Attached files
file | filename |
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EX-32.1 - Eloxx Pharmaceuticals, Inc. | v199713_ex32-1.htm |
EX-31.1 - Eloxx Pharmaceuticals, Inc. | v199713_ex31-1.htm |
EX-31.2 - Eloxx Pharmaceuticals, Inc. | v199713_ex31-2.htm |
EX-32.2 - Eloxx Pharmaceuticals, Inc. | v199713_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
(Mark
One)
x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For
the fiscal year ended June 30, 2010
OR
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For the
transition period from ___________ to _____________
Commission
file number: 001-31326
SENESCO
TECHNOLOGIES, INC.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
84-1368850
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
|
incorporation
or organization)
|
303
George Street, Suite 420, New Brunswick, New Jersey
|
08901
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(732)
296-8400
|
(Registrant’s
telephone number,
including
area code)
|
Securities
registered under Section 12(b) of the Act:
Title of each class
|
Name of each exchange on which
registered
|
Common
Stock, $0.01 par value per
share.
|
NYSE
Amex
|
Securities
registered under Section 12(g) of the Act:
None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405
of the Securities Act. Yes ¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act
. Yes ¨ No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T ((§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See definitions of “accelerated filer”, “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act). Yes
¨ No
x
As of
December 31, 2009, the aggregate market value of the registrant’s common stock
held by non-affiliates of the registrant was $7,253,840, based on the
closing sales price as reported on the NYSE Amex on that date.
Indicate
the number of shares outstanding of each of the registrant's classes of common
stock, as of September 26, 2010:
Class
|
Number of Shares
|
|||
Common
Stock, $0.01 par value
|
63,596,073 | |||
Preferred
Stock, $0.01 par value
|
6,191 |
Explanatory
Note
We are filing this Amendment No. 1 on
Form 10-K/A of Senesco Technologies, Inc. (the “Form 10-K”) to amend
our Annual Report on Form 10-K for the year ended June 30, 2010, filed on
September 28, 2010, to include the information required by Part III of the
Form 10-K as we no longer anticipate filing our proxy statement for the
2010 annual meeting, within 120 days of June 30, 2010. With the exception
of the inclusion of information required by Part III, no information
contained in our previously filed Form 10-K has been
changed.
TABLE OF CONTENTS [NOTE:
UPDATE PAGE NUMBERS]
Item
|
Page
|
||
PART III
|
10.
|
Directors,
Executive Officers and Corporate Governance
|
1
|
11.
|
Executive
Compensation
|
7
|
|
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
32
|
|
13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
34
|
|
14.
|
Principal
Accounting Fees and Services
|
38
|
|
PART IV
|
15.
|
Exhibits
and Financial Statement Schedules
|
40
|
SIGNATURES
|
41
|
PART
III
Item
10.
|
Directors,
Executive Officers and Corporate
Governance.
|
The
following is a list of our current directors and executive officers, as of
October 15, 2010, together with their ages and business
backgrounds:
Name
|
Age
|
Capacities in
Which Served
|
In Current
Position Since
|
|||
Leslie
J. Browne, Ph.D.
|
60
|
President
and Chief Executive Officer
|
May
2010
|
|||
John
E. Thompson, Ph.D.
|
69
|
Executive
Vice President and Chief Scientific Officer, Director
|
July
2004
|
|||
Joel
P. Brooks
|
51
|
Chief
Financial Officer, Treasurer and Secretary
|
December
2000
|
|||
Richard
Dondero
|
60
|
Vice
President of Research and Development
|
July
2004
|
|||
Harlan
W. Waksal, M.D.
|
57
|
Chairman
of the Board of Directors
|
June
2009
|
|||
John.
N. Braca (1) (2)
|
52
|
Director
|
October
2003
|
|||
Christopher
Forbes (3)
|
59
|
Director
|
January
1999
|
|||
Warren
J. Isabelle
|
58
|
Director
|
June
2009
|
|||
Thomas
C. Quick (3)
|
55
|
Director
|
February
1999
|
|||
David
Rector (1) (2)
|
63
|
Director
|
February
2002
|
|||
Rudolf
Stalder (2)
|
69
|
Director
|
February
1999
|
|||
Jack
Van Hulst
|
|
71
|
|
Director
|
|
January
2007
|
|
(1)
|
Member
of the Compensation Committee
|
|
(2)
|
Member
of the Audit Committee
|
|
(3)
|
Member
of the Nominating and Corporate Governance
Committee
|
None of
our current executive officers are related to any other executive officer or to
any of our directors. Our executive officers are elected annually by
our board and serve until their successors are duly elected and
qualified.
Leslie J. Browne, Ph.D. was appointed our
President and Chief Executive Officer in May 2010. Dr. Browne has over thirty
years of experience in the pharmaceutical industry. Prior to joining Senesco in
May 2010, he served from October 2008 to May 2010 as President and CEO, and is
currently chair, of Phrixus Pharmaceuticals, Inc., a private biotech working on
muscular dystrophy and heart failure. He recently served from January
2007 to January 2009 as chair of the New Jersey Technology Council, where he
continues as a member of the board. He also served from April 2007 to
January 2009 as an independent director of Genelabs Technologies, which was sold
to GSK, and from September 2004 to May 2008 as President, CEO and Director of
Pharmacopeia, a Nasdaq listed company, where he transformed the company from a
discovery contract research organization to a clinical development stage
biopharmaceutical company with multiple internal development programs. Prior to
joining Pharmacopeia, Dr. Browne was the Chief Operating Officer at Iconix
Pharmaceuticals, Inc., a privately-held chemogenomics company from October 2001
to July 2004. Before Iconix, Dr. Browne held key positions at
Berlex/Schering AG from 1990 to 2000, including Corporate Vice President, Berlex
Laboratories, Inc. and President of Schering Berlin Venture Corporation. At
Berlex Biosciences he rebuilt the drug discovery operation and championed a
number of important pharma-biotech collaborations. In 1979, Dr. Browne began his
industrial career at Ciba-Geigy, now Novartis, where he invented fadrozole, for
the treatment of breast cancer and was closely involved in the discoveries of
Femaraâ and
Diovanâ, which became
major products for Novartis.
1
John E. Thompson, Ph.D. has
been our director since October 2001. Dr. Thompson was appointed our
President and Chief Executive Officer in January 1999, and he continued in that
capacity until September 1999 when he was appointed Executive Vice President of
Research and Development. In July 2004, Dr. Thompson became our
Executive Vice President and Chief Scientific Officer. Dr. Thompson
is the inventor of the technology that we develop. Since July 2001,
he has been the Associate Vice President, Research and, from July 1990 to June
2001, he was the Dean of Science at the University of Waterloo in Waterloo,
Ontario, Canada. Dr. Thompson has a Ph.D. in Biology from the
University of Alberta, Edmonton, and he is a Fellow of the Royal Society of
Canada. Dr. Thompson is also the recipient of a Lady Davis Visiting
Fellowship, the Sigma Xi Award for Excellence in Research, the CSPP Gold Medal
and the Technion Visiting Fellowship. Dr. Thompson has an in-depth
knowledge and understanding of the science underlying our technology and how it
relates to human health and agricultural applications.
Joel Brooks was appointed our
Chief Financial Officer and Treasurer in December 2000. From September 1998
until November 2000, Mr. Brooks was the Chief Financial Officer of Blades Board
and Skate, LLC, a retail establishment specializing in the action sports
industry. Mr. Brooks was Chief Financial Officer from 1997 until 1998
and Controller from 1994 until 1997 of Cable and Company Worldwide,
Inc. He also held the position of Controller at USA Detergents, Inc.
from 1992 until 1994, and held various positions at several public accounting
firms from 1983 through 1992. Mr. Brooks is also a director and
chairman of the audit committee of USA Technologies, Inc. Mr. Brooks
received his Bachelor of Science degree in Commerce with a major in Accounting
from Rider University in February 1983.
Richard Dondero was appointed
our Vice President of Research and Development in July 2004. From
July 2002 until July 2004, Mr. Dondero was a Group Leader in the Proteomics
Reagent Manufacturing division of Molecular Staging, Inc., a biotech firm
engaged in the measurement and discovery of new biomarkers. From 1985
through June 2001, Mr. Dondero served in several roles of increasing
responsibility through Vice President of Operations and Product Development at
Cistron Biotechnology, Inc. From 1977 through 1985, Mr. Dondero
served as a senior scientist at Johnson and Johnson, and from 1975 through 1977,
as a scientist at Becton Dickinson. Mr. Dondero received his Bachelor
of Arts degree from New Jersey State University in 1972 and his Master of
Science degree from Seton Hall University in 1976.
Harlan W. Waksal, M.D. has
been our chairman of the board of directors since June 2009 and a director since
October 2008. From July 2003 to present, Dr. Waksal has been the
President and Sole Proprietor of Waksal Consulting L.L.C., which provides
strategic business and clinical development counsel to biotechnology companies.
Dr. Waksal co-founded the biotechnology company, ImClone Systems Inc. in
1984. From March, 1987 through July 2003, Dr. Waksal had served in
various senior roles for ImClone Systems Incorporated as follows: March 1987
through April 1994 – President; April 1994 through May 2002 – Executive Vice
President and Chief Operating Officer; May 2002 through July 2003 – President,
Chief Executive Officer and Chief Operating Officer. Dr. Waksal also
served as a director of ImClone Systems Incorporated from March 1987 through
January 2005. Dr. Waksal is currently a member of the Board of
Trustees of Oberlin College. Dr. Waksal received a Bachelor of Arts
in Biology from Oberlin College and an M.D. from Tufts University School of
Medicine. Dr. Waksal is knowledgeable in science, drug development, regulatory
and clinical affairs. In addition, he ran and operated a public
biotechnology company and is familiar with the issues of corporate
governance.
2
John N. Braca has been our
director since October 2003. Mr. Braca has also served as a director
and board observer for other healthcare, technology and biotechnology companies
over the course of his career. Mr. Braca currently serves as a director of
Nevada Gold Holdings, Inc. Since August 2010, Mr. Braca has been the
controller for Iroko Pharmaceuticals, a privately-held global pharmaceutical
company based in Philadelphia. From April 2006 through July 2010, Mr.
Braca was the managing director of Fountainhead Venture Group, a healthcare
information technology venture fund based in the Philadelphia area, and has been
working with both investors and developing companies to establish exit and
business development opportunities. From May 2005 through March 2006,
Mr. Braca was a consultant and advisor to GlaxoSmithKline management in their
research operations. From 1997 to April 2005, Mr. Braca was a general
partner and director of business investments for S.R. One, Limited, or S.R. One,
the venture capital subsidiary of GlaxoSmithKline. In addition, from
January 2000 to July 2003, Mr. Braca was a
general partner of Euclid SR Partners Corporation, an independent venture
capital partnership. Prior to joining S.R. One, Mr. Braca held
various finance and operating positions of increasing responsibility within
several subsidiaries and business units of GlaxoSmithKline. Mr. Braca
is a licensed Certified Public Accountant in the state of Pennsylvania and is
affiliated with the American Institute of Certified Public Accountants and the
Pennsylvania Institute of Certified Public Accountants. Mr. Braca
received a Bachelor of Science in Accounting from Villanova University and a
Master of Business Administration in Marketing from Saint Joseph’s
University. Mr. Braca’s financial background, operating experience
with both large pharmaceutical companies and developing biotechnology companies,
provides the board with practical experience for issues facing the
Company. In addition, Mr. Braca also has a strong corporate
governance background through his experience with other company
boards.
Christopher Forbes has been
our director since January 1999. Since 1989, Mr. Forbes has been Vice
Chairman of Forbes, Inc., which publishes Forbes Magazine and
Forbes.com. From 1981 to 1989, Mr. Forbes was Corporate Secretary at
Forbes. Prior to 1981, he held the position of Vice President and Associate
Publisher. Mr. Forbes has been a director of Forbes, Inc. since
1977. Mr. Forbes is the Chairman of the American Friends of the
Louvre, and he also sits on the boards of The Friends of New Jersey State
Museum, The New York Academy of Art, and the Prince Wales
Foundation. He is also a member of the board of advisors of The
Princeton University Art Museum. Mr. Forbes received a Bachelor of Arts degree
in Art History from Princeton University in 1972. In 1986, he was
awarded the honorary degree of Doctor of Humane Letters by New Hampshire College
and in 2003 was appointed a Chevalier of the Legion of Honor by the French
Government. Mr. Forbes knowledge regarding corporate operations as
well as his business acumen, provide the board with experience in running a
corporation and addressing the issues that face a growing company, such as
ours.
3
Warren J. Isabelle has been
our director since June 2009. Mr. Isabelle is a founder and principal
of Ironwood Investment Management L.L.C., located in Boston, MA. Mr.
Isabelle founded Ironwood Investment Management L.L.C in August
1997. From 1983 until 1997 Mr. Isabelle was with Pioneer Management
Corporation where he served most recently as Director of Research and Head of
U.S. Equities. Mr. Isabelle has also, since January 2004, served as a
member of the Public Board and Vice-Chairman of the Investment Committee of the
University of Massachusetts Foundation. Mr. Isabelle is a Chartered
Financial Analyst and member of the CFA institute and the American Chemical
Society. Mr. Isabelle received a Bachelor of Science degree in
chemistry from Lowell Technological Institute, a Master of Science degree in
Polymer Science and Engineering from the University of Massachusetts, and a MBA
from the Wharton School, University of Pennsylvania. Mr. Isabelle’s
experience as an investment analyst and portfolio manager provides the Company
with valuable insight into the biotechnology industry and the publically-traded
capital markets.
Thomas C. Quick has been our
director since February 1999. Since 2003, Mr. Quick has been the
President of First Palm Beach Properties, Inc. From 2001 through
2003, Mr. Quick was the Vice Chairman of Quick & Reilly/Fleet Securities,
Inc., successor to The Quick & Reilly Group, Inc., a holding company for
four (4) major financial services businesses. From 1996 until 2001,
Mr. Quick was the President and Chief Operating Officer and a director of Quick
& Reilly/Fleet Securities, Inc. From 1985 to 1996, he was
President of Quick & Reilly, Inc., a Quick & Reilly subsidiary and a
national discount brokerage firm. Mr. Quick serves as a member of the
board of directors and compensation committee of B.F. Enterprises. He is also a
member of the board of directors of Best Buddies, The American Ireland Fund and
Venetian Heritage, Inc. He is a trustee of the National Corporate Theater Fund,
Cold Spring Harbor Laboratories, the Norton Museum and the Inter-City
Scholarship Foundation of New York City. Mr. Quick is a
graduate of Fairfield University. As a result of his professional and
other experiences, Mr. Quick has a deep understanding of corporate operations
and strategy, and operations in both the US and internationally. Mr.
Quick also has significant corporate governance experience through his service
on other company boards.
David Rector has been our
director since February 2002. Mr. Rector also serves as a director
and member of the compensation and audit committee of the Dallas Gold and Silver
Exchange (formerly Superior Galleries, Inc.). Mr. Rector also serves on the
board of directors of Nevada Gold Holdings, Inc., Standard Drilling, Inc.,
Universal Mining Corp. and Li3 Energy, Inc. Since October 2009 through present,
Mr. Rector has been President and CEO of Li3 Energy, Inc. Since July 2009
through present, Mr. Rector has served as President and CEO of Nevada Gold
Holdings, Inc. Since September 2008 through present, Mr. Rector has served as
President and CEO of Universal Gold Mining Corp. Since October 2007 through
present, Mr. Rector has served as President and CEO of Standard Drilling Inc.
From May 2004 through December 2006, Mr. Rector had served in senior
management positions with Nanoscience Technologies, Inc., a development stage
company engaged in the development of DNA Nanotechnology. Also, since
1985, Mr. Rector has been the Principal of The David Stephen Group, which
provides enterprise consulting services to emerging and developing companies in
a variety of industries. From 1983 until 1985, Mr. Rector served as
President and General Manager of Sunset Designs, Inc., a domestic and
international manufacturer and marketer of consumer product craft kits, and a
wholly-owned subsidiary of Reckitt & Coleman N.A. From 1980 until
1983, Mr. Rector served as the Director of Marketing of Sunset
Designs. From 1971 until 1980, Mr. Rector served in progressive roles
in the financial and product marketing departments of Crown Zellerbach
Corporation, a multi-billion dollar pulp and paper industry
corporation. Mr. Rector received a Bachelor of Science degree in
Business/Finance from Murray State University in 1969. As a result of
these professional and other experiences, Mr. Rector has a deep business
understanding of developing companies. Mr. Rector also brings corporate
governance experience through his service on other company
boards.
4
Rudolf Stalder has been our director since
February 1999 and was appointed as our Chairman and Chief Executive Officer on
January 10, 2000. On October 4, 2001, Mr. Stalder resigned as our
Chief Executive Officer. On June 8, 2009, Mr. Stalder resigned as our
Chairman. Mr. Stalder is a former member of
the executive boards of Credit Suisse Group and Credit Suisse First Boston and
former Chief Executive Officer of the Americas Region of Credit Suisse Private
Banking. Mr. Stalder joined Credit Suisse in 1980 as a founding
member and Deputy Head of the Multinational Services Group. In 1986,
he became Executive Vice President. He was named to Credit Suisse’s
Executive Board in 1989. In 1990, he became Head of the Commercial
Banking Division and a Member of the Executive Committee. From 1991
to 1995, Mr. Stalder was Chief Financial Officer of Credit Suisse First Boston
and a Member of the Executive Boards of Credit Suisse Group and Credit Suisse
First Boston. He became head of the Americas Region of Credit Suisse
Private Banking in 1995 and retired in 1998. Prior to moving to the
United States, Mr. Stalder was a member of the Board of Directors for several
Swiss subsidiaries of major corporations including AEG, Bayer, BTR, Hoechst,
Saint Gobain, Solvay and Sony. He is a fellow of the World Economic
Forum. He currently serves on the board of the Greater Bridgeport
Symphony. He was a member of the Leadership Committee of the
Consolidated Corporate Fund of Lincoln Center for the Performing Arts, Board of
The American Ballet Theatre and a Trustee of Carnegie Hall. From 1991
through 1998, Mr. Stalder was Chairman of the New York Chapter of the
Swiss-American Chamber of Commerce. He continues to serve as an
advisory board member of the American-Swiss Foundation. Mr. Stalder
received a diploma in advanced finance management at the International
Management Development Institute in Lausanne, Switzerland in 1976. He
completed the International Senior Managers Program at Harvard University in
1985. Mr. Stalder is an experienced executive with former CEO
experience and senior executive level experience at large multinational
companies. He also has corporate governance experience through service on other
public company boards.
Jack Van Hulst has been our
director since January 2007. Mr. Van Hulst was appointed as our President and
Chief Executive Officer effective November 16, 2009. Mr. Van Hulst
was further appointed as our Secretary effective February 1,
2010. Mr. Van Hulst resigned as our President and Chief Executive
Officer and Secretary effective May 25, 2010. Mr. Van Hulst also
serves as a director and member of the compensation and audit committees of Napo
Pharmaceuticals, Inc. and HiTech Pharmacal, Inc. He has more than 42
years of international experience in the pharmaceutical industry. He began his
career in 1968 at Organon, which was subsequently acquired by AKZO, N.V., the
multinational human and animal healthcare company, where he was based in Europe
and the US and responsible for establishing AKZO’s position in the US in the
manufacturing and sales and marketing of fine chemicals. Mr. Van Hulst later
became President of AKZO’s US Pharmaceutical Generic Drug Business and was
responsible for establishing AKZO in the US generic drug industry. From 1989 to
1999, Mr. Van Hulst successively owned and led two generic pharmaceutical
companies, improving their operations and then selling them to a private equity
group and a pharmaceutical company. From 1999 to 2005, he was Executive Vice
President at Puerto Rico-based MOVA Pharmaceutical Corporation, a contract
manufacturer to the pharmaceutical industry that recently merged with
Canadian-based Patheon. Mr. Van Hulst also serves as Chairman of the
Board of The International Center in New York, a non-profit
organization. Mr. Van Hulst received a Masters degree in law from the
University in Utrecht, Netherlands in 1968. Mr. Van Hulst possesses management
experience as a result of his prior positions. Mr. Van Hulst spent years holding
a number of management roles at other pharmaceutical companies and this
experience assists the Company in working though the similar issues that it may
face in its own operations.
5
Section 16(a) Beneficial
Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires a company’s directors, officers and
stockholders who beneficially own more than 10% of any class of equity
securities of the company registered pursuant to Section 12 of the Exchange Act,
collectively referred to herein as the Reporting Persons, to file initial
statements of beneficial ownership of securities and statements of changes in
beneficial ownership of securities with respect to the company’s equity
securities with the SEC. All Reporting Persons are required by SEC
regulation to furnish us with copies of all reports that such Reporting Persons
file with the SEC pursuant to Section 16(a).
Based
solely on our review of the copies of such forms received by us and upon written
representations of the Reporting Persons received by us, we believe that there
has been compliance with all Section 16(a) filing requirements applicable to our
Reporting Persons.
Code
of Business Ethics and Conduct
On
March 17, 2003, our board adopted a Code of Business Ethics and Conduct,
which may also be found on our website at www.senesco.com. Our Code of
Ethics contains written standards designed to deter wrongdoing and to
promote:
|
·
|
honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
|
·
|
full,
fair, accurate, timely, and understandable disclosure in reports and
documents filed with the SEC and in other public communications made by
the Company;
|
|
·
|
compliance
with applicable governmental laws, rules and
regulations;
|
|
·
|
the
prompt internal reporting of violations of our Code of Ethics to an
appropriate person or persons identified in our Code of Ethics;
and
|
|
·
|
accountability
for adherence to our Code of
Ethics.
|
Each of
our employees, officers and directors completed a signed certification to
document his or her understanding of and compliance with our Code of
Ethics.
Audit
Committee
|
We have
an Audit Committee which was established in accordance with
Section 3(a)(58)(A) of the Exchange Act. Our Audit Committee was
established in July 1999. On June 27, 2008, our board adopted an
Amended and Restated Audit Committee Charter. The primary responsibilities
of our Audit Committee include:
|
·
|
appointing,
approving the compensation of, and assessing the independence of our
independent registered public accounting
firm;
|
|
·
|
overseeing
the work of our independent registered public accounting firm, including
through the receipt and consideration of certain reports from our
independent registered public accounting
firm;
|
6
|
·
|
reviewing
and discussing with management and our independent registered public
accounting firm our annual and quarterly financial statements and related
disclosures;
|
|
·
|
monitoring
our internal control over financial reporting, disclosure controls and
procedures and code of business conduct and
ethics;
|
|
·
|
discussing
our risk management policies;
|
|
·
|
establishing
policies regarding hiring employees from our independent registered public
accounting firm and procedures for the receipt and retention of accounting
related complaints and concerns;
|
|
·
|
meeting
independently with our independent registered public accounting firm and
management; and
|
|
·
|
preparing
the audit committee report required by SEC
rules.
|
Our Audit
Committee is currently comprised of John N. Braca, David Rector and Rudolf
Stalder. Mr. Braca currently serves as the chairman of the Audit
Committee. The NYSE Amex currently requires an Audit Committee
comprised solely of independent directors. Messrs. Braca, Rector and
Stalder are “independent” members of our board as defined in Rule 10A-3 under
the Securities Exchange Act of 1934, as amended, or the Exchange Act, and
Section 803 of the NYSE Amex Company Guide. In addition, our board of
directors has determined that Mr. Braca satisfies the definition of an audit
committee “financial expert” as set forth in Item 401(d) (5) of Regulation S-K
promulgated by the SEC. Our Audit Committee held four (4) meetings
during Fiscal 2010.
Item
11. Executive
Compensation.
Compensation Discussion and
Analysis
This
Compensation Discussion and Analysis explains the principles underlying our
compensation policies and decisions and the principal elements of compensation
paid to our executive officers during Fiscal 2010 and as anticipated for Fiscal
2011. Our Chief Executive Officer, Chief Financial Officer and all of
our other executive officers included in the Summary Compensation Table will be
referred to as the “named executive officers” for purposes of this
discussion.
Compensation
Objectives and Philosophy
The
Compensation Committee, also referred to herein as the Committee, of the board
is responsible for the following:
|
·
|
to
discharge the board’s responsibilities relating to compensation of our
directors and named executive
officers;
|
|
·
|
to
have overall responsibility for approving and evaluating our director and
officer compensation plans, policies and
programs;
|
|
·
|
to
have responsibility for producing an annual report on executive
compensation for inclusion in our annual report or proxy statement;
and
|
7
|
·
|
to
review and discuss with our management the Compensation Discussion &
Analysis, which is included in our annual report or proxy
statement.
|
As part
of this process, the Committee seeks to accomplish the following objectives with
respect to our executive compensation programs:
|
·
|
to
motivate, recruit and retain executives capable of meeting our strategic
objectives;
|
|
·
|
to
provide incentives to ensure superior executive performance and successful
financial results for us; and
|
|
·
|
to
align the interests of executives with the long-term interests of our
stockholders.
|
The
Committee seeks to achieve these objectives by:
|
·
|
linking
a substantial portion of compensation to our achievement of long-term and
short-term financial objectives and the individual’s contribution to the
attainment of those objectives;
|
|
·
|
providing
long-term equity-based incentives and encouraging direct share ownership
by executives with the intention of providing incentive-based compensation
to encourage a long-term focus on company profitability and stockholder
value; and
|
|
·
|
understanding
the marketplace and establishing a compensation structure that is adjusted
for our position in the marketplace and our current financial condition
and limited capital resources.
|
Setting
Executive Compensation
In Fiscal
2009, the Committee engaged J. Richard and Co., also referred to herein as J.
Richard, a nationally recognized compensation consulting firm, to provide
competitive compensation data and general advice on our compensation programs
and policies for our Chief Executive Officer, and J. Richard was available for
consultation with the Committee to discuss the compensation programs for our
other named executive officers. During Fiscal 2009, J. Richard
performed a market analysis of the compensation paid by comparable companies and
provided the Committee with recommended compensation ranges for the Chief
Executive Officer based on the competitive data. In addition, the
Chief Executive Officer provided recommendations to the Committee with respect
to the compensation packages for those other named executive officers for Fiscal
2009, and the Committee also reviewed the Chief Executive Officer’s
recommendation against compensation paid by comparable companies.
For
Fiscal 2010, the Committee’s objective was to target each component of
compensation listed below to be competitive with comparable positions at peer
group companies, and to target the total annual compensation of each named
executive officer at the appropriate level for comparable positions at the
competitive peer group companies.
8
During the compensation review process
for Fiscal 2010, the Committee elected not to engage an independent compensation
consultant. This decision was based on the Committee’s belief that
prior years analysis did not closely enough parallel the scope of our business
relative to the breadth of operations in general, executive officers scope of
duties and responsibilities, position in the life cycle, financial
responsibilities, capitalization and size of management staff. The
Committee also met with the Chief Executive Officer who agreed with the approach
not to engage an outside consultant and agreed to provide a review of
management’s performance against objectives for the period to assist in
ascertaining equity award levels. The Committee consulted with J.
Richard as needed regarding its proposed programs and approaches to compensation
during Fiscal 2010, for which J. Richard was compensated. In
addition, the Committee consulted with J. Richard in connection with its plans
for Fiscal 2011.
The Committee elected to identify
various companies in the biotech sector it felt were somewhat close in scope of
operation to the Company. It became evident, as in prior years, that
due to the key banner points listed above (the breadth of operations in general,
executive officers scope of duties and responsibilities, position in the life
cycle, financial responsibilities, capitalization and size of management staff)
it is very difficult to identify such public entities for comparative
purposes. For Fiscal 2010 and Fiscal 2009, the companies we elected
to evaluate were as follows: Adolor Corporation (ADLR); MDRNA
Inc. (MRNA); Anesiva Inc. (ANSV); Santarus Inc. (SNTS); Sequenom, Inc.(SQNM);
Cubist (CBST); Lexicon (LXRX); and Targacept, Inc. (TRGT).
However,
in determining the compensation of each named executive officer, the Committee
also considers a number of other factors, including our recent performance and
the named executive officer’s individual performance, the Chief Executive
Officer’s recommendations and the importance of the executive’s position and
role in relation to execution of the Company’s strategic plan. There
is no pre-established policy for allocation of compensation between cash and
non-cash components or between short-term and long-term
components. Instead, the Committee determines the mix of compensation
for each named executive officer based on its review of the competitive data,
its subjective analysis of that individual’s performance and contribution to our
financial performance, the financial strength and outlook of the Company and,
most of all, what is considered fair and reasonable based on the scope of
operations and responsibilities. For the Chief Executive Officer, for
Fiscal 2010, the Committee set his performance targets and compensation levels
based upon the input from the Committee’s analysis and from the Chief Executive
Officer. For other named executive officers, the Committee sets performance
targets and compensation levels after receiving recommendations from the Chief
Executive Officer and reviewing those recommendations with the full
Committee.
In
selecting companies to survey for such compensation purposes, the Committee
considered many factors not directly associated with the stock price performance
of those companies, such as geographic location, development stage,
organizational structure and market capitalization. For this reason,
there is not a meaningful correlation between the companies included within the
peer group identified for comparative compensation purposes and the companies
included within the RDG Micro Biotechnology Index.
9
Components
of Compensation
For
Fiscal 2010, our executive compensation program included the following
components:
|
·
|
base
salary;
|
|
·
|
cash
bonuses;
|
|
·
|
annual
short-term equity incentives;
|
|
·
|
a
continuation of the long-term equity incentive program;
and
|
|
·
|
change
in control and other severance
arrangements.
|
Currently,
for Fiscal 2011, our executive compensation program includes the following
components:
|
·
|
base
salary;
|
|
·
|
annual
short-term equity incentives; and
|
|
·
|
a
continuation of the long-term equity incentive
program.
|
The
Committee seeks to align the named executive officers’ and stockholders’
interests in a pay for performance environment. On average, a large portion of
an executive officer's total compensation is at risk, with the amount actually
paid tied to achievement of pre-established objectives and individual
goals.
Base
Salary
In General – It is the
Committee’s objective to set a competitive rate of annual base salary or
consulting fees for each named executive officer. The Committee
believes competitive base salaries are necessary to attract and retain top
quality executives, since it is common practice for public companies to provide
their executive officers with a guaranteed annual component of compensation that
is not subject to performance risk. However, the Committee recognizes
that we are still a development stage company, with little to no revenue
currently and believes that developing too rigid of a compensation structure can
become detrimental to our progress.
When
compared to comparable positions at the competitive peer group companies, it is
the Committee’s objective to target the base compensation level of executive
officers below the 50th percentile because of our current financial
position. Historically, the compensation level for our executive
officers has been below the 25th
percentile of competitive peer group companies. However, in determining the
compensation of each executive officer, the Committee also considers a number of
other factors, including recent Company and individual performance and the CEO’s
recommendations. There is no pre-established policy for allocation of
compensation between cash and non-cash components or between short-term and
long-term components. Instead, the Committee determines the mix of
compensation for each executive officer based on its review of the competitive
data and its subjective analysis of that individual’s performance and
contribution to the Company’s financial performance.
10
Base Salary for Fiscal 2010
– For Fiscal 2010,
each named executive officer’s salary was not increased as the Committee deemed
the scope of their resource management (i.e. personnel, operating budgets, and
outside relationships) were commensurate, fair and reasonable relative to their
current base salary rate. The table below shows annual Fiscal 2010
and Fiscal 2009 base salary or consulting rates for each named executive
officer:
2010
|
2009
|
%
|
||||||||||||
Name
|
Title
|
Salary
|
Salary
|
Increase
|
||||||||||
Leslie
J. Browne, Ph.D
|
President
and Chief Executive Officer (1)
|
$ | 250,000 | $ | 0 | 0.0 | % | |||||||
Bruce
C. Galton
|
President
and Chief Executive Officer (2)
|
$ | 255,000 | $ | 255,000 | 0.0 | % | |||||||
Jack
Van Hulst
|
President
and Chief Executive Officer (3)
|
$ | 60,000 | $ | 0 | 0.0 | % | |||||||
John
E. Thompson
|
Executive
Vice-President and Chief
|
|||||||||||||
Scientific
Officer
|
$ | 65,000 | (4) | $ | 65,000 | (4) | 0.0 | % | ||||||
Sascha
P. Fedyszyn
|
Vice-President
of Corporate
|
|||||||||||||
Development
and Secretary (5)
|
$ | 107,500 | $ | 107,500 | 0.0 | % | ||||||||
Joel
P. Brooks
|
Chief
Financial Officer and Treasurer
|
$ | 160,000 | $ | 160,000 | 0.0 | % | |||||||
Richard
Dondero
|
Vice-President
of Research and
|
|||||||||||||
Development
|
$ | 143,000 | $ | 143,000 | 0.0 | % |
|
(1)
|
Dr.
Browne was appointed President and Chief Executive Officer on May 25,
2010.
|
|
(2)
|
Mr.
Galton resigned from the Company on November 16,
2009.
|
|
(3)
|
Mr.
Van Hulst was appointed President and Chief Executive Officer on November
16, 2009 and resigned as President and Chief Executive Officer on May 24,
2010.
|
|
(4)
|
Represents
consulting fees paid under a consulting
agreement.
|
|
(5)
|
Mr.
Fedyszyn resigned from the Company on February 1,
2010.
|
Effective
November 16, 2009, Jack Van Hulst, a member of our board of directors, assumed
the role of President and Chief Executive Officer of Senesco. We did
not enter into an employment agreement with Mr. Van Hulst, however, the
Committee and independent members of the board determined to pay to Mr. Van
Hulst a monthly salary in the amount of $5,000 and to grant to Mr. Van Hulst
options to purchase shares of our common stock, par value $0.01, in the amount
of 25,000 options per month, pursuant to our 2008 Incentive Compensation Plan,
which such options vested immediately upon each issuance. Such
options were granted quarterly, two (2) trading days following the Company’s
filing of its quarterly report for the respective quarterly
period. Mr. Van Hulst resigned as President and Chief Executive
Officer on May 24, 2010, but remains a member of our board of
directors.
Effective
May 25, 2010, Leslie J. Browne was appointed President and Chief Executive
Officer of Senesco.
Annual Bonuses for Fiscal
2010– Bonuses are determined at the discretion of the board based upon
the recommendation of the Committee. In October 2010, cash bonuses
were granted to Mr. Brooks and Mr. Dondero in the amount of $15,000 each for
services rendered in Fiscal 2010.
The
Committee wishes to provide additional compensation to all of the named
executive officers, including the Chief Executive Officer, through the
development of incentive programs based on the named executives performance and
attainment of stated objectives that enhance shareholder value in order to (i)
link a substantial portion of their compensation to the achievement of
short-term and long-term objectives and (ii) to save cash given our limited
capital resources.
11
During Fiscal 2009, the Committee
determined that we could in no manner financially support the terms of the
various employment agreements in effect. The Committee issued a
notice of non-renewal to all named executive officers in effect not renewing the
employment agreements moving forward following the various upcoming anniversary
dates of each agreement. We anticipate that each of the named
executive officers will, following the expiration of their employment
agreements, continue as employees on an “at will basis”, meaning that either we
or the employees may discontinue their employment with or without notice or
cause. The employees’ respective salaries, duties and titles may be
adjusted as determined by the Committee.
Base Salary for Fiscal 2011 –
For Fiscal 2011, after a review of the factors discussed above, the following
named executive officer’s salaries were increased as follows.
2011
|
2010
|
%
|
||||||||||||
Name
|
Title
|
Salary
|
Salary
|
Increase
|
||||||||||
Joel
P. Brooks
|
Chief
Financial Officer, Treasurer and Secretary
|
$ | 164,800 | $ | 160,000 | 3.0 | % | |||||||
Richard
Dondero
|
Vice-President
of Research and
|
|||||||||||||
Development
|
$ | 147,300 | $ | 143,000 | 3.0 | % |
The
Committee did not change the salary of Leslie J. Browne, Ph.D., our President
and Chief Executive Officer, due to the fact that Dr. Browne’s compensation was
recently determined in connection with his appointment to his current positions
in May 2010. Additionally, the Committee did not change the
consulting fee for John E. Thompson, Ph.D., our Executive Vice President and
Chief Scientific Officer, as such consulting fee will be reviewed and revised,
as necessary, by the Committee in connection with the board’s review of our
research and development budget for Fiscal 2011.
Annual Bonuses for Fiscal
2011– Bonuses are determined at the discretion of the
board
based upon the recommendation of the Committee.
Short
Term Incentive Equity Awards
In General – A portion of each
named officer’s compensation is provided in the form of short-term equity
awards. It is the Committee’s belief that properly structured equity
awards are an effective method of aligning the short-term interests of our named
executive officers with those of our stockholders.
Equity
awards were made in the form of incentive stock options, also referred to herein
as ISO’s. The Committee has followed a grant practice of tying equity
awards to its annual year-end review of individual performance, its assessment
of our performance and our operational results.
Incentive Stock Option Fiscal 2010
Awards – On
February 16, 2010, the Committee determined to award options to purchase shares
of common stock of the Company, par value $0.01, to each of Joel Brooks and
Richard Dondero. These option grants were intended to retain such
officers and to motivate such officers in the continued performance of their
respective offices.
12
Accordingly,
effective February 19, 2010, Mr. Brooks and Mr. Dondero were each granted
options to purchase 300,000 shares of the Company’s common stock pursuant to the
Company’s 2008 Incentive Compensation Plan. Such options vest as
follows:
|
·
|
Options
to purchase 60,000 shares of common stock vest immediately upon issuance;
and
|
|
·
|
Unless
otherwise determined by the Committee, options to purchase up to 60,000
shares of common stock vest on each of June 30, 2010, June 30, 2011, June
30, 2012 and June 30, 2013.
|
The
Committee had the right to evaluate Mr. Brooks’ and Mr. Dondero’s respective
performances during the preceding fiscal year and unilaterally reduce their
unvested options in the Committee’s sole discretion. The unvested
options of a relevant officer shall be forfeited upon the termination of such
officer’s employment. The options were granted at an exercise price
equal to the fair market value of the Company’s common stock on February 19,
2010 or $0.29.
Short-Term Incentive Plan for Fiscal
2011 – The Committee, in coordination with the Company’s Chief Executive
Officer, has established the Company’s short-term goals and objectives for
Fiscal 2011, which include the following:
|
·
|
Contributions
relating to the development of the Company’s SNS01-T
assets:
|
|
o
|
Submit
IND for Phase I/II clinical trial;
|
|
o
|
Initiate
Phase I/II clinical trial;
|
|
o
|
Plan
Phase II clinical trial;
|
|
o
|
Develop
SNS01-T development plan to NDA
submission;
|
|
·
|
Contributions
relating to finance objectives:
|
|
o
|
Maintain
sufficient capital resources;
|
|
o
|
Maintain
NYSE Amex compliance;
|
|
o
|
Increase
shareholder communications and enhance investor
relations;
|
|
·
|
Contributions
relating to corporate development:
|
|
o
|
Update
corporate strategy; and
|
|
o
|
Re-align
Company structure to best implement corporate
strategies.
|
The
foregoing goals and objectives shall be weighted as follows: 50% for
contributions relating to the development of the Company’s SNS01-T assets; 25%
to contributions relating to finance objectives; and 25% to contributions
relating to corporate development. The option awards for each of the
foregoing goals and objectives shall be equally alloted to the following named
executive officers – Dr. Browne and Messrs. Brooks and Dondero – at one-third
each.
13
The
Committee, working with the Company’s Chief Executive Officer, has identified
additional individual performance goals and objectives for Fiscal 2011 for
Messrs. Brooks and Dondero, which primarily include broadening their knowledge
base and leadership profile within the scientific and business community of our
peers, competitors, clients and customers.
In
October 2010, the Committee determined to award the foregoing options to
purchase shares of common stock of the Company, par value $0.01, to the
following named executive officers in connection with the short-term goals and
objectives for Fiscal 2011:
Leslie
J. Browne, Ph.D.
|
725,000 | |||
Joel
Brooks
|
425,000 | |||
Richard
Dondero
|
425,000 | |||
John
E. Thompson, Ph.D.
|
425,000 |
Such
options will be granted two days after the filing of our quarterly report on
Form 10-Q for the period ended September 30, 2010 and will have an exercise
price equal to the closing price of the common stock on the date of
grant. Twenty-five percent (25%) of such options will vest on the
first anniversary of the date of grant with the balance vesting at a rate of
1/36 for each month thereafter, unless the Committee has determined that the
performance metrics have not been met.
Long-Term
Incentive Equity Awards
In General – A portion of each
named executive officer’s compensation is provided in the form of long-term
incentive equity awards as set forth in the Long-Term Incentive Plan (the
“LTIP”) discussed below. It is the Committee’s belief that properly
structured equity awards are an effective method of aligning the long term
interests of our named executive officers with those of our
stockholders.
Beginning
with Fiscal 2008, equity awards have been made in the form of restricted stock
units, also referred to herein as RSU’s; however, each executive officer could
elect to receive an equity award in stock options. Beginning with
Fiscal 2010, equity awards have been made in the form of stock
options. The Committee followed a grant practice of tying equity
awards upon of the completion of certain event milestones (“LTIP Event
Milestones”) discussed below. Accordingly, it is expected that any
equity awards to the named executive officers will be made promptly after the
completion of each LTIP Event Milestone. The Committee has
established long-term incentive grant guidelines for eligible named executive
officers based on competitive annual grant data provided by management’s
compensation consultant and by J. Richard, the Committee’s compensation
consultant.
Long-Term Incentive Plan –
Beginning on December 13, 2007 (the “LTIP Effective Date”) and ending on the
earlier of (i) the completion of the Third LTIP Event Milestone or (ii) three
(3) years from the LTIP Effective Date, LTIP equity grants to our named
executive officers are in the form of RSU’s and ISO’s. Each RSU and
ISO entitles the recipient to receive one share of our common stock upon vesting
or upon a designated date or event following such vesting. Each ISO
was granted with an exercise price of $0.99. Each named executive had
the option of receiving their RSU grant in the form of RSU’s or
ISO’s. If a named executive chose to receive ISO’s in lieu of RSU’s,
then such named executive was granted twice as many ISO’s, due to the $0.99
exercise price of such ISO’s.
14
The total
RSU’s and ISO’s in the LTIP pool awarded to our named executive officers was
775,000 shares, which consisted of 225,000 RSU’s and 550,000 ISO’s, representing
3.9% of the outstanding shares as of July 1, 2009.
The
amount and percentage of the RSU’s awarded, as adjusted for forfeitures, to all
the named executive officers as a whole for the completion of each of the three
LTIP Event Milestones are as follows:
LTIP Event Milestone
|
Percentage of
LTIP RSU and
ISO Award Pool
|
Total Amount of RSUs and
ISO’s Awarded As a Whole to
All Named Executive Officers
|
||||||
First LTIP Event Milestone.
The Execution of a Research Agreement
to Conduct Phase I/II Trials at a Research Facility
|
20 | % | 120,000 | |||||
Second LTIP Event Milestone.
The Filing and Acceptance by the U.S. FDA of an
investigation new drug application, or IND, by the date set by the
Committee
|
20 | % | 120,000 | |||||
Third LTIP Event Milestone.
The Successful Completion of Phase I/II Trials
Approved by the FDA by the date set by the
Committee
|
60 | % | 360,000 |
Each
named executive officer eligible to receive an award pursuant to the LTIP is
required to be employed by the Company upon the completion of each individual
LTIP Event Milestone. If a named executive officer is no longer
employed by the Company before the completion of an individual LTIP Event
Milestone, then such named executive officer’s respective RSU or ISO award tied
to such uncompleted LTIP Event Milestone will be forfeited and so will that
total portion of the whole LTIP award pool. The Committee shall have the sole
discretion to reinstate any eliminated portion or segment of a LTIP Event
Milestone award or that portion of a LTIP Event Milestone award for a successor
to the LTIP Event Milestones.
15
The LTIP
awards for each current named executive officer upon the completion of each
individual LTIP Event Milestone shall be as follows:
Name
|
Title
|
Percentage of
Total RSU’s
Awarded Upon
Completion of a
LTIP Event
Milestone
|
Number of
RSU’s Awarded
upon Completion
of First LTIP
Event Milestone
|
Number of
RSU’s Awarded
upon
Completion of
Second LTIP
Event Milestone
|
Number of
RSU’s Awarded
upon
Completion of
Third LTIP
Event Milestone
|
|||||||||||||
Joel P. Brooks
(1)
|
Chief Financial Officer, Treasurer and
Secretary
|
10 | % | 10,000 | 10,000 | 30,000 | ||||||||||||
John E. Thompson
(2)
|
Executive Vice-President and Chief Scientific
Officer
|
25 | % | 50,000 | 50,000 | 150,000 | ||||||||||||
Richard Dondero
(2)
|
Vice-President of Research and
Development
|
30 | % | 60,000 | 60,000 | 180,000 |
(1)
Represents
RSU’s.
(2)
Represents ISO’s.
As of the date hereof, the Committee
has determined that the First LTIP Event Milestone has been met and the RSU’s
and Options related to such event shall vest two trading days after the filing
of our quarterly report on Form 10-Q for the period ended September 30,
2010. The Committee has also determined that none of the remaining
LTIP Event Milestones have been met and will expire on December 13,
2010.
Market Timing of Equity
Awards. The Compensation Committee does not engage in any market timing
of the equity awards made to the executive officers or other award recipients,
and accordingly, there is no established practice of timing our awards in
advance of the release of favorable financial results or adjusting the award
date in connection with the release of unfavorable financial developments
affecting our business. In addition, we will attempt, when
possible, to make equity awards to our executive officers and directors promptly
after the release of our financial results. For example, the October
2010 awards shall vest two trading days after the filing of our quarterly report
on Form 10-Q for the quarter ended September 30, 2010.
Executive
Benefits and Perquisites
In General – The named
executive officers also are provided with certain market competitive
benefits. They are currently not provided with any
perquisites. It is the Committee’s belief that such benefits are
necessary for us to remain competitive and to attract and retain top caliber
executive officers, since such benefits are typically provided by companies in
the biotechnology industry and with other companies with which we compete for
executive talent.
16
Retirement Benefits – The
named executive officers may participate in the company-wide 401(k)
plan. We do not make any contributions to the 401(k) plan and do not
have any additional retirement benefits.
Other Benefits and Perquisites
– All administrative employees, including the named executive officers, are
eligible to receive standard health, disability, and life
insurance. We do not provide any additional benefits and
perquisites.
IRC
Section 162(m) compliance
As a
result of Section 162(m) of the Internal Revenue Code, publicly-traded
companies such as us are not allowed a federal income tax deduction for
compensation, paid to the Chief Executive Officer and the four other highest
paid executive officers, to the extent that such compensation exceeds
$1 million per officer in any one year and does not otherwise qualify as
performance-based compensation. Currently, our stock option compensation
packages are structured so that compensation deemed paid to an executive officer
in connection with the exercise of a stock option should qualify as
performance-based compensation that is not subject to the $1 million
limitation. However, other awards, like RSU’s and ISO’s, made under our stock
incentive plans may or may not so qualify. In establishing the cash and equity
incentive compensation programs for the executive officers, it is the
Committee’s view that the potential deductibility of the compensation payable
under those programs should be only one of a number of relevant factors taken
into consideration, and not the sole governing factor. For that reason the
Committee may deem it appropriate to continue to provide one or more executive
officers with the opportunity to earn incentive compensation, including cash
bonus programs tied to our financial performance and RSU awards, which may be in
excess of the amount deductible by reason of Section 162(m) or other
provisions of the Internal Revenue Code. It is the Committee’s belief that cash
and equity incentive compensation must be maintained at the requisite level to
attract and retain the executive officers essential to our financial success,
even if part of that compensation may not be deductible by reason of the
Section 162(m) limitation. For Fiscal 2010, none of our
executive officer’s compensation reached the $1 million
limitation. The Committee will continue to evaluate such $1 million
limitation in Fiscal 2011.
Report
of the Compensation Committee
The
Compensation Committee has reviewed and discussed the Compensation, Discussion
and Analysis with management, and based on this review and these discussions,
the Compensation Committee recommended to the board that the Compensation,
Discussion and Analysis be included in the Company’s Annual Report on Form
10-K/A.
This
report is submitted on behalf of the
|
Compensation
Committee
|
David
Rector, Chairman
|
John
N. Braca
|
17
Other
Compensation
Summary
Compensation Table
The
following table sets forth information concerning compensation for services
rendered in all capacities during the fiscal years ended June 30, 2010, June 30,
2009 and June 30, 2008 awarded to, earned by or paid to: (i) each person who
served as our Chief Executive Officer; (ii) our Chief Financial Officer; and
(iii) each of our three other executive officers whose total compensation for
Fiscal 2010 was in excess of $100,000, collectively referred to herein as the
named executive officers. No other executive officers who would have
otherwise been includable in such table on the basis of total compensation for
Fiscal 2010 have been excluded by reason of their termination of employment or
change in executive status during that year.
Name
and Principal
Position
|
Year
(1)
|
Salary
($)(2)
|
Bonus
($)(3)
|
Stock
Awards
($) (4)
|
Option
Awards
($) (5)
|
Non-
Equity
Incentive Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
All
Other
Compensation
($) (6)
|
Total
($)
|
|||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||||||||
Leslie
J. Browne, Ph.D. (7)
|
2010
|
$ | 27,885 | - | - | $ | 9,120 | - | - | $ | 37,005 | |||||||||||||||||||||||
(President
and Chief
|
2009
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Executive
Officer)
|
2008
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Jack
Van Hulst (8)
|
2010
|
$ | 32,538 | - | - | $ | 41,976 | - | - | - | $ | 74,514 | ||||||||||||||||||||||
(Former
President and
|
2009
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Chief
Executive Officer)
|
2008
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Bruce
C. Galton (9)
|
2010
|
$ | 91,612 | - | - | - | - | - | $ | 97,875 | $ | 189,487 | ||||||||||||||||||||||
(Former
President and
|
2009
|
$ | 258,348 | - | $ | 39,600 | $ | 7,793 | - | - | - | $ | 305,741 | |||||||||||||||||||||
Chief
Executive Officer)
|
2008
|
$ | 258,347 | - | $ | 49,723 | $ | 24,414 | - | - | $ | 14,711 | $ | 347,195 | ||||||||||||||||||||
Joel
P. Brooks
|
2010
|
$ | 163,306 | $ | 15,000 | - | $ | 7,040 | - | - | - | $ | 185,346 | |||||||||||||||||||||
(Chief
Financial Officer ,
|
2009
|
$ | 161,986 | - | $ | 16,800 | $ | 4,870 | - | - | - | $ | 183,656 | |||||||||||||||||||||
Secretary
and Treasurer)
|
2008
|
$ | 149,885 | - | $ | 36,903 | $ | 15,258 | - | - | - | $ | 202,046 | |||||||||||||||||||||
Richard
Dondero
|
2010
|
$ | 146,677 | $ | 15,000 | - | $ | 7,040 | - | - | - | $ | 168,717 | |||||||||||||||||||||
(Vice-President
of
|
2009
|
$ | 145,507 | - | - | $ | 41,670 | - | - | - | $ | 187,177 | ||||||||||||||||||||||
Research)
|
2008
|
$ | 130,008 | - | - | $ | 69,920 | - | - | - | $ | 199,928 | ||||||||||||||||||||||
Sascha P.
Fedyszyn (10)
|
2010
|
$ | 56,407 | - | - | - | - | - | $ | 42,666 | $ | 99,073 | ||||||||||||||||||||||
(Former
Vice-President of
|
2009
|
$ | 108,091 | - | $ | 25,200 | $ | 4,870 | - | - | - | $ | 138,161 | |||||||||||||||||||||
Corporate
Development and Secretary)
|
2008
|
$ | 103,634 | - | $ | 24,948 | $ | 14,247 | - | - | $ | 3,731 | $ | 146,560 | ||||||||||||||||||||
John
E. Thompson Ph.D.
|
2010
|
$ | 65,000 | - | - | - | - | - | - | $ | 65,000 | |||||||||||||||||||||||
(Executive
Vice-President
|
2009
|
$ | 65,000 | - | - | $ | 26,950 | - | - | - | $ | 91,950 | ||||||||||||||||||||||
and
Chief Scientific Officer)
|
2008
|
$ | 65,000 | - | - | $ | 54,280 | - | - | - | $ | 119,280 |
(1)
|
Senesco’s
fiscal year ends on June 30.
|
(2)
|
Such
amount represents actual salary paid, including such amounts deferred in
connection with our 401K plan.
|
18
(3)
|
The
bonus earned for the fiscal year ended June 30, 2010 was declared and paid
in October 2010. There were no bonuses earned or paid during
the fiscal years ended June 30, 2009 and June 30,
2008.
|
(4)
|
The
amounts shown are the compensation costs recognized in our financial
statements related to RSU’s awarded to each named executive officer, to
the extent we recognized compensation cost for such awards in accordance
with the provisions of SFAS 123R. The fair values of the RSU’s
awarded were calculated based on the fair market value of the underlying
shares of common stock on the respective grant dates and were not adjusted
to take into account any estimated forfeitures. The following
table shows the portion of the overall amount of the compensation cost
attributable to each RSU.
|
Name
|
Grant Date
|
# of Shares
Subject to RSU
Associated With
Cost
|
Compensation Cost
in Fiscal 2009
|
Compensation Cost
in Fiscal 2008
|
||||||||||
Bruce
C. Galton
|
11/19/2008
|
66,000 | $ | 39,600 | $ | - | ||||||||
12/13/2007
|
52,225 | $ | - | $ | 49,723 | |||||||||
Joel
P. Brooks
|
11/19/2008
|
28,000 | $ | 16,800 | $ | - | ||||||||
12/13/2007
|
37,275 | $ | - | $ | 36,903 | |||||||||
Sascha
P. Fedyszyn
|
11/19/2008
|
42,000 | $ | 25,200 | $ | - | ||||||||
12/13/2007
|
25,200 | $ | - | $ | 24,948 |
(5)
|
The
amounts shown are the compensation costs recognized in our financial
statements related to stock options granted to each named executive
officer, to the extent we recognized compensation cost for such awards in
accordance with the provisions of SFAS 123R. For a discussion
of valuation assumptions used in the SFAS 123R calculations, see Note 12
of Notes to Consolidated Financial Statements. The grant date
fair values used to calculate such compensation costs were not adjusted to
take into account any estimated forfeitures. The following
table shows the portion of the overall amount of the compensation cost
attributable to each.
|
19
Name
|
Option
Grant
Date
|
Exercise
Price
|
# of Shares
Associated
With
Charge
|
Compensation
Cost in Fiscal
2010
|
Compensation
Cost in Fiscal
2009
|
Compensation
Cost in Fiscal
2008
|
||||||||||||||||
Leslie
J. Browne, Ph.D.
|
5/25/2010
|
$ | 0.55 | 1,000,000 | 9,120 | - | - | |||||||||||||||
2/19/2010
|
$ | 0.29 | 37,500 | 7,920 | - | - | ||||||||||||||||
Jack
Van Hulst
|
5/20/2010
|
$ | 0.61 | 75,000 | 34,056 | - | - | |||||||||||||||
12/13/2007
|
- | - | - | - | - | |||||||||||||||||
Bruce
C. Galton
|
12/14/2006
|
$ | 1.08 | 40,000 | - | $ | 7,793 | $ | 16,320 | |||||||||||||
12/14/2005
|
$ | 1.40 | 40,000 | - | - | $ | 8,094 | |||||||||||||||
2/19/2010
|
$ | 0.29 | 300,000 | 7,040 | - | - | ||||||||||||||||
Joel
P. Brooks
|
12/14/2006
|
$ | 1.08 | 25,000 | - | $ | 4,870 | $ | 10,199 | |||||||||||||
12/14/2005
|
$ | 1.40 | 25,000 | - | - | $ | 5,059 | |||||||||||||||
2/19/2010
|
$ | 0.29 | 300,000 | 7,040 | - | - | ||||||||||||||||
11/19/2008
|
$ | 0.60 | 80,000 | - | $ | 36,800 | - | |||||||||||||||
Richard
Dondero
|
12/13/2007
|
$ | 0.99 | 71,924 | - | - | $ | 54,662 | ||||||||||||||
12/14/2006
|
$ | 1.08 | 25,000 | - | $ | 4,870 | $ | 10,199 | ||||||||||||||
12/14/2005
|
$ | 1.40 | 25,000 | - | - | $ | 5,059 | |||||||||||||||
12/14/2006
|
$ | 1.08 | 25,000 | - | $ | 4,870 | $ | 10,199 | ||||||||||||||
Sascha
P. Fedyszyn
|
12/14/2005
|
$ | 1.40 | 20,000 | - | - | $ | 4,048 | ||||||||||||||
11/19/2008
|
$ | 0.60 | 48,000 | - | $ | 22,080 | - | |||||||||||||||
12/13/2007
|
$ | 0.99 | 52,676 | - | - | $ | 40,033 | |||||||||||||||
John
E. Thompson Ph.D.
|
12/14/2006
|
$ | 1.08 | 25,000 | - | $ | 4,870 | $ | 10,199 | |||||||||||||
12/14/2005
|
$ | 1.40 | 20,000 | - | - | $ | 4,048 |
(6) Such amount represents unused vacation
time and severance paid during the fiscal year ended June 30, 2010 and unused
vacation time paid during the fiscal year ended June 30,
2008.
(7) Dr. Browne was appointed President and Chief Executive
Officer on May 25, 2010.
(8)
Mr. Van
Hulst served as our President and Chief Executive Officer from November 16, 2009
through May 24, 2010.
(9) Mr.
Galton resigned as our President and Chief Executive Officer on November 16,
2009.
(10) Mr. Fedyszyn resigned as our
Vice-President Corporate Development and Secretary on February 1,
2010.
Executive
Compensation Agreements
On July
1, 2003, Joel P. Brooks entered into an employment agreement with Senesco for a
term of three (3) years. The agreement automatically renewed for successive
one-year terms thereafter, unless written notice of termination was provided at
least 120 days prior to the end of the applicable term. Notice of
termination of the agreement was provided on May 18, 2009, and Mr. Brooks’
employment agreement expired on June 30, 2010.
20
On July
19, 2004, we hired Richard Dondero as our new Vice President of Research and
Development. In conjunction with Mr. Dondero’s appointment, we
entered into a three (3) year employment agreement with Mr. Dondero, effective
July 19, 2004. The agreement automatically renewed for successive one
(1) year terms thereafter, unless written notice of termination was provided at
least 120 days prior to the end of the applicable term. Notice of termination of
the agreement was provided on May 18, 2009 and Mr. Dondero’s employment
agreement expired on July 18, 2010. The agreement provides Mr.
Dondero with an annual base salary of $110,000 plus certain benefits, including
potential bonuses, equity awards and other perquisites as determined by our
board. Our board has since approved several increases in Mr.
Dondero’s base salary, which is currently $147,300.
On May 25, 2010, we hired Leslie J.
Browne, Ph.D. as our new President and Chief Executive Office. In
conjunction with Dr. Browne’s appointment, we entered into an agreement whereby
we will pay six months of severance at his base salary in effect at such time,
in the event that Dr. Browne is terminated without cause within the first year
of employment, which would amount to $125,000. He would also be
provided with a continuation of his medical benefits for a period of six months
from the date of termination.
21
Grants
of Plan-Based Awards
The
following Grants of Plan Based Awards table provides additional information
about stock and option awards and equity incentive plan awards granted to our
named executive officers during the fiscal year ended June 30,
2010.
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
All Other
Stock
Awards:
Number
of
Shares
of Stock
|
All Other
Option
Awards:
Number of
Securities
Under-
lying
|
Exercise
or Base
Price of
Option
|
Grant
Date Fair
Value of
Equity
|
|||||||||||||||||||||||||||||||||||||
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
or
Units
(#)
|
Options
(#)
|
Awards
($/Sh)
|
Awards
($)
|
|||||||||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
||||||||||||||||||||||||||||||||
Leslie
J. Browne, Ph.D.
|
5/25/2010
|
- | - | - | - | - | - | - | 1,000,000 | $ | 0.55 | $ | 440,000 | |||||||||||||||||||||||||||||
Jack
Van Hulst
|
2/19/2010
|
- | - | - | - | - | - | - | 37,500 | $ | 0.29 | $ | 8,250 | |||||||||||||||||||||||||||||
5/20/2010
|
- | - | - | - | - | - | - | 75,000 | $ | 0.61 | $ | 34,500 | ||||||||||||||||||||||||||||||
Joel
P. Brooks
|
2/19/2010
|
- | - | - | - | - | - | - | 300,000 | $ | 0.29 | $ | 66,000 | |||||||||||||||||||||||||||||
Richard
Dondero
|
2/19/2010
|
- | - | - | - | - | - | - | 300,000 | $ | 0.29 | $ | 66,000 |
22
Outstanding
Equity Awards at Fiscal Year-End
The
following table summarizes the equity awards we have made to our named executive
officers which are outstanding as of June 30, 2010.
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexer-
cisable
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of Stock
That Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested ($)
|
|||||||||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j) (1)
|
|||||||||||||||||||||||||||
Leslie
J. Browne, Ph.D.
|
- | - | 1,000,000 | (2) | $ | 0.55 |
5/25/2020
|
- | - | - | - | |||||||||||||||||||||||||
Jack
Van
|
37,500 | - | - | $ | 0.29 |
2/19/2020
|
- | - | - | - | ||||||||||||||||||||||||||
Hulst
|
75,000 | - | - | $ | 0.61 |
5/20/2020
|
- | - | - | - | ||||||||||||||||||||||||||
Bruce
C.
|
130,000 | (3) | - | - | $ | 2.10 |
10/05/2011
|
- | - | - | - | |||||||||||||||||||||||||
Galton
|
300,000 | (4) | - | - | $ | 2.05 |
12/01/2011
|
- | - | - | - | |||||||||||||||||||||||||
50,000 | (5) | - | - | $ | 2.16 |
06/19/2013
|
- | - | - | - | ||||||||||||||||||||||||||
30,000 | (5) | - | - | $ | 3.15 |
12/16/2013
|
- | - | - | - | ||||||||||||||||||||||||||
35,000 | (5) | - | - | $ | 3.45 |
12/16/2014
|
- | - | - | - | ||||||||||||||||||||||||||
40,000 | (5) | - | - | $ | 1.40 |
12/14/2015
|
- | - | - | - | ||||||||||||||||||||||||||
40,000 | (5) | - | - | $ | 1.08 |
12/14/2016
|
- | - | - | - | ||||||||||||||||||||||||||
Joel
P.
|
120,000 | (6) | - | 180,000 | $ | 0.29 |
2/19/2020
|
- | - | - | - | |||||||||||||||||||||||||
Brooks
|
25,000 | (5) | - | - | $ | 2.25 |
12/01/2010
|
- | - | - | - | |||||||||||||||||||||||||
15,000 | (5) | - | - | $ | 2.15 |
11/01/2011
|
- | - | - | - | ||||||||||||||||||||||||||
12,500 | (5) | - | - | $ | 1.65 |
10/09/2012
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 2.16 |
06/19/2013
|
- | - | - | - | ||||||||||||||||||||||||||
15,000 | (5) | - | - | $ | 3.15 |
12/16/2013
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 3.45 |
12/16/2014
|
- | - | - | - | ||||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.40 |
12/14/2015
|
- | - | - | - | ||||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.08 |
12/14/2016
|
- | - | - | - | ||||||||||||||||||||||||||
- | - | - | - | - | - | - | 50,000 | (7) | $ | 16,000 | ||||||||||||||||||||||||||
Richard
|
120,000 | (6) | - | 180,000 | $ | 0.29 |
2/19/2020
|
- | - | - | - | |||||||||||||||||||||||||
Dondero
|
10,000 | (5) | - | - | $ | 3.45 |
12/16/2014
|
- | - | - | - | |||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.40 |
12/14/2015
|
- | - | - | - | ||||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.08 |
12/14/2016
|
- | - | - | - | ||||||||||||||||||||||||||
71,924 | (8) | - | - | $ | 0.99 |
12/13/2017
|
- | - | - | - | ||||||||||||||||||||||||||
- | - | 300,000 | (8) | $ | 0.99 |
12/13/2017
|
- | - | - | - | ||||||||||||||||||||||||||
76,000 | (8) | - | - | $ | 0.60 |
11/19/2018
|
- | - | - | - | ||||||||||||||||||||||||||
Sascha
P.
|
35,000 | (5) | - | - | $ | 2.25 |
12/01/2010
|
- | - | - | - | |||||||||||||||||||||||||
Fedyszyn
|
10,000 | (5) | - | - | $ | 2.15 |
11/01/2011
|
- | - | - | - | |||||||||||||||||||||||||
10,000 | (5) | - | - | $ | 1.65 |
10/09/2012
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 2.16 |
06/19/2013
|
- | - | - | - | ||||||||||||||||||||||||||
15,000 | (5) | - | - | $ | 3.15 |
12/16/2013
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 3.45 |
12/16/2014
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 1.40 |
12/14/2015
|
- | - | - | - | ||||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.08 |
12/14/2016
|
- | - | - | - | ||||||||||||||||||||||||||
- | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
John
E.
|
80,000 | (5) | - | - | $ | 2.05 |
12/01/2011
|
- | - | - | - | |||||||||||||||||||||||||
Thompson
|
20,000 | (5) | - | - | $ | 2.35 |
01/07/2013
|
- | - | - | - | |||||||||||||||||||||||||
Ph.D.
|
20,000 | (5) | - | - | $ | 3.15 |
12/16/2013
|
- | - | - | - | |||||||||||||||||||||||||
55,000 | (5) | - | - | $ | 3.45 |
12/16/2014
|
- | - | - | - | ||||||||||||||||||||||||||
20,000 | (5) | - | - | $ | 1.40 |
12/14/2015
|
- | - | - | - | ||||||||||||||||||||||||||
25,000 | (5) | - | - | $ | 1.08 |
12/14/2016
|
- | - | - | - | ||||||||||||||||||||||||||
52,676 | (8) | - | - | $ | 0.99 |
12/13/2017
|
- | - | - | - | ||||||||||||||||||||||||||
- | - | 250,000 | (8) | $ | 0.99 |
12/13/2017
|
- | - | - | - | ||||||||||||||||||||||||||
48,000 | (8) | - | - | $ | 0.60 |
11/19/2018
|
- | - | - | - |
23
(1)
|
The
amounts in this column are calculated by multiplying the number in column
(i) by the closing price on June 30, 2010 of
$0.32.
|
(2)
|
One-third
of such options will vest on the first anniversary of the date of grant
with one-thirtysixth of the balance vesting each month
thereafter.
|
(3)
|
100,000
of such options vested on the date of grant and an additional 10,000
options vested on each of the one month, two month and three month
anniversary of the date of grant.
|
(4)
|
100,000
of such options vested on each of the first, second and third anniversary
of the date of grant.
|
(5)
|
One-third
of such options vested on the date of grant and an additional one-third of
such options vested or will vest on each of the first and second
anniversary of the date of grant.
|
(6)
|
60,000
of such options vested on the date of grant and an additional 60,000 of
such options vested on June 30, 2010. One-third of the
remaining options will vest on each of June 30, 2011, June 30, 2012 and
June 30, 2013.
|
(7)
|
Such
amounts consist of performance based RSU’s which will vest if certain
milestones are met under our long-term incentive
plan.
|
(8)
|
Such
amounts consist of performance based options which have vested upon the
achievement of certain milestones or will vest if certain milestones are
met under our and long-term incentive
plan.
|
24
Options Exercised and Stock
Vested
The table
below shows option exercise and stock award vesting activity for our named
executive officers during the year ended June 30, 2010.
|
Option
Awards
|
Stock
Awards
|
||||||||||||||
Number
of
Shares
|
Value |
Number
of
Shares
|
Value | |||||||||||||
Acquired
on
|
Realized
on
|
Acquired
on
|
Realized
on
|
|||||||||||||
Exercise
|
Exercise
|
Vesting
|
Vesting
|
|||||||||||||
Name
|
(#) |
($)
|
(#) |
($)(1)
|
||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||
Leslie
J. Browne Ph.D.
|
- | - | - | - | ||||||||||||
Jack
Van Hulst
|
- | - | - | - | ||||||||||||
Bruce
C. Galton
|
— | — | 49,500 | $ | 19,800 | |||||||||||
Joel
P. Brooks
|
— | — | 26,600 | $ | 10,374 | |||||||||||
Sascha
Fedyszyn
|
— | — | 39,900 | $ | 15,561 | |||||||||||
Richard
Dondero
|
— | — | — | — | ||||||||||||
John
E. Thompson, Ph.D.
|
— | — | — | — |
(1)
|
Such
amounts in this column were calculated by multiplying the number in column
(d) by the closing price on the date of
vesting.
|
25
Employment
Contracts, Termination of Employment, and Change-in-Control
Arrangements
Executive Severance.
Certain of our named executive officer’s have employment agreements which
contain severance provisions. The following table shows the potential
incremental payments to our named executive officers in the event of their
termination or termination in connection with a change of control of our company
as of June 30, 2010. John E. Thompson, Ph.D. is not included in this table as he
does not have an employment contract or any termination or change if control
arrangements.
Leslie
J. Browne, Ph.D.
|
Joel
P. Brooks (1)
|
Richard
Dondero (2)
|
||||||||||||||||||||||
Without
Cause
|
Change
in
Control
|
Without
Cause
|
Change
in
Control
|
Without
Cause
|
Change
in
Control
|
|||||||||||||||||||
Benefit
|
$
(3)
|
$
|
$ | $ | $ (3) | $ (4) | ||||||||||||||||||
Cash
Severance(5)
|
$ | 125,000 | $ | - | $ | - | $ | - | $ | 143,000 | $ | 125,457 | ||||||||||||
#
of Months
|
6 | - | - | - | 12 | 12 | ||||||||||||||||||
Equity
|
||||||||||||||||||||||||
Unvested
Restricted Stock
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Unvested
RSU’s
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Unvested
Options
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Common
Stock
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Other
Benefits
|
||||||||||||||||||||||||
Health,
Disability and Life Insurance
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Total
|
$ | 125,000 | $ | - | $ | - | $ | - | $ | 143,000 | $ | 125,457 |
(1)
|
Mr.
Brooks’ employment agreement terminated on June 30,
2010.
|
(2)
|
Mr.
Dondero’s employment agreement terminated on July 19,
2010.
|
(3)
|
Such
amounts are calculated using the named executive’s base salary in effect
as of June 30, 2010 multiplied by the number of months of severance the
named executive is entitled to.
|
(4)
|
Such
amounts are calculated using the named executive’s average compensation
paid during the past five years multiplied by the number of months of
severance the named executive is entitled
to.
|
(5)
|
Such
amounts are payable as a lump sum.
|
26
Compensation
of Directors
Equity
Grants Fiscal 2010:
We do not
automatically grant options or other equity to our board. Our Compensation
Committee reviews the equity program each year with its compensation consultant
and determines the appropriate level of the equity awards. We provide
reimbursement to directors for reasonable and necessary expenses incurred in
connection with attendance at meetings of the board of directors and other
Senesco business.
In
October 2010, the Committee granted the following options to the directors for
their service during Fiscal 2010. Such grants will be effective two (2)
trading days after we file our quarterly report on Form 10-Q for the quarter
ended September 30, 2010:
Director
|
Total # of
Options Granted
|
|||
Harlan W. Waksal, M.D.
|
200,000 | |||
Rudolf Stalder
|
100,000 | |||
Christopher Forbes
|
125,000 | |||
Thomas C. Quick
|
100,000 | |||
John N. Braca
|
150,000 | |||
David Rector
|
150,000 | |||
Jack Van Hulst(1)
|
100,000 | |||
Warren J. Isabelle
|
100,000 |
|
(1)
|
Mr.
Van Hulst was employed by the Company from November 16, 2009 through May
24, 2010.
|
Such
grants will vest as follows: one-half (1/2) upon the date of grant and the
remaining one-half (1/2) will vest one (1) year from the date of
grant.
Additionally,
In October 2010, the Committee granted an additional 500,000 options to Harlan
W. Waksal, M.D. for his commitment, leadership and individual performance during
Fiscal 2010. Such grant will be effective two (2) trading days after we file our
quarterly report on Form 10-Q for the quarter ended September 30, 2010.
Twenty-five percent (25%) of such options shall vest on the first anniversary of
the date of grant and one-thirty-six of such grant each month
thereafter.
27
Commencing
in Fiscal 2009, after review and consultation with the Compensation Committee’s
compensation consultant, we implemented a new compensation plan for our
directors pursuant to which we pay each director cash compensation as
consideration for their service on our board as follows:
Annual
(Base) Retainer
|
$ | 10,000 | ||
Per
Scheduled Board Meeting Fee
|
$ | 1,500 |
(1)
|
|
Per
Committee Meeting Fee
|
$ | 750 |
(2)
|
|
Additional
Annual Retainer:
|
||||
Chairman
of the Board
|
$ | 5,000 | ||
Audit
Committee Chair
|
$ | 3,500 | ||
Compensation
Committee Chair
|
$ | 3,500 | ||
Nominating
and Corporate Governance Committee Chair
|
$ | 1,500 | ||
Non-Chair
Committee Member Additional Retainer
(All
Committees)
|
$ | 1,000 | ||
Maximum
Per Diem For All Meetings
|
$ | 2,000 |
|
(1)
|
$750
for telephonic meetings (less than 30 minutes:
$375).
|
|
(2)
|
$375
for telephonic meetings.
|
Such cash
compensation is paid in quarterly increments. A director may elect, provided
such election is made prior to the time the cash award is made, to receive, in
lieu of such cash payments, either (i) restricted stock units, or RSU’s, in an
amount equal to such cash award or (ii) twice the number of options in an amount
equal to such cash award. Such election to receive (y) cash or (z) equity in the
form of RSU’s or options applies for the entire year. The directors have all
elected to receive options in lieu of cash for Fiscal 2010 and Fiscal 2011,
except for Messrs. Braca and Rector, who have elected to receive their retainer
fees in cash and their meeting fees in options, and Mr. Isabelle, who has
elected to receive his fees in cash. The RSU’s or options are granted effective
two (2) days following the filing of our quarterly reports on Form 10-Q. The
exercise price will be the closing price on the day before the grant
date.
Further,
in consideration for his service on a Finance Committee of the board, from
November 16, 2009 through May 31, 2010, Mr. Braca received additional board
compensation in the amount of $6,000 a month as well as 10,000 options per month
to purchase shares of the Company’s common stock. Such options vested on
the last business day of the fiscal quarter in accordance with the terms of the
Company’s 2008 Incentive Compensation Plan, but shall not be issued until at
least two (2) trading days after the Company issues its financial results for
such quarter. The Committee further indicated that such compensation was in
addition to any other fees received by Mr. Braca for his service on the board
and its other committees.
28
Director
Compensation
The table
below shows the compensation paid or awarded to our independent directors during
the fiscal year ended June 30, 2010.
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards ($)
|
Option
Awards
(1) ($)
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total ($)
|
|||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||||||||
Rudolf
Stalder
|
— | — | $ | 56,153 | — | — | — | $ | 56,153 | |||||||||||||||||||
Christopher
Forbes
|
— | — | $ | 42,632 | — | — | — | $ | 42,632 | |||||||||||||||||||
Thomas
C. Quick
|
— | — | $ | 32,928 | — | — | — | $ | 32,928 | |||||||||||||||||||
John
N. Braca
|
$ | 57,125 | — | $ | 60,226 | — | — | — | $ | 117,351 | ||||||||||||||||||
David
Rector
|
$ | 18,125 | — | $ | 43,248 | — | — | — | $ | 61,373 | ||||||||||||||||||
Jack
Van Hulst(2)
|
— | — | $ | 33,502 | — | — | — | $ | 33,502 | |||||||||||||||||||
Harlan
W. Waksal, M.D.
|
— | — | $ | 57,132 | — | — | — | $ | 57,132 | |||||||||||||||||||
Warren
J. Isabelle
|
$ | 26,300 | — | $ | 4,362 | — | — | — | $ | 30,662 |
|
(1)
|
Represents
the aggregate grant date fair value for stock options granted in Fiscal
2010 accounted for in accordance with the FASB ASC Topic 718. For
information regarding assumptions underlying the FASB ASC Topic 718
valuation of equity awards, see Note 7 of the Consolidated Financial
Statements in our Annual Report on Form 10-K/A for the fiscal year ended
June 30, 2010.
|
(2)
|
Mr. Van Hulst was
employed by the Company from November 16, 2009 through May 24,
2010.
|
29
Director
|
Option
Grant Date
|
Exercise
Price
|
# of Shares
Associated
With Charge
|
Compensation
Cost in Fiscal
2010
|
||||||||||
Rudolf
Stalder
|
5/20/2010
|
$ | 0.61 | 10,041 | $ | 4,464 | ||||||||
2/19/2010
|
$ | 0.29 | 56,666 | $ | 11,719 | |||||||||
11/19/2009
|
$ | 0.39 | 122,949 | $ | 26,998 | |||||||||
11/19/2008
|
$ | 0.60 | 80,000 | $ | 12,972 | |||||||||
Christopher
Forbes
|
5/20/2010
|
$ | 0.67 | 9,631 | $ | 4,228 | ||||||||
2/19/2010
|
$ | 0.32 | 54,166 | $ | 10,692 | |||||||||
11/19/2009
|
$ | 0.43 | 88,718 | $ | 19,957 | |||||||||
11/19/2008
|
$ | 0.66 | 50,000 | $ | 7,755 | |||||||||
Thomas
C. Quick
|
5/20/2010
|
|
$ | 0.61 | 6,967 | $ | 3,097 | |||||||
2/19/2010
|
$ | 0.29 | 43,334 | $ | 8,961 | |||||||||
11/19/2009
|
$ | 0.39 | 60,898 | $ | 14,384 | |||||||||
11/19/2008
|
$ | 0.60 | 40,000 | $ | 6,486 | |||||||||
John
N. Braca
|
5/20/2010
|
$ | 0.61 | 35,533 | $ | 15,800 | ||||||||
2/19/2010
|
$ | 0.29 | 65,834 | $ | 13,614 | |||||||||
11/19/2009
|
$ | 0.39 | 88,462 | $ | 19,462 | |||||||||
11/19/2008
|
|
$ | 0.60 | 70,000 | $ | 11,350 | ||||||||
David
Rector
|
5/20/2010
|
$ | 0.61 | 5,533 | $ | 2,460 | ||||||||
2/19/2010
|
$ | 0.29 | 50,834 | $ | 10,512 | |||||||||
11/19/2009
|
$ | 0.39 | 86,539 | $ | 18,926 | |||||||||
11/19/2008
|
$ | 0.60 | 70,000 | $ | 11,350 | |||||||||
Jack
Van Hulst(1)
|
5/20/2010
|
- | - | - | ||||||||||
2/19/2010
|
|
$ | 0.29 | 29,166 | $ | 6,031 | ||||||||
11/19/2009
|
$ | 0.39 | 86,410 | $ | 20,985 | |||||||||
11/19/2008
|
$ | 0.60 | 40,000 | $ | 6,486 | |||||||||
Harlan
W. Waksal, M.D.
|
5/20/2010
|
|
$ | 0.61 | 22,951 | $ | 10,205 | |||||||
2/19/2010
|
$ | 0.29 | 77,500 | $ | 16,027 | |||||||||
11/19/2009
|
$ | 0.39 | 136,923 | $ | 30,900 | |||||||||
11/19/2008
|
- | - | - | |||||||||||
Warren
J. Isabelle
|
11/19/2009
|
$ | 0.39 | 25,000 | $ | 4,362 |
|
(1)
|
Mr.
Van Hulst was employed by the Company from November 16, 2009 through May
24, 2010.
|
As
described above, on November 19, 2009, February 19, 2010, and May 20, 2010, each
of our non-employee directors received options to purchase shares of our common
stock pursuant to the provisions of the 2008 Stock Plan. The options have
an exercise price of $0.39 per share, $0.29 per share and $0.61 per share,
respectively, the fair market value of the common stock on the grant dates
(except for the grants to Christopher Forbes, which have exercise prices of
$0.66 per share, $0.43 per share, $0.32 per share and $0.67 per share,
respectively (110% of the fair market value of the common stock on the grant
date)).
30
The
following table shows the total number of shares of our common stock subject to
option awards (vested and unvested) for each non-employee director as of June
30, 2010:
Director
|
Total # of Options
Outstanding
|
|||
Rudolf
Stalder
|
909,951 | |||
Christopher
Forbes
|
478,211 | |||
Thomas
C. Quick
|
371,205 | |||
John
N. Braca
|
469,569 | |||
David
Rector
|
452,646 | |||
Jack
Van Hulst(1)
|
378,032 | |||
Harlan
W. Waksal, M.D.
|
263,958 | |||
Warren
J. Isabelle
|
25,000 |
|
(1)
|
Mr.
Van Hulst was employed by the Company from November 16, 2009 through May
24, 2010.
|
Dr.
Thompson has received compensation for providing research and development
management services to us. See “Certain Relationships and Related
Transactions” which sets forth the details of the compensation for Dr.
Thompson.
Compensation
Committee Interlocks and Insider Participation
No member
of the Compensation Committee is or has been an officer or employee of our
company or any of our subsidiaries. In addition, no member of the Compensation
Committee had any relationships with us or any other entity that requires
disclosure under the regulations promulgated by the SEC, and none of our
executive officers served on the compensation committee or board of any company
that employed any member of our board.
31
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The
following table sets forth, as of September 30, 2010, the beneficial ownership
of the common stock of by (i) each person known by us to be the beneficial owner
of more than 5% of the total number of shares of our common stock outstanding as
of such date; (ii) each of our directors and our named executive officers; and
(iii) all of our directors and our current executive officers as a
group.
Name and Address of Beneficial Owner (1)
|
Amount and Nature of
Beneficial Ownership(2)
|
Percent
of Class(3)
|
||||||
(i) Certain
Beneficial Owners:
|
||||||||
Partlet
Holdings Limited
International
House, 1st Floor
41,
The Parade
St.
Helier, JERSEY, Channel
Islands
|
7,961,309 |
(4)
|
11.4 | % | ||||
(ii) Directors,
Named Executives and Chief Executive Officer:
|
||||||||
Harlan
W. Waksal, M.D.
|
2,878,459 |
(5)
|
4.3 | % | ||||
Rudolf
Stalder.
|
2,552,951 |
(6)
|
3.9 | % | ||||
Leslie
J Browne,
Ph.D..
|
- | - | ||||||
John
E. Thompson,
Ph.D..
|
892,676 |
(7)
|
1.4 | % | ||||
Christopher
Forbes
|
18,131,977 |
(8)
|
24.2 | % | ||||
Thomas
C.
Quick
|
1,589,540 |
(9)
|
2.4 | % | ||||
David
Rector
|
841,257 |
(10)
|
1.3 | % | ||||
Jack
Van
Hulst
|
444,972 |
(11)
|
* | |||||
John
N. Braca
|
678,092 |
(12)
|
1.1 | % | ||||
Warren
Isabelle
|
194,323 |
(13)
|
* | |||||
Joel
P. Brooks
|
318,375 |
(14)
|
* | |||||
Richard
Dondero
|
327,924 |
(15)
|
* | |||||
(iii) All
Directors and current executive officers as a group (12
persons)
|
28,850,546 |
(16)
|
35.2 | % |
*
|
Less
than 1%
|
(1)
|
Unless
otherwise provided, all addresses should be care of Senesco Technologies,
Inc., 303 George Street, Suite 420, New Brunswick, New Jersey
08901.
|
(2)
|
Except
as otherwise indicated, all shares of common stock are beneficially owned
and sole investment and voting power is held by the persons named.
|
(3)
|
Applicable
percentage of ownership is based on 64,302,322 shares of our common stock
outstanding as of September 30, 2010, plus any common stock equivalents
and options or warrants held by such holder which are presently or will
become exercisable within sixty (60) days after September 30,
2010.
|
(4)
|
Includes
3,618,056 shares of common stock issuable pursuant to presently
exercisable warrants.
|
(5)
|
Includes
625,000 shares of common stock issuable pursuant to the conversion of 200
shares of Series B convertible preferred stock and 1,431,291 shares of
common stock issuable pursuant to presently exercisable options and
warrants.
|
32
(6)
|
Includes
1,499,013 shares of common stock issuable pursuant to presently
exercisable options and warrants.
|
(7)
|
Represents
572,000 shares of common stock held by 2091794 Ontario Ltd. and 320,676
shares of common stock issuable pursuant to presently exercisable options
issued to John E. Thompson, Ph.D. Excludes 250,000 shares of
common stock underlying options which become exercisable upon the
achievement of certain performance
milestones.
|
(8)
|
Includes
3,125,000 shares of common stock issuable pursuant to the conversion of
1,200 shares of Series B convertible preferred stock and 7,569,688 shares
of common stock issuable pursuant to presently exercisable options and
warrants.
|
(9)
|
Represents
675,173 shares of common stock and 150,389 shares of common stock issuable
pursuant to warrants issued to Thomas C. Quick Charitable
Foundation. Represents 139,734 shares of common stock and
371,205 shares of common stock issuable pursuant to presently exercisable
options or issued to Thomas C.
Quick.
|
(10)
|
Includes
590,511 shares of common stock issuable pursuant to presently exercisable
options and warrants.
|
(11)
|
Includes
409,904 shares of common stock issuable pursuant to presently exercisable
options and warrants.
|
(12)
|
Includes
540,128 shares of common stock issuable pursuant to presently exercisable
options and warrants.
|
(13)
|
Includes
92,559 shares of common stock issuable pursuant to presently exercisable
options and warrants.
|
(14)
|
Includes
277,500 shares of common stock issuable pursuant to presently exercisable
options. Excludes 180,000 shares of common stock underlying
options which become exercisable more than sixty (60) days after September
30, 2010 and 50,000 shares of common stock underlying RSU’s which become
vested upon the achievement of certain performance
milestones.
|
(15)
|
Includes
327,924 shares of common stock issuable pursuant to presently exercisable
options. Excludes 180,000 shares of common stock underlying
options which become exercisable more than sixty (60) days after September
30, 2010 and 300,000 shares of common stock underlying options which
become vested upon the achievement of certain performance
milestones.
|
(16)
|
See
Notes 6 through 15.
|
The
following table reflects information relating to equity compensation plans as of
June 30, 2010.
Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights
|
Weighted-average
exercise price of
outstanding
options,
warrants and
rights
|
Number of securities
remaining
available for future issuance
under equity compensation
plans
|
||||||||||
Equity
compensation plans approved by security holders
|
7,319,172 |
(1)
|
$ | 1.13 | 7,935,712 |
(2)
|
||||||
Equity
compensation plans not approved by security holders
|
— | — | — | |||||||||
Total
|
7,319,172 |
(1)
|
$ | 1.13 | 7,935,712 |
(2)
|
(1) Issued
pursuant to our 1998 Stock Plan and 2008 Stock Plan.
(2) Available
for future issuance pursuant to our 2008 Stock Plan.
33
Item
13. Certain
Relationships and Related Transactions, and Director Independence.
Contractual
Relationships
Service
Agreements
Christopher
Forbes, our director, is also Vice Chairman of Forbes, Inc., which publishes
Forbes Magazine. Forbes, Inc. has provided and will continue to
provide us with introductions to strategic alliance partners and, from time to
time, use of its office space. In recognition of these services,
during the last two fiscal years, we granted to Forbes, Inc. warrants to
purchase shares of our common stock as follows:
Date of Grant
|
# of Warrant
Shares
|
Exercise Price
|
Value of Services
on Date of Grant
|
# of Warrant
Shares Vested
|
||||||||||||
November
19, 2008
|
500 | $ | 0.60 | $ | 230 | 334 |
The
exercise price of the warrants granted to Forbes, Inc. represented the fair
market value of our common stock on the dates of grant.
Research and Development
Agreements
Effective
September 1, 1998, we entered into a three-year research and development
agreement, which has been extended for successive periods through November 30,
2010, with John E. Thompson, Ph.D. and the University of Waterloo in Waterloo,
Ontario, Canada, referred to as the University. Dr. Thompson is our
director and officer and beneficially owns approximately 1.4% of our common
stock. Dr. Thompson is the Associate Vice President, Research and
former Dean of Science of the University. Dr. Thompson and the
University will provide research and development under our
direction. Research and development expenses under this agreement for
the years ended June 30, 2010 and 2009 aggregated US $672,693 and US $653,104,
respectively. Effective September 1, 2010, we, Dr. Thompson and the
University extended the agreement for an additional three-month period through
November 30, 2010 in the amount of CAN $164,200. As of September 30,
2010, such amount represented approximately US $164,200.
Consulting
Agreement
Effective
May 1, 1999, we entered into a three-year consulting agreement, which has been
extended for successive periods through June 30, 2011, for research
and development with Dr. Thompson. This agreement provided for
monthly payments of $3,000 through June 2004. However, effective
January 1, 2003, 2006 and 2007, the agreement was amended to increase the
monthly payments from $3,000 to $5,000, from $5,000 to $5,200, and from $5,200
to $5,417, respectively.
34
Debt
/ Equity Transactions
Transaction With Stanford
Entities
As
previously disclosed in a Form 8-K filed on November 9, 2009, on November 6,
2009, each of Stanford Venture Capital Holdings, Inc., or SVCH, and Stanford
International Bank, Ltd., or SIBL (collectively SVCH and SIBL are referred to
herein as Stanford), who are the beneficial owners of a significant interest in
Senesco Technologies, Inc., simultaneously entered into definitive agreements
with certain members of the Company’s Board of Directors to sell all of their
respective interests in the Company, including shares of common stock,
convertible debentures and warrants, (the “Securities”) held by each of the
Stanford entities to each of Harlan W. Waksal, M.D., Rudolf Stalder, Christopher
Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the
Thomas C. Quick Charitable Foundation. Each of Harlan W. Waksal,
M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van
Hulst and Warren Isabelle are members of the Company’s Board of Directors, also
referred to herein as the Insiders. The Thomas C. Quick Charitable Foundation is
an affiliate of Mr. Thomas C. Quick who is also a member of the Company’s Board
of Directors. Such transaction was negotiated privately between
Stanford and the foregoing persons and their affiliates and was subject to
certain closing conditions.
On
February 19, 2010, SVCH and the Insiders closed on their definitive agreement to
sell all of their Securities for an aggregate purchase price of
$890,000. As a result of the transaction, the members of the
Company’s Board of Directors, as a group, will beneficially own a controlling
interest of approximately 40.9% of the Company’s common stock. In
addition, Mr. Christopher Forbes, who was the main investor in the transaction,
will, individually, beneficially own approximately 27.5% of the Company’s common
stock. The Insiders have not closed on the agreement between them and
SIBL as certain closing conditions to that agreement have not been met as of
yet.
On March
4, 2010, the insiders of Senesco Technologies, Inc. who had previously purchased
all of the convertible debentures, warrants and common stock of Senesco which
were previously held by Stanford Venture Capital Holdings, Inc., notified the
Company that they have elected, subject to stockholder approval, to convert
their convertible debentures at a conversion price of $0.83. Under
the terms of the convertible debentures, such convertible debentures could have
converted at a floating conversion rate equal to the lower of $0.83, or 80
percent of the lowest daily Volume-Weighted Average Price (VWAP) for the
five-day period immediately preceding the conversion date, which equated to
$0.22. The conversion of the debentures was approved by our
stockholders on May 25, 2010.
Transaction with JMP
Securities
On
February 17, 2010, the Company entered into a credit agreement with JMP
Securities LLC, also referred to herein as the Credit Agreement. The
agreement provides the Company with, subject to certain restrictions, including
the existence of suitable collateral, up to a $3.0 million line of credit upon
which the Company may draw at any time, also referred to herein as the Line of
Credit. Any draws upon the Line of Credit accrue at a monthly
interest rate of (i) the broker rate in effect at the time of the draw (which is
currently 2.0%), plus (ii) 2.75%. There are no other conditions or
fees or expenses associated with the Line of Credit. The Line of
Credit is not secured by any assets of the Company, but it is secured by certain
assets of the Chairman of our Board of Directors, Harlan W. Waksal, M.D., which
are currently held by JMP Securities.
35
March 2010 Transaction with
Christopher Forbes and Harlan W. Waksal, M.D.
On June 2, 2010, we sold 1,200 shares
of 10% Series B Preferred Stock to Christopher Forbes and Harlan W. Waksal, M.D.
for cash. We received proceeds in the amount of
$1,200,000.
Pursuant to the securities purchase
agreement, the Series B Preferred Stock is convertible into approximately
3,750,000 shares of our common stock. In addition, Mr. Forbes and Dr. Waksal
received immediately exercisable warrants to purchase up to approximately
3,750,000 shares of our common stock.
Each share of Preferred Stock has a
stated value of $1,000 (the “Stated Value”). Each holder of shares of Preferred
Stock is entitled to receive semi-annually dividends at the rate of 10% per
annum of the Stated Value for each share of Preferred Stock. Except in limited
circumstances, we can elect to pay the dividends in cash or shares of common
stock. If the dividends are paid in shares of common stock, such
shares will be priced at the lower of 90% of the average VWAP for the 20 days
immediately preceding the payment date or $0.224. The dividends are
subject to a 30% make whole provision.
The shares of Preferred Stock are
convertible into shares of common stock at an initial conversion price of $0.32
per share and are convertible at any time, The conversion price is subject to
adjustment if we sell or grant any common stock or common stock equivalents,
subject to certain exclusions, at an effective price per share that is lower
than the conversion price of the Preferred Stock. After 18 months
from the date of issuance of the Preferred Stock, if our common stock trades
above $0.80 for 20 out of 30 consecutive trading days, the Preferred Stock will
no longer be subject to adjustment.
We may force conversion of the
Preferred Stock if our common stock trades above $0.80 for 20 out of 30
consecutive trading days and there is an effective registration statement for
the underlying common stock or such underlying common stock is freely tradable
under rule 144.
Warrants
Pursuant to the purchase agreement, we
delivered a Series B Warrant to Mr. Forbes and Dr. Waksal. Each
Warrant has an initial exercise price of $0.35 per share of common stock. The
Warrants are immediately exercisable and have a five year term.
36
Review
and Approval of Related Person Transactions
Our Audit
Committee Charter requires that our Audit Committee review and approve or ratify
transactions involving us and any executive officer, director, director nominee,
5% stockholder and certain of their immediate family members, also referred to
herein as a related person. The policy and procedures cover any transaction
involving a related person, also referred to herein as a related person
transaction, in which the related person has a material interest and which does
not fall under an explicitly stated exception set forth in the applicable
disclosure rules of the SEC.
A related
person transaction will be considered approved or ratified if it is authorized
by the Audit Committee after full disclosure of the related person’s interest in
the transaction. In considering related person transactions, the Audit Committee
will consider any information considered material to investors and the following
factors:
|
·
the related person’s interest in the
transaction;
|
|
|
|
·
the approximate dollar value of the
transaction;
|
|
|
|
·
whether the transaction was undertaken in the ordinary course of our
business;
|
|
|
|
·
whether the terms of the transaction are no less favorable to us than
terms that we could have reached with an unrelated third party;
and
|
|
|
|
·
the purpose and potential benefit to us of the
transaction.
|
37
Item
14. Principal
Accounting Fees and Services.
The
aggregate fees billed by McGladrey & Pullen, LLP and RSM McGladrey,
Inc. for services performed for the years ended June 30, 2010 and 2009 are as
follows:
2010
|
2009
|
|||||||
Audit
Fees
|
$ | 91,000 | $ | 105,000 | ||||
Audit
Related Fees
|
8,500 | 8,000 | ||||||
Tax
Fees
|
- | 5,815 | ||||||
All
Other Fees
|
- | 1,715 | ||||||
Total
Fees
|
$ | 99,500 | $ | 120,530 |
AUDIT
FEES
The
aggregate audit fees for the years ended June 30, 2010 and 2009 were primarily
related to the audit of the our annual financial statements and review of those
financial statements included in our quarterly reports on Form 10-Q and fees for
professional services rendered in connection with documents filed with the
Securities and Exchange Commission.
AUDIT
RELATED FEES
Audit
related fees for the years ended June 30, 2010 and 2009 were primarily incurred
in connection with our equity offerings and fees in connection with
correspondence with the SEC and the NYSE Amex.
TAX
FEES
Tax fees
for the year ended June 30, 2009 related to the review of our tax
returns.
ALL
OTHER FEES
All other
fees for the year ended June 30, 2009 related to consultations in connection
with our short-term and long-term incentive plans.
Pre-Approval
Policies and Procedures
In
accordance with its charter, the Audit Committee is required to approve all
audit and non-audit services provided by the independent auditors and shall not
engage the independent auditors to perform the specific non-audit services
prescribed by law or regulation.
The Audit
Committee has adopted policies and procedures relating to the pre-approval of
all audit and non-audit services that are to be performed by our independent
registered public accounting firm. This policy generally provides
that we will not engage our independent registered public accounting firm to
render audit or non-audit services unless the service is specifically approved
in advance by the Audit Committee or the engagement is entered into pursuant to
one of the pre-approval procedures described below.
From time
to time, the Audit Committee may pre-approve specified types of services that
are expected to be provided to us by our independent registered public
accounting firm during the next 12 months. Any such pre-approval is
detailed as to the particular service or type of services to be provided and is
also generally subject to a maximum dollar amount.
38
The Audit
Committee has also delegated to the chairman of the Audit Committee the
authority to approve any audit or non-audit services to be provided to us by our
independent registered public accounting firm. Any approval of
services by a member of the Audit Committee pursuant to this delegated authority
is reported on at the next meeting of the Audit Committee.
39
PART
IV
Item
15. Exhibits
and Financial Statement Schedules.
(a)
(3) Exhibits.
Reference
is made to the Exhibit Index on Page 43.
40
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized this 25th day of October
2010.
SENESCO
TECHNOLOGIES, INC.
|
||
By:
|
/s/ Leslie J. Browne
|
|
Leslie
J. Browne, President and
|
||
Chief
Executive Officer
|
||
(principal
executive officer)
|
||
By:
|
/s/ Joel Brooks
|
|
Joel
Brooks, Chief Financial Officer
|
||
(principal
financial and accounting
officer)
|
41
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||
/s/ Harlan W. Waksal, M.D
|
Chairman
and Director
|
October
25, 2010
|
||
Harlan
W. Waksal, M.D.
|
||||
/s/ Leslie J. Browne
|
President
and Chief Executive
|
October
25, 2010
|
||
Leslie
J. Browne
|
Officer
(principal executive officer)
|
|||
/s/ Joel Brooks
|
Chief
Financial Officer and Treasurer
|
October
25, 2010
|
||
Joel
Brooks
|
(principal
financial and accounting officer)
|
|||
/s/ John E. Thompson
|
Executive
Vice President, Chief
|
October
25, 2010
|
||
John
E. Thompson
|
Scientific
Officer and Director
|
|||
/s/ John Braca
|
Director
|
October
25, 2010
|
||
John
Braca
|
||||
/s/ Christopher Forbes
|
Director
|
October
25, 2010
|
||
Christopher
Forbes
|
||||
/s/ Warren J. Isabelle
|
Director
|
October
25, 2010
|
||
Warren
J. Isabelle
|
||||
/s/ Thomas C. Quick
|
Director
|
October
25, 2010
|
||
Thomas
C. Quick
|
||||
/s/ David Rector
|
Director
|
October
25, 2010
|
||
David
Rector
|
||||
/s/ Rudolf Stalder
|
Director
|
October
25, 2010
|
||
Rudolf
Stalder
|
||||
/s/ Jack Van Hulst
|
Director
|
October
25, 2010
|
||
Jack
Van Hulst
|
|
|
42
EXHIBIT
INDEX
Exhibit
No.
|
Description of Exhibit
|
|
31.1
†
|
Certification
of the principal executive officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
†
|
Certification
of the principal financial and accounting officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
|
32.1 †
|
Certification
of the principal executive officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
32.2 †
|
Certification
of the principal financial and accounting officer pursuant to Section 906
of the Sarbanes-Oxley Act of
2002.
|
†
Filed
herewith.
43