1998 Stock Plan amendment in such a manner and to such a degree as so
required. Any such amendment or termination of the 1998 Stock Plan is not
permitted to affect options already granted and such options will remain in full
force and effect as if the 1998 Stock Plan had not been amended or terminated,
unless mutually agreed otherwise between the Grantee and the Board of Directors,
which agreement must be in writing and signed by the Grantee and the Company.
22
FEDERAL INCOME TAX ASPECTS
(a) INCENTIVE STOCK OPTIONS
Some options to be issued under the 1998 Stock Plan will be designated as
ISOs and are intended to qualify under Section 422 of the Code. Under the
provisions of that Section of the Code and the related regulations, an optionee
will not be required to recognize any income for federal income tax purposes at
the time of grant of an ISO. Additionally, the Company will not be entitled to
any deduction. The exercise of an ISO also is not a taxable event, although the
difference between the option price and the fair market value on the date of
exercise is an item of tax preference for purposes of the alternative minimum
tax. The taxation of gain or loss upon the sale of stock acquired upon exercise
of an ISO depends in part on whether the stock is disposed of at least two (2)
years after the date the option was granted and at least one (1) year after the
date the stock was transferred to the optionee, referred to as the ISO Holding
Period.
If the ISO Holding Period is met, then, upon sale of the stock acquired
upon exercise of an ISO, the optionee will recognize long-term capital gain in
the amount equal to the excess of the sale price of the stock over the exercise
price. If the ISO Holding Period is not met, then, upon disposition of such
shares, referred to as a disqualifying disposition, the optionee will realize
compensation, taxable as ordinary income, in an amount equal to the excess of
the fair market value of the shares at the time of exercise over the option
price, limited, however, to the gain on sale. Any additional gain would be
taxable as capital gain (see discussion of capital gains under the section
relating to NQSOs, below). If the optionee disposes of the shares in a
disqualifying disposition at a price that is below the fair market value of the
shares at the time the ISO was exercised and such disposition is a sale or
exchange to an unrelated party, the amount includible as compensation income to
the optionee will be limited to the excess of the amount received on the sale or
exchange over the exercise price.
If the optionee recognizes ordinary income upon a disqualifying
disposition, the Company generally will be entitled to a tax deduction in the
same amount.
Effective as of January 1, 1998, the holding period for long term capital
gain treatment is reduced to one (1) year. Hence, if the ISO Holding Period is
met, any disposition on or after January 1, 1998 would be taxable to the
optionee as a long-term capital gain or loss; any such gains are taxable at a
maximum rate of 20%.
A maximum capital gains rate of 18% applies to certain sales after December
31, 2000 of shares acquired upon the exercise of an ISO if such shares have been
held for at least five (5) years.
If the ISO is exercised by delivery of previously owned shares of Common
Stock in partial or full payment of the option price, no gain or loss will
ordinarily be recognized by the optionee on the transfer of such previously
owned shares. However, if the previously owned transferred shares were acquired
through the exercise of an ISO, the optionee may realize ordinary income with
respect to the shares used to exercise an ISO if such transferred shares have
not been held for the ISO Holding Period. If an ISO is exercised through the
payment of the exercise price by the delivery of Common Stock, to the extent
that the number of shares received exceeds the number of shares surrendered,
such excess shares will possibly be considered ISO stock with a zero basis.
23
(b) NON-QUALIFIED STOCK OPTIONS
Some options to be issued under the 1998 Stock Plan will be designated as
NQSOs. If (as in the case of NQSOs granted under the 1998 Stock Plan at this
time) the NQSO does not have a "readily ascertainable fair market value" at the
time of the grant, the NQSO is not included as compensation income at the time
of grant. Rather, the optionee realizes compensation income only when the NQSO
is exercised and the optionee has become substantially vested in the shares
transferred. The shares are considered to be substantially vested when they are
either transferable or not subject to a substantial risk of forfeiture. The
amount of income realized is equal to the excess of the fair market value of the
shares at the time the shares become substantially vested over the sum of the
exercise price plus the amount, if any, paid by the optionee for the NQSO. If a
NQSO is exercised through payment of the exercise price by the delivery of
Common Stock, to the extent that the number of shares received by the optionee
exceeds the number of shares surrendered, ordinary income will be realized by
the optionee at that time only in the amount of the fair market value of such
excess shares, and the tax basis of such excess shares will be such fair market
value. When the optionee disposes of the shares acquired pursuant to a NQSO, the
optionee will recognize capital gain or loss equal to the difference between the
amount received for the shares and the optionee's basis in the shares.
Under the 1998 Stock Plan, the optionee's basis in the shares will be the
exercise price plus the compensation income realized at the time of exercise.
Under tax legislation which became effective as of January 1, 1998, the capital
gain or loss will be short term (with gains generally subject to tax as ordinary
income) if the shares are disposed of within one year after the option is
exercised and long term (with gains generally subject to tax at a maximum rate
of 20%) if the shares are disposed of more than one year after the option is
exercised.
A maximum capital gains rate of 18% applies to certain sales, after
December 31, 2000, of shares acquired upon the exercise of a NQSO if such shares
have been held for at least five (5) years.
The Company is generally entitled to a deductible compensation expense in
an amount equivalent to the amount included as compensation income to the
optionee. This deduction is allowed in the Company's taxable year in which the
income is included as compensation to the optionee.
Except as otherwise indicated, the preceding discussion is based upon
federal tax laws and regulations in effect on the date of the preparation of
this Summary, which are subject to change, and upon an interpretation of the
relevant sections of the Code, their legislative histories and the income tax
regulations which interpret similar provisions of the Code. Furthermore, the
foregoing is only a general discussion of the federal income tax aspects of the
1998 Stock Plan and does not purport to be a complete description of all federal
income tax aspects of the 1998 Stock Plan. Optionees may also be subject to
state and local taxes in connection with the grant or exercise of options
granted under the 1998 Stock Plan and the sale or other disposition of shares
acquired upon exercise of the options. Each key employee receiving a grant of
options should consult with his or her personal tax advisor regarding the
federal, state and local tax consequences of participating in the 1998 Stock
Plan.
(c) RESTRICTED STOCK AWARDS
A participant will not recognize taxable income upon the grant of a
restricted stock award unless the participant makes a valid election under
Section 83(b) of the Code (a "Section 83(b) Election"). If the participant makes
a valid Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the Common Stock at the time the award is granted and the
purchase price paid for the Common Stock. If a valid Section 83(b) Election is
not made, then the participant will recognize ordinary compensation income, at
the time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's tax
basis in the Common Stock. This capital gain or loss will be a long-term capital
gain or loss if the shares are held for more than one year.
24
PREVIOUSLY GRANTED OPTIONS UNDER THE 1998 STOCK PLAN
As of October 19, 2001, options to purchase six hundred eighty thousand
(680,000) shares of Common Stock have been granted (net of forfeitures which are
added back to the shares available for issuance under the 1998 Stock Plan) under
the 1998 Stock Plan. The weighted average exercise price of such options is
$2.86 per share.
The following table sets forth the options granted under the 1998 Stock
Plan to: (i) the Named Executives; (ii) each nominee for election as a Director;
(iii) all current executive officers as a group; (iv) all current Directors who
are not executive officers as a group; (v) each associate of any of such
Directors, executive officers or nominees; (vi) each person who has received or
is to receive 5% of such options or rights; and (vii) all employees, including
all current officers who are not executive officers, as a group:
NAME AND TITLE NUMBER OF WEIGHTED AVERAGE
-------------- OPTIONS GRANTED EXERCISE PRICE
--------------- --------------
Ruedi Stalder, Chairman of the Board and Director....... 115,000 $2.20
Bruce C. Galton, President and Chief Executive Officer.. 130,000 2.10
John E. Thompson, Ph.D., Executive Vice President
of Research and Development and Director............... 40,000 3.85
Christopher Forbes, Director............................ 40,000 3.50
Thomas C. Quick, Director............................... 40,000 3.50
Steven Katz, Director................................... 65,000 2.73
Sascha P. Fedyszyn, Vice President of Corporate
Development and Secretary.............................. 65,000 2.83
Joel P. Brooks, Chief Financial Officer and Treasurer... 25,000 2.25
Phillip O. Escaravage(1)................................ 40,000 3.85
All current executive officers as a group (4 persons)... 260,000 2.32
All current Directors and nominees who are not
executive officers as a group (4 persons).............. 260,000 2.73
All employees, including all current officers who are
not executive officers as a group (1 person)........... 40,000 3.85
--------------------
(1) Former Director and executive officer of the Company and current beneficial
owner of 15.3% of the Company's Common Stock as of October 19, 2001.
Whether or not Stockholder approval of the amendment to the 1998 Stock Plan
is obtained, options previously granted pursuant to the 1998 Stock Plan will
remain valid and outstanding.
As of October 19, 2001, the fair market value of the Common Stock
underlying options granted pursuant to the 1998 Stock Plan was equal to $2.25
per share as determined by the closing price of the Company's Common Stock on
the NASD OTC Bulletin Board on such date.
25
In addition to the options listed in the table above, on October 4, 2001,
the Board of Directors unanimously approved the grant of options to purchase
eight hundred ninety-five thousand (895,000) shares of the Company's Common
Stock to certain executive officers, Directors and other affiliates of the
Company at future dates as described below.
The Company shall grant the following to Mr. Stalder: (i) options to
purchase one hundred fifty thousand (150,000) shares of the Company's Common
Stock to be granted effective November 1, 2001, with an exercise price equal to
$4.00 per share, with one-third (1/3) of such options vesting on the date of
grant, one-third (1/3) of such options vesting on January 15, 2002 and one-third
(1/3) of such options vesting on January 15, 2003; (ii) options to purchase
sixty-five thousand (65,000) shares of the Company's Common Stock to be granted
effective December 1, 2001, with an exercise price equal to the fair market
value of the Company's Common Stock as defined in the 1998 Stock Plan, with all
such options vesting on the date of grant (options shall be granted in lieu of
receiving cash compensation for services provided as an officer of the Company
during the period from January 1, 2000 through September 30, 2001); and (iii)
options to purchase forty thousand (40,000) shares of the Company's Common Stock
to be granted effective December 1, 2001, with an exercise price equal to the
fair market value of the Company's Common Stock as defined in the 1998 Stock
Plan, with one-half (1/2) of such options vesting on the date of grant and
one-half (1/2) of such options vesting on December 1, 2002.
The Company shall grant to Mr. Galton effective December 1, 2001, options
to purchase three hundred thousand (300,000) shares of the Company's Common
Stock, with an exercise price equal to the fair market value of the Company's
Common Stock as defined in the 1998 Stock Plan, with one-third (1/3) of such
options vesting on each of the first, second and third anniversaries of the date
of grant.
The Company shall grant to Dr. Thompson effective December 1, 2001, options
to purchase eighty thousand (80,000) shares of the Company's Common Stock, with
an exercise price equal to 110% of the fair market value of the Company's Common
Stock as defined in the 1998 Stock Plan, with one-third (1/3) of such options
vesting on the date of grant and one-third (1/3) of such options vesting on each
of the first and second anniversaries of the date of grant.
The Company shall grant to Mr. Forbes effective December 1, 2001, options
to purchase forty thousand (40,000) shares of the Company's Common Stock, with
an exercise price equal to the fair market value of the Company's Common Stock
as defined in the 1998 Stock Plan, and with one-half (1/2) of such options
vesting on the date of grant and one-half (1/2) of such options vesting on
December 1, 2002.
The Company shall grant to Mr. Quick effective December 1, 2001, options to
purchase forty thousand (40,000) shares of the Company's Common Stock, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, and with one-half (1/2) of such options vesting
on the date of grant and one-half (1/2) of such options vesting on December 1,
2002.
The Company shall grant the following to Mr. Katz: (i) options to purchase
fifty thousand (50,000) shares of the Company's Common Stock to be granted
effective November 1, 2001, with an exercise price equal to $4.00 per share,
with one-third (1/3) of such options vesting on the date of grant, one-third
(1/3) of such options vesting on January 15, 2002 and one-third (1/3) of such
options vesting on January 15, 2003; (ii) conditioned upon the execution of a
certain license agreement no later than March 31, 2002, but with a grant date no
earlier than December 1, 2001, options to purchase twenty-five thousand (25,000)
shares of the Company's Common Stock to be granted on the date such license
agreement is executed (or December 1, 2001 if the license agreement is executed
before such date), with an exercise price equal to the fair market value of the
Company's Common Stock as defined in the 1998 Stock Plan, with all such options
vesting on the date of grant; and (iii) options to purchase forty thousand
(40,000) shares of the Company's Common Stock to be granted effective December
1, 2001, with an exercise price equal to the fair market value of the Company's
Common Stock as defined in the 1998 Stock Plan, with one-half (1/2) of such
options vesting on the date of grant and one-half (1/2) of such options vesting
on December 1, 2002.
The Company shall grant to Mr. Fedyszyn effective November 1, 2001, options
to purchase ten thousand (10,000) shares of the Company's Common Stock, with an
exercise price equal to the fair market value of the Company's Common Stock as
defined in the 1998 Stock Plan, with one-third (1/3) of such options vesting on
the date of grant and one-third (1/3) of such options vesting on each of the
first and second anniversaries of the date of grant.
26
The Company shall grant to Mr. Brooks effective November 1, 2001, options
to purchase fifteen thousand (15,000) shares of the Company's Common Stock, with
an exercise price equal to the fair market value of the Company's Common Stock
as defined in the 1998 Stock Plan, with one-third (1/3) of such options vesting
on the date of grant and one-third (1/3) of such options vesting on each of the
first and second anniversaries of the date of grant.
The Company shall grant to Mr. Escaravage effective December 1, 2001,
options to purchase forty thousand (40,000) shares of the Company's Common
Stock, with an exercise price equal to 110% of the fair market value of the
Company's Common Stock as defined in the 1998 Stock Plan, and with one-half
(1/2) of such options vesting on the date of grant and one-half (1/2) of such
options vesting on December 1, 2002.
REGISTRATION
The Company intends to file a Form S-8 registration statement covering the
shares of the Company's Common Stock issuable under the 1998 Stock Plan.
PROPOSED AMENDMENT
The Stockholders are being asked to consider and vote upon a proposed
amendment (the "Amendment") to the 1998 Stock Plan to increase the maximum
number of shares of the Company's Common Stock available for issuance under the
1998 Stock Plan from one million (1,000,000) shares to two million (2,000,000)
shares.
Even though the 1998 Stock Plan by its terms does not require Stockholder
approval for the Amendment to be adopted, the Board of Directors is seeking that
approval, because the additional options which may be granted under the 1998
Stock Plan following adoption of the Amendment will not be considered ISOs for
federal income tax purposes unless Stockholder approval has been obtained within
twelve (12) months from the adoption of the Amendment by the Board of Directors.
If Stockholder approval is not obtained, then the options will be treated as
non-qualified stock options. The Board of Directors believes it is in the
Company's best interests to permit option holders to take advantage of the more
favorable tax treatment given to ISOs (as discussed above).
The Board of Directors believes that the Amendment provides an important
inducement to recruit and retain the best available personnel. The Board of
Directors believes that providing employees, Directors and consultants with an
opportunity to invest in the Company rewards them appropriately for their
efforts on behalf of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT.
27
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has, subject to Stockholder approval,
retained Goldstein Golub Kessler LLP as independent auditors of the Company for
the fiscal year ending June 30, 2002. Neither the firm nor any of its Directors
has any direct or indirect financial interest in or any connection with the
Company in any capacity other than as auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 2002.
One or more representatives of Goldstein Golub Kessler LLP is expected to
attend the Meeting and have an opportunity to make a statement and/or respond to
appropriate questions from Stockholders.
INDEPENDENT AUDITORS' FEES AND OTHER MATTERS
Audit Fees
Goldstein Golub Kessler LLP billed the Company an aggregate of $53,954 in
fees for professional services rendered in connection with the audit of the
Company's financial statements for the fiscal year ended June 30, 2001 and the
reviews of the financial statements included in each of the Company's Quarterly
Reports on Form 10-QSB during the fiscal year ended June 30, 2001.
Financial Information Systems Design and Implementation Fees
Goldstein Golub Kessler LLP did not bill the Company for any professional
services rendered to the Company and its affiliates for the fiscal year ended
June 30, 2001 in connection with financial information systems design or
implementation, the operation of the Company's information system or the
management of its local area network.
All Other Fees
Goldstein Golub Kessler LLP did not bill the Company for any other services
rendered to the Company and its affiliates for the fiscal year ended June 30,
2001.
Leased Employees
Goldstein Golub Kessler LLP "the Firm" has a continuing relationship with
American Express Tax and Business Services, Inc. "TBS" from which it leases
auditing staff who are full time, permanent employees of TBS and through which
its partners provide non-audit services. As a result of this arrangement, the
Firm has no full time employees and therefore, none of the audit services
performed were provided by permanent full-time employees of the Firm. The Firm
manages and supervises the audit and audit staff, and is exclusively responsible
for the opinion rendered in connection with its examination.
STOCKHOLDERS' PROPOSALS
Stockholders who wish to submit proposals for inclusion in the Company's
proxy statement and form of proxy relating to the 2002 Annual Meeting of
Stockholders must advise the Secretary of the Company of such proposals in
writing by July 2, 2002.
OTHER MATTERS
The Board of Directors 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.
28
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne by the
Company.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by Directors, officers and other employees of
the Company who will not be specially compensated for these services. The
Company 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. The
Company 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 Directors and officers of the Company is
based upon information received from the individual Directors and officers.
SENESCO TECHNOLOGIES, INC. WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS
REPORT ON FORM 10-KSB FOR THE YEAR ENDED JUNE 30, 2001, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS
STOCKHOLDERS OF RECORD ON OCTOBER 19, 2001 AND TO EACH BENEFICIAL STOCKHOLDER ON
THAT DATE UPON WRITTEN REQUEST MADE TO THE SECRETARY OF THE COMPANY. 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.
By Order of the Board of Directors
/s/ Sascha P. Fedyszyn
Sascha P. Fedyszyn
Secretary
New Brunswick, New Jersey
October 29, 2001
29
APPENDIX A
----------
SENESCO TECHNOLOGIES, INC.
BOARD OF DIRECTORS
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
The Board of Directors (the "Board") has directed that an Audit Committee be
established to function as an overseer of Senesco Technologies, Inc., a Delaware
corporation, (the "Corporation") financial reporting process and internal
controls. The following charter for the Audit Committee has been reviewed and
approved by the Board of Directors.
PREAMBLE
Audit Committees generally are mandated by NYSE, AMEX and Nasdaq requirements
and must be composed solely, or at least principally, of outside directors. Such
a committee is generally responsible for reviewing with management the financial
controls and accounting and reporting activities of the corporation. To the
extent practicable, the members of the Audit Committee should have a sufficient
understanding of financial reporting and internal control principles to
understand and help deal with material financial reporting and internal control
issues.
In performing its duties, the Audit Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and
external auditors.
MEMBERSHIP
The Audit Committee shall be comprised of a minimum of two (2) independent
(outside) directors. To the extent practical, the members of the Audit Committee
should have a sufficient understanding of financial reporting and internal
control principles to understand and help deal with material financial reporting
and internal control issues.
Independent directors shall be defined as being independent of management and
free from any relationship that, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment as an Audit Committee
member.
The Chief Financial Officer, or such similar executive officer, the
Corporation's financial departments and the independent outside auditing firm
shall assist the Audit Committee in its efforts to perform its duties and
responsibilities.
AUTHORITY
The Board delegates to the Audit Committee the authority to review, report and
recommend on the (i) qualifications and selection of the Corporation's
independent accountants; (ii) scope, fees and results of any audit; and (iii)
non-audit services and related fees.
The Audit Committee shall have direct and uninhibited access to all financial,
legal and other staff and advisors of the Corporation. Advisors and staff
members of the Audit Committee may assist the Audit Committee members in
defining their roles and responsibilities, consult with Audit Committee members
regarding a specific audit or other issues that may arise in the course of the
Audit Committee's duties, and conduct independent investigations, studies or
tests. The Audit Committee shall have the authority to employ accountants,
attorneys or other advisors to assist the Audit Committee in special
circumstances approved by the majority of the Board. The Audit Committee shall
meet quarterly, and, as necessary, at the call of the Board of Directors. The
Audit Committee shall submit a written report to the Board of Directors
subsequent to any meeting.
The Audit Committee shall have the authority to select and/or terminate the
Corporation's outside audit firm and outside legal counsel and the Corporation's
independent counsel of record.
30
PRINCIPAL FUNCTIONS
The following lists the principal functions of the Audit Committee:
o Interview and recommend which firm to engage as the Corporation's
outside auditor and review and evaluate the performance of this firm.
o Interview and recommend which firm to engage as the Corporation's
outside legal counsel and review and evaluate the performance of this
firm.
o Review the external auditors' compensation, the proposed terms of its
engagement and its independence from management.
o Review the outside legal counsel's compensation, the proposed terms of
its engagement and its independence from management.
o Review the appointment and replacement of the senior internal auditing
executive and senior internal legal counsel.
o Serve as a channel of communication between the external auditor and
the Board and between the senior internal auditing executive and the
Board.
o Review the results of each external audit, including any
qualifications in the external auditor's opinion, any related
management letter, management's responses to recommendations made by
the external auditor in connection with the audit, reports submitted
to the Audit Committee by the internal auditing department that are
material to the Corporation as a whole and management's responses to
those reports.
o Review the Corporation's annual financial statements and any
significant disputes between management and the external auditor that
arose in connection with the preparation of those financial
statements.
o Consider, in consultation with the external auditor and the senior
internal auditing executive the adequacy of the Corporation's internal
financial controls. Among other things, these controls must be
designed to provide reasonable assurance that the Corporation's
publicly reported financial statements are presented fairly and in
conformity with generally accepted accounting principles.
o Consider major changes and other major questions of choice regarding
the appropriate auditing and accounting principles and practices to be
followed when preparing the Corporation's financial statements.
o Review the procedures employed by the Corporation in preparing
published financial statements and related management commentaries.
o Meet periodically with management to review the Corporation's major
financial risk exposures and the risks associated with any significant
litigation actions being addressed by the Corporation.
o Review major issues regarding accounting principles and practices that
could significantly affect the Corporation's financial statements.
o The Audit Committee shall meet with the Corporation's external auditor
prior to the commencement of the audit to review the planning and
staffing of the audit and to discuss any particular areas that may
require emphasis or special procedures during that year's audit.
LIMITATIONS
According to Section 141(c)(2) of the Delaware General Corporation Law (the
"DGCL"), there are certain powers that the Board may not lawfully delegate to
the Audit Committee. Such powers include, but are not limited to, the following:
1. Approve, adopt or recommend to stockholders any action or matter expressly
required by the DGCL to be submitted to stockholders for approval; or
31
2. Adopt, amend or repeal bylaws.
Accordingly, the Audit Committee shall not have any authority with respect to
the foregoing.
After the completion of the Corporation's annual audit, the Audit Committee
should review with the external auditor any problems or difficulties that the
external auditor may have encountered, any management letter provided by the
accountants, and the Corporation's response to that letter. With respect to any
areas identified as requiring special audit procedures, the Audit Committee
shall review the findings of the independent auditor and determine whether
revisions to corporate policy or procedures are necessary. The Audit Committee
should periodically evaluate the degree of independence of the Corporation's
external auditor, including any effect of non-audit services provided by the
independent accounting firm.
Within a similar context, the Audit Committee shall have the authority to
periodically meet with the Corporation's outside legal counsel or internal
counsel to review all appropriate areas of management's activities and determine
any problems or difficulties that such counsel may be encountering, any
management letter provided by the Corporation's outside legal counsel and the
Corporation's response to that letter.
While most meetings with external auditors and legal counsel will be conducted
in the presence of the chief financial officer, or such similar executive
officer, and other members of management, the Audit Committee shall have the
authority to periodically meet the outside auditors and legal counsel without
the participation of management to determine whether the auditors and/or legal
counsel had the full cooperation of management, if there are any matters
regarding the Corporation and its financial and legal affairs and records that
make these independent firms uncomfortable and whether the accounting systems
and controls required are in place or need strengthening in the judgment of such
auditors and legal counsel.
MAJOR CHANGES IN ACCOUNTING PRINCIPALS
The Audit Committee shall review major issues regarding accounting principles
and practices that could significantly affect the Corporation's financial
statements.
OTHER RESPONSIBILITIES
The Audit Committee may be also assigned other responsibilities related to the
reliability of the Corporation's financial results and related matters such as
preliminary review of annual and quarterly reports and review of periodic
filings with the SEC.
Adopted by the Board of Directors
as of July 26, 1999.
32
APPENDIX B
----------
SENESCO TECHNOLOGIES, INC.
1998 STOCK INCENTIVE PLAN
(as amended and restated on January 22, 1999 and September 30, 1999)
1. Purposes of the Plan. The purposes of this Plan are to attract and
--------------------
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, non-Employee members of the Board
and Consultants of the Company and its Subsidiaries and to promote the success
of the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder. Stock purchase rights may also be
granted under the Plan.
2. Certain Definitions. As used herein, the following definitions shall
-------------------
apply:
(a) "Administrator" means the Board or any of its Committees appointed
-------------
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
-----
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" means the Committee appointed by the Board of Directors
in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
------------
(f) "Company" means Senesco Technologies, Inc., a Delaware corporation.
-------
(g) "Consultant" means any person, including an advisor, who is engaged
----------
by the Company or any Parent or subsidiary to render services and is compensated
for such services, and any director of the Company whether compensated for such
services or not.
(h) "Continuous Status as an Employee" means the absence of any
-----------------------------------
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Board, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor.
(i) "Employee" means any person, including officers and directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(k) "Fair Market Value" means, as of any date, the value of Common
------------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be
the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange for the last market
trading day prior to the time of determination as reported in the Wall
Street Journal or such other source as the Administrator deems reliable or;
(ii) If the Common Stock is quoted on Nasdaq (but not on the
National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low asked prices for the
Common Stock or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as
-----------------------
an incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" means an Option not intended to
---------------------------
qualify as an Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to the Plan.
------
(o) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(p) "Optionee" means an Employee or Consultant who receives an Option.
--------
(q) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 1998 Stock Incentive Plan.
----
(s) "Restricted Stock" means shares of Common Stock acquired pursuant
----------------
to a grant of stock purchase rights under Section 11 below.
- 2 -
(t) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 13 of the Plan.
(u) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is five hundred thousand (500,000) shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock.
If an option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Administration With Respect to Directors and Officers. With
------------------------------------------------------
respect to grants of Options or stock purchase rights to Employees who are
also officers or directors of the Company, the Plan shall be administered
by (A) the Board, if the Board may administer the Plan in compliance with
Rule 16b-3 promulgated under the Exchange Act or any successor thereto
("Rule 16b-3") with respect to a plan intended to allow transactions
between the Company and the Optionee to be exempt for Section 16(b) of the
Exchange Act, or (B) a Committee designated by the Board to administer the
Plan, which Committee shall be constituted in such a manner as to permit
the Plan to comply with Rule 16b-3 with respect to a plan intended to allow
transactions between the Company and the Optionee to be exempt for Section
16(b) of the Exchange Act. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board.
From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies, however
caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Rule 16b-3 with respect
to a plan intended to qualify thereunder as a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3,
------------------------------
the Plan may be administered by different bodies with respect to directors,
non-director officers and Employees who are neither directors nor officers.
(iii) Administration With Respect to Consultants and Other
----------------------------------------------------------
Employees. With respect to grants of Options or stock purchase rights to
---------
Employees who are neither directors nor officers of the Company or to
Consultants, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with Rule 16b-3, or
- 3 -
(B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the legal requirements relating
to the administration of incentive stock option plans, if any, of Delaware
corporate law and applicable securities laws and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time
to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however
caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
----------------------------
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(k) of the Plan;
(ii) to select the officers, Consultants and Employees to whom
Options and stock purchase rights may from time to time be granted
hereunder;
(iii) to determine whether and to what extent Options and stock
purchase rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but
not limited to, the share price and any restriction or limitation or waiver
of forfeiture restrictions regarding any Option or other award and/or the
shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion);
(vii) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(f) instead of Common Stock;
(viii)to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the
amount, if any, of any deemed earnings on any deferred amount during any
deferral period);
- 4 -
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted; and
(x) to determine the terms and restrictions applicable to stock
purchase rights and the Restricted Stock purchased by exercising such stock
purchase rights.
(c) Effect of Committee's Decision. All decisions, determinations and
------------------------------
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.
- 5 -
7. Term of Option. The term of each Option shall be the term stated in
--------------
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that
- 6 -
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the option is
exercised, (6) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price, (7) by
delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (8)
any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
---------------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment. In the event of termination of an
---------------------------
Optionee's consulting relationship or Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, but only within ninety (90)
days (or such other period of time as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option and not exceeding ninety (90) days) after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth
- 7 -
in the Option Agreement), exercise his Option to the extent that Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
----------------------
9(b) above, in the event of termination of an Optionee's consulting relationship
or Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of
----------
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(f) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
10. Non-Transferability of Options. The Option may not be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. The terms of the Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.
- 8 -
11. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock purchase rights may be issued either
------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer stock purchase rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid (which price shall not be less than 50% of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the stock purchase right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
-----------------
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Committee
may determine.
(c) Other Provisions. The Restricted Stock purchase agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Shareholder. Once the stock purchase right is
-------------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock purchase right is exercised, except as provided in Section 13
of the Plan.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
------------------------------------------------------------
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or stock purchase right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold
- 9 -
from the Shares to be issued upon exercise of the Option, or the Shares to be
issued in connection with the stock purchase right, if any, that number of
Shares having a Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(e) the election must be made on or prior to the applicable Tax Date;
(f) once made, the election shall be irrevocable as to the particular
Shares of the Option or Right as to which the election is made;
(g) all elections shall be subject to the consent or disapproval of
the Administrator;
(h) if the Optionee is subject to Rule 16b-3, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or stock purchase
right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. Adjustments Upon Changes in Capitalization or Merger. Subject to any
-----------------------------------------------------
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of
- 10 -
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a merger or consolidation of the Company with or into
another corporation or the sale of all or substantially all of the Company's
assets (hereinafter, a "merger"), the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Board shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger, the Option or right confers the
right to purchase, for each Share of stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger was not solely common stock of the
successor corporation or its Parent, the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to be
received upon the exercise of the Option, for each Share of stock subject to the
Option, to be solely common stock of the successor corporation or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.
14. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
- 11 -
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
--------------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
16. Conditions Upon Issuance of Shares. Shares shall not be issued
-------------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
17. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. Agreements. Options and stock purchase rights shall be evidenced by
----------
written agreements in such form as the Board shall approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be subject to
---------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
- 12 -
20. Information to Optionees. The Company shall provide to each Optionee,
-------------------------
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
* * * * * * * *
- 13 -
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 Ruedi Stalder and Sascha P.
Fedyszyn, 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 Hyatt Regency, New Brunswick, New Jersey at
10:00 A.M., local time, on November 29, 2001, 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 AND 3.
(continued and to be signed on reverse side)
FOR all nominees VOTE
listed at right WITHHELD
(except as marked to from all
the contrary below) nominees
1. ELECTION OF
DIRECTORS. | | | | NOMINEES:
(Mark one only) Ruedi Stalder
Bruce C. Galton
John E. Thompson, Ph.D.
Christopher Forbes
Thomas C. Quick.
VOTE FOR all the nominees listed at right; except
vote withheld from the following nominees
(if any).
-----------------------------------------------
2. APPROVAL OF PROPOSAL TO AMEND THE COMPANY'S 1998 STOCK INCENTIVE PLAN, AS
AMENDED (THE "1998 STOCK PLAN"), TO INCREASE THE MAXIMUM NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE 1998 STOCK PLAN FROM ONE
MILLION (1,000,000) SHARES TO TWO MILLION (2,000,000) SHARES.
FOR | | AGAINST | | ABSTAIN | |
3. APPROVAL OF PROPOSAL TO RATIFY THE APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP
AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
2002.
FOR | | AGAINST | | ABSTAIN | |
4. In his discretion, the proxy is authorized to vote upon other matters as may
properly come before the Meeting.
THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF THE SIGNER IS A CORPORATION, PLEASE
SIGN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER, GIVING FULL TITLE AS SUCH.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE MARK, SIGN, DATE AND RETURN I WILL WILL NOT
THE PROXY CARD PROMPTLY, USING THE | | attend the | |
ENCLOSED ENVELOPE. Meeting
Signature of Stockholder
-----------------------------------
Signature of Stockholder if held jointly
-----------------------------------
DATED:
--------------------, 2001
NOTE: Please sign exactly as your name appears on your stock certificates.
When shares are held by joint tenants, both should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.