SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File No. 0-22307
SENESCO TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 84-1368850
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
34 Chambers Street, Princeton, New Jersey 08542
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(Address of Principal Executive Offices) (Zip Code)
(609) 252-0680
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(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes: X No:
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State the number of shares outstanding of each of the Issuer's classes of
common stock, as of October 31, 1999:
Class Number of Shares
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Common Stock, $.01 par value 6,212,134
Transitional Small Business Disclosure Format (check one):
Yes: No: X
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.................................. 1
CONDENSED CONSOLIDATED BALANCE SHEET
as of September 30, 1999 (unaudited)....................... 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1999, From
Inception on July 1, 1998 through September 30, 1998,
and From Inception on July 1, 1998 through
September 30, 1999 (unaudited)............................. 3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY (DEFICIT) From Inception on July 1, 1998
through September 30, 1999 (unaudited)..................... 4
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended September 30, 1999, From
Inception on July 1, 1998 through September 30, 1998,
and From Inception on July 1, 1998 through
September 30, 1999 (unaudited)............................. 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)................................................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Plan of Operation....................... 9
Liquidity and Capital Resources............................ 15
Results of Operations...................................... 17
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds............. 18
Item 5. Other Information..................................... 19
Item 6. Exhibits and Reports on Form 8-K...................... 20
SIGNATURES ...................................................... 21
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Senesco Technologies, Inc. (the
"Company") and its subsidiary, Senesco, Inc., a New Jersey corporation
("Senesco") believe that the disclosures are adequate to assure that the
information presented is not misleading in any material respect.
The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal year.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED BALANCE SHEET
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(unaudited)
September 30,
1999
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ASSETS
------
CURRENT ASSETS:
Cash............................................................ $ 457,241
Prepaid expense................................................. 6,772
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Total Current Assets........................................ $ 464,013
Equipment, net.................................................. 73,787
Intangible assets, net.......................................... 54,928
Security deposit................................................ 10,863
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TOTAL ASSETS................................................ $ 603,591
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable................................................ 79,721
Accrued expenses................................................ 11,466
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Total Current Liabilities................................... 91,187
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Grant payable................................................... 10,573
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TOTAL LIABILITIES........................................... 101,760
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STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares, $0.01 par value, authorized;
0 shares issued and outstanding............................... --
Common stock, 20,000,000 shares, $0.01 par value, authorized;
6,212,134 issued and outstanding.............................. 62,121
Capital in excess of par........................................ 2,503,232
Deficit accumulated during the development stage................ (1,675,326)
Deferred fees................................................... (388,196)
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Total Stockholders' Equity.................................... 501,831
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................... $ 603,591
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See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited)
<TABLE>
<CAPTION>
For the Three From Inception on From Inception on
Months Ended July 1, 1998 through July 1, 1998 through
September 30, September 30, September 30,
1999 1998 1999
--------------- -------------------- --------------------
<S> <C> <C> <C>
Revenue................................ $ -- $ -- $ --
Operating Expenses:
General and administrative........... 387,131 85,179 1,369,528
Research and development............. 119,200 -- 292,661
---------- ----------- -----------
Total Operating Expenses............... 506,331 85,179 1,662,189
Interest expense, net.................. -- -- 13,137
---------- ----------- -----------
Net Loss............................... $ (506,331) $ (85,179) $ (1,675,326)
========== =========== ===========
Basic Net Loss Per Share............... $ (0.08) $ (0.04) $ (0.41)
========== =========== ===========
Basic Weighted Average
Number of Shares Outstanding........ 6,212,134 1,999,796 4,099,502
========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
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FROM INCEPTION ON JULY 1, 1998 THROUGH SEPTEMBER 30, 1999 (unaudited)
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<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Capital in Excess Development Deferred
Common Stock of Par Value Stage Fees Total
------------------ ----------------- ----------- -------- -----
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C> <C>
Common stock outstanding....... 999,898 $ 1,500 $ (1,500) $ -- $ -- $ --
Contribution of capital
through payment of expenses.... -- -- 85,179 -- -- 85,179
Issuance of common stock in
reverse merger on January 22,
1999 at $0.0015 per share...... 1,700,000 2,550 (2,550) -- -- --
Issuance of common stock for
cash on May 21, 1999 at
$5.26875 per share............. 379,597 569 1,995,413 -- -- 1,995,982
Issuance of common stock for
placement fees on May 21, 1999
at $0.0015 per share........... 26,572 40 (40) -- -- --
Fair market value of options
and warrants granted on
September 7, 1999.............. -- -- 484,192 -- (388,196) 95,996
Two for one stock split,
reincorporation, and change in
par value to $0.01 effective
September 30, 1999............. 3,106,067 57,462 (57,462) -- -- --
Net loss....................... -- -- -- (1,675,326) -- (1,675,326)
----------- -------- ---------- ----------- --------- ---------
Balance at September 30, 1999.. 6,212,134 $ 62,121 $2,503,232 $(1,675,326) $(388,196) $ 501,831
=========== ======== ========== =========== ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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(unaudited)
<TABLE>
<CAPTION>
From Inception From Inception
For the Three on July 1, 1998 on July 1, 1998
Months Ended through through
September 30, September 30, September 30,
1999 1998 1999
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<S> <C> <C> <C>
Cash flows used in operating activities:
Net loss............................................ $ (506,331) $ (85,179) $ (1,675,326)
Adjustments to reconcile net loss
to cash used in operating activities:
Capital contributed through payment of expenses
by stockholder.................................... -- 85,179 85,179
Issuance of stock options and warrants for services. 95,996 -- 95,996
Depreciation and amortization....................... 4,097 -- 8,100
(Increase) decrease in operating assets:
Prepaid expense..................................... 5,770 -- (6,772)
Patent costs........................................ (13,278) (16,417) (56,413)
Security deposit.................................... -- -- (10,863)
Increase (decrease) in operating liabilities:
Accounts payable.................................... (90,012) 16,417 79,721
Accrued expenses.................................... 8,612 -- 11,466
---------- ---------- ------------
Cash flows used in operating activities............. (495,146) -- (1,468,912)
---------- ---------- ------------
Cash flows from investing activity:
Purchase of equipment............................... (4,877) -- (80,402)
---------- ---------- ------------
Cash flows provided by financing activity:
Proceeds from grant................................. 10,573 -- 10,573
Proceeds from issuance of common stock.............. -- -- 1,995,982
---------- ---------- ------------
Cash flows provided by financing activities......... 10,573 -- 2,006,555
---------- ---------- ------------
Net increase (decrease) in cash..................... (489,450) -- 457,241
Cash at beginning of period......................... 946,691 -- --
---------- ---------- ------------
Cash at end of period............................... $ 457,241 -- $ 457,241
========== ========== ============
Supplemental disclosures of cash flow information:
Interest paid....................................... $ -- $ -- $ 22,270
========== ========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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(unaudited)
Note 1 - Basis of Presentation:
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting solely of
those which are of a normal recurring nature, necessary to present fairly its
financial position as of September 30, 1999, the results of its operations and
cash flows for the three months ended September 30, 1999 and for the period from
inception on July 1, 1998 through September 30, 1998 and its operations and cash
flows for the period from inception on July 1, 1998 through September 30, 1999.
Interim results are not necessarily indicative of results for the full
fiscal year.
Senesco, a wholly-owned subsidiary of the Company, was incorporated on
November 24, 1998 and is the successor entity to Senesco, L.L.C., a New Jersey
limited liability company, which was formed on June 25, 1998 but commenced
operations on July 1, 1998. This transfer was accounted for at historical cost
in a manner similar to a pooling of interest with the recording of net assets
acquired at their historical book value.
Senesco is a development stage company that was organized to commercially
exploit technology acquired and developed in connection with the identification
and characterization of genes which control the aging of fruits, flowers,
vegetables and crops.
Note 2 - Loss Per Share:
Basic loss per common share is computed by dividing the loss by the
weighted average number of common shares outstanding during the period. During
the period from inception on July 1, 1998 through September 30, 1999, there were
no dilutive securities outstanding. During the quarter ending September 30,
1999, shares to be issued upon the exercise of options and warrants are not
included in the computation of loss per share as their effect is anti-dilutive.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
Note 3 - Significant Events:
In July 1999, a Joint Venture, to which the Company is a 50% owner, applied
for and received a conditional grant from the Israel - United States Binational
Research and Development Foundation (the "BIRD Foundation"). This agreement will
allow the Joint Venture to receive $340,000 over a four-year period. During the
three months ended September 30, 1999, the Company received $10,573 from the
BIRD Foundation for research and development expenses the Company has incurred
which are associated with the research and development efforts of the Joint
Venture. Grants received from the BIRD Foundation will be paid back only upon
the commercial success of the Joint Venture, as defined.
On September 7, 1999, pursuant to the Company's 1998 Stock Incentive Plan
(the "Plan"), the Company granted options to purchase an aggregate of 407,000
shares of the Company's common stock (the "Options"), on a post-Stock Split
basis, as follows: (i) 200,000 Options to Directors of the Company, with
one-half of the Options vesting on September 7, 1999 and one-half of the Options
vesting on June 30, 2000, 40,000 of such Options were granted at an exercise
price of $3.85, and the remaining 160,000 Options were granted at an exercise
price of $3.50; (ii) 30,000 Options to members of the Company's Scientific
Advisory Board at an exercise price equal to $3.50 per share, vesting upon the
completion of a one year term on January 31, 2000; (iii) 90,000 Options to
Officers of the Company, with 36,666 Options vesting on the date of grant,
20,000 Options vesting on June 30, 2000, 16,667 Options vesting on the first
anniversary from the date of grant, and 16,667 Options vesting on the second
anniversary from the date of grant, 40,000 of such Options were granted at an
exercise price of $3.85, and the remaining 50,000 Options were granted at an
exercise price of $3.50; and (iv) 87,000 Options to the Company's employees and
consultants, at an exercise price equal to $3.50 per share, with 16,334 Options
vesting on the date of grant, 5,000 Options vesting on July 15, 2000, 24,000
Options vesting on the first anniversary from the date of grant, 23,998 Options
vesting on the second anniversary from the date of grant, and 17,668 Options
vesting on the third anniversary from the date of grant.
On September 7, 1999, the Company granted to their patent counsel as
partial consideration for services rendered, options to purchase 10,000 shares
of the Company's Common Stock, on a post-Stock Split adjusted basis, at an
exercise price equal to $3.50 per share, with 3,332 options vesting on the date
of grant, 3,334 options vesting on the first anniversary of the date of grant,
and 3,334 options vesting on the second anniversary of the date of grant. Such
options were granted outside of the Company's Plan.
Christopher Forbes, a director of the Company is Vice-Chairman of Forbes,
Inc., which publishes Forbes Magazine, a leading business publication. Forbes,
Inc. has provided and will continue to provide the Company with advertising,
introductions to strategic alliance partners
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
and, from time to time, use of its office space, entertainment facilities and
various other support services. The value of the past and future services are
approximately $205,000. In recognition of the 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, on a
post-Stock Split adjusted basis, at an exercise price of $3.50 per share, which
was the closing bid on the NASD OTC Bulletin Board on the day of grant. Such
warrant vests as follows: 20,000 on the date of grant and 20,000 on each of the
first, second and third anniversary of the date of grant.
On September 29, 1999, the Board of Directors of the Company approved and
declared a 2-for-1 forward stock split (the " Stock Split"). Stockholders of
record as of the close of business on October 8, 1999 received one (1)
additional share of the Company's Common Stock for every one (1) share of Common
Stock held on that date. The Stock Split became effective on the NASD OTC
Bulletin Board on October 25, 1999. All share and per share amounts provided in
the foregoing financial statements have been restated to reflect the Stock Split
as of September 30, 1999.
On September 30, 1999, the Board of Directors of the Company approved the
reincorporation of the Company solely for the purpose of changing its state of
incorporation from the state of Idaho to the state of Delaware. In order to
facilitate such reincorporation, on September 30, 1999 the Company, an Idaho
Corporation, merged with and into the newly formed Senesco Technologies, Inc., a
Delaware Corporation (the "Reincorporation"). Stockholder approval for the
Reincorporation was obtained at the January 21, 1999 Special Meeting of
Stockholders.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION.
OVERVIEW
History and Organization
The predecessor entity to the registrant, Nava Leisure USA, Inc. (the
registrant, prior to the Merger (defined below), is referred to herein, as
"Nava"), was organized on April 1, 1964 under the laws of the State of Idaho
under the name, "Felton Products, Inc.," having the stated purpose of engaging
in various investment activities, without limitation of its general corporate
powers to engage in any lawful activities. Nava engaged in limited investment
and business development operations and, from the time of its inception, Nava
has undergone several name and business changes. Until the Merger and since
approximately 1988, Nava had no assets, capital or income. Prior to the Merger,
Nava was considered a development stage company and, due to its status as a
"shell" corporation, its principal business purpose was to merge with or
otherwise acquire an operating entity.
On March 27, 1997, Nava voluntarily registered its Common Stock under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), in order to make information concerning itself more readily available to
the public. On October 9, 1998, Nava entered into an Agreement and Plan of
Merger by which, subject to approval of the stockholders of Nava, Nava Leisure
Acquisition Corp., a New Jersey corporation and a wholly-owned subsidiary of
Nava, was to merge with and into Senesco, Inc., a New Jersey corporation
("Senesco"), and the stockholders of Senesco were to receive newly issued,
unregistered and restricted common stock of Nava such that the stockholders of
Senesco would acquire a majority of Nava's outstanding common Stock (the
"Merger"). On January 21, 1999, the stockholders of Nava approved the Merger and
the transactions contemplated thereby, and the Merger became effective on
January 22, 1999. Pursuant to the Merger, Nava changed its name to Senesco
Technologies, Inc. (herein referred to as the "Company"), and Senesco remained a
wholly-owned subsidiary of the Company. Senesco was incorporated on November 24,
1998 under the name, "Senesco of New Jersey, Inc." and is the successor entity
to Senesco, L.L.C., a New Jersey limited liability company which was formed on
June 25, 1998.
On September 29, 1999, the Board of Directors of the Company approved and
declared a 2-for-1 forward stock split (the " Stock Split"). Stockholders of
record as of the close of business on October 8, 1999 received one (1)
additional share of the Company's Common Stock for every one (1) share of Common
Stock held on that date. The Stock Split became effective on the NASD OTC
Bulletin Board on October 25, 1999.
On September 30, 1999, the Board of Directors of the Company approved the
reincorporation of the Company solely for the purpose of changing its state of
incorporation from the state of Idaho to the state of Delaware. In order to
facilitate such reincorporation, the Company, an Idaho Corporation, on September
30, 1999, merged with and into the newly formed Senesco Technologies, Inc., a
Delaware Corporation (the "Reincorporation"). Stockholder approval for the
Reincorporation was obtained at the January 21, 1999 Special Meeting of
Stockholders.
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<PAGE>
Business of the Company
The business of the Company is currently operated through Senesco. The
primary business of the Company is the development and commercial exploitation
of potentially significant technology in connection with the identification and
characterization of a gene (a lipase gene) and other genes which the company
believes control the aging (senescence) of all plant tissues (flowers, fruits
and vegetables).
Senescence in plant tissues is the natural aging of these tissues. Loss of
cellular membrane integrity attributable to lipase gene expression is an early
event during the senescence of all plant tissues that prompts the deterioration
of fresh flowers, fruits and vegetables. This loss of integrity, which is
attributable to the formation of lipid metabolites in membrane bilayers that
"phase-separate," causes the membranes to become "leaky." A decline in cell
function ensues leading to deterioration and eventual death (spoilage) of the
tissue.
Presently, the technology utilized by the industry for controlling
senescence and increasing the shelf life of flowers, fruits and vegetables
relies on reducing ethylene biosynthesis, and hence only has application to a
limited number of plants that are ethylene-sensitive.
The Company's research and development plan focuses on four major groups of
consumer products: fruits, vegetables, flowers and row crops. The Company's
research and development efforts seek to isolate and characterize the lipase
gene in an example from each of these four categories. Once a gene is
characterized, the Company seeks to create a transgenic (i.e., genetically
altered) example of each to show proof of concept in each category. The Company
is presently focusing on tomato, carnation, arabidopsis and banana plants. The
Company has successfully proceeded towards the benchmarks for ultimate gene
isolation and gene characterization, and transformation for these four plants
according to the internal time-table defined in the Company's research and
development plan.
Within the next year, as work is completed on these four plants, the
Company will continue its research and development strategy by expanding the
altered lipase technology into a variety of other commercially viable
agricultural crops. Such plants are expected to include corn, lettuce and
strawberries, among others. The company is also identifying and characterizing
other genes that are involved in the aging (senescence) process. Following
development of altered lipase seedlings and seeds, if successful, the Company's
overall marketing strategy is expected to be flexible in order to allow for
differences in plant reproduction and farming procedures customarily utilized in
different sectors of the broad agricultural and horticultural markets. There can
be no assurance, however, that the Company's research and development efforts
will be successful, or if successful, that the Company will be able to
commercially exploit its technology.
Joint Venture
On May 14, 1999, the Company entered into a joint venture agreement with
Rahan Meristem Ltd., an Israeli company engaged in the worldwide export
marketing of banana germ-plasm (the "Joint Venture"). The Company will
contribute, by way of a limited, exclusive world-wide license to the Joint
Venture, access to its technology, discoveries, inventions, know-how
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<PAGE>
(patentable or otherwise), pertaining to plant genes and their cognate expressed
proteins that are induced during senescence (plant aging) for the purpose of
developing, on a joint basis, genetically altered banana plants which will
result in a "longer shelf life" banana. Rahan Meristem Ltd. will contribute its
technology, inventions and know-how with respect to banana plants. The Joint
Venture is equally owned by each of the parties. There can be no assurance,
however, that the Company's Joint Venture will be successful, or if successful,
that the Company will be able to commercially exploit its technology.
The Joint Venture applied for and received a conditional grant which totals
$340,000 over a four year period from the Israel - U.S. Binational Research and
Development (the "BIRD") Foundation (the "BIRD Grant"). The Joint Venture will
receive a conditional grant in the first year equal to $94,890 which constitutes
50% of the Joint Venture's year one research and development budget. Pursuant to
the BIRD Grant, such grant, along with certain royalty payments, shall only be
repaid to the BIRD Foundation upon the commercial success of the Joint Venture's
technology, which success is measured based upon certain benchmarks and/or
milestones achieved by the Joint Venture. Such benchmarks are reported
periodically to the Foundation by the Joint Venture. Moreover, to date, the
Company has received $10,573 from the BIRD Foundation for research and
development expenses the Company has incurred which are associated with the
research and development efforts of the Joint Venture.
INTELLECTUAL PROPERTY
Research and Development Agreement
The inventor of the Company's technology, John E. Thompson, Ph.D., is the
Dean of Science at the University of Waterloo in Waterloo, Ontario and was
recently appointed as the Executive Vice President of Research and Development
of the Company. Dr. Thompson is also a stockholder of the Company and owns
13.68% of the outstanding shares of the Common Stock of the Company as of
September 30, 1999. Senesco entered into a three-year research and development
agreement, dated as of September 1, 1998, with Dr. Thompson and the University
of Waterloo (the "Research and Development Agreement"). The Research and
Development Agreement provides that the University of Waterloo shall perform
research and development under the direction of Senesco, and Senesco shall pay
for the cost of such work and make certain payments totaling $750,000 Canadian
(as specified therein)
The Company's future research and development program focuses on the
discovery and development of new gene technologies which aim to extend shelf
life and to confer other positive traits on fruits, flowers, vegetables and row
crops. Over the next twelve months, the Company plans the following research and
development initiatives: (A) the isolation of new genes in the arabidopsis plant
and tomato plant at the University of Waterloo; (B) the isolation of new genes
in the carnation plant pursuant to an agreement with Dr. Sasha Vainstein of
Hebrew University; and (C) the isolation of new genes in the banana plant
through the Joint Venture. Transgenic plants that possess new beneficial traits
such as drought and disease protection will then be developed in each of these
varieties. The Company also plans to expand its research and development
initiative beyond these four plants into a variety of other crops.
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<PAGE>
Patent Applications
Dr. Thompson and his colleagues, Yuwen Hong and Katalin Hudak, filed a
patent application on June 26, 1998 (the "Original Patent Application") to
protect their invention, which is directed to methods for controlling senescence
in plants. By assignment dated June 25, 1998 and recorded with the United States
Patent and Trademark Office (the "PTO") on June 26, 1998, Dr. Thompson and
Messrs. Hong and Hudak assigned all of their rights in and to the Original
Patent Application and any other applications filed in the United States or
elsewhere with respect to the invention and/or improvements thereto to Senesco,
L.L.C. The Company succeeded to the assignment and ownership of the Original
Patent Application. Dr. Thompson, and Messrs. Hong and Hudak filed an amendment
to the Original Patent Application on February 16, 1999 (the "Amended Patent
Application" and together with the Original Patent Application, the "First
Patent Application") titled "DNA Encoding A Plant Lipase, Transgenic Plants and
a Method for Controlling Senescence in Plants." The Amended Patent Application
serves as a continuation of the Original Patent Application. Concurrent with the
filing of the Amended Patent Application with the PTO and as in the case of the
Original Patent Application, Dr. Thompson, Messrs. Hong and Hudak assigned all
of their rights in and to the Amended Patent Application and any other
applications filed in the United States or elsewhere with respect to such
invention and/or improvements thereto to Senesco. Dr. Thompson and Messrs. Hong
and Hudak have received shares of restricted common stock of the Company in
consideration for the assignment of the First Patent Application. The
inventions, which were the subject of the First Patent Application, include a
method for controlling senescence of plants, a vector containing a cDNA whose
expression regulates senescence, and a transformed microorganism expressing the
lipase of cDNA. Management believes that the inventions provide a means for
delaying deterioration and spoilage, which could greatly increase the shelf-life
of fruits, vegetables, and flowers by silencing or substantially repressing the
expression of the lipase gene induced coincident with the onset of senescence.
The Company filed a second patent application (the "Second Patent
Application") on July 6, 1999, titled "DNA Encoding A Plant Deoxyhypusine
Synthase, Transgenic Plants and A Method for Controlling Programmed Cell Death
in Plants." The inventors named on the patent are Dr. John E. Thompson,
Tzann-Wei Wang and Dongen Lily Lu. Concurrent with the filing of the Second
Patent Application with the PTO and as in the case of the First Patent
Application, Dr. Thompson, Messrs. Wang and Lu assigned all of their rights in
and to the Second Patent Application and any other applications filed in the
United States or elsewhere with respect to such invention and/or improvements
thereto to Senesco. Dr. Thompson and Messrs. Wang and Lu have received options
to purchase common stock of the Company in consideration for the assignments of
the Second Patent Application. The inventions include a method for the genetic
modification of plants to control the onset of either age-related or
stress-induced senescence, an isolated DNA molecule encoding a senescence
induced gene, and an isolated protein encoded by the DNA molecule. There can be
no assurance that patent protection will be granted with respect to the First
Patent Application or the Second Patent Application or that, if granted, the
validity of such patents will not be challenged. Furthermore, there can be no
assurance that claims of infringement upon the proprietary rights of others will
not be made, or if made, could be successfully defended against.
-12-
<PAGE>
Competition
The Company's competitors in the field of delaying plant senescence through
genetic modification are companies that develop and produce transgenic plants.
Such companies include: Agritope Inc.; Dekalb Genetics; ArgEvo; DNAP Holding
Corporation; and Garst Seed Company, among others. The Company believes that its
proprietary technology is unique and, therefore, places the Company at a
competitive advantage in the industry. However, there can be no assurance that
its competitors will not develop a similar product with superior properties or
at greater cost-effectiveness than the Company.
Government Regulation
At present, the U.S. federal government regulation of biotechnology is
divided among three agencies. The U.S. Department of Agriculture (the "USDA")
regulates the import and interstate movement of specific types of genetic
engineering that may be used in the creation of transgenic plants. The
Environmental Protection Agency (the "EPA") regulates activity related to the
invention of plant pesticides and herbicides, which may include certain kinds of
transgenic plants. The Food and Drug Administration (the "FDA") regulates foods
derived from new plant varieties. The FDA requires that transgenic plants meet
the same standards for safety that are required for all other plants and foods
in general. Except in the case of additives that significantly alter a food's
structure, the FDA does not require any additional standards or specific
approval for genetically engineered foods but expects transgenic plant
developers to consult the FDA before introducing a new food into the market
place.
The Company believes that its current activities, which to date have been
confined to research and development efforts, do not require licensing or
approval by any governmental regulatory agency. The Company may be required,
however, to obtain such licensing or approval from the governmental regulatory
agencies described above prior to the commercialization of its genetically
engineered plants. There can be no assurance that such licensing or approval by
any governmental regulatory agency will be obtained in a timely manner, if at
all. In addition, government regulations are subject to change and, in such
event, there can be no assurance that the Company may not be subject to
additional regulations or require such licensing or approval in the future.
Employees
The Company currently has six employees, four of whom are currently
executive officers and are involved in the management of the Company.
The officers are assisted by a Scientific Advisory Board made up of
prominent experts in the field of transgenic plants. A. Carl Leopold, Ph.D.
serves 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
-13-
<PAGE>
National Science Foundation and the National Aeronautics and Space
Administration. Alan B. Bennett, Ph.D., and William R. Woodson, Ph.D. are the
other members of the Scientific Advisory Board. 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. 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 is a world-recognized expert in horticultural science and serves on
numerous international and national committees and professional societies.
In addition to his service on the Scientific Advisory Board, the Company
utilizes Dr. Bennett as a consultant experienced in the transgenic plant
industry.
Furthermore, pursuant to the Research and Development Agreement, the
majority of the Company's research and development activities are conducted at
the University of Waterloo under the supervision of Dr. Thompson. The Company
utilizes the University's substantial research staff including graduate and
post-graduate researchers.
The Company anticipates hiring additional employees in the next year to
meet needs created by possible expansion of its marketing activities and product
development.
Safe Harbor Statement
Certain statements included in this Form 10-QSB, including, without
limitation, statements regarding the anticipated growth in the markets for the
Company's services, the continued development of the lipase technology, the
approval of the Company's Patent Applications, the possibility of governmental
approval in order to sell or offer for sale to the general public a genetically
engineered plant or plant product, the successful implementation of the Joint
Venture with Rahan Meristem Ltd., the success of the Research and Development
Agreement, statements relating to the Company's Patent Applications, the
anticipated longer term growth of the Company's business, and the timing of the
projects and trends in future operating performance, are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. The factors discussed herein and others expressed from time to
time in the Company's filings with the Securities and Exchange Commission could
cause actual results and developments to be materially different from those
expressed in or implied by such statements.
-14-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Overview
As of September 30, 1999, the Company's cash balance was $457,241, and the
Company's working capital was $372,826. As of September 30, 1999, the Company
had a tax loss carry-forward of $1,675,326 to off-set future taxable income.
There can be no assurance, however, that the Company will be able to take
advantage of any or all of such tax loss carry-forward, if at all, in future
fiscal years.
Financing Needs
To date, the Company has not generated any revenues. The Company has not
been profitable since inception, may incur additional operating losses in the
future, and may require additional financing to continue the development and
commercialization of its technology. While the Company does not expect to
generate significant revenues from the sale of products in the near future, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees, revenues from contract
research, or other related revenue.
The Company expects its capital requirements to increase significantly over
the next several years as it commences new research and development efforts,
undertakes new product developments, increases sales and administration
infrastructure and embarks on developing in-house business capabilities and
facilities. The Company's future liquidity and capital funding requirements will
depend on numerous factors, including, but not limited to, the levels and costs
of the Company's research and development initiatives and the cost and timing of
the expansion of the Company's sales and marketing efforts.
The Company anticipates that it will be able to fund operations over the
next twelve (12) months. To enable the Company to fund its research and
development and commercialization efforts, including the hiring of additional
employees, the Company, on May 21, 1999, consummated a private placement of
759,194 shares of its Common Stock, on a post-Stock Split adjusted basis, at
$2.63 per share, on a post-Stock Split adjusted basis, for an aggregate gross
proceeds of $2,000,000 (the "Private Placement").
The Company engaged Lionheart Services, Inc. as its placement agent (the
"Placement Agent"), pursuant to the Placement Agency Agreement dated as of April
30, 1999 (the "Placement Agency Agreement"). The Placement Agent elected to be
paid in stock, and as a result, the Company issued 53,144 shares of restricted
Common Stock, on a post-Stock Split adjusted basis, of the Company to the
Placement Agent in consideration of such commissions. In connection with the
Private Placement, the Company also executed a Common Stock Purchase Agreement
with each purchaser of Common Stock, dated as of May 11, 1999 (the "Stock
Purchase Agreement"). Pursuant to the Stock Purchase Agreement, the purchase
price per share of Common Stock was equal to $2.63, on a post-Stock Split
adjusted basis. In addition, the Company entered into a Registration Rights
Agreement with each purchaser dated as of May 11, 1999 (the "Registration Rights
Agreement"). The Registration Rights Agreement provides for,
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<PAGE>
among other things, a demand registration right beginning after January 22,
2000, as well as piggy-back registration rights for a three-year period from the
Closing Date.
Furthermore, certain directors of the Company participated in the Private
Placement. Specifically, such directors of the Company purchased, in the
aggregate, 341,636 shares of restricted Common Stock, on a post-Stock Split
adjusted basis, on the same terms and conditions as the other purchasers
thereunder.
The Company anticipates receiving additional funds from the BIRD Grant to
assist in funding its Joint Venture. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Year 2000 Compliance
Historically, certain computer programs have been written using two digits
rather than four to define the applicable year, which could result in the
computer recognizing a date using "00" as the year 1900 rather than the year
2000. This, in turn, could result in major system failures or miscalculations,
and is generally referred to as the "Year 2000 Problem." The Company has
assessed its state of readiness with respect to the Year 2000 Problem. The
Company's management has reviewed and tested the Company's internal business
systems for Year 2000 compliance. The Company believes that, based on results of
such review and testing, the Company's internal business systems, including its
computer systems, are Year 2000 compliant. The Company has not and does not
anticipate any material future expenditures relating to the Year 2000 compliance
of its internal systems. There can be no assurance, however, that the Year 2000
Problem will not adversely affect the Company's business, financial condition,
results of operations or cash flows.
In addition, the Company receives data derived from the computer systems of
various sources, which data or software may or may not be Year 2000 compliant.
Although the Company is currently taking steps to address the impact, if any, of
the Year 2000 Problem relating to the data received from its clients, failure of
such computer systems to properly address the Year 2000 Problem may adversely
affect the Company's business, financial condition, results of operations or
cash flows.
The Year 2000 disclosures discussed above are based on numerous
expectations which are subject to uncertainties. Certain risk factors which
could have a material adverse effect on the Company's results of operations and
financial condition include but are not limited to: failure to identify critical
systems which will experience failures, errors in the remediation efforts,
inability to obtain new replacements for non-compliant systems or equipment,
general economic downturn relating to Year 2000 failures in the U.S. and in
other countries, failures in global banking systems and capital markets, or
extended failures by public and private utility companies or common carriers
supplying services to the Company.
-16-
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 and 1998
- ----------------------------------------------
The Company is a development stage company, and revenues for each of the
quarters ended September 30, 1999 ("First Quarter of Fiscal 2000") and 1998
("First Quarter of Fiscal 1999") were zero. Operating expenses in each of the
First Quarter of Fiscal 2000 and Fiscal 1999 were comprised of general and
administrative expenses, sales and marketing expenses and research and
development expenses. Operating expenses for each of the First Quarter of Fiscal
2000 and Fiscal 1999 were $506,331 and $85,179, respectively, an increase of
$421,152 or 494%.
General and administrative expenses in each of the First Quarter of Fiscal
2000 and Fiscal 1999 consisted primarily of professional salaries and benefits,
depreciation and amortization, professional and consulting services, office rent
and corporate insurance. General and administrative expenses were $387,131 in
the First Quarter of Fiscal 2000 and $85,179 in the First Quarter of Fiscal
1999. The increase during the First Quarter of Fiscal 2000 of $301,952 or 354%,
from the corresponding Fiscal 1999 quarter, resulted primarily from the
significant increase in operating activities.
Sales and marketing expenses in each of the First Quarter of Fiscal 2000
and Fiscal 1999 were zero.
Research and development expenses in each of the First Quarter of Fiscal
2000 and Fiscal 1999 consisted of professional salaries and benefits, fees
associated with Research and Development Agreement and allocated overhead
charged to research and development projects. Research and development expenses
during each of the First Quarter of Fiscal 2000 and Fiscal 1999 were $119,200
and $0, respectively. The increase during the First Quarter of Fiscal 2000 of
$119,200 from the corresponding Fiscal 1999 quarter, resulted primarily from the
significant increase in operating activities.
Period From Inception on July 1, 1998 through September 30, 1999
- ----------------------------------------------------------------
The Company is a development stage company. From inception through
September 30, 1999, the Company had no revenues.
The Company has incurred losses each year since inception and has an
accumulated deficit of $1,675,326 at September 30, 1999. The Company expects to
continue to incur losses over, approximately, the next two to three years from
expenditures on research, product development, marketing and administrative
activities.
The Company does not expect to generate significant revenues from product
sales for, approximately, the next two to three years during which the Company
will engage in significant research and development efforts. However, the
Company may enter into licensing or other agreements with marketing and
distribution partners that may result in license fees, revenues from contract
research, and other related revenues. No assurance can be given, however, that
such research and development efforts will result in any commercially viable
products, or that any licensing or other agreements with marketing and
distribution partners will be entered into and result in revenues. Successful
future operations will depend on the Company's ability to transform its research
and development activities into commercializable products.
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<PAGE>
PART II. OTHER INFORMATION.
---------------------------
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On September 7, 1999, pursuant to the Company's 1998 Stock Incentive Plan
(the "Plan"), the Company granted options to purchase an aggregate of 407,000
shares of the Company's common stock (the "Options"), on a post-Stock Split
basis, as follows: (i) 200,000 Options to Directors of the Company, with
one-half of the Options vesting on September 7, 1999 and one-half of the Options
vesting on June 30, 2000, 40,000 of such Options were granted at an exercise
price of $3.85, and the remaining 160,000 Options were granted at an exercise
price of $3.50; (ii) 30,000 Options to members of the Company's Scientific
Advisory Board at an exercise price equal to $3.50 per share, vesting upon the
completion of a one year term on January 31, 2000; (iii) 90,000 Options to
Officers of the Company, with 36,666 Options vesting on the date of grant,
20,000 Options vesting on June 30, 2000, 16,667 Options vesting on the first
anniversary from the date of grant, and 16,667 Options vesting on the second
anniversary from the date of grant, 40,000 of such Options were granted at an
exercise price of $3.85, and the remaining 50,000 Options were granted at an
exercise price of $3.50; and (iv) 87,000 Options to the Company's employees and
consultants, at an exercise price equal to $3.50 per share, with 16,334 Options
vesting on the date of grant, 5,000 Options vesting on July 15, 2000, 24,000
Options vesting on the first anniversary from the date of grant, 23,998 Options
vesting on the second anniversary from the date of grant, and 17,668 Options
vesting on the third anniversary from the date of grant.
On September 7, 1999, the Company granted to their patent counsel as
partial consideration for services rendered, options to purchase 10,000 shares
of the Company's Common Stock, on a post-Stock Split adjusted basis, at an
exercise price equal to $3.50 per share, with 3,332 options vesting on the date
of grant, 3,334 options vesting on the first anniversary of the date of grant,
and 3,334 options vesting on the second anniversary of the date of grant. Such
options were granted outside of the Company's Plan.
Christopher Forbes, a director of the Company is Vice-Chairman of Forbes,
Inc., which publishes Forbes Magazine, a leading business publication. 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. The
value of the past and future services are approximately $205,000. In recognition
of the 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, on a post-Stock Split adjusted basis, at an exercise
price of $3.50 per share, which was the closing bid on the NASD OTC Bulletin
Board on the day of grant. Such warrant vests as follows: 20,000 on the date of
grant and 20,000 on each of the first, second and third anniversary of the date
of grant.
No underwriter was employed by the Company in connection with the issuance
of the securities described above. The Company believes that the issuance of the
foregoing securities was exempt from registration under either (i) Section 4(2)
of the Securities Act of 1933, as amended (the "Act"), as transactions not
involving a public offering and such securities having been acquired for
investment and not with a view to distribution, or (ii) Rule 701 under the Act
as transactions made pursuant to a written compensatory benefit plan or pursuant
to a written contract relating to compensation. All recipients had adequate
access to information about the Company.
-18-
<PAGE>
ITEM 5. OTHER INFORMATION.
Forward Stock Split
On September 29, 1999, the Board of Directors of the Company approved and
declared a 2-for-1 forward stock split (the " Stock Split"). Stockholders of
record as of the close of business on October 8, 1999 received one (1)
additional share of the Company's Common Stock for every one (1) share of Common
Stock held on that date. The Stock Split became effective on the NASD OTC
Bulletin Board on October 25, 1999.
Reincorporation
On September 30, 1999, the Board of Directors of the Company approved the
reincorporation of the Company solely for the purpose of changing its state of
incorporation from the state of Idaho to the state of Delaware. In order to
facilitate such reincorporation, on September 30, 1999, the Company, an Idaho
Corporation, merged with and into the newly formed Senesco Technologies, Inc., a
Delaware Corporation (the "Reincorporation"). Stockholder approval for the
Reincorporation was obtained at the January 21, 1999 Special Meeting of
Stockholders.
-19-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
2.1 Agreement and Plan of Merger dated as of September 30, 1999 made
by and between Senesco Technologies, Inc., an Idaho corporation,
and Senesco Technologies, Inc., a Delaware Corporation.
3.1 Certificate of Incorporation of the Company as filed with the
state of Delaware on September 30, 1999.
3.2 Bylaws of the Company as adopted on September 30, 1999.
4.1 Form of Warrant with Forbes, Inc.
4.2 Form of Option Agreement with Kenyon & Kenyon
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SENESCO TECHNOLOGIES, INC.
DATE: November 15, 1999 By: /s/ Phillip O. Escaravage
-------------------------------------
Phillip O. Escaravage, Chairman, Chief
Executive Officer and President
(Principal Executive Officer)
DATE: November 15, 1999 By: /s/ Christian P. R. Ahrens
-------------------------------------
Christian P. R. Ahrens, Secretary
(Principal Financial and Accounting
Officer)
-21-
AGREEMENT AND PLAN OF MERGER
OF
SENESCO TECNHOLOGIES, INC.
(an Idaho corporation)
AND
SENESCO TECHNOLOGIES, INC.
(a Delaware corporation)
AGREEMENT AND PLAN OF MERGER (this "Plan of Merger") dated the 30th day of
September 1999 between Senesco Technologies, Inc., a Delaware corporation
("STI-Delaware"), and Senesco Technologies, Inc., an Idaho corporation
("STI-Idaho"), and approved and adopted by STI-Delaware by resolution of its
Board of Directors on September 30, 1999, and approved and adopted by STI-Idaho
by resolution of its Board of Directors on September 30, 1999 (the "Merger").
WITNESSETH:
WHEREAS, STI-Delaware is a corporation organized and existing under the
laws of the State of Delaware and was incorporated on September 29, 1999; and
WHEREAS, STI-Idaho is a corporation organized and existing under the laws
of the State of Idaho and was incorporated on April 1, 1964; and
WHEREAS, Section 30-1-1107 of the Idaho Business Corporation Act permits a
merger of a business corporation of the State of Idaho with and into a business
corporation of another jurisdiction; and
<PAGE>
WHEREAS, Section 252 of the General Corporation Law of the State of
Delaware permits the merger of a business corporation of another jurisdiction
with and into a business corporation of the State of Delaware; and
WHEREAS, STI-Idaho and STI-Delaware and the respective Boards of Directors
thereof declare it advisable and to the advantage, welfare, and best interest of
said corporations and their respective stockholders to merge STI-Idaho with and
into STI-Delaware pursuant to the provisions of Section 30-1-1107 of the Idaho
Business Corporation Act and pursuant to the provisions of Section 252 of the
General Corporation Law of the State of Delaware upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and of the mutual
agreement of the parties hereto, being thereunto duly entered into by STI-Idaho
and approved by a resolution adopted by its Board of Directors and being
thereunto duly entered into by STI-Delaware and approved by a resolution adopted
by its Board of Directors, and intending to be legally bound, this Plan of
Merger and the terms and conditions hereof and the mode of carrying the same
into effect, together with any provisions required or permitted to be set forth
herein, are hereby determined and agreed upon as hereinafter in this Plan of
Merger set forth.
1. STI-Idaho and STI-Delaware shall pursuant to the provisions of the
Idaho Business Corporation Act and the provisions of the General Corporation Law
of the State of Delaware, be merged with and into a single corporation, to wit,
STI-Delaware, which shall be the Surviving Corporation from and after the
effective time of the merger, and which is sometimes hereinafter referred to as
the "Surviving Corporation", and which shall continue to exist as said Surviving
Corporation under its present name pursuant to the provisions of the General
2
<PAGE>
Corporation Law of the State of Delaware. The separate existence of STI-Idaho,
which is sometimes hereinafter referred to as the "Terminating Corporation",
shall cease at said effective time in accordance with the provisions of the
Idaho Business Corporation Act.
2. The Certificate of Incorporation, as amended and restated, of
STI-Delaware, as now in force and effect, shall continue to be the Certificate
of Incorporation of said Surviving Corporation until further amended and changed
pursuant to the provisions of the General Corporation Law of the State of
Delaware.
3. The present By-Laws of STI-Delaware will be the By-Laws of said
Surviving Corporation and will continue in full force and effect until changed,
altered or amended as therein provided and in the manner prescribed by the
provisions of the General Corporation Law of the State of Delaware.
4. The directors and officers in office of STI-Delaware at the effective
time of the merger shall be the members of the first Board of Directors and the
first officers of the Surviving Corporation, all of whom shall hold their
directorships and offices until the election and qualification of their
respective successors or until their tenure is otherwise terminated in
accordance with the By-Laws of the Surviving Corporation.
5. Upon the effective date of the Merger, the manner and basis of
converting the shares of STI-Idaho into shares of Surviving Corporation shall be
as follows: each issued share of the Terminating Corporation immediately prior
to the effective time and date of the merger shall, at the effective time and
date of the Merger, be converted into one share of the Surviving Corporation.
3
<PAGE>
6. This Plan of Merger herein made and approved shall be submitted to the
shareholders of the Terminating Corporation for their approval in the manner
prescribed by the provisions of the Idaho Business Corporation Act, and the
Merger of the Terminating Corporation with and into the Surviving Corporation
shall be authorized in the manner prescribed by the General Corporation Law of
the State of Delaware.
7. Neither of the Constituent Entities shall, prior to the effective date
of the Merger, engage in any activity or transaction, other than in the ordinary
course of business, except as contemplated by this Plan of Merger.
8. The Board of Directors of STI-Idaho or the Board of Directors of
STI-Delaware may, in its respective discretion, abandon this Merger without
further action or approval by the members or shareholders of the Constituent
Entities, at any time before the effective date of the Merger.
9. The Merger herein provided for shall be effective upon filing of a
certificate of merger with the Secretary of State of the State of Delaware.
10. This Plan of Merger shall be governed by and construed in accordance
with the laws of the State of Delaware.
11. This Plan of Merger may be executed in any number of counterparts, and
all such counterparts and copies shall be and constitute an original instrument.
**********
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be duly executed, acknowledged and certified as of the date first
above written.
SENESCO TECHNOLOGIES, INC.
(a Delaware corporation)
By: /s/ Phillip O. Escaravage
------------------------------------
Name: Phillip O. Escaravage
Title: Chairman and Chief Executive
Officer
SENESCO TECHNOLOGIES, INC.
(an Idaho corporation)
By: /s/ Phillip O. Escaravage
------------------------------------
Name: Phillip O. Escaravage
Title: Chairman and Chief
Operating Officer
5
CERTIFICATE OF INCORPORATION
OF
SENESCO TECHNOLOGIES, INC.
The undersigned, for purposes of forming a corporation pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
FIRST: The name of the Corporation is Senesco Technologies, Inc.
-----
SECOND: The Corporation's registered office in the State of Delaware is
------
located at Corporation Service Company, 1013 Centre Road, City of Wilmington,
County of New Castle, Delaware 19805. The name of its registered agent at such
address is Corporation Service Company.
THIRD: The purpose for which the Corporation is organized is to engage in
-----
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware and to possess and exercise all
of the powers and privileges granted by such law and any other law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
------
Corporation shall have authority to issue is Twenty Five Million (25,000,000)
shares. The Corporation is authorized to issue two classes of stock designated
"Common Stock" and "Preferred Stock," respectively. The total number of shares
of Common Stock authorized to be issued by the Corporation is Twenty Million
(20,000,000), each such share of Common Stock having a $.01 par value. The total
number of shares of Preferred Stock authorized to be issued by the Corporation
is Five Million (5,000,000), each such share of Preferred Stock having $.01 par
value.
The Board of Directors is expressly authorized to provide for the issuance
of all or any shares of the Preferred Stock in one or more classes or series,
and to fix for each such class or series such voting powers, full or limited, or
no voting powers, and such distinctive designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of such class or series and as may be permitted by the General
Corporation Law of the State of Delaware, including, without limitation, the
authority to provide that any such class or series may be (i) subject to
redemption at such time or times and at such price or prices; (ii) entitled to
receive dividends (which may be cumulative or non-cumulative) at such rates, on
such conditions, and at such times, and payable in preference to, or in such
relation to, the dividends payable on any other class or classes or any other
series; (iii) entitled to such rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation; or (iv) convertible into, or
exchangeable for, shares of any other class or classes of stock, or of any other
series of the same or any other class or classes of stock, of the Corporation at
such price or prices or at such rates of exchange and with such adjustments; all
as may be stated in such resolution or resolutions.
1
<PAGE>
FIFTH: The name and mailing address of the sole incorporator is Emilio
-----
Ragosa, Esq., c/o Buchanan Ingersoll Professional Corporation, 500 College Road
East, Princeton, New Jersey 08540.
SIXTH: The number of directors constituting the Corporation's Board of
-----
Directors shall be determined in accordance with the Bylaws of the corporation.
SEVENTH: The Corporation is to have perpetual existence.
-------
EIGHTH: In furtherance and not limitation of the powers conferred by law,
------
subject to any limitations contained elsewhere in this Certificate of
Incorporation, the Bylaws of the Corporation may be adopted, amended or repealed
by a majority of the board of directors of the Corporation, and any Bylaws
adopted by the board of directors of the Corporation may be amended or repealed
by the stockholders entitled to vote thereon. Election of directors need not be
by written ballot.
NINTH: A director of the Corporation shall not be personally liable either
-----
to the Corporation or to any stockholder for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, or (ii) for acts or omissions
which are not in good faith or which involve intentional misconduct or knowing
violation of the law, or (iii) for any matter in respect of which such director
shall be liable under Section 174 of Title 8 of the General Corporation Law of
the State of Delaware or any amendment thereto or successor provision thereto,
or (iv) for any transaction from which the director shall have derived an
improper personal benefit. Neither amendment nor repeal of this paragraph nor
the adoption of any provision of the Certificate of Incorporation inconsistent
with this paragraph shall eliminate or reduce the effect of this paragraph in
respect of any matter occurring, or any cause of action, suit or claim that, but
for this paragraph of this Article, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
TENTH: The Corporation shall indemnify its directors and officers to the
-----
fullest extent authorized or permitted by law, as now or hereafter in effect,
and such right to indemnification shall continue as to a person who has ceased
to be a director or officer of the Corporation and shall inure to the benefit of
his or her heirs, executors and personal and legal representative; provided,
however, that, except for proceedings to enforce rights to indemnification, the
Corporation shall not be obligated to indemnify any director or officer or his
or her heirs, executors or personal or legal representatives) in connection with
a proceeding (or part thereof) initiated by such person unless such proceeding
(or part thereof) was authorized or consented to by the Board of Directors. The
right to indemnification conferred by this Article TENTH shall include the right
to be paid by the Corporation the expenses incurred in defending or otherwise
participating in any proceeding in advance of its final disposition.
2
<PAGE>
The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article TENTH to directors and officers of the Corporation.
The rights to indemnification and to the advance of expenses conferred in
this Article TENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under this Certificate of Incorporation, the
By-Laws of the Corporation, any statute, agreement, vote of stockholders or
disinterested directors or otherwise.
Any repeal or modification of this Article TENTH by the stockholders of the
Corporation shall not adversely affect any rights to indemnification and to the
advancement of expenses of a director or officer of the Corporation existing at
the time of such repeal or modification with respect to any acts or omissions
occurring prior to such repeal or modification.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
--------
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
TWELFTH: The Corporation reserves the right to amend, alter, change or
-------
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
***************
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<PAGE>
IN WITNESS WHEREOF, the undersigned, being the sole incorporator
hereinabove named, does hereby execute this Certificate of Incorporation this
29th day of September, 1999.
/s/ Emilio Ragosa
----------------------------
Emilio Ragosa, Esq.
Sole Incorporator
BYLAWS
OF
SENESCO TECHNOLOGIES, INC.
(a Delaware corporation)
ARTICLE I
Stockholders
------------
SECTION 1. Fixing Date for Determination of Stockholders of Record. In
-----------------------------------------------------------
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
days prior to such other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action of the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
<PAGE>
SECTION 2. Annual Meetings. The annual meeting of stockholders for the
----------------
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year at such date and time,
within or without the State of Delaware, as the Board of Directors shall
determine.
SECTION 3. Special Meetings. Special meetings of stockholders for the
-----------------
transaction of such business as may properly come before the meeting may be
called only by the Chief Executive Officer, President, Chairman of the Board of
Directors (if any) or by order of a majority of the Board of Directors, and
shall be held at such date and time, within or without the State of Delaware, as
may be specified by such order. Whenever the directors shall fail to fix such
place, the meeting shall be held at the principal executive office of the
Corporation.
SECTION 4. Notice of Meetings. Written notice of all meetings of the
-------------------
stockholders, stating the place, date and hour of the meeting and the place
within the city or other municipality or community at which the list of
stockholders may be examined, shall be mailed or delivered to each stockholder
not less than 10 nor more than 60 days prior to the meeting. Notice of any
special meeting shall state in general terms the purpose or purposes for which
the meeting is to be held and the business transacted at any such meeting shall
be limited to matters relating to the purpose or purposes set forth in the
notice of meeting.
SECTION 5. Stockholder Lists. The officer who has charge of the stock
------------------
ledger of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 6. Quorum. Except as otherwise provided by law or the Corporation's
------
Certificate of Incorporation, a quorum for the transaction of business at any
meeting of stockholders shall consist of the holders of record of a majority of
the issued and outstanding shares of the capital stock of the Corporation
entitled to vote at the meeting, present in person or by proxy. At all meetings
of the stockholders at which a quorum is present, all matters, except as
otherwise provided by law or the Certificate of Incorporation, shall be decided
by the vote of the holders of a majority of the shares entitled to vote thereat
present in person or by proxy. If there be no such quorum, the holders of a
majority of such shares so present or represented may adjourn the meeting from
time to time, without further notice, until a quorum shall have been obtained.
When a quorum is once present it is not broken by the subsequent withdrawal of
any stockholder.
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<PAGE>
SECTION 7. Organization. Meetings of stockholders shall be presided over
------------
by the Chairman, if any, or if none or in the Chairman's absence, the
Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the Chief
Executive Officer or President, or, if none of the foregoing is present, by a
chairman to be chosen by the stockholders entitled to vote who are present in
person or by proxy at the meeting. The Secretary of the Corporation, or in the
Secretary's absence an Assistant Secretary, shall act as secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary is present, the
presiding officer of the meeting shall appoint any person present to act as
secretary of the meeting.
SECTION 8. Voting; Proxies; Required Vote. (a) At each meeting of
---------------------------------
stockholders, every stockholder shall be entitled to vote in person or by proxy
appointed by instrument in writing, subscribed by such stockholder or by such
stockholder's duly authorized attorney-in-fact (but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a
longer period), and, unless the Certificate of Incorporation provides otherwise,
shall have one vote for each share of stock entitled to vote registered in the
name of such stockholder on the books of the Corporation on the applicable
record date fixed pursuant to these Bylaws. At all elections of directors the
voting may, but need not be by ballot and a plurality of the votes cast there
shall elect. Except as otherwise required by law or the Certificate of
Incorporation, any other action shall be authorized by a majority of the votes
cast.
(b) Any action required or permitted to be taken at any meeting of
stockholders may, except as otherwise required by law or the Certificate of
Incorporation, be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of record of the issued and outstanding capital stock of
the Corporation having a majority of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, and the writing or writings are filed with the permanent
records of the Corporation. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
(c) Where a separate vote by a class or classes, present in person or
represented by proxy, shall constitute a quorum entitled to vote on a matter,
the affirmative vote of the majority of shares of such class or classes present
in person or represented by proxy at the meeting shall be the act of such class,
unless otherwise provided in the Corporation's Certificate of Incorporation.
SECTION 9. Inspectors. Unless otherwise required by law, the Board of
----------
Directors, in advance of any meeting, may, but need not, appoint one or more
inspectors of election to act at the meeting or any adjournment thereof. If an
inspector or inspectors are not so appointed, the person presiding at the
meeting may, but need not, appoint one or more inspectors. In case any person
who may be appointed as an inspector fails to appear or act, the vacancy may be
filled by appointment made by the directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of
3
<PAGE>
stock represented at the meeting, the existence of a quorum, and the validity
and effect of proxies, and shall receive votes, ballot or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by such inspector or inspectors and
execute a certificate of any fact found by such inspector or inspectors.
ARTICLE II
Board of Directors
------------------
SECTION 1. General Powers. The business, property and affairs of the
---------------
Corporation shall be managed by, or under the direction of, the Board of
Directors.
SECTION 2. Qualification; Classes; Number; Term; Remuneration. (a) Each
-----------------------------------------------------
director shall be at least 18 years of age. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The Board of Directors shall be divided into Class A and Class B
directors (as defined below). The number of directors constituting the entire
Board, or any class of directors, shall be such number as may be fixed from time
to time by action of the stockholders or Board of Directors, but in no event
less than one, one of whom may be selected by the Board of Directors to be its
Chairman. The use of the phrase "entire Board" herein refers to the total number
of directors which the Corporation would have if there were no vacancies.
(b) Class A Directors who are elected at an annual meeting of stockholders,
or who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal.
(c) Class B Directors who are elected at an annual meeting of stockholders
shall hold office until the annual meeting following the next annual meeting and
until their successors are elected and qualified or until their earlier
resignation or removal. Class B Directors who are elected in the interim to fill
vacancies and newly created directorships, shall hold office until the next
annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal.
(d) Directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
4
<PAGE>
SECTION 3. Quorum and Manner of Voting. Except as otherwise provided by
---------------------------
law, a majority of the entire Board shall constitute a quorum. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting
from time to time to another time and place without notice. The vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 4. Places of Meetings. Meetings of the Board of Directors may be
------------------
held at any place within the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors, or as may be specified in the
notice of meeting.
SECTION 5. Annual Meeting. Following the annual meeting of stockholders,
---------------
the newly elected Board of Directors shall meet for the purpose of the election
of officers and the transaction of such other business as may properly come
before the meeting. Such meeting may be held without notice immediately after
the annual meeting of stockholders at the same place at which such stockholders'
meeting is held.
SECTION 6. Regular Meetings. Regular meetings of the Board of Directors
-----------------
shall be held at such times and places as the Board of Directors shall from time
to time by resolution determine. Notice need not be given of regular meetings of
the Board of Directors held at times and places fixed by resolution of the Board
of Directors. Where appropriate communication facilities are reasonably
available, any or all Directors shall have the right to participate in all or
any part of a meeting of the Board of Directors, or any Committee thereof, by
means of conference telephone or any means of communication by which all persons
participating in the meeting are able to hear each other.
SECTION 7. Special Meetings. Special meetings of the Board of Directors
-----------------
shall be held whenever called by the Chairman of the Board, Chief Executive
Officer, President, Vice-Chairman or by a majority of the directors then in
office.
SECTION 8. Notice of Special Meetings. A notice of the place, date and time
--------------------------
and the purpose or purposes of each special meeting of the Board of Directors
shall be given to each director by mailing the same at least two days before the
special meeting, or by telegraphing or telephoning the same or by delivering the
same personally not later than the day before the day of the meeting.
SECTION 9. Organization. At all meetings of the Board of Directors, the
------------
Chairman, if any, or if none or in the Chairman's absence or inability to act
the Chief Executive Officer or President, or in the Chief Executive Officer or
President's absence or inability to act, a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
SECTION 10. Resignation; Removal. Any director may resign at any time upon
--------------------
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the Chief Executive Officer, President or Secretary, unless
otherwise specified in the resignation. Unless otherwise provided in the
Certificate of Incorporation, any or all of the directors may be
5
<PAGE>
removed, with cause, only by the holders of a majority of the shares of stock
outstanding and entitled to vote for the election of directors.
SECTION 11. Vacancies. Unless otherwise provided in these Bylaws, vacancies
---------
on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors or
otherwise, may be filled by the affirmative vote of a majority of the remaining
directors, although less than a quorum, or by a sole remaining director, or at a
special meeting of the stockholders, by the holders of shares entitled to vote
for the election of directors.
SECTION 12. Action by Written Consent. Any action required or permitted to
-------------------------
be taken at any meeting of the Board of Directors may be taken without a meeting
if all the directors consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors.
ARTICLE III
Committees
----------
SECTION 1. Appointment. From time to time the Board of Directors by a
-----------
resolution adopted by a majority of the entire Board may appoint any committee
or committees for any purpose or purposes, to the extent lawful, which shall
have powers as shall be determined and specified by the Board of Directors in
the resolution of appointment.
SECTION 2. Procedures, Quorum and Manner of Acting. Each committee shall
----------------------------------------
fix its own rules of procedure, and shall meet where and as provided by such
rules or by resolution of the Board of Directors. Except as otherwise provided
by law, the presence of a majority of the then appointed members of a committee
shall constitute a quorum for the transaction of business by that committee, and
in every case where a quorum is present the affirmative vote of a majority of
the members of the committee present shall be the act of the committee. Each
committee shall keep minutes of its proceedings, and actions taken by a
committee shall be reported to the Board of Directors.
SECTION 3. Action by Written Consent. Any action required or permitted to
--------------------------
be taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if all the members of the committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the committee.
SECTION 4. Term; Termination. In the event any person shall cease to be a
------------------
director of the Corporation, such person shall simultaneously therewith cease to
be a member of any committee appointed by the Board of Directors.
6
<PAGE>
ARTICLE IV
Officers
--------
SECTION 1. Officers. The Corporation shall have as officers, a Chairman of
--------
the Board, a Chief Executive Officer, a President, a Secretary and a Treasurer.
The Corporation may also have, at the discretion of the Board of Directors, a
Chief Operating Officer, a Chief Financial Officer, one or more Vice Presidents,
one or more assistant secretaries, one or more assistant treasurers and such
other officers as the Board may from time to time deem proper. Any two or more
offices may be held by the same person except the offices of the President and
Secretary.
SECTION 2. Election of Officers. The officers of the Corporation shall be
--------------------
chosen by the Board of Directors.
SECTION 3. Term of Office and Remuneration. The term of office of all
----------------------------------
officers shall be one year and until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
SECTION 4. Resignation; Removal. Any officer may resign at any time upon
---------------------
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the Chief Executive Officer, President or Secretary, unless
otherwise specified in the resignation. Any officer shall be subject to removal,
with or without cause, at any time by vote of a majority of the entire Board.
SECTION 5. Chief Executive Officer. In the absence of any designation to
-------------------------
the contrary by the Board, the President shall be the Chief Executive Officer.
The Chief Executive Officer shall, in the absence of the chairperson of the
Board, if any, preside at all meetings of the shareholders and of the Board at
which he or she is present in committee with the President, if the Chief
Executive Officer shall be someone other than the President, and shall exercise
his or her authority in committee with the President. Subject to the control of
the Board and, within the scope of their authority, any committees thereof, the
President and the Chief Executive Officer, whether such offices are held by the
same individual or otherwise, shall (a) have general and active management of
all the business, property and affairs of the Corporation, (b) see that all
orders and resolutions of the Board and the committees thereof are carried into
effect, (c) have custody of the corporate seal, or entrust the same to the
Secretary, (e) act as the duly authorized representative of the Board in all
matters, except where the board has formally designated some other person or
group to act, and (f) in general perform all the usual duties incident to the
office(s) and such other duties as may be assigned to such person(s) by the
Board of Directors.
7
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SECTION 6. President. The President shall, in the absence of the
---------
chairperson of the Board, if any, preside at all meetings of the shareholders
and of the Board at which he or she is present in committee with the Chief
Executive Officer, if the President shall be someone other than the Chief
Executive Officer, and the President shall have the same authority as the Chief
Executive Officer as set forth above and, if the President shall be someone
other than the Chief Executive Officer, shall exercise such authority in
committee with the Chief Executive Officer. In addition, the President shall
perform such other duties as the Board of Directors may from time to time
designate.
SECTION 7. Vice-President. A Vice-President may execute and deliver in the
--------------
name of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office as assigned by the
Board of Directors, the Chief Executive Officer or the President, and shall have
such other authority as from time to time may be assigned by the Board of
Directors, the Chief Executive Officer or the President.
SECTION 8. Treasurer.
---------
(a) The Treasurer shall keep, or cause to be kept, the books and records of
account of the Corporation.
(b) The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Corporation with such depositories as may be designated
from time to time by resolution of the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the Chief Executive Officer, the President and the
Board, whenever they request it, an account of all of his transactions as
Treasurer and of the financial condition of the Corporation, and shall have such
other powers and perform such other duties as may be prescribed from time to
time by the Board, the Chief Executive Officer or as the President may from time
to time delegate.
(c) The Treasurer shall also in general have all other duties incident to
the position of Treasurer and such other duties as may be assigned by the Board
of Directors, the Chief Executive Officer or President.
SECTION 9. Secretary. The Secretary shall in general have all the duties
---------
incident to the office of Secretary and such other duties as may be assigned by
the Board of Directors, the Chief Executive Officer or the President.
SECTION 10. Chief Financial Officer. The Chief Financial Officer, if there
-----------------------
shall be one, shall keep, or cause to be kept, the books and records of account
of the Corporation. The Chief Financial Officer shall deposit all monies and
other valuables in the name and to the credit of the Corporation with such
depositories as may be designated from time to time by resolution of the Board
of Directors. He or she shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, shall render to the President and the Board,
whenever they request it, an account of all of his transactions as Chief
Financial Officer and of the financial condition of the Corporation, and shall
have such other powers and perform such other duties as may be prescribed from
time to time by the Board or as the President may from time to time delegate.
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<PAGE>
SECTION 11. Assistant Officers. Any assistant officer shall have such
-------------------
powers and duties of the officer such assistant officer assists as such officer
or the Board of Directors shall from time to time prescribe.
ARTICLE V
Books and Records
-----------------
SECTION 1. Location. The books and records of the Corporation may be kept
--------
at such place or places within or outside the State of Delaware as the Board of
Directors or the respective officers in charge thereof may from time to time
determine. The record books containing the names and addresses of all
stockholders, the number and class of shares of stock held by each and the dates
when they respectively became the owners of record thereof shall be kept by the
Secretary as prescribed in the Bylaws and by such officer or agent as shall be
designated by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and all other
---------------------------
corporate notices may be delivered personally or mailed to each stockholder at
the stockholder's address as it appears on the records of the Corporation.
ARTICLE VI
Certificates Representing Stock
-------------------------------
SECTION 1. Certificates; Signatures. The shares of the Corporation shall be
------------------------
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate, signed by or in the name of the Corporation by
the Chief Executive Officer or President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
representing the number of shares registered in certificate form. Any and all
signatures on any such certificate may be facsimiles. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue. The name of the holder of record of the shares
represented thereby, with the number of such shares and the date of issue, shall
be entered on the books of the Corporation.
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SECTION 2. Transfers of Stock. Upon compliance with provisions restricting
------------------
the transfer or registration of transfer of shares of stock, if any, shares of
capital stock shall be transferable on the books of the Corporation only by the
holder of record thereof in person, or by duly authorized attorney, upon
surrender and cancellation of certificates for a like number of shares, properly
endorsed, and the payment of all taxes due thereon.
SECTION 3. Fractional Shares. The Corporation may, but shall not be
------------------
required to, issue certificates for fractions of a share where necessary to
effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer
and registration of certificates representing shares of the Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The Corporation may
---------------------------------------
issue a new certificate of stock in place of any certificate, theretofore issued
by it, alleged to have been lost, stolen or destroyed, and the Board of
Directors may require the owner of any lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate.
ARTICLE VII
Dividends
---------
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine whether
any, and, if any, what part of any, funds legally available for the payment of
dividends shall be declared as dividends and paid to stockholders; the division
of the whole or any part of such funds of the Corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it shall not be
required at any time, against such discretion, to divide or pay any part of such
funds among or to the stockholders as dividends or otherwise; and before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet
contingencies, or for repairing or maintaining any property of the Corporation,
or for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
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<PAGE>
ARTICLE VIII
Ratification
------------
Any transaction, questioned in any law suit on the ground of lack of
authority, defective or irregular execution, adverse interest of director,
officer or stockholder, non-disclosure, miscomputation, or the application of
improper principles of practices of accounting, may be ratified before or after
judgment, by the Board of Directors or by the stockholders, and if so ratified
shall have the same force and effect as if the questioned transaction had been
originally duly authorized. Such ratification shall be binding upon the
Corporation and its stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE IX
Indemnification
---------------
SECTION 1. Right to Indemnification. The Corporation shall indemnify and
-------------------------
hold harmless, to the fullest extent permitted by law as it presently exists or
may hereafter be amended, any person who was or is made or is threatened to be
made a party or is otherwise involved in any action or suit, whether or not by
or in the right of the Corporation, or proceeding, whether civil, criminal,
administrative or investigative (collectively, a "proceeding") by reason of the
fact that he, or a person for whom he is the legal representative, is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust, enterprise or
nonprofit entity, including service with respect to employee benefit plans,
against all liability and loss, including judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement, incurred, suffered or
paid by or on behalf of such person, and expenses (including attorneys' fees)
reasonably incurred by such person.
SECTION 2. Prepayment of Expenses. The Corporation shall pay the expenses
----------------------
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, provided, however, that the payment of expenses incurred
-----------------
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this Article or
otherwise.
SECTION 3. Claims. The right to indemnification and payment of expenses
------
under the Certificate of Incorporation, these Bylaws or otherwise shall be a
contract right. If a claim for indemnification or payment of expenses under this
Article is not paid in full within sixty days after a written claim therefor has
been received by the Corporation, the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.
11
<PAGE>
SECTION 4. Non-Exclusivity of Rights. The rights conferred on any person by
-------------------------
this Article shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
SECTION 5. Other Indemnification. The Corporation's obligation, if any, to
---------------------
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
SECTION 6. Amendment or Repeal. Any repeal or modification of the foregoing
-------------------
provisions of this Article IX shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE X
Corporate Seal
--------------
The corporate seal shall have inscribed thereon the name of the Corporation
and the year of its incorporation, and shall be in such form and contain such
other words and/or figures as the Board of Directors shall determine. The
corporate seal may be used by printing, engraving, lithographing, stamping or
otherwise making, placing or affixing, or causing to be printed, engraved,
lithographed, stamped or otherwise made, placed or affixed, upon any paper or
document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
ARTICLE XI
Fiscal Year
-----------
The fiscal year of the Corporation shall be that which is determined by the
Board of Directors, and is subject to change by the Board of Directors.
ARTICLE XII
Waiver of Notice
----------------
Whenever notice is required to be given by these Bylaws or by the
Certificate of Incorporation or by law, a written waiver thereof, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
12
<PAGE>
ARTICLE XIII
Bank Accounts, Drafts, Contracts, Etc.
--------------------------------------
SECTION 1. Bank Accounts and Drafts. In addition to such bank accounts as
------------------------
may be authorized by the Board of Directors, the primary financial officer or
any person designated by said primary financial officer, whether or not an
employee of the Corporation, may authorize such bank accounts to be opened or
maintained in the name and on behalf of the Corporation as he may deem necessary
or appropriate, payments from such bank accounts to be made upon and according
to the check of the Corporation in accordance with the written instructions of
said primary financial officer, or other person so designated by the Treasurer.
SECTION 2. Contracts. The Board of Directors may authorize any person or
---------
persons, in the name and on behalf of the Corporation, to enter into or execute
and deliver any and all deeds, bonds, mortgages, contracts and other obligations
or instruments, and such authority may be general or confined to specific
instances.
SECTION 3. Proxies; Powers of Attorney; Other Instruments. The Chairman,
------------------------------------------------
Chief Executive Officer, President or any other person designated by either of
them shall have the power and authority to execute and deliver proxies, powers
of attorney and other instruments on behalf of the Corporation in connection
with the rights and powers incident to the ownership of stock by the
Corporation. The Chairman, Chief Executive Officer, President or any other
person authorized by proxy or power of attorney executed and delivered by either
of them on behalf of the Corporation may attend and vote at any meeting of
stockholders of any company in which the Corporation may hold stock, and may
exercise on behalf of the Corporation any and all of the rights and powers
incident to the ownership of such stock at any such meeting, or otherwise as
specified in the proxy or power of attorney so authorizing any such person. The
Board of Directors, from time to time, may confer like powers upon any other
person.
SECTION 4. Financial Reports. The Board of Directors may appoint the
------------------
primary financial officer or other fiscal officer and/or the Secretary or any
other officer to cause to be prepared and furnished to stockholders entitled
thereto any special financial notice and/or financial statement, as the case may
be, which may be required by any provision of law.
ARTICLE XIV
Amendments
----------
The Board of Directors shall have the power to adopt, amend or repeal these
Bylaws. Bylaws adopted by the Board of Directors may be repealed or amended, and
new Bylaws may be made by the stockholders, and the stockholders may prescribe
that any Bylaw made by them shall not be altered, amended or repealed by the
Board of Directors. The Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the Bylaws of the Corporation by a vote of
the majority of directors, subject, however, to any limitation thereof contained
in these Bylaws.
*******
13
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF SENESCO TECHNOLOGIES, INC.
DATED: SEPTEMBER 7, 1999
This certifies that FORBES, INC. (the "Holder"), for value received is
entitled, subject to the terms set forth below, to purchase from Senesco
Technologies, Inc., an Idaho corporation (the "Company"), Forty Thousand
(40,000) fully paid and nonassessable shares (the "Warrant Shares") of the
Company's Common Stock, $.0015 par value, at a price of $7.00 per share (the
"Exercise Price").
1. Exercise Price. The Exercise Price is $7.00 for each share of Common
---------------
Stock, which is the Fair Market Value per share of Common Stock on the date
hereof, as determined by the Board. Fair Market Value shall mean the closing
price of the Company's Common Stock as reported on the NASD OTC Bulletin Board,
Nasdaq National Market, Nasdaq SmallCap Market, or such other stock exchange.
2. Exercise of Warrant. This Warrant shall be exercisable during its term
-------------------
as follows:
(i) Right to Exercise
(a) Subject to subsections 3(i)(b) and (c) below, shares subject to
this Warrant shall become exercisable based upon the following schedule
until all of such shares are exercisable:
Vesting Period Percentage Exercisable
-------------- ----------------------
Date Hereof 25%
12 months from Date Hereof 25%
24 months from Date Hereof 25%
36 months from Date Hereof 25%
(b) This Warrant may not be exercised for a fraction of a Share.
(c) In no event may this Warrant be exercised after the date of
expiration of the term of this Warrant as set forth in Section 8 below.
<PAGE>
(ii) Method of Exercise. This Warrant shall be exercisable by written
-------------------
notice in the form attached as Exhibit A, which shall state the election to
exercise the Warrant, the number of Shares in respect of which the Warrant is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company. Such written notice shall be signed by Holder and shall
be delivered in person or by certified mail to the President, Secretary or Chief
Financial Officer of the Company or such other agent designated in writing by
the Company. The written notice shall be accompanied by payment of the exercise
price. This Warrant shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the exercise price. 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 Warrant Stock, notwithstanding the
exercise of the Warrant. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Warrant.
No shares will be issued pursuant to the exercise of a Warrant
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Holder on the date on which the Warrant is
exercised with respect to such Shares.
4. Investment Representations; Restrictions on Transfer.
----------------------------------------------------
(i) By receipt of this Warrant, by its execution and by its exercise in
whole or in part, Holder represents to the Company the following:
(a) Holder understands that this Warrant and any Shares purchased upon
its exercise are securities, the issuance of which requires compliance with
federal and state securities laws.
(b) Holder is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
Holder is acquiring these securities for investment for Holder's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(c) Holder acknowledges and understands that the securities constitute
"restricted securities" under the Securities Act and must be held
indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Holder further
acknowledges and understands that the Company is under no obligation to
register the securities. Holder understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the transfer
of the securities unless they are registered or such registration is not
required in the opinion
-2-
<PAGE>
of counsel satisfactory to the Company and any other legend required under
applicable state securities laws.
(d) Holder is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions. Rule 701 provides that if the
issuer qualifies under Rule 701 at the time of exercise of the Warrant by
the Holder, such exercise will be exempt from registration under the
Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, ninety (90) days thereafter the securities exempt under Rule
701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including among other things: (1) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate, (2)
the availability of certain public information about the Company, and the
amount of securities being sold during any three-month period not exceeding
the limitations specified in Rule 144(e), if applicable. Notwithstanding
this paragraph 4(i)(d), the Holder acknowledges and agrees to the
restrictions set forth in paragraph 4(ii) below.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Warrant, then the securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the availability of certain public
information about the Company; (2) the resale occurring not earlier than
the time period prescribed by Rule 144 after the party has purchased, and
made full payment for, within the meaning of Rule 144, the securities to be
sold; and (3) in the case of an affiliate, or of a non-affiliate who has
held the securities less than the time period prescribed by Rule 144, the
sale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934) and the amount of securities
being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(ii) Holder agrees, in connection with an underwritten public offering of
the Company's securities, (1) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by Holder (other than those shares included in the
registration) without the prior written consent of the underwriters managing
such underwritten public offering of the Company's securities for a period of
one hundred eighty (180) days from the effective date of such registration (the
"Lock Up Period"), and (2) further agrees to execute any agreement reflecting
clause (1) above, or extending the Lock Up Period, as may be requested by the
underwriters at the time of the public offering.
-3-
<PAGE>
5. Method of Payment. Payment of the exercise price shall be made by cash
-----------------
or check.
6. Restrictions on Exercise. This Warrant may not be exercised if the
-------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
the Code of Federal Regulations as promulgated by the Federal Reserve Board. As
a condition to the exercise of this Warrant, the Company may require Holder to
make any representation and warranty to the Company as may be required by any
applicable law or regulation.
7. Non-Transferability of Warrant. This Warrant may not be transferred in
------------------------------
any manner other than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Holder only by Holder. The terms of this
Warrant shall be binding upon the executors, administrators, heirs, successors
and assigns of Holder.
8. Term of Warrant. This Warrant may not be exercised more than ten years
---------------
from the date of grant of this Warrant, and may be exercised during such term
only in accordance with the terms of this Warrant Agreement.
9. Adjustments Upon Changes in Capitalization or Merger. The number of
------------------------------------------------------
shares of Common Stock covered by each outstanding Warrant 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." 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 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 a Warrant.
In the event of the proposed dissolution or liquidation of the Company, the
Board shall notify the Holder at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised, the Warrant 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 Warrant shall be assumed or an equivalent warrant
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 Warrant or to substitute an equivalent warrant, the
Board shall, in lieu of such assumption or substitution, provide for the Holder
to have the right to exercise the Warrant as to all of the Warrant Stock,
including Shares as to which the Warrant would not otherwise be exercisable. If
the Board makes a Warrant fully exercisable in lieu of assumption or
substitution in the event of a merger, the Board shall notify the Holder that
the Warrant shall be fully exercisable for a period of fifteen (15) days from
the date of such
-4-
<PAGE>
notice, and the Warrant will terminate upon the expiration of such period. For
the purposes of this paragraph, the Warrant shall be considered assumed if,
following the merger, the Warrant or right confers the right to purchase, for
each Share of stock subject to the Warrant 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 Warrant,
for each Share of stock subject to the Warrant, 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.
10. Repurchase Rights of the Company. The Holder understands that the
----------------------------------
Company has the option to repurchase any Shares issued by the Company upon the
exercise of any portion of this Agreement, provided, however, that such
issuances were made pursuant to the exercise of Warrants prior to the effective
date of the Company's initial underwritten public offering of the Company's
securities. Such repurchases shall be at the Fair Market Value of the Shares
repurchased as of the date on which the Company exercises such option.
11. Taxation Upon Exercise of Warrant. Holder understands that, upon
-----------------------------------
exercise of this Warrant, Holder will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares over the
exercise price. Holder hereby agrees to notify the Company in writing within
thirty (30) days after the date of any such disposition. Upon a resale of such
Shares by the Holder, any difference between the sale price and the Fair Market
Value of the Shares on the date of exercise of the Warrant will be treated as
capital gain or loss.
12. Tax Consequences. The Holder understands that any of the foregoing
----------------
references to taxation are based on federal income tax laws and regulations now
in effect. The Holder has reviewed with the Holder's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Holder is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents. The Holder understands that the Holder (and not the Company) shall be
responsible for the Holder's own tax liability that may arise as a result of the
transactions contemplated by this Agreement.
DATED: September 7, 1999
-----------------
SENESCO TECHNOLOGIES, INC.
By:
------------------------------
Phillip O. Escaravage
Chairman, Chief Executive Officer and
President
-5-
<PAGE>
HOLDER ACKNOWLEDGES AND AGREES THAT THIS WARRANT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A CONSULTANT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
HOLDER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE CONSULTING RELATIONSHIP AT
ANY TIME, WITH OR WITHOUT CAUSE.
Holder has reviewed this Warrant Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Warrant
Agreement and fully understands all provisions of this Warrant Agreement. Holder
agrees to notify the Company upon any change in the residence address indicated
below.
Dated:
----------------------
-----------------------------------
Name:
------------------------------
Residence Address:
-----------------------------------
-----------------------------------
-----------------------------------
Social Security No.
----------------
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF WARRANT
TO:
FROM:
DATE:
RE: Exercise of Warrant
I hereby exercise my Warrant to purchase shares of Common
--------------
Stock at $ per share (total exercise price of $ ),
------------- ------------
effective today's date. This notice is given in accordance with the terms of my
Warrant Agreement dated , 19 . The warrant price and vested amount
--------- ----
is in accordance with Sections 2 and 3 of the Warrant Agreement.
Attached is a check payable to Senesco Technologies, Inc. for the total
exercise price of the shares being purchased, if applicable, or such other
method of payment as provided by Section 5 of the Warrant Agreement. The
undersigned confirms the representations made in Section 4 of the Warrant
Agreement.
Please prepare the stock certificate in the following name(s):
------------------------------------------
------------------------------------------
If the stock is to be registered in a name other than your name, please so
advise the Company. The Warrant Agreement requires the Company's approval for
registration in a name other than your name and requires certain agreements from
any joint owner.
Sincerely,
-----------------------------------
(Signature)
-----------------------------------
(Print or Type Name)
Letter and consideration
received on , 20 .
------------------- --
By:
---------------------------
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
NONSTATUTORY STOCK OPTION AGREEMENT
Senesco Technologies, Inc., an Idaho corporation (the "Company"), hereby
grants to Kenyon & Kenyon (the "Optionee") an Option to purchase a total of Five
Thousand (5,000) shares of Common Stock (the "Shares"), at the price determined
as provided herein, and in all respects subject to the terms set forth below.
1. Nature of the Option. This Option is a Nonstatutory Stock Option, is
--------------------
not intended to qualify for any special tax benefits to the Optionee and is
granted outside of the Company's 1998 Stock Incentive Plan, as amended.
2. Exercise Price. The exercise price is $7.00 for each share of Common
--------------
Stock, which is the Fair Market Value per share of Common Stock on the date of
grant, as determined by the Board. Fair Market Value shall mean the closing
price of the Company's Common Stock as reported on the NASD OTC Bulletin Board,
Nasdaq National Market, Nasdaq SmallCap Market, or such other stock exchange.
3. Exercise of Option. This Option shall be exercisable during its term
------------------
as follows:
(i) Right to Exercise
-----------------
(a) Subject to subsections 3(i)(b) and (c) below, shares subject to
this Option shall become exercisable based upon the following schedule
until all of such shares are exercisable:
Vesting Period Percentage Exercisable
-------------- ----------------------
Date of Grant 33 1/3%
12 months from Date of Grant 33 1/3%
24 months from Date of Grant 33 1/3%
(b) This Option may not be exercised for a fraction of a Share.
(c) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 8 below.
<PAGE>
(ii) Method of Exercise. This Option shall be exercisable by written notice
------------------
in the form attached as Exhibit A, which shall state the election to exercise
the Option, the number of Shares in respect of which the Option is being
exercised, and such other representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as may be required
by the Company. Such written notice shall be signed by Optionee and shall be
delivered in person or by certified mail to the President, Secretary or Chief
Financial Officer of the Company or such other agent designated in writing by
the Company. The written notice shall be accompanied by payment of the exercise
price. This Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the exercise price. 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 shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
4. Investment Representations; Restrictions on Transfer.
----------------------------------------------------
(i) By receipt of this Option, by its execution and by its exercise in
whole or in part, Optionee represents to the Company the following:
(a) Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires compliance
with federal and state securities laws.
(b) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(c) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and must be
held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
Optionee further acknowledges and understands that the Company is under no
obligation to register the securities. Optionee understands that the
certificate evidencing the securities will be imprinted with a legend which
prohibits the transfer of the securities unless they are registered or such
registration is not required in
-2-
<PAGE>
the opinion of counsel satisfactory to the Company and any other legend
required under applicable state securities laws.
(d) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions. Rule 701 provides that if the
issuer qualifies under Rule 701 at the time of exercise of the Option by
the Optionee, such exercise will be exempt from registration under the
Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, ninety (90) days thereafter the securities exempt under Rule
701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including among other things: (1) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate, (2)
the availability of certain public information about the Company, and the
amount of securities being sold during any three-month period not exceeding
the limitations specified in Rule 144(e), if applicable. Notwithstanding
this paragraph 4(i)(d), the Optionee acknowledges and agrees to the
restrictions set forth in paragraph 4(ii) below.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the availability of certain public
information about the Company; (2) the resale occurring not earlier than
the time period prescribed by Rule 144 after the party has purchased, and
made full payment for, within the meaning of Rule 144, the securities to be
sold; and (3) in the case of an affiliate, or of a non-affiliate who has
held the securities less than the time period prescribed by Rule 144, the
sale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934) and the amount of securities
being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(ii) Optionee agrees, in connection with an underwritten public offering of
the Company's securities, (1) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by Optionee (other than those shares included in the
registration) without the prior written consent of the underwriters managing
such underwritten public offering of the Company's securities for a period of
one hundred eighty (180) days from the effective date of such registration (the
"Lock Up Period"), and (2) further agrees to execute any agreement reflecting
clause (1) above, or extending the Lock Up Period, as may be requested by the
underwriters at the time of the public offering.
-3-
<PAGE>
5. Method of Payment. Payment of the exercise price shall be made by cash
-----------------
or check.
6. Restrictions on Exercise. This Option may not be exercised if the
-------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
the Code of Federal Regulations as promulgated by the Federal Reserve Board. As
a condition to the exercise of this option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by any
applicable law or regulation.
7. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner other than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
8. Term of Option. This Option may not be exercised more than ten years
--------------
from the date of grant of this Option, and may be exercised during such term
only in accordance with the terms of this Option Agreement.
9. Adjustments Upon Changes in Capitalization or Merger. The number of
------------------------------------------------------
shares of Common Stock covered by each 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." 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 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
-4-
<PAGE>
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.
10. Repurchase Rights of the Company. The Optionee understands that the
---------------------------------
Company has the option to repurchase any Shares issued by the Company upon the
exercise of any portion of this Agreement, provided, however, that such
issuances were made pursuant to the exercise of Options prior to the effective
date of the Company's initial underwritten public offering of the Company's
securities. Such repurchases shall be at the Fair Market Value of the Shares
repurchased as of the date on which the Company exercises such option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
---------------------------------
exercise of this Option, Optionee will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares over the
exercise price. Optionee hereby agrees to notify the Company in writing within
thirty (30) days after the date of any such disposition. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the option will be treated
as capital gain or loss.
12. Tax Consequences. The Optionee understands that any of the foregoing
----------------
references to taxation are based on federal income tax laws and regulations now
in effect. The Optionee has reviewed with the Optionee's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Optionee is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents. The Optionee understands that the Optionee (and not the Company) shall
be responsible for the Optionee's own tax liability that may arise as a result
of the transactions contemplated by this Agreement.
DATE OF GRANT: September 7, 1999
-----------------
SENESCO TECHNOLOGIES, INC.
By:
-------------------------------------
Phillip O. Escaravage
Chairman, Chief Executive Officer and
President
-5-
<PAGE>
OPTIONEE ACKNOWLEDGES AND AGREES THAT THIS OPTION, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A CONSULTANT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE CONSULTING RELATIONSHIP AT
ANY TIME, WITH OR WITHOUT CAUSE.
Optionee has reviewed this Option Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of this Option Agreement.
Optionee agrees to notify the Company upon any change in the residence address
indicated below.
Dated:
----------------------
-----------------------------------
Name:
------------------------------
Residence Address:
-----------------------------------
-----------------------------------
-----------------------------------
Social Security No.
----------------
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTION
TO:
FROM:
DATE:
RE: Exercise of Stock Option
I hereby exercise my option to purchase shares of Common
--------------
Stock at $ per share (total exercise price of $ ),
------------ ------------
effective today's date. This notice is given in accordance with the terms of my
Stock Option Agreement dated , 19 . The option price and vested
---------- ----
amount is in accordance with Sections 2 and 3 of the Stock Option Agreement.
Attached is a check payable to Senesco Technologies, Inc. for the total
exercise price of the shares being purchased, if applicable, or such other
method of payment as provided by Section 5 of the Stock Option Agreement. The
undersigned confirms the representations made in Section 4 of the Stock Option
Agreement.
Please prepare the stock certificate in the following name(s):
------------------------------------------
------------------------------------------
If the stock is to be registered in a name other than your name, please so
advise the Company. The Stock Option Agreement requires the Company's approval
for registration in a name other than your name and requires certain agreements
from any joint owner.
Sincerely,
-----------------------------------
(Signature)
-----------------------------------
(Print or Type Name)
Letter and consideration
received on , 20 .
------------------- --
By:
---------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 1999 WHICH ARE
INCLUDED IN THE REGISTRANT'S FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001035354
<NAME> Senesco Technologies, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 457,241
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 464,013
<PP&E> 73,787
<DEPRECIATION> 6,614
<TOTAL-ASSETS> 603,591
<CURRENT-LIABILITIES> 91,187
<BONDS> 0
0
0
<COMMON> 62,121
<OTHER-SE> 2,503,232
<TOTAL-LIABILITY-AND-EQUITY> 603,591
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 506,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (506,331)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (0.08)<F1>
<EPS-DILUTED> (0.08)<F2>
<FN>
<F1> -- This amount represents Basic Earnings per Share in accordance with the
requirements of Statement of Financial Accounting Standards No. 128 - "Earnings
per Share."
<F2> -- This amount represents Diluted Earnings per Share in accordance with the
requirements of Statement of Financial Accounting Standards No. 128 - "Earnings
per Share."
</FN>
</TABLE>
