SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2001
Commission File No. 0-22307
SENESCO TECHNOLOGIES, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 84-1368850
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
303 George Street, Suite 420, New Brunswick, NJ 08901
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(Address of Principal Executive Offices) (Zip Code)
(732) 296-8400
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(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes: X No:
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State the number of shares outstanding of each of the Issuer's classes of
common stock, as of January 31, 2002:
Class Number of Shares
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Common Stock, $0.01 par value 10,558,616
Transitional Small Business Disclosure Format (check one):
Yes: No: X
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements......................................... 1
CONDENSED CONSOLIDATED BALANCE SHEET
as of December 31, 2001 (unaudited) and June 30, 2001............. 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2001 and
December 31, 2000, For the Six Months Ended December 31,
2001 and December 31, 2000, and From Inception on
July 1, 1998 through December 31, 2001 (unaudited)................ 3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIENCY)
From Inception on July 1, 1998 through December 31, 2001
(unaudited)....................................................... 4
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended December 31, 2001 and
December 31, 2000, and From Inception on July 1, 1998
through December 31, 2001 (unaudited)............................. 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)....................................................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Plan of Operation.............................. 12
Liquidity and Capital Resources................................... 20
Results of Operations............................................. 22
PART II. OTHER INFORMATION.
Item 2. Changes in Securities and Use of Proceeds.................... 25
Item 4. Stockholder Vote............................................. 29
Item 5. Other Information............................................ 30
Item 6. Exhibits and Reports on Form 8-K............................. 31
SIGNATURES.................................................................. 32
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PART I. FINANCIAL INFORMATION.
------------------------------
ITEM 1. FINANCIAL STATEMENTS.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. However, Senesco Technologies, Inc., a
Delaware corporation (the "Company"), and its wholly-owned subsidiary, Senesco,
Inc., a New Jersey corporation ("Senesco"), believe that the disclosures are
adequate to assure that the information presented is not misleading in any
material respect.
The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal year.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
December 31, June 30,
2001 2001
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(unaudited)
ASSETS
------
CURRENT ASSETS:
Cash............................................................... $ 2,816,428 $ 14,330
Prepaid expenses and other current assets.......................... 9,090 15,554
------------ -----------
Total Current Assets........................................... 2,825,518 29,884
Property and equipment, net........................................ 77,002 78,757
Intangible assets, net............................................. 230,235 157,920
Security deposit................................................... 7,187 7,187
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TOTAL ASSETS................................................... $ 3,139,942 $ 273,748
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
CURRENT LIABILITIES:
Accounts payable................................................... $ 25,148 $ 168,922
Accrued expenses................................................... 413,606 265,732
------------ -----------
Total Current Liabilities................................... 438,754 434,654
Grant payable...................................................... 56,858 45,807
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TOTAL LIABILITIES.............................................. 495,612 480,461
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STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, authorized 5,000,000 shares, $0.01 par value,
no shares issued................................................. -- --
Common stock, authorized 20,000,000 shares, $0.01 par value,
9,987,187 shares issued and outstanding.......................... 99,872 78,726
Capital in excess of par........................................... 9,210,523 5,469,758
Deficit accumulated during the development stage................... (6,596,943) (5,490,902)
Deferred compensation related to issuance of options and warrants.. (69,122) (264,295)
------------ -----------
Total Stockholders' Equity (Deficiency).......................... 2,644,330 (206,713)
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)..................................................... $ 3,139,942 $ 273,748
============ ===========
See Notes to Condensed Consolidated Financial Statements.
-2-
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(unaudited)
From Inception on
For the Three For the Three For the Six For the Six July 1, 1998
Months Ended Months Ended Months Ended Months Ended through
December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2000 2001
------------- ------------- ------------- ------------ -----------------
Revenue................................ $ 125,000 $ -- $ 125,000 $ -- $ 125,000
----------- ----------- ------------ ------------ ------------
Operating Expenses:
General and administrative........... 395,409 407,893 676,128 742,327 4,395,049
Research and development............. 93,821 130,714 156,976 247,832 1,286,361
Non-cash charges for options and
warrants issued in exchange for
services............................. 387,192 40,350 541,040 111,370 1,267,112
----------- ----------- ------------ ------------ ------------
Total Operating Expenses............... 876,422 578,957 1,374,144 1,101,529 6,948,522
----------- ----------- ------------ ------------ ------------
Loss From Operations................... (751,422) (578,957) (1,249,144) (1,101,529) (6,823,522)
Sale of state income tax loss.......... 150,551 60,331 150,551 60,331 210,882
Interest (expense) income, net......... (3,895) 11,238 (7,448) 27,520 15,697
----------- ----------- ------------ ------------ ------------
Net Loss............................... $ (604,766) $ (507,388) $ (1,106,041) $ (1,013,678) $ (6,596,943)
=========== =========== ============ ============ ============
Basic and Diluted Net Loss Per Common
Share.................................. $ (0.07) $ (0.06) $ (0.14) $ (0.13)
=========== =========== ============ ============
Basic and Diluted Weighted Average
Number of Common
Shares Outstanding..................... 8,403,231 7,873,292 8,138,262 7,873,292
=========== =========== ============ ============
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
-----------------------------
CONDENSED CONSOLIDATED STATEMENT OF
-----------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
FROM INCEPTION ON JULY 1, 1998 THROUGH DECEMBER 31, 2001
--------------------------------------------------------
(unaudited)
Deferred
Deficit Compensation
Accumulated Related to the
Capital in During the Issuance of
Excess of Development Options and
Common Stock Par Value Stage Warrants Total
---------------------- ------------ ----------- -------------- ----------
Shares Amount
------ ------
Common stock outstanding........... 2,000,462 $ 20,005 $ (20,005) -- -- --
Contribution of capital............ -- -- 85,179 -- -- $ 85,179
Issuance of common stock in
reverse merger on January 22,
1999 at $0.01 per share............ 3,400,000 34,000 (34,000) -- -- --
Issuance of common stock for
cash on May 21, 1999 at
$2.63437 per share................. 759,194 7,592 1,988,390 -- -- 1,995,982
Issuance of common stock for
placement fees on May 21, 1999
at $0.01 per share................. 53,144 531 (531) -- -- --
Fair market value of options
and warrants granted on
September 7, 1999.................. -- -- 252,578 -- $ (72,132) 180,446
Fair market value of warrants
granted on October 1, 1999......... -- -- 171,400 -- (108,600) 62,800
Fair market value of warrants
granted on December 15, 1999....... -- -- 331,106 -- -- 331,106
Issuance of common stock for
cash on January 26, 2000 at
$2.867647 per share................ 17,436 174 49,826 -- -- 50,000
Issuance of common stock for
cash on January 31, 2000 at
$2.87875 per share................. 34,737 347 99,653 -- -- 100,000
(continued)
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENT OF
-----------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
FROM INCEPTION ON JULY 1, 1998 THROUGH DECEMBER 31, 2001
--------------------------------------------------------
(unaudited)
Deferred
Deficit Compensation
Accumulated Related to the
Capital in During the Issuance of
Excess of Development Options and
Common Stock Par Value Stage Warrants Total
---------------------- ------------ ----------- -------------- ----------
Shares Amount
------ ------
Issuance of common stock for
cash on February 4, 2000 at
$2.934582 per share................ 85,191 852 249,148 -- -- 250,000
Issuance of common stock for
cash on March 15, 2000 at
$2.527875 per share................ 51,428 514 129,486 -- -- 130,000
Issuance of common stock for
cash on June 22, 2000 for
$1.50 per share.................... 1,471,700 14,718 2,192,833 -- -- 2,207,551
Commissions, legal and bank fees
associated with issuances for
the year ended June 30, 2000....... -- -- (260,595) -- -- (260,595)
Fair market value of warrants
granted on September 4, 2001....... -- -- 41,800 -- -- 41,800
Fair market value of warrants
granted on October 2, 2000......... -- -- 80,700 -- -- 80,700
Fair market value of warrants
granted on October 15, 2001........ -- -- 40,498 -- -- 40,498
Fair market value of options and
and warrants granted on
November 1, 2001................... -- -- 138,714 -- -- 138,714
Issuance of common stock and
warrants for cash on November
30, 2001 at $1.75 per unit......... 1,142,858 11,429 1,988,571 -- -- 2,000,000
Fair market value of options
and warrants granted on
December 1, 2001................... -- -- 131,300 -- -- 131,300
(continued)
See Notes to Condensed Consolidated Financial Statements.
-5-
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
-----------------------------
CONDENSED CONSOLIDATED STATEMENT OF
-----------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
FROM INCEPTION ON JULY 1, 1998 THROUGH DECEMBER 31, 2001
--------------------------------------------------------
(unaudited)
Deferred
Deficit Compensation
Accumulated Related to the
Capital in During the Issuance of
Excess of Development Options and
Common Stock Par Value Stage Warrants Total
---------------------- ------------ ----------- -------------- ----------
Shares Amount
------ ------
Issuance of common stock and
warrants associated with
bridge loan conversion on
December 3, 2001................... 305,323 3,053 531,263 -- -- 534,316
Fair market value of options
granted in lieu of payment of
expenses on December 1, 2001....... -- -- 131,250 -- -- 131,250
Issuance of common stock and
warrants for cash on December
26, 2001 at $1.75 per unit......... 665,714 6,657 1,158,343 -- -- 1,165,000
Commissions, legal and bank
fees associated with issuances
during the six months ended
December 31, 2001.................. -- -- (414,522) -- -- (414,522)
Change in fair market value of
options and warrants granted....... -- -- 148,138 -- 111,610 259,748
Net loss........................... -- -- -- (6,596,943) -- (6,596,943)
--------- -------- ----------- ----------- --------- -----------
Balance at December 31, 2001 9,987,187 $ 99,872 $ 9,210,523 $(6,596,943) $ (69,122) $ 2,644,330
========= ======== =========== =========== ========= ===========
See Notes to Condensed Consolidated Financial Statements.
-6-
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(unaudited)
From Inception
For the Six For the Six on July 1, 1998
Months Ended Months Ended through
December 31, December 31, December 31,
2001 2000 2001
------------ ------------ ---------------
Cash flows used in operating activities:
Net loss............................................ $ (1,106,041) $ (1,013,678) $ (6,596,943)
Adjustments to reconcile net loss
to net cash used in operating activities:
Noncash capital contribution........................ -- -- 85,179
Issuance of common stock and warrants for interest.. 9,316 -- 9,316
Issuance of stock options and warrants for services. 541,040 111,370 1,267,112
Depreciation and amortization....................... 11,371 10,812 58,248
(Increase) decrease in operating assets:
Prepaid expense and other current assets............ 6,464 966 (9,090)
Security deposit.................................... -- -- (7,187)
Increase (decrease) in operating liabilities:
Accounts payable.................................... (143,774) 52,369 25,148
Accrued expenses.................................... 279,124 (47,882) 413,606
------------ ------------ ------------
Net cash used in operating activities............... (402,500) (886,043) (4,754,611)
------------ ------------ ------------
Cash flows from investing activities:
Patent costs........................................ (72,315) (47,421) (240,252)
Purchase of property and equipment.................. (9,616) (2,163) (125,233)
------------ ------------ ------------
Net cash used in investing activities............... (81,931) (49,584) (365,485)
------------ ------------ ------------
Cash flows provided from financing activities:
Proceeds from grant................................. 11,051 -- 56,858
Proceeds from issuance of bridge notes.............. 525,000 -- 525,000
Proceeds from issuance of common stock, net......... 2,750,478 -- 7,354,666
------------ ------------ ------------
Cash flows provided by financing activities......... 3,286,529 -- 7,936,524
------------ ------------ ------------
Net increase (decrease) in cash..................... 2,802,098 (935,627) 2,816,428
Cash at beginning of period......................... 14,330 1,555,749 --
------------ ------------ ------------
Cash at end of period............................... $ 2,816,428 $ 620,122 $ 2,816,428
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest............ $ -- $ -- $ 22,317
============ ============ ============
Non-cash conversion of bridge notes into
common stock........................................ $ 534,316 $ -- $ 534,316
============ ============ ============
See Notes to Condensed Consolidated Financial Statements.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These unaudited condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB for the
year ended June 30, 2001.
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments, consisting
solely of those which are of a normal recurring nature, necessary to present
fairly its financial position as of December 31, 2001 and as of June 30, 2001,
the results of its operations for the three month periods ended December 31,
2001 and 2000, the results of its operations and cash flows for the six month
periods ended December 31, 2001 and 2000 and for the period from inception on
July 1, 1998 through December 31, 2001.
Interim results are not necessarily indicative of results for the full
fiscal year.
Senesco is a development stage functional genomics company whose mission
is to enhance the quality and productivity of fruits, flowers, vegetables and
agronomic crops through the control of senescence (aging) in plants. Results to
date include longer shelf life of perishable produce, increased seed and biomass
yield and greater tolerance to environmental stress.
NOTE 2 - LOSS PER SHARE:
Net loss per common share is computed by dividing the loss by the
weighted average number of common shares outstanding during the period. Since
September 7, 1999, the Company has had outstanding options and warrants to
purchase its common stock, $0.01 par value per share (the "Common Stock"),
however, shares to be issued upon the exercise of options and warrants are not
included in the computation of diluted loss per share as the effect is
anti-dilutive.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
NOTE 3 - SIGNIFICANT EVENTS:
Employment Agreement
On October 4, 2001, the Company hired Bruce C. Galton as its new
President and Chief Executive Officer. In conjunction with Mr. Galton's
appointment, the Company entered into a three-year employment agreement with Mr.
Galton, effective October 4, 2001. The agreement shall automatically renew for
successive one-year terms thereafter, unless written notice of termination is
provided at least 120 days prior to the end of the applicable term. The
agreement provides Mr. Galton with an annual base salary of $200,000 plus
certain benefits, including potential bonuses, equity awards and other
perquisites as determined by the Board of Directors. The agreement also provides
that Mr. Galton is entitled to a lump sum payment of 1.5 times his base annual
salary if his employment with the Company is terminated without cause or with
good reason (as defined within the agreement). If Mr. Galton's employment with
the Company is terminated pursuant to a change in control (as defined within the
agreement), he is entitled to receive the difference between the monies actually
received upon termination and 1.5 times his annual base salary.
Stock Incentive Plan, Option Grants and Additional Warrant Grants
On October 4, 2001, the Board of Directors of the Company approved an
amendment to the Company's 1998 Stock Incentive Plan, as amended (the "Plan"),
to increase the maximum number of shares of Common Stock available for issuance
under the Plan from 1,000,000 shares to 2,000,000 shares. Stockholder approval
for the increase was obtained at the Company's Annual Meeting of Stockholders
held on November 29, 2001.
On October 4, 2001, the Board of Directors unanimously approved and the
Company subsequently issued: (i) options under the Plan to purchase an aggregate
of 1,116,000 shares of Common Stock with a weighted average exercise price of
$2.38 per share; and (ii) warrants to purchase an aggregate of an additional
180,000 shares of Common Stock with a weighted average exercise price of $1.59
per share. The effective dates of the above grants were from October 2, 2001
through December 1, 2001.
On December 1, 2001, the Company granted, pursuant to the Plan, to Ruedi
Stalder, the Company's former Chief Executive Officer, options to purchase
65,000 shares of Common Stock with an exercise price of $2.05 per share. Such
options were granted to Mr. Stalder in lieu of receiving cash compensation in
the amount of $131,250 for services provided as an officer of the Company during
the period from January 1, 2000 through September 30, 2001.
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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
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(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
License Agreement
In November 2001, the Company entered into a worldwide exclusive license
with Harris Moran Seed Company (the "License") to commercialize the Company's
technology in lettuce and certain melons. In connection with the License, the
Company received an initial license fee of $125,000 in November 2001. Upon the
completion of certain marketing and development benchmarks set forth in the
License, the Company will receive a total of $4,000,000 in development payments
over a multi-year period along with royalties upon commercial introduction.
New Jersey Economic Development Authority
In November 2001, pursuant to the New Jersey Technology Tax Credit
Transfer Program (the "Program"), the Company received approval from the New
Jersey Economic Development Authority (the "EDA") to sell the Company's New
Jersey net operating loss tax benefit in the amount of $174,325 for the fiscal
year ended June 30, 2000. In December 2001, the Company sold its entire New
Jersey net operating loss tax benefit and received net proceeds of $150,551. The
Company may apply to participate in the Program to sell its New Jersey net
operating loss tax benefit in the amount of approximately $151,000 for the
fiscal year ended June 30, 2001. An application must be submitted to the EDA by
June 30, 2002. However, there can be no assurance that the Company will be
approved to participate in the Program for the year ended June 30, 2001 or if
approved, that the Company will be able to sell all or part of its New Jersey
net operating loss tax benefit.
Financings
On November 30, 2001, the Company consummated a private placement (the
"Stanford Private Placement") with Stanford Venture Capital Holdings, Inc.
("Stanford"), of 1,142,858 shares of Common Stock and warrants to purchase
1,000,000 shares of Common Stock for the aggregate cash consideration of
$2,000,000. Costs associated with the Stanford Private Placement totaled
$256,347. The Company did not engage a placement agent for the sale of such
securities. Fifty percent (50%) of the warrants were issued with an exercise
price equal to $2.00 per share and fifty percent (50%) of the warrants were
issued with an exercise price equal to $3.25 per share, with all such warrants
vesting on the date of grant. Pursuant to the Securities Purchase Agreement, the
purchase price of one unit, which consisted of one share of Common Stock and a
warrant to purchase 0.875 shares of Common Stock, was equal to $1.75 per unit.
In addition, the Company entered into a Registration Rights Agreement with
Stanford. The Registration Rights Agreement provides, among other things, that a
shelf registration statement be filed on or before June 30, 2002, as well as
piggy-back registration rights for a three-year period from the date of the
agreement.
-10-
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
-----------------------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
During the period from July 10, 2001 through November 5, 2001, the
Company issued six unsecured bridge notes (the "Notes") payable to certain
directors of the Company in the aggregate principal amount of $525,000. The
Notes had an annual interest rate equal to the prime rate on the date that the
Notes were issued (5.50% to 6.75%) and such interest was payable upon maturity
of the Notes. The Notes and accrued interest were due on January 15, 2002. On
December 3, 2001, the directors converted the Notes and accrued interest in the
aggregate amount of $534,316 into 305,323 shares of Common Stock and warrants to
purchase 267,158 shares of Common Stock on the same terms and conditions as the
Stanford Private Placement.
Also, in November 2001, the Company initiated a private placement to
certain accredited investors (the "Accredited Investor Private Placement") for a
minimum aggregate investment of $1,000,000 and a maximum aggregate investment of
$3,000,000. The private placement offered units of one share of Common Stock and
a warrant to purchase 0.4375 shares of Common Stock at a price equal to $1.75
per unit. Fifty percent (50%) of the warrants were offered with an exercise
price equal to $2.00 per share and fifty percent (50%) of the warrants were
offered with an exercise price equal to $3.25 per share, with all such warrants
vesting on the date of grant. On December 26, 2001, the Company entered into
Securities Purchase Agreements for the aggregate amount of 665,714 shares of
Common Stock and warrants to purchase 291,250 shares of Common Stock for the
aggregate cash consideration of $1,165,000. Costs associated with these
transactions totaled $158,175. The Company did not engage a placement agent for
the sale of such securities. In addition, the Company entered into Registration
Rights Agreements with these purchasers. The Registration Rights Agreements
provide for, among other things, piggy-back registration rights for a three-year
period from the date of each agreement.
In connection with the above private placements, on December 26, 2001,
the Board of Directors unanimously approved the issuance of warrants to certain
entities to purchase an additional 500,000 shares of Common Stock on the same
terms and conditions as the warrants issued in the Accredited Investor Private
Placement.
NOTE 4 - SUBSEQUENT EVENT:
In January 2002, the Company consummated another private placement with
Stanford for 571,429 shares of Common Stock and warrants to purchase 500,000
shares of Common Stock for the aggregate cash consideration of $1,000,000, on
the same terms and conditions as the initial Stanford Private Placement. Costs
associated with this transaction approximated $140,000.
-11-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION.
OVERVIEW
Business of the Company
The primary business of Senesco Technologies, Inc., a Delaware
corporation (the "Company"), and its wholly-owned subsidiary, Senesco, Inc., a
New Jersey corporation ("Senesco"), is the research, development and commercial
exploitation of a potentially significant platform technology involving the
identification and characterization of genes that the Company believes control
the aging of plant cells (senescence) and may also control the programmed cell
death of mammalian cells (apoptosis). The Company's technology goals for plant
applications are to: (i) extend the shelf-life of perishable plant products;
(ii) produce larger and more leafy crops; (iii) increase crop production (yield)
in horticultural and agronomic crops; and (iv) reduce the harmful effects of
environmental stress.
Senescence in plant tissues is the natural aging of these tissues. Loss
of cellular membrane integrity is an early event during the senescence of all
plant tissues that prompts the deterioration of fresh flowers, fruits and
vegetables. This loss of integrity, which is attributable to the formation of
lipid metabolites in membrane bilayers that "phase-separate," causes the
membranes to become "leaky." A decline in cell function ensues, leading to
deterioration and eventual death (spoilage) of the tissue. A delay in senescence
increases shelf-life and extends the plant's growth timeframe, which allows the
plant to devote more time to the photosynthetic process. The Company has shown
that the additional energy gained in this period leads directly to increased
seed production, and therefore increases crop yield. Seed production is a vital
agricultural function. For example, oil-bearing crops store oil in their seeds.
The Company has also shown that delaying senescence allows the plant to allocate
more energy toward growth, leading to larger plants (increased biomass) and more
leafy crops. Most recently, the Company has demonstrated that delaying
senescence results in crops which exhibit increased resilience to water
deprivation. Drought resistant crops may ultimately be more cost effective due
to reduced loss in the field and less time spent on crop management.
The technology presently utilized by the industry for increasing the
shelf-life in certain flowers, fruits and vegetables relies on reducing ethylene
biosynthesis, and hence only has application to a limited number of plants that
are ethylene-sensitive.
The Company's technology is novel in that its research and development
focuses on the discovery and development of new gene technologies, which are
designed to confer positive traits on fruits, flowers, vegetables, forestry
species and agronomic crops. To date, the Company has isolated and characterized
the senescence-induced lipase gene, deoxyhypusine synthase ("DHS") gene and
Factor 5A gene in certain species of plants. The Company's goal is to inhibit
the expression of (or silence) these genes to delay senescence, which will in
turn extend shelf-life, increase biomass, increase yield and increase resistance
to environmental stress, thereby demonstrating "proof of concept" in each
category of crop. In addition to the Harris Moran License Agreement (as defined
below), the Company plans to license this technology to additional strategic
partners and/or enter into joint ventures.
-12-
The Company is currently working with lettuce, melon, tomato, canola,
Arabidopsis (a model plant which produces oil in a manner similar to canola) and
banana plants, and has obtained "proof of concept" for the lipase and DHS genes
in several of these plants. Near-term research and development initiatives
include: (i) silencing the Factor 5A gene in these six types of plants; and (ii)
further propagation of transformed plants with the Company's silenced genes.
Additionally, the Company has isolated the DHS and Factor 5A genes in mammalian
tissue. The Company has also completed its research and development initiative
in carnation flower, which yielded a one hundred percent (100%) increase in
shelf-life through the inhibition of the DHS reaction.
Subsequent initiatives include: (i) expanding the lipase, DHS and Factor
5A gene technology into a variety of other commercially viable agricultural
crops such as lettuce and melon; (ii) developing transformed plants that possess
new beneficial traits such as increased tolerance to disease and environmental
stress; and (iii) assessing the function of the DHS and Factor 5A genes in
mammalian tissue through the accumulation of additional experimental data. The
Company's strategy focuses on various plants to allow flexibility that will
accommodate different plant reproduction strategies among the various sectors of
the broad agricultural and horticultural markets. There can be no assurance,
however, that the Company's research and development efforts will be successful,
or if successful, that the Company will be able to commercially exploit its
technology.
The Company's research and development is performed by third party
researchers at the direction of the Company pursuant to various research and
license agreements. The primary research and development effort takes place at
the University of Waterloo in Ontario, Canada, where the technology was
developed. Additional research and development is performed in connection with
the Harris Moran License Agreement as well as through the Company's Joint
Venture (as defined below) with Rahan Meristem Ltd. in Israel.
Agricultural Target Markets
The Company's technology embraces crops that are reproduced both through
seeds and propagation, which are the only two means of commercial crop
reproduction. Propagation is a process whereby the plant does not produce
fertile seeds and must reproduce through cuttings from the parent plant which
are planted and become new plants. In order to address the complexities
associated with marketing and distribution in the worldwide produce market, the
Company has adopted a multi-faceted commercialization strategy, in which it
plans to enter into licensing agreements or other strategic relationships with a
variety of companies on a crop-by-crop basis.
In November 2001, the Company entered into a worldwide exclusive license
with Harris Moran Seed Company (the "Harris Moran License Agreement" or
"License") to commercialize the Company's technology in lettuce and certain
melons. In connection with the License, the Company received an initial license
fee of $125,000 in November 2001. Upon the completion of certain marketing and
development benchmarks set forth in the License, the Company will receive a
total of $4,000,000 in development payments over a multi-year period along with
royalties upon commercial introduction.
-13-
Agricultural Marketing
Based upon the Company's multi-faceted commercialization strategy, it
anticipates that there may be a significant period of time before plants
enhanced using its technology reach consumers. Thus, the Company has not begun
to actively market its technology directly to consumers, but rather, it has
sought to establish itself within the industry through its advertising program
in trade journals, newspapers, a national magazine, as well as through direct
communication with prospective licensees.
Joint Venture
On May 14, 1999, the Company entered into a joint venture agreement with
Rahan Meristem Ltd., an Israeli company ("Rahan"), engaged in the worldwide
export marketing of banana germ-plasma (the "Joint Venture"). Rahan accounts for
approximately ten percent (10%) of the worldwide export of banana seedlings. The
Company has contributed, by way of a limited, exclusive, world-wide license to
the Joint Venture, access to its technology, discoveries, inventions and
know-how (patentable or otherwise), pertaining to plant genes and their cognate
expressed proteins that are induced during senescence (plant aging) for the
purpose of developing, on a joint basis, genetically enhanced banana plants
which will result in a "longer shelf-life" banana. Rahan has contributed its
technology, inventions and know-how with respect to banana plants. The Joint
Venture is equally owned by each of the parties. There can be no assurance,
however, that the Joint Venture will be successful, or if successful, that the
Company will be able to commercially exploit its technology.
The Joint Venture applied for and received a conditional grant that
totals approximately $340,000, which constitutes fifty percent (50%) of the
Joint Venture's research and development budget over a four year period, from
the Israel - U.S. Binational Research and Development (the "BIRD") Foundation
(the "BIRD Grant"). Such grant, along with certain royalty payments, shall only
be repaid to the BIRD Foundation upon the commercial success of the Joint
Venture's technology. The commercial success is measured based upon certain
benchmarks and/or milestones achieved by the Joint Venture. These benchmarks are
reported periodically to the BIRD Foundation by the Joint Venture. As of
December 31, 2001, Senesco has directly received a total of $56,858, $11,051 of
which was received during the current quarter, from the BIRD Foundation for
research and development expenses the Company has incurred which are associated
with the research and development efforts of the Joint Venture. The Company
expects to receive additional installments of the BIRD Grant as its expenditures
associated with the Joint Venture increase above certain levels. As of December
31, 2001, the Company's portion of the Joint Venture's aggregate expenses
totaled approximately $182,000, $11,500 of which was incurred during the current
quarter.
All aspects of the Joint Venture's research and development initiative
are proceeding on time, or are ahead of the original schedule laid out at the
inception of the Joint Venture. Both the DHS and lipase genes have been
identified and isolated in banana, and the Joint Venture is currently in the
process of silencing these genes. Once silenced, the goal is to transform banana
plants, thereby yielding fruit with extended shelf-life and plants which are
more tolerant to disease and environmental stress.
-14-
Consistent with the Company's commercialization strategy, it intends to
attract other companies interested in strategic partnerships or licensing its
technology. The Harris Moran License Agreement and the Joint Venture with Rahan
are steps toward the execution of its strategy. The Company also plans to enter
into joint ventures with companies having well-established channels of
distribution and, in such cases, the Company will have more direct control over
commercialization activities. However, there can be no assurance that the
Company will be able to successfully implement its commercialization strategy.
INTELLECTUAL PROPERTY
Research and Development
The inventor of the Company's technology, John E. Thompson, Ph.D., is
the Associate Vice President, Research and former Dean of Science at the
University of Waterloo in Ontario, Canada, and is the Executive Vice President
of Research and Development of the Company. Dr. Thompson is also a director and
stockholder of the Company and owns 5.7% of the outstanding shares of the
Company's common stock, $0.01 par value (the "Common Stock") as of December 31,
2001. Senesco entered into a three-year research and development agreement,
dated as of September 1, 1998 (the "Research and Development Agreement"), with
the University of Waterloo and Dr. Thompson as the principal inventor. The
Research and Development Agreement provides that the University of Waterloo will
perform research and development under the direction of Senesco, and Senesco
will pay for the cost of this work and make certain payments totaling
approximately CDN $1,250,000 (as specified therein), which represented
approximately US $835,000 on December 31, 2001. In return for these payments,
the Company has all rights to the intellectual property derived from the
research. Effective September 1, 2001, the Company extended the Research and
Development Agreement for an additional one-year period in the amount of CDN
$433,700. As of December 31, 2001, such amount represented approximately US
$272,000. During the three month periods ended December 31, 2001 and December
31, 2000, the Company has spent approximately $67,022 and $89,948, respectively,
in connection with the Research and Development Agreement. During the six month
periods ended December 31, 2001 and December 31, 2000, the Company has spent
approximately $114,160 and $167,743, respectively, in connection with the
Research and Development Agreement.
Effective May 1, 1999, the Company entered into a consulting agreement
for research and development with Dr. Thompson. On July 1, 2001, the Company and
Dr. Thompson renewed the consulting agreement for an additional three-year term
as provided for under the terms and conditions of the agreement. This agreement
provides for monthly payments of $3,000 to Dr. Thompson through June 2004. The
agreement shall automatically renew for an additional three-year term, unless
either of the parties provides the other with written notice within six months
of the end of the term.
The Company's future research and development program focuses on the
discovery and development of new gene technologies which aim to extend
shelf-life and to confer other positive traits on fruits, flowers, vegetables
and agronomic row crops and on the commencement of additional mammalian cell
research. Over the next twelve months, the Company plans the following research
and development initiatives: (i) the development of transformed plants that
possess new beneficial traits, such as protection against drought and disease,
with emphasis on
-15-
lettuce, melon, corn, forestry products and the other species noted in (ii)
through (v); (ii) the development of enhanced banana plants through the Joint
Venture with Rahan; (iii) the development of enhanced lettuce and melon plants
through the Harris Moran License Agreement; (iv) the isolation of new genes in
the Arabidopsis, tomato, lettuce, soybean, rape seed (canola) and melon plants,
among others, at the University of Waterloo; and (v) assessing the function of
the DHS and Factor 5A genes in mammalian tissue. The Company may further expand
its research and development initiative beyond the initiatives listed above.
Patent Applications
Dr. Thompson and his colleagues, Dr. Yuwen Hong and Dr. Katalin Hudak,
filed a patent application on June 26, 1998 (the "Original Patent Application")
to protect their invention, which is directed to methods for controlling
senescence in plants. By assignment dated June 25, 1998 and recorded with the
United States Patent and Trademark Office (the "PTO"), on June 26, 1998, Drs.
Thompson, Hong and Hudak assigned all of their rights in and to the Original
Patent Application and any other applications filed in the United States or
elsewhere with respect to the invention and/or improvements thereto to Senesco,
L.L.C. Senesco succeeded to the assignment and ownership of the Original Patent
Application. Drs. Thompson, Hong and Hudak filed an amendment to the Original
Patent Application on February 16, 1999 (the "Amended Patent Application" and
together with the Original Patent Application, the "First Patent Application")
titled "DNA Encoding A Plant Lipase, Transgenic Plants and a Method for
Controlling Senescence in Plants." The Amended Patent Application serves as a
continuation of the Original Patent Application. Concurrent with the filing of
the Amended Patent Application with the PTO and as in the case of the Original
Patent Application, Drs. Thompson, Hong and Hudak assigned all of their rights
in and to the Amended Patent Application and any other applications filed in the
United States or elsewhere with respect to such invention and/or improvements
thereto to Senesco. Drs. Thompson, Hong and Hudak have received shares of
restricted Common Stock of the Company in consideration for the assignment of
the First Patent Application. The inventions, which were the subject of the
First Patent Application, include a method for controlling senescence of plants,
a vector containing a cDNA whose expression regulates senescence, and a
transformed microorganism expressing the lipase of the cDNA. Management believes
that the inventions provide a means for delaying deterioration and spoilage,
which could greatly increase the shelf-life of fruits, vegetables, and flowers
by silencing or substantially repressing the expression of the lipase gene
induced coincident with the onset of senescence.
The Company filed a second patent application (the "Second Patent
Application," and together with the First Patent Application, collectively, the
"Patent Applications") on July 6, 1999, titled "DNA Encoding A Plant
Deoxyhypusine Synthase, Transgenic Plants and a Method for Controlling
Programmed Cell Death in Plants." The inventors named on the patent are Drs.
John E. Thompson, Tzann-Wei Wang and Dongen Lily Lu. Concurrent with the filing
of the Second Patent Application with the PTO and as in the case of the First
Patent Application, Drs. Thompson, Wang and Lu assigned all of their rights in
and to the Second Patent Application and any other applications filed in the
United States or elsewhere with respect to such invention and/or improvements
thereto to Senesco. Drs. Thompson, Wang and Lu have received options to purchase
Common Stock of the Company in consideration for the assignments of the Second
Patent Application. The inventions include a method for the genetic modification
of plants to
-16-
control the onset of either age-related or stress-induced senescence, an
isolated DNA molecule encoding a senescence induced gene, and an isolated
protein encoded by the DNA molecule.
The Company has broadened the scope of its intellectual property
protection by utilizing the Patent Cooperation Treaty ("PCT") to facilitate
international filing and prosecution of the Patent Applications. The First
Patent Application was published through the PCT in August 2000, and then
between August 2001 and October 2001 was filed in Australia, Canada, China,
Japan, Korea, New Zealand and Europe through the European Patent Office, which
has twenty member states. Israel is the last remaining country in which the
Company opted to file that has yet to issue a filing date. The Second Patent
Application was published by the PCT in January 2001.
The Company is in the process of drafting various patent applications
for new aspects of the Company's senescence technology. The Company has filed
several new Continuations in Part ("CIPs") on both the First Patent Application
and the Second Patent Application to ensure, on an ongoing basis, that its
intellectual property pertaining to new technological developments is
appropriately protected.
There can be no assurance that patent protection will be granted with
respect to all the foregoing Patent Applications, or any other applications, or
that, if granted, the validity of such patents will not be challenged.
Furthermore, there can be no assurance that claims of infringement upon the
proprietary rights of others will not be made, or if made, could be successfully
defended against.
Agricultural Market Competition and Industry Trends
The Company's competitors in the agricultural industry are primarily
focused on research and development rather than commercialization. Those
competitors which are presently attempting to distribute their technology have
generally utilized one of the following commercialization distribution channels:
(i) licensing technology to major marketing and distribution partners; (ii)
distributing seedlings directly to growers; or (iii) entering into strategic
alliances. In addition, some competitors are owned by established produce
distribution companies, which alleviates the need for strategic alliances, while
others are attempting to create their own distribution and marketing channels.
The Company's competitors in the field of delaying plant senescence are
companies that develop and produce transformed plants in which ethylene
biosynthesis has been silenced. Such companies include, among others: Paradigm
Genetics; Aventis Crop Science; Mendel Biotechnology; Bionova Holding
Corporation; Renessen LLC; Exelixis Plant Sciences, Inc.; and Eden Bioscience.
The Company believes that its proprietary technology is unique and,
therefore, places it at a competitive advantage in the industry. However, there
can be no assurance that the Company's competitors will not develop a similar
product with properties superior to its own or at greater cost-effectiveness.
-17-
Government Regulation
At present, the U.S. federal government regulation of biotechnology is
divided among three agencies: (i) the U.S. Department of Agriculture regulates
the import, field-testing and interstate movement of specific types of genetic
engineering that may be used in the creation of transformed plants; (ii) the
Environmental Protection Agency regulates activity related to the invention of
plant pesticides and herbicides, which may include certain kinds of transformed
plants; and (iii) the Food and Drug Administration (the "FDA") regulates foods
derived from new plant varieties. The FDA requires that transformed plants meet
the same standards for safety that are required for all other plants and foods
in general. Except in the case of additives that significantly alter a food's
structure, the FDA does not require any additional standards or specific
approval for genetically engineered foods but expects transformed plant
developers to consult the FDA before introducing a new food into the market
place.
The Company believes that its current activities, which to date have
been confined to research and development efforts, do not require licensing or
approval by any governmental regulatory agency. The Company may be required,
however, to obtain such licensing or approval from governmental regulatory
agencies prior to the commercialization of its transformed plants. There can be
no assurance that such licensing or approval by any governmental regulatory
agency will be obtained in a timely manner, if at all. In addition, government
regulations are subject to change and, in such event, the Company may be subject
to additional regulations or require such licensing or approval in the future.
Employees
In addition to the scientists performing funded research for the Company
at the University of Waterloo, as of December 31, 2001, the Company had five
employees and one consultant, four of whom were executive officers and were
involved in the management of the Company.
The officers are assisted by a Scientific Advisory Board that consisted
consisted of three prominent experts in the field of transformed plants. Alan
Bennett, Ph.D., is the Executive Director of the Office of Technology Transfer
at the University of California. His research interests include: the molecular
biology of tomato fruit development and ripening; the molecular basis of
membrane transport; and cell wall disassembly. A. Carl Leopold, Ph.D., and
William R. Woodson, Ph.D. were the other members of the Scientific Advisory
Board. The Company is recruiting scientists with a broader field of expertise
than had previously existed on the Scientific Advisory Board. In connection with
this recruitment effort, Drs. Leopold and Woodson stepped down from the
Scientific Advisory Board on October 31, 2001. Dr. Bennett continues to serve as
Chairman of the Scientific Advisory Board.
In connection with the expanding scope of the Company's research and
development program, Charles A. Dinarello, M.D. joined the Scientific Advisory
Board in February 2002. Dr. Dinarello is a Professor of Medicine at the
University of Colorado School of Medicine, a member of the U.S. National Academy
of Sciences and the author of over 500 published research articles. In addition
to his active academic research career, Dr. Dinarello has held advisory
positions with two branches of the National Institutes of Health and positions
on the Board of Governors of both the Weizmann Institute and Ben Gurion
University.
-18-
In addition to his service on the Scientific Advisory Board, the Company
utilizes Dr. Bennett as a consultant experienced in plant transformation.
Effective November 1, 2001, the Company entered into a one-year consulting
agreement with Dr. Bennett, which provides for monthly payments of $2,400 to Dr.
Bennett through October 31, 2002.
Furthermore, pursuant to the Research and Development Agreement, the
majority of the Company's research and development activities are conducted at
the University of Waterloo under the supervision of Dr. Thompson. The Company
utilizes the University's substantial research staff including graduate and
post-graduate researchers.
The Company may hire additional employees over the next twelve months to
meet needs created by possible expansion of its marketing activities and product
development.
Safe Harbor Statement
Certain statements included in this Form 10-QSB, including, without
limitation, statements regarding the anticipated growth in the markets for the
Company's services, the continued development of the Company's genetic
technology, the approval of the Company's Patent Applications, the possibility
of governmental approval in order to sell or offer for sale to the general
public a genetically engineered plant or plant product, the successful
implementation of the Joint Venture with Rahan, the success of the Research and
Development Agreement, statements relating to the Company's Patent Applications,
the anticipated longer term growth of the Company's business, and the timing of
the projects and trends in future operating performance, are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. The factors discussed herein and others expressed from time to
time in the Company's filings with the Securities and Exchange Commission could
cause actual results and developments to be materially different from those
expressed in or implied by such statements. The Company does not undertake to
update any forward-looking statements.
-19-
LIQUIDITY AND CAPITAL RESOURCES
Overview
As of December 31, 2001, the Company's cash balance was $2,816,428, and
the Company had working capital of $2,386,764. As of December 31, 2001, the
Company had a federal tax loss carry-forward of approximately $4,965,000 and a
state tax loss carry-forward of approximately $2,525,000 to offset future
taxable income. There can be no assurance, however, that the Company will be
able to take advantage of any or all of such tax loss carry-forwards, if at all,
in future fiscal years.
Financing Needs
To date, the Company has not generated any significant revenues. The
Company has not been profitable since inception, will incur additional operating
losses in the future, and may require additional financing to continue the
development and subsequent commercialization of its technology. While the
Company does not expect to generate significant revenues in the near future, the
Company may enter into additional licensing or other agreements with marketing
and distribution partners that may result in license fees, revenues from
contract research, or other related revenue.
The Company expects its capital requirements to increase significantly
over the next several years as it commences new research and development
efforts, undertakes new product developments, increases marketing and
administration infrastructure and embarks on developing in-house business
capabilities and facilities. The Company's future liquidity and capital funding
requirements will depend on numerous factors, including, but not limited to, the
levels and costs of the Company's research and development initiatives and the
cost and timing of the expansion of the Company's marketing efforts.
BIRD Grant
In October 2001, the Company received $11,051 from the BIRD Foundation
for research and development expenses that the Company has incurred in
connection with the Joint Venture. The Company anticipates receiving additional
funds from the BIRD Grant in the future to assist in funding its Joint Venture.
License Agreement
In November 2001, the Company entered into a worldwide exclusive
licensing agreement with Harris Moran Seed Company to commercialize the
Company's technology in lettuce and certain melons. In connection with the
License, the Company received an initial license fee of $125,000 in November
2001. Upon the completion of certain marketing and development benchmarks as set
forth in the License, the Company will receive a total of $4,000,000 in
development payments over a multi-year period along with royalties upon
commercial introduction.
-20-
New Jersey Economic Development Authority
In November 2001, pursuant to the New Jersey Technology Tax Credit
Transfer Program (the "Program"), the Company received approval from the New
Jersey Economic Development Authority (the "EDA") to sell the Company's New
Jersey net operating loss tax benefit in the amount of $174,325 for the fiscal
year ended June 30, 2000. In December 2001, the Company sold its entire New
Jersey net operating loss tax benefit and received net proceeds of $150,551. The
Company may apply to participate in the Program to sell its New Jersey net
operating loss tax benefit in the amount of approximately $151,000 for the
fiscal year ended June 30, 2001. An application must be submitted to the EDA by
June 30, 2002. However, there can be no assurance that the Company will be
approved to participate in the Program for the year ended June 30, 2001 or if
approved, that the Company will be able to sell all or part of its New Jersey
net operating loss tax benefit.
Financings
On November 30, 2001, the Company consummated a private placement (the
"Stanford Private Placement") with Stanford Venture Capital Holdings, Inc.
("Stanford"), of 1,142,858 shares of Common Stock and warrants to purchase
1,000,000 shares of Common Stock for the aggregate cash consideration of
$2,000,000. Costs associated with the Stanford Private Placement totaled
$256,347. Pursuant to the Securities Purchase Agreement, the purchase price of
one unit, which consisted of one share of Common Stock and a warrant to purchase
0.875 shares of Common Stock, was equal to $1.75 per unit.
On December 1, 2001, the Company granted, pursuant to the Plan, to Ruedi
Stalder, the Company's former Chief Executive Officer, options to purchase
65,000 shares of Common Stock with an exercise price of $2.05 per share. Such
options were granted to Mr. Stalder in lieu of receiving cash compensation in
the amount of $131,250 for services provided as an officer of the Company during
the period from January 1, 2000 through September 30, 2001.
During the period from July 10, 2001 through November 5, 2001, the
Company issued six unsecured bridge notes (the "Notes") payable to certain
directors of the Company in the aggregate principal amount of $525,000. The
Notes had an annual interest rate equal to the prime rate on the date that the
Notes were issued (5.50% to 6.75%) and such interest was payable upon maturity
of the Notes. The Notes and accrued interest were due on January 15, 2002. On
December 3, 2001, the directors converted the Notes and accrued interest in the
aggregate amount of $534,316 into 305,323 shares of Common Stock and warrants to
purchase 267,158 shares of Common Stock on the same terms and conditions as the
Stanford Private Placement.
Also, in November 2001, the Company initiated a private placement (the
"Accredited Investor Private Placement") to certain accredited investors for a
minimum aggregate investment of $1,000,000 and a maximum aggregate investment of
$3,000,000. The private placement offered units of one share of Common Stock and
a warrant to purchase 0.4375 shares of Common Stock at a price equal to $1.75
per unit. On December 26, 2001, the Company entered into Securities Purchase
Agreements for the aggregate amount of 665,714 shares of Common Stock and
warrants to purchase 291,250 shares of Common Stock for the aggregate cash
consideration of $1,165,000. Costs associated with these transactions totaled
$158,175.
-21-
In January 2002, the Company consummated another private placement with
Stanford for 571,429 shares of Common Stock and warrants to purchase 500,000
shares of Common Stock for the aggregate cash consideration of $1,000,000, on
the same terms and conditions as the initial Stanford Private Placement. Costs
associated with this transaction approximated $140,000. Pursuant to the
Securities Purchase Agreement, the purchase price of one unit, which consisted
of one share of Common Stock and a warrant to purchase 0.875 shares of Common
Stock, was equal to $1.75 per unit.
The Company believes it has sufficient cash on hand to support its
operating plan for at least the next twelve months. To enable the Company to
fund its research and development and commercialization efforts, during November
2001 through January 2002, the Company issued an aggregate of 2,380,000 shares
of Common Stock and warrants to purchase 1,791,250 of Common Stock for aggregate
gross proceeds in the amount of $4,165,000, through several private placements.
Additionally, Notes in the aggregate amount of $534,316, payable to certain
directors of the Company, were converted into 305,323 shares of Common Stock and
warrants to purchase 267,158 shares of Common Stock.
RESULTS OF OPERATIONS
Three Months Ended December 31, 2001 and Three Months Ended December 31, 2000
- -----------------------------------------------------------------------------
The Company is a development stage company. From its inception of
operations on July 1, 1998 through September 30, 2001, the Company had no
revenues. For the three months ended December 31, 2001, the Company had total
revenue of $125,000. Revenue for the three month period ended December 31, 2001
consisted of the initial license fee in connection with the Harris Moran License
Agreement.
Operating expenses in each of the three month periods ended December 31,
2001 and December 31, 2000 were comprised of general and administrative
expenses, research and development expenses and non-cash advertising, consulting
and professional costs. Operating expenses for the three month periods ended
December 31, 2001 and December 31, 2000 were $876,422 and $578,957,
respectively, an increase of $297,465, or 51.4%.
General and administrative expenses in each of the three month periods
ended December 31, 2001 and December 31, 2000 consisted primarily of
professional salaries and benefits, professional and consulting services,
recruiting fees, office rent and investor relations expenses. General and
administrative expenses for the three month periods ended December 31, 2001 and
December 31, 2000 were $395,409 and $407,893, respectively. The decrease during
the three month period ended December 31, 2001 of $12,484, or 3.1%, from the
corresponding three month period ended December 31, 2000, resulted primarily
from decreases in consulting fees, payroll, accounting fees and office rent,
which were partially offset by increases in legal fees, recruiting fees and
investor relations expenses.
Research and development expenses in each of the three month periods
ended December 31, 2001 and December 31, 2000 consisted primarily of
professional salaries and benefits, fees associated with the Research and
Development Agreement, direct expenses charged to research and development
projects and allocated overhead charged to research and development projects.
-22-
Research and development expenses for the three month periods ended December 31,
2001 and December 31, 2000 were $93,821 and $130,714, respectively. The decrease
during the three month period ended December 31, 2001 of $36,893, or 28.2%, from
the corresponding three month period ended December 31, 2000, resulted primarily
from a reconciling adjustment for the period from June 1, 2000 through August
31, 2001 in connection with the Research and Development Agreement with the
University of Waterloo, a reduction in the amount of research fees paid in
connection with the carnation project, which was completed during the year ended
June 30, 2001, and a reduction in the amount of fees incurred for the Scientific
Advisory Board.
Non-cash charges for options and warrants issued in exchange for
services for the three month periods ended December 31, 2001 and December 31,
2000 were $387,192 and $40,350, respectively. Such costs consisted primarily of
non-employee stock options and warrants granted as consideration for certain
advertising, consulting and professional services. The increase during the three
month period ended December 31, 2001 of $346,842, or 859.6%, from the
corresponding three month period ended December 31, 2000, resulted primarily
from the issuance of options and warrants and the vesting of previously issued
options and warrants for advertising, consulting and professional services from
October 1, 2001 through December 31, 2001.
Six Months Ended December 31, 2001 and Six Months Ended December 31, 2000
- -------------------------------------------------------------------------
The Company is a development stage company. From its inception of
operations on July 1, 1998 through September 30, 2001, the Company had no
revenues. For the six months ended December 31, 2001, the Company had total
revenue of $125,000. Revenue for the six month period ended December 31, 2001
consisted of the initial license fee in connection with the Harris Moran License
Agreement.
Operating expenses in each of the six month periods ended December 31,
2001 and December 31, 2000 were comprised of general and administrative
expenses, research and development expenses and non-cash advertising, consulting
and professional costs. Operating expenses for the six month periods ended
December 31, 2001 and December 31, 2000 were $1,374,144 and $1,101,529,
respectively, an increase of $272,615, or 24.7%.
General and administrative expenses in each of the six month periods
ended December 31, 2001 and December 31, 2000 consisted primarily of
professional salaries and benefits, professional and consulting services,
recruiting fees, office rent and investor relations expenses. General and
administrative expenses for the six month periods ended December 31, 2001 and
December 31, 2000 were $676,128 and $742,327, respectively. The decrease during
the six month period ended December 31, 2001 of $66,199, or 8.9%, from the
corresponding six month period ended December 31, 2000, resulted primarily from
decreases in consulting fees, accounting fees and office rent, which were
partially offset by an increase in legal and recruiting fees.
Research and development expenses in each of the six month periods ended
December 31, 2001 and December 31, 2000 consisted primarily of professional
salaries and benefits, fees associated with the Research and Development
Agreement, direct expenses charged to research and development projects and
allocated overhead charged to research and development projects. Research and
development expenses for the six month periods ended December 31, 2001 and
-23-
December 31, 2000 were $156,976 and $247,832, respectively. The decrease during
the six month period ended December 31, 2001 of $90,856, or 36.7%, from the
corresponding six month period ended December 31, 2000, resulted primarily from
a reconciling adjustment for the period from June 1, 2000 through August 31,
2001 in connection with the Research and Development Agreement with the
University of Waterloo, a reduction in the amount of research fees paid in
connection with the carnation project, which was completed during the year ended
June 30, 2001, and a reduction in the amount of fees incurred for the Scientific
Advisory Board.
Non-cash charges for options and warrants issued in exchange for
services for the six month periods ended December 31, 2001 and December 31, 2000
were $541,040 and $111,370, respectively. Such costs consisted primarily of
non-employee stock options and warrants granted as consideration for certain
advertising, consulting and professional services. The increase during the six
month period ended December 31, 2001 of $429,670, or 385.8%, from the
corresponding six month period ended December 31, 2000, resulted primarily from
the issuance of options and warrants and the vesting of previously issued
options and warrants for advertising, consulting and professional services from
July 1, 2001 through December 31, 2001.
Period From Inception on July 1, 1998 through December 31, 2001
- ---------------------------------------------------------------
The Company is a development stage company. From its inception of
operations on July 1, 1998 through September 30, 2001, the Company had no
revenues. For the quarter ended December 31, 2001, the Company had revenue of
$125,000, which consisted of the initial license fee in connection with the
Harris Moran License Agreement.
The Company has incurred losses each year since inception and has an
accumulated deficit of $6,596,943 at December 31, 2001. The Company expects to
continue to incur losses over, approximately, the next two to three years from
expenditures on research, product development, marketing and administrative
activities.
The Company does not expect to generate significant revenues in the near
future, during which time the Company will engage in significant research and
development efforts. In November 2001, the Company entered into the Harris Moran
License Agreement to commercialize the Company's technology in lettuce and
various melons. The License provides that, upon completion of certain marketing
and development benchmarks, the Company will receive a total of $4,000,000 in
development payments over a multi-year period along with royalty payments to the
Company upon commercial introduction. Consistent with the Company's
commercialization strategy, the Company intends to attract other companies
interested in strategic partnerships or licensing the Company's technology that
may result in license fees, revenues from contract research and other related
revenues. There can be no assurance, however, that the Company will be
successful in attracting other companies willing to form strategic partnerships
or license its technology. Furthermore, no assurance can be given that the
Company's research and development efforts will result in any commercially
viable products, or that any licensing or other agreements with marketing and
distribution partners will result in revenues sufficient to support the
business. Successful future operations will depend on the Company's ability to
transform its research and development activities into commercializable
technology.
-24-
PART II. OTHER INFORMATION.
---------------------------
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Option Grants to Affiliates
On October 4, 2001, the Board of Directors unanimously approved and
subsequently issued options and warrants as described below:
The Company granted, pursuant to the Company's 1998 Stock Incentive
Plan, as amended (the "Plan"), the following to Ruedi Stalder, a current
director and former executive officer of the Company: (i) effective October 2,
2001, options to purchase 75,000 shares of Common Stock with an exercise price
equal to $1.50 per share, with all such options vesting on the date of grant;
(ii) effective November 1, 2001, options to purchase 150,000 shares of Common
Stock with an exercise price equal to $4.00 per share, with one-third of such
options vesting on the date of grant, one-third of such options vesting on
January 15, 2002 and one-third of such options vesting on January 15, 2003;
(iii) effective December 1, 2001, options to purchase 65,000 shares of Common
Stock with an exercise price equal to $2.05 per share, with all such options
vesting on the date of grant (options granted in lieu of receiving cash
compensation for services provided as an officer of the Company during the
period from January 1, 2000 through September 30, 2001); and (iv) effective
December 1, 2001, options to purchase 40,000 shares of Common Stock with an
exercise price equal to $2.05 per share, with one-half of such options vesting
on the date of grant and one-half of such options vesting on December 1, 2002.
The Company granted, pursuant to the Plan, the following to Bruce C.
Galton, the President and Chief Executive Officer and a director of the Company:
(i) effective October 5, 2001, options to purchase an aggregate of 130,000
shares of Common Stock with an exercise price equal to $2.10 per share, with
100,000 of such options vesting on the date of grant and 10,000 of such options
vesting on each of October 31, 2001, November 30, 2001, and December 31, 2001
(30,000 of such options were granted in lieu of receiving cash compensation for
services provided as an officer of the Company during the period from October 4,
2001 through December 31, 2001); and (ii) effective December 1, 2001, options to
purchase 300,000 shares of Common Stock, with an exercise price equal to $2.05
per share, with one-third of such options vesting on each of the first, second
and third anniversaries of the date of grant.
The Company granted, pursuant to the Plan, to John E. Thompson, Ph.D.,
the Executive Vice President of Research and Development and a director of the
Company, effective December 1, 2001, options to purchase 80,000 shares of Common
Stock with an exercise price equal to $2.05 per share, with one-third of such
options vesting on the date of grant and one-third of such options vesting on
each of the first and second anniversaries of the date of grant.
The Company granted, pursuant to the Plan, to Christopher Forbes, a
director of the Company, effective December 1, 2001, options to purchase 40,000
shares of Common Stock with an exercise price equal to $2.05 per share, with
one-half of such options vesting on the date of grant and one-half of such
options vesting on December 1, 2002.
-25-
The Company granted, pursuant to the Plan, to Thomas C. Quick, a
director of the Company, effective December 1, 2001, options to purchase 40,000
shares of Common Stock with an exercise price equal to $2.05 per share, with
one-half of such options vesting on the date of grant and one-half of such
options vesting on December 1, 2002.
The Company granted, pursuant to the Plan, the following to Steven Katz,
a former director and former executive officer of the Company: (i) effective
October 2, 2001, options to purchase 25,000 shares of Common Stock with an
exercise price equal to $1.50 per share, with all such options vesting on the
date of grant; (ii) effective November 1, 2001, options to purchase 50,000
shares of Common Stock with an exercise price equal to $4.00 per share, with
one-third of such options vesting on the date of grant, one-third of such
options vesting on January 15, 2002 and one-third of such options vesting on
January 15, 2003; (iii) effective December 1, 2001, options to purchase 40,000
shares of Common Stock with an exercise price equal to $2.05 per share, with
one-half of such options vesting on the date of grant and one-half of such
options vesting on December 1, 2002; and (iv) for services rendered in
connection with the Harris Moran License Agreement, effective December 1, 2001,
options to purchase 25,000 shares of Common Stock with an exercise price equal
to $2.05 per share, with all such options vesting on the date of grant.
The Company granted, pursuant to the Plan, to Sascha Fedyszyn, the Vice
President of Corporate Development and Secretary of the Company, effective
November 1, 2001, options to purchase 10,000 shares of Common Stock with an
exercise price equal to $2.15 per share, with one-third of such options vesting
on the date of grant and one-third of such options vesting on each of the first
and second anniversaries of the date of grant.
The Company granted, pursuant to the Plan, to Joel Brooks, the Chief
Financial Officer and Treasurer of the Company, effective November 1, 2001,
options to purchase 15,000 shares of Common Stock with an exercise price equal
to $2.15 per share, with one-third of such options vesting on the date of grant
and one-third of such options vesting on each of the first and second
anniversaries of the date of grant.
The Company granted, pursuant to the Plan, to Phillip Escaravage, the
Vice Chairman and a former director of the Company, effective December 1, 2001,
options to purchase 40,000 shares of Common Stock with an exercise price equal
to $2.26 per share, with one-half of such options vesting on the date of grant
and one-half of such options vesting on December 1, 2002.
Warrant and Option Grants to Non-Affiliates
In connection with the hiring of Mr. Galton, the Company's new President
and Chief Executive Officer, the Company issued to Christenson, Hutchinson,
McDowell, LLC, an executive management recruiter, a five-year warrant, effective
September 4, 2001, to purchase 20,000 shares of Common Stock with an exercise
price of $0.01 per share, with such warrant being fully vested on the date of
grant.
The Company granted, pursuant to the Plan, to a former employee of the
Company, effective November 1, 2001, options to purchase 1,000 shares of Common
Stock with an exercise price equal to $2.15 per share, with all such options
vesting on the date of the grant.
-26-
The Company granted, pursuant to the Plan, the following to a member of
the Company's Scientific Advisory Board: (i) for services rendered as a member
of the Company's Scientific Advisory Board, effective November 1, 2001, options
to purchase 10,000 shares of Common Stock with an exercise price equal to $2.15
per share, with all such options vesting on the date of the grant; and (ii) for
services rendered in connection with the Harris Moran License Agreement,
effective December 1, 2001, options to purchase 20,000 shares of Common Stock
with an exercise price equal to $2.05 per share, with all such options vesting
on the date of grant.
The Company granted, pursuant to the Plan, to each of two former members
of the Company's Scientific Advisory Board, for services rendered as a member of
the Company's Scientific Advisory Board, effective November 1, 2001, options to
purchase an aggregate of 25,000 shares of Common Stock with an exercise price
equal to $2.15 per share, with all such options vesting on the date of the
grant.
For services rendered, including providing the Company with advertising,
introductions to strategic alliance partners and, from time to time, use of its
office space, entertainment facilities and various other support services, the
Company granted to a certain entity, effective November 1, 2001, a ten-year
warrant to purchase 80,000 shares of Common Stock with an exercise price equal
to $2.15 per share. The warrant vests as follows: one-third on the date of grant
and one-third on each of the first and second anniversaries of the date of
grant.
For investment advisory services rendered, the Company granted to
certain individuals, effective October 15, 2001, seven-year warrants to purchase
an aggregate of 50,000 shares of Common Stock with an exercise price equal to
$1.00 per share. The warrants vest as follows: one-third on the date of grant
and one-third on each of the first and second anniversaries of the date of
grant.
For legal services rendered, the Company granted to certain entities,
effective November 1, 2001, ten-year warrants to purchase an aggregate of 30,000
shares of Common Stock with an exercise price equal to $2.15 per share. The
warrants vest as follows: one-third on the date of grant and one-third on each
of the first and second anniversaries of the date of grant.
In connection with the private placements, the Company will grant to
certain entities five-year warrants to purchase an aggregate of 500,000 shares
of Common Stock on the same terms and conditions as the Accredited Investor
Private Placement.
Financings
On November 30, 2001, the Company consummated the Stanford Private
Placement, of 1,142,858 shares of Common Stock and warrants to purchase
1,000,000 shares of Common Stock for the aggregate cash consideration of
$2,000,000. Costs associated with the Stanford Private Placement totaled
$256,347. The Company did not engage a placement agent for the sale of such
securities. Fifty percent (50%) of the warrants were issued with an exercise
price equal to $2.00 per share and fifty percent (50%) of the warrants were
issued with an exercise price equal to $3.25 per share, with all such warrants
vesting on the date of grant. Pursuant to the Securities Purchase Agreement, the
purchase price of one unit, which consisted of one share of Common Stock and a
warrant to purchase 0.875 shares of Common Stock, was equal to $1.75 per unit.
In addition, the Company entered into a Registration Rights Agreement with
Stanford.
-27-
The Registration Rights Agreement provides, among other things, that a shelf
registration statement be filed on or before June 30, 2002, as well as
piggy-back registration rights for a three-year period from the date of the
agreement.
During the period from July 10, 2001 through November 5, 2001, the
Company issued Notes payable to certain directors of the Company in the
aggregate principal amount of $525,000. The Notes had an annual interest rate
equal to the prime rate on the date that the Notes were issued (5.50% to 6.75%)
and such interest was payable upon maturity of the Notes. The Notes and accrued
interest were due on January 15, 2002. On December 3, 2001, the directors
converted the Notes and accrued interest in the aggregate amount of $534,316
into 305,323 shares of Common Stock and warrants to purchase 267,158 shares of
Common Stock on the same terms and conditions as the Stanford Private Placement.
Also, in November 2001, the Company initiated the Accredited Investor
Private Placement for a minimum aggregate investment of $1,000,000 and a maximum
aggregate investment of $3,000,000. The private placement offered units of one
share of Common Stock and a warrant to purchase 0.4375 shares of Common Stock at
a price equal to $1.75 per unit. On December 26, 2001, the Company entered into
Securities Purchase Agreements for the aggregate amount of 665,714 shares of
Common Stock and warrants to purchase 291,250 shares of Common Stock for the
aggregate cash consideration of $1,165,000. Fifty percent (50%) of the warrants
were offered with an exercise price equal to $2.00 per share and fifty percent
(50%) of the warrants were offered with an exercise price equal to $3.25 per
share, with all such warrants vesting on the date of grant. Costs associated
with these transactions totaled $158,175. The Company did not engage a placement
agent for the sale of such securities. In addition, the Company entered into
Registration Rights Agreements with these purchasers. The Registration Rights
Agreements provide for, among other things, piggy-back registration rights for a
three-year period from the date of each agreement.
In January 2002, the Company consummated another private placement with
Stanford, of 571,429 shares of Common Stock and warrants to purchase 500,000
shares of Common Stock for the aggregate cash consideration of $1,000,000, on
the same terms and conditions as the initial Stanford Private Placement. Costs
associated with this transaction approximated $140,000.
No underwriter was employed by the Company in connection with the
issuance of the securities described above. The Company believes that the
issuance of the foregoing securities was exempt from registration under Section
4(2) of the Securities Act of 1933, as amended, as transactions not involving a
public offering. Each of the recipients acquired the securities for investment
purposes only and not with a view to distribution and had adequate information
about the Company.
-28-
ITEM 4. STOCKHOLDER VOTE.
(a) The Annual Meeting of Stockholders of the Company (the "Meeting") was
held on November 29, 2001.
(b) The following is a complete list of the current Directors of the
Company, each of whom were elected to a one-year term at the Meeting,
and whose term of office continued after the meeting.
Christopher Forbes
Bruce C. Galton
Thomas C. Quick
Ruedi Stalder
John E. Thompson, Ph.D.
(c) There were 4,790,537 shares of Common Stock present at the Meeting in
person or by proxy out of a total number of 7,872,626 shares of Common
Stock issued and outstanding and entitled to vote at the Meeting.
(i) The proposals and results of the vote of the stockholders taken
at the Meeting by ballot and by proxy as solicited by the Company
on behalf of the Board of Directors were as follows:
(A) For the election of the nominees for the Board of Directors
of the Company:
Nominee For Withheld
------------------------ --------------- --------------
Christopher Forbes 4,782,191 8,346
Bruce C. Galton 4,782,191 8,346
Thomas C. Quick 4,782,191 8,346
Ruedi Stalder 4,782,191 8,346
John E. Thompson, Ph.D. 4,782,191 8,346
(B) For the proposal to approve an amendment to the Company's
1998 Stock Plan (the "Plan") to increase the maximum number
of shares of Common Stock available for issuance under the
Plan from 1,000,000 shares to 2,000,000 shares:
For Against Abstain Broker Non-Votes
----------- ----------- ------------ ----------------
3,237,832 124,502 6,419 1,421,784
-29-
(C) For the proposal to ratify the appointment of Goldstein
Golub and Kessler, LLP as the independent auditors of the
Company for the fiscal year ending June 30, 2002:
For Against Abstain
----------- ----------- -----------
4,773,859 11,066 5,612
ITEM 5. OTHER INFORMATION.
Management Restructuring
On October 4, 2001, John E. Thompson, Ph.D., the Company's Executive
Vice President of Research and Development, was elected to the Board of
Directors and Phillip O. Escaravage, the Company's Vice Chairman, resigned as a
director.
On October 4, 2001, Bruce C. Galton was appointed President and Chief
Executive Officer of the Company. In connection with Mr. Galton's appointment,
Ruedi Stalder resigned as Chief Executive Officer and Steven Katz resigned as
President and Chief Operating Officer of the Company. Mr. Stalder continues to
serve as the Chairman and a director and Mr. Katz continued to serve as a
director until the end of his term on November 29, 2001, when Mr. Galton was
elected.
In conjunction with Mr. Galton's appointment as President and Chief
Executive Officer, the Company entered into a three-year employment agreement
with Mr. Galton, effective October 4, 2001. The agreement shall automatically
renew for successive one-year terms thereafter, unless written notice of
termination is provided at least 120 days prior to the end of each applicable
term. The agreement provides Mr. Galton with an annual base salary of $200,000
plus certain benefits, including potential bonuses, equity awards and other
perquisites as determined by the Board of Directors. The agreement also provides
that Mr. Galton is entitled to a lump sum payment of 1.5 times his base annual
salary if his employment with the Company is terminated without cause or with
good reason (as defined within the agreement). If Mr. Galton's employment with
the Company is terminated pursuant to a change in control (as defined within the
agreement), he is entitled to receive the difference between the monies actually
received upon termination and 1.5 times his annual base salary.
-30-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
4.1 Form of Warrant issued to each of Stanford Venture Capital
Holdings, Inc., certain officers of Stanford Venture Capital
Holdings, Inc., and certain directors of the Company (with
attached schedule of parties and terms thereto).
4.2 Form of Warrant issued to certain accredited investors (with
attached schedule of parties and terms thereto).
4.3 Form of Warrant issued to certain third parties for services
rendered (with attached schedule of parties and terms thereto).
10.1 Securities Purchase Agreement by and between the Company and
Stanford Venture Capital Holdings, Inc. dated November 30, 2001.
10.2 Securities Purchase Agreement by and between the Company and
Stanford Venture Capital Holdings, Inc. dated January 16, 2002.
10.3 Form of Securities Purchase Agreement by and between the Company
and certain directors of the Company (with attached schedule of
parties and terms thereto).
10.4 Form of Securities Purchase Agreement by and between the Company
and certain accredited investors (with attached schedule of
parties and terms thereto).
10.5 Form of Registration Rights Agreement by and between the Company
and each of Stanford Venture Capital Holdings, Inc. and certain
directors of the Company (with attached schedule of parties and
terms thereto).
10.6 Form of Registration Rights Agreement by and between the Company
and each of certain accredited investors (with attached schedule
of parties and terms thereto).
10.7 1998 Stock Incentive Plan, as amended on November 29, 2001.
10.8* License Agreement by and between the Company and Harris Moran
Seed Company dated November 19, 2001.
10.9 Employment Agreement by and between the Company and Bruce C.
Galton dated October 4, 2001.
10.10 Indemnification Agreement by and between the Company and Bruce C.
Galton dated October 4, 2001.
10.11 Consulting Agreement by and between the Company and Alan B.
Bennett, Ph.D. dated November 1, 2001.
(b) Reports on Form 8-K.
None.
* Confidential Treatment has been requested for portions of this
Exhibit.
-31-
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SENESCO TECHNOLOGIES, INC.
DATE: February 14, 2002 By: /s/ Bruce C. Galton
-----------------------------------------------
Bruce C. Galton, President
and Chief Executive Officer
(Principal Executive Officer)
DATE: February 14, 2002 By: /s/ Joel Brooks
--------------------------------------------
Joel Brooks, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)
Officer)
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
-------------------------------------------------------
Warrant No. [ ] Number of Shares: [ ]
(subject to adjustment)
Date of Issuance: [ ]
Original Issue Date (as defined in subsection 2(a)(i)(B)): [ ]
SENESCO TECHNOLOGIES, INC.
--------------------------
Common Stock Purchase Warrant
-----------------------------
(Void after [ ])
SENESCO TECHNOLOGIES, INC., a Delaware corporation (the "Company"), for
value received, hereby certifies that [ ] (the "Registered Holder"), is
entitled, subject to the terms and conditions set forth below, to purchase from
the Company, in whole or in part, at any time or from time to time on or after
the date of issuance and on or before 5:00 p.m. (Eastern time) on [ ], [ ]
shares of Common Stock, $0.01 par value per share, of the Company ("Common
Stock"), at a purchase price of $[ ] per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as adjusted
from time to time pursuant to the provisions of this Warrant, are hereinafter
referred to as the "Warrant Shares" and the "Purchase Price," respectively.
1. Exercise.
--------
(a) Vesting. The Warrant Shares shall be immediately exercisable.
-------
(b) Method of Exercise. The Registered Holder may, at its option,
-------------------
elect to exercise this Warrant, in whole or in part and at any time or from time
to time, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by or on behalf of the Registered Holder, at the
- ---------
principal office of the Company, or at such other office or agency as the
Company may designate in writing to the Registered Holder, accompanied by
payment in full, in lawful money of the United States, of the Purchase Price
payable in respect of the number of Warrant Shares purchased upon such exercise.
(c) Exercise Date. Each exercise of this Warrant shall be deemed to
--------------
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
subsection 1(b) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(d) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such
certificates.
(d) Issuance of Certificates. As soon as practicable after the
--------------------------
exercise of this Warrant in whole or in part, and in any event within 10 days
thereafter, the Company, at its expense, will cause to be issued in the name of,
and delivered to, the Registered Holder, or as the Registered Holder (upon
payment by the Registered Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise,
which shall include, if applicable, the rounding of any fraction up to the
nearest whole number of shares of Common Stock pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of Warrant Shares for which this Warrant
was so exercised.
2. Adjustments.
-----------
(a) Adjustments to Purchase Price for Diluting Issues.
-------------------------------------------------
(i) Special Definitions. For purposes of this Section 2, the
--------------------
following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
------
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.
(B) "Original Issue Date" shall mean the date on which this
--------------------
Warrant was first issued (or, if this Warrant was issued upon partial exercise
of, or in replacement of, another warrant of like tenor, then the date on which
such original warrant was first issued).
(C) "Convertible Securities" shall mean any evidences of
-----------------------
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock, but excluding Options.
(D) "Additional Shares of Common Stock" shall mean all
------------------------------------
shares of Common Stock issued (or, pursuant to subsection 2(a)(iii) below,
deemed to be issued) by the Company after the Original Issue Date, other than:
(I) shares of Common Stock issued or
issuable upon conversion or exchange of
any Convertible Securities or exercise
of any Options, outstanding on the
Original Issue Date;
(II) shares of Common Stock issued or
issuable by reason of a dividend, stock
split, split-up or other distribution on
shares of Common Stock that is covered
by subsection 2(b) or 2(c) below.
-2-
(III) shares of Common Stock (or Options with
respect thereto) issued or issuable to
employees or directors of, or
consultants to, the Company or any of
its subsidiaries pursuant to a plan,
agreement or arrangement approved by the
Board.
(ii) No Adjustment of Purchase Price. No adjustment to the
-----------------------------------
Purchase Price shall be made as the result of the issuance of Additional Shares
of Common Stock if the consideration per share (determined pursuant to
subsection 2(a)(v)) for such Additional Share of Common Stock issued or deemed
to be issued by the Company is equal to or greater than $1.75 per share, as
adjusted for those events set forth in subsections 2(b) and 2(c) below.
(iii) Issue of Securities Deemed Issue of Additional Shares of
-----------------------------------------------------------
Common Stock.
- ------------
(A) If the Company at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible Securities
(excluding Options or Convertible Securities which, upon exercise, conversion or
exchange thereof, would entitle the holder thereof to receive shares of Common
Stock which are specifically excepted from the definition of Additional Shares
of Common Stock by subsection 2(a)(i)(D) above) or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard to
any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date.
(B) If the terms of any Option or Convertible Security, the
issuance of which resulted in an adjustment to the Purchase Price pursuant to
the terms of subsection 2(a)(iv) below, are revised (either automatically
pursuant to the provisions contained therein or as a result of an amendment to
such terms) to provide for either (1) any increase or decrease in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
such Option or Convertible Security or (2) any increase or decrease in the
consideration payable to the Company upon such exercise, conversion or exchange,
then, effective upon such increase or decrease becoming effective, the Purchase
Price computed upon the original issue of such Option or Convertible Security
(or upon the occurrence of a record date with respect thereto) shall be
readjusted to such Purchase Price as would have obtained had such revised terms
been in effect upon the original date of issuance of such Option or Convertible
Security. Notwithstanding the foregoing, no adjustment pursuant to this clause
(B) shall have the effect of increasing the Purchase Price to an amount which
exceeds the lower of (i) the Purchase Price on the original adjustment date, or
(ii) the Purchase Price that would have resulted from any issuances of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
(C) If the terms of any Option or Convertible Security
(excluding Options or Convertible Securities which, upon exercise, conversion or
exchange thereof, would entitle the holder thereof to receive shares of Common
Stock which are
-3-
specifically excepted from the definition of Additional Shares of Common Stock
by subsection 2(a)(i)(D) above), the issuance of which did not result in an
adjustment to the Purchase Price pursuant to the terms of subsection 2(a)(iv)
below (either because the consideration per share (determined pursuant to
subsection 2(a)(v) hereof) of the Additional Shares of Common Stock subject
thereto was equal to or greater than the Purchase Price then in effect, or
because such Option or Convertible Security was issued before the Original Issue
Date), are revised after the Original Issue Date (either automatically pursuant
to the provisions contained therein or as a result of an amendment to such
terms) to provide for either (1) any increase or decrease in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
such Option or Convertible Security or (2) any increase or decrease in the
consideration payable to the Company upon such exercise, conversion or exchange,
then such Option or Convertible Security, as so amended, and the Additional
Shares of Common Stock subject thereto (determined in the manner provided in
subsection 2(a)(iii)(A) above) shall be deemed to have been issued effective
upon such increase or decrease becoming effective.
(D) Upon the expiration or termination of any unexercised
Option or unconverted or unexchanged (as applicable) Convertible Security which
resulted (either upon its original issuance or upon a revision of its terms) in
an adjustment to the Purchase Price pursuant to the terms of subsection 2(a)(iv)
below, the Purchase Price shall be readjusted to such Purchase Price as would
have obtained had such Option or Convertible Security never been issued.
(E) No adjustment in the Purchase Price shall be made upon
the issue of shares of Common Stock or Convertible Securities upon the exercise
of Options or the issue of shares of Common Stock upon the conversion or
exchange of Convertible Securities, provided that the Purchase Price has been
previously adjusted pursuant to this Section.
(iv) Adjustment of Purchase Price Upon Issuance of Additional
-----------------------------------------------------------
Shares of Common Stock. In the event the Company shall at any time after the
- -----------------------
Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to subsection
2(a)(iii)), without consideration or for a consideration per share less than
$1.75 per share, as adjusted for those events set forth in subsections 2(b) and
2(c) below, then the Purchase Price shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by multiplying
such Purchase Price by a fraction, (A) the numerator of which shall be (1) the
number of shares of Common Stock outstanding immediately prior to such issue
plus (2) the number of shares of Common Stock which the aggregate consideration
received or to be received by the Company for the total number of Additional
Shares of Common Stock so issued would purchase at such Purchase Price; and (B)
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such Additional
Shares of Common Stock so issued; provided that, (i) for the purpose of this
subsection 2(a)(iv), all shares of Common Stock issuable upon conversion or
exchange of Convertible Securities outstanding immediately prior to such issue
shall be deemed to be outstanding, and (ii) the number of shares of Common Stock
deemed issuable upon conversion or exchange of such outstanding Convertible
Securities shall be determined without giving effect to any adjustments to the
conversion or exchange price or conversion or exchange rate of such Convertible
Securities resulting from the issuance of Additional Shares of Common Stock that
is the subject of this calculation.
-4-
(v) Determination of Consideration. For purposes of this
---------------------------------
subsection 2(a), the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property: Such consideration shall:
-----------------
(I) insofar as it consists of cash, be
computed at the aggregate of cash
received by the Company;
(II) insofar as it consists of property other
than cash, be computed at the fair
market value thereof at the time of such
issue, as determined in good faith by
the Board; and
(III) in the event Additional Shares of Common
Stock are issued or deemed to be issued
together with other shares or securities
or other assets of the Company for
consideration which covers both, be the
proportion of such consideration so
received, computed as provided in
clauses (I) and (II) above, as
determined in good faith by the Board.
(B) Options and Convertible Securities. The consideration
-----------------------------------
per share received by the Company for Additional Shares of Common Stock deemed
to have been issued pursuant to subsection 2(a)(iii), relating to Options and
Convertible Securities, shall be determined by dividing
(I) the sum of the total amount, if any,
received or receivable by the Company as
consideration for the issue of such
Options or Convertible Securities, plus
the minimum aggregate amount of
additional consideration (as set forth
in the instruments relating thereto,
without regard to any provision
contained therein for a subsequent
adjustment of such consideration)
payable to the Company upon the exercise
of such Options or the conversion or
exchange of such Convertible Securities,
or in the case of Options for
Convertible Securities,the exercise of
such Options for Convertible Securities
and the conversion or exchange of such
Convertible Securities, by
(II) the maximum number of shares of Common
Stock (as set forth in the instruments
relating thereto, without regard to any
provision contained therein for a
subsequent adjustment of such number)
issuable upon the exercise of such
Options or the conversion or exchange of
such Convertible Securities or, in the
case of Options for Convertible
-5-
Securities, the exercise of such Options
for Convertible Securities and the
conversion or exchange of such
Convertible Securities.
(vi) Multiple Closing Dates. In the event the Company shall issue
----------------------
on more than one date Additional Shares of Common Stock which are comprised of
shares of the same series or class of Common Stock, and such issuance dates
occur within a period of no more than 120 days, then, upon the final such
issuance, the Purchase Price shall be readjusted to give effect to all such
issuances as if they occurred on the date of the final such issuance (and
without giving effect to any adjustments as a result of such prior issuances
within such period).
(b) Adjustment for Stock Splits and Combinations. If the Company shall
--------------------------------------------
at any time, or from time to time, after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Purchase Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Company shall at any time or from time to time after the Original Issue Date
combine or consolidate the outstanding shares of Common Stock, the Purchase
Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph shall become effective at the
close of business on the date the subdivision or combination or consolidation
becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time, or from time to time, after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:
(A) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(B) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
- -------- -------
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Purchase Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(d) Adjustment in Number of Warrant Shares. When any adjustment is
---------------------------------------
required to be made in the Purchase Price pursuant to subsections 2(a), 2(b) or
2(c), the number of Warrant Shares purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect
-6-
immediately prior to such adjustment, by (ii) the Purchase Price in effect
immediately after such adjustment.
(e) Adjustments for Other Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
Registered Holder shall receive upon exercise hereof, in addition to the number
of shares of Common Stock issuable hereunder, the kind and amount of securities
of the Company, cash or other property which the Registered Holder would have
been entitled to receive had this Warrant been exercised on the date of such
event and had the Registered Holder thereafter, during the period from the date
of such event to and including the Exercise Date, retained any such securities
receivable during such period, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.
(f) Adjustment for Reorganization, Reclassification or Similar Events.
-----------------------------------------------------------------
If there shall occur any reorganization, recapitalization, reclassification,
consolidation or merger involving the Company in which the Common Stock is
converted into or exchanged for securities, cash or other property (other than a
transaction covered by subsections 2(b), 2(c) or 2(e)) (collectively, a
"Reorganization"), then, following such Reorganization, the Registered Holder
shall receive upon exercise hereof the kind and amount of securities, cash or
other property which the Registered Holder would have been entitled to receive
pursuant to such Reorganization if such exercise had taken place immediately
prior to such Reorganization. In any such case, appropriate adjustment (as
determined in good faith by the Board) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Registered Holder, to the end that the provisions set forth in this
Section 2 (including provisions with respect to changes in and other adjustments
of the Purchase Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any securities, cash or other property thereafter
deliverable upon the exercise of this Warrant.
(g) Certificate as to Adjustments. Upon the occurrence of each
-------------------------------
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall, as promptly as reasonably practicable but in any
event not later than 10 days thereafter, compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at any time of the Registered
Holder (but in any event not later than 10 days thereafter), furnish or cause to
be furnished to the Registered Holder a certificate setting forth; (i) such
adjustments and readjustments; (ii) the Purchase Price then in effect; and (iii)
the number of shares of Common Stock and the amount, if any, of other
securities, cash or property which then would be received upon the exercise of
this Warrant.
3. Fractional Shares. The Company shall not be required upon the exercise
------------------
of this Warrant to issue any fractions of shares of Common Stock or fractional
Warrants; provided,
--------
-7-
however, that if the Registered Holder exercises this Warrant, any fractional
- -------
shares of Common Stock shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock. The Registered Holder of this
Warrant, by acceptance hereof, expressly waives his right to receive any
fractional share of Common Stock or fractional Warrant upon exercise of this
Warrant.
4. Investment Representations. The initial Registered Holder represents and
--------------------------
warrants to the Company as follows:
(a) Investment. It is acquiring the Warrant, and (if and when it
----------
exercises this Warrant) it will acquire the Warrant Shares, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and the Registered Holder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof;
(b) Federal and State Compliance. The Registered Holder understands
----------------------------
that this Warrant and any Warrant Shares purchased upon its exercise are
securities, the issuance of which requires compliance with federal and state
securities law, including the Securities Act of 1933, as amended (the "Act");
(c) Accredited Investor. The Registered Holder is an "accredited
--------------------
investor" as defined in Rule 501(a) under the Act;
(d) Experience. The Registered Holder has made such inquiry concerning
----------
the Company and its business and personnel as it has deemed appropriate; and the
Registered Holder has sufficient knowledge and experience in finance and
business that it is capable of evaluating the risks and merits of its investment
in the Company; and
(e) Restricted Securities. The Registered Holder acknowledges and
----------------------
understands that the Warrant and Warrant Shares constitute restricted securities
under the Act and must be held indefinitely unless subsequently registered under
the Act or an exemption from such registration is available.
5. Transfers, etc.
--------------
(a) This Warrant may be assigned by the Registered Holder to an
"accredited investor," as defined in Rule 501(a) of the Act, upon the execution
and delivery to the Company of the assignment form annexed hereto, subject to
any restrictions imposed by applicable securities laws.
(b) The Warrant Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Act, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Act. Notwithstanding the foregoing, no
registration or opinion of counsel shall be required for (i) a transfer by a
Registered Holder which is an entity to a wholly owned subsidiary of such
entity, a transfer by a Registered Holder which is a partnership to a partner of
such partnership or a retired partner of such partnership or to the estate of
any such partner or retired partner, or a transfer by a Registered
-8-
Holder which is a limited liability company to a member of such limited
liability company or a retired member or to the estate of any such member or
retired member, provided that the transferee in each case agrees in writing to
be subject to the terms of this Section 5, or (ii) a transfer made in accordance
with Rule 144 under the Act.
(c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BEPLEDGED, HYPOTHECATED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT
OR AN OPINION OF COUNSEL TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder thereof, at such
time as they become eligible for resale pursuant to Rule 144(k) under the Act.
(d) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change its address as shown on the warrant register by written notice to the
Company requesting such change.
6. Registration Rights. The shares of Common Stock issuable and issued
-------------------
upon exercise of this Warrant shall be entitled to certain registration rights
in accordance with the provisions of that certain Registration Rights Agreement,
dated [ ], between the Company and the Registered Holder (the "Registration
Rights Agreement").
7. Redemption of Warrant. Notwithstanding anything to the contrary
----------------------
contained in this Warrant or elsewhere, the Warrant cannot be redeemed by the
Company under any circumstances, without the prior written consent of the
Registered Holder.
8. Impairment. The Company will not, by amendment of its charter
----------
documents or through reorganization, consolidation, merger, dissolution, issue
or sale of securities, sale of assets or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against dilution or other
impairment.
9. Subscription Rights for Shares of Common Stock or Other Securities.
-------------------------------------------------------------------
In case the Company or an affiliate of the Company shall, at any time after the
date hereof and prior to the exercise of the Warrant, in full, issue any rights
to subscribe for shares of Common Stock or any other securities of the Company
or of such affiliate to all of the holders of Common Stock, the holder of the
unexercised Warrant shall be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise of the Warrant, to receive such
rights at the time
-9-
such rights are distributed to the other stockholders of the Company, but only
to the extent of the number of shares of Common Stock, if any, for which the
Warrant remains exercisable.
10. Notices of Record Date, etc. In the event:
---------------------------
(a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or
(b) of any capital reorganization of the Company, any reclassification
of the Common Stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the surviving entity and its Common Stock is not converted into
or exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will send or
cause to be sent to the Registered Holder a notice specifying, as the case may
be, (i) the record date for such dividend, distribution or right, and the amount
and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other stock or securities at the time deliverable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be sent at least 10
days prior to the record date or effective date for the event specified in such
notice.
11. Reservation of Stock. The Company will at all times reserve and
---------------------
keep available, solely for issuance and delivery upon the exercise of this
Warrant, such number of Warrant Shares and other securities, cash and/or
property, as from time to time shall be issuable upon the exercise of this
Warrant. The Warrant Shares issued upon such exercise shall be validly issued,
fully paid and non-assessable.
12. Replacement Warrant. Upon receipt of evidence reasonably
---------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
13. Agreement in Connection with Public Offering. The Registered
-----------------------------------------------
Holder agrees, in connection with an underwritten public offering of the
Company's securities pursuant to a registration statement under the Act, (i) not
to sell, make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any shares of Common Stock held by the Registered Holder
(other than any shares included in the offering) without the prior written
consent of the Company or the underwriters managing such underwritten public
offering of the Company's
-10-
securities for a period of 180 days from the effective date of such registration
statement, and (ii) to execute any agreement reflecting clause (i) above as may
be requested by the Company or the managing underwriters at the time of such
offering.
14. Notices. All notices and other communications from the Company to
-------
the Registered Holder in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery, to the address last
furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection
herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next
business day delivery, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the Registered Holder and thereafter all references in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice. All such notices and communications shall be deemed delivered
(i) two business days after being sent by certified or registered mail, return
receipt requested, postage prepaid, or (ii) one business day after being sent
via a reputable nationwide overnight courier service guaranteeing next business
day delivery.
15. No Rights as Stockholder. Until the exercise of this Warrant, the
------------------------
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
16. Amendment or Waiver. Any term of this Warrant may be amended or
--------------------
waived only by an instrument in writing signed by the party against which
enforcement of the change or waiver is sought. No waivers of any term, condition
or provision of this Warrant, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
17. Section Headings. The section headings in this Warrant are for the
----------------
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
18. Governing Law. This Warrant will be governed by and construed in
--------------
accordance with the internal laws of the State of Delaware (without reference to
the conflicts of law provisions thereof).
19. Facsimile Signatures. This Warrant may be executed by facsimile
---------------------
signature.
* * * * * * *
-11-
EXECUTED as of the Date of Issuance indicated above.
SENESCO TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
Title:
ATTEST:
- -------------------------
EXHIBIT I
PURCHASE FORM
-------------
To: Dated:
----------------------- ------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. [ ]), hereby elects to purchase [ ] shares of the Common Stock of
SENESCO TECHNOLOGIES, INC. covered by such Warrant.
The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant in lawful money
of the United States in the amount of $[ ].
[ ]
By:
--------------------------------------
Name:
---------------------------------
Title:
---------------------------------
-17-
Schedule of Parties
-------------------
to
--
Warrants Issued in Connection with the Stanford Private Placements
------------------------------------------------------------------
and
---
Warrants Issued in Connection with the Conversion of Notes by Certain Directors
-------------------------------------------------------------------------------
Warrant Date of Warrant Number of Exercise
No. Issuance Holder Shares Price
- -------------- -------------- ---------------------------------------------- ------------------- ---------------
38 12/03/01 Christopher Forbes 89,053 2.00
39 12/03/01 Christopher Forbes 89,053 3.25
40 12/03/01 Thomas Quick 44,527 2.00
41 12/03/01 Thomas Quick 44,526 3.25
50 01/16/02 Stanford Venture Capital Holdings, Inc. 125,000 2.00
51 01/16/02 Stanford Venture Capital Holdings, Inc. 125,000 3.25
54 01/24/02 Daniel T. Bogar 31,250 2.00
55 01/24/02 Daniel T. Bogar 31,250 3.25
56 01/24/02 William R. Fusselmann 31,250 2.00
57 01/24/02 William R. Fusselmann 31,250 3.25
58 01/24/02 Osvaldo Pi 31,250 2.00
59 01/24/02 Osvaldo Pi 31,250 3.25
60 01/24/02 Ronald M. Stein 31,250 2.00
61 01/24/02 Ronald M. Stein 31,250 3.25
64 12/03/01 Stanford Venture Capital Holdings, Inc. 250,000 2.00
65 12/03/01 Stanford Venture Capital Holdings, Inc. 250,000 3.25
66 12/03/01 Daniel T. Bogar 62,500 2.00
67 12/03/01 Daniel T. Bogar 62,500 3.25
68 12/03/01 William R. Fusselmann 62,500 2.00
69 12/03/01 William R. Fusselmann 62,500 3.25
70 12/03/01 Osvaldo Pi 62,500 2.00
71 12/03/01 Osvaldo Pi 62,500 3.25
72 12/03/01 Ronald M. Stein 62,500 2.00
73 12/03/01 Ronald M. Stein 62,500 3.25
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
------------------------------------------------------
Warrant No. [ ] Number of Shares:[ ]
(subject to adjustment)
Date of Issuance: [ ]
Original Issue Date (as defined in subsection 2(a)): [ ]
SENESCO TECHNOLOGIES, INC.
--------------------------
Common Stock Purchase Warrant
-----------------------------
(Void after [ ])
SENESCO TECHNOLOGIES, INC., a Delaware corporation (the "Company"), for
value received, hereby certifies that [ ] (the "Registered Holder"), is
entitled, subject to the terms and conditions set forth below, to purchase from
the Company, at any time or from time to time on or after the date of issuance
and on or before 5:00 p.m. (Eastern time) on [ ], [ ] shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a purchase price
of $[ ] per share. The shares purchasable upon exercise of this Warrant, and the
purchase price per share, each as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the "Warrant Shares"
and the "Purchase Price," respectively.
1. Exercise.
--------
(a) Vesting. The Warrant Shares shall be immediately exercisable.
-------
(b) Method of Exercise. The Registered Holder may, at its option,
-------------------
elect to exercise this Warrant, in whole or in part and at any time or from time
to time, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by or on behalf of the Registered Holder, at the
- ----------
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of the Purchase Price payable in respect of the number of Warrant
Shares purchased upon such exercise.
(c) Exercise Date. Each exercise of this Warrant shall be deemed to
--------------
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
subsection 1(b) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(d) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such
certificates.
(d) Issuance of Certificates. As soon as practicable after the
--------------------------
exercise of this Warrant in whole or in part, and in any event within 10 days
thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as the Registered Holder (upon payment by the Registered
Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise,
which shall include, if applicable, the rounding of any fraction up to the
nearest whole number of shares of Common Stock pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of Warrant Shares for which this Warrant
was so exercised.
2. Adjustments.
-----------
(a) Adjustment for Stock Splits and Combinations. If the Company shall
--------------------------------------------
at any time or from time to time after the date on which this Warrant was first
issued (or, if this Warrant was issued upon partial exercise of, or in
replacement of, another warrant of like tenor, then the date on which such
original warrant was first issued) (either such date being referred to as the
"Original Issue Date") effect a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Company shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of Common Stock,
the Purchase Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
- -------- -------
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall
-2-
be recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of
the time of actual payment of such dividends or distributions.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
---------------------------------------
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b),
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(d) Adjustments for Other Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
Registered Holder shall receive upon exercise hereof, in addition to the number
of shares of Common Stock issuable hereunder, the kind and amount of securities
of the Company, cash or other property which the Registered Holder would have
been entitled to receive had this Warrant been exercised on the date of such
event and had the Registered Holder thereafter, during the period from the date
of such event to and including the Exercise Date, retained any such securities
receivable during such period, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.
(e) Adjustment for Reorganization. If there shall occur any
--------------------------------
reorganization, recapitalization, reclassification, consolidation or merger
involving the Company in which the Common Stock is converted into or exchanged
for securities, cash or other property (other than a transaction covered by
subsections 2(a), 2(b) or 2(d)) (collectively, a "Reorganization"), then,
following such Reorganization, the Registered Holder shall receive upon exercise
hereof the kind and amount of securities, cash or other property which the
Registered Holder would have been entitled to receive pursuant to such
Reorganization if such exercise had taken place immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Board) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder, to the end that the provisions set forth in this Section 2 (including
provisions with respect to changes in and other adjustments of the Purchase
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any securities, cash or other property thereafter deliverable upon
the exercise of this Warrant.
(f) Certificate as to Adjustments. Upon the occurrence of each
-------------------------------
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall, as promptly as reasonably practicable but in any
event not later than 10 days thereafter, compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at
-3-
any time of the Registered Holder (but in any event not later than 10 days
thereafter), furnish or cause to be furnished to the Registered Holder a
certificate setting forth (i) the Purchase Price then in effect and (ii) the
number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the exercise of this Warrant.
3. Fractional Shares. The Company shall not be required upon the exercise
------------------
of this Warrant to issue any fractions of shares of Common Stock or fractional
Warrants; provided, however,
-------- -------
that if the Registered Holder exercises this Warrant, any fractional shares of
Common Stock shall be eliminated by rounding any fraction up to the nearest
whole number of shares of Common Stock. The Registered Holder of this Warrant,
by acceptance hereof, expressly waives his right to receive any fractional share
of Common Stock or fractional Warrant upon exercise of this Warrant.
4. Investment Representations. The initial Registered Holder represents and
----------------------------
warrants to the Company as follows:
(a) Investment. It is acquiring the Warrant, and (if and when it
----------
exercises this Warrant) it will acquire the Warrant Shares, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and the Registered Holder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof;
(b) Federal and State Compliance. The Registered Holder understands
------------------------------
that this Warrant and any Warrant Shares purchased upon its exercise are
securities, the issuance of which requires compliance with federal and state
securities law, including the Securities Act of 1933, as amended (the "Act");
(c) Accredited Investor. The Registered Holder is an "accredited
--------------------
investor" as defined in Rule 501(a) under the Act;
(d) Experience. The Registered Holder has made such inquiry concerning
----------
the Company and its business and personnel as it has deemed appropriate; and the
Registered Holder has sufficient knowledge and experience in finance and
business that it is capable of evaluating the risks and merits of its investment
in the Company; and
(e) Restricted Securities. The Registered Holder acknowledges and
----------------------
understands that the Warrant and Warrant Shares constitute restricted securities
under the Act and must be held indefinitely unless subsequently registered under
the Act or an exemption from such registration is available.
5. Transfers, etc.
--------------
(a) This Warrant may not be transferred in any manner other than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of the Registered Holder only by the Registered Holder. The terms of
this Warrant shall be binding upon the executors, administrators, heirs,
successor and assigns of the Registered Holder.
-4-
(b) The Warrant Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act. Notwithstanding the
foregoing, no registration or opinion of counsel shall be required for (i) a
transfer by a Registered Holder which is an entity to a wholly owned subsidiary
of such entity, a transfer by a Registered Holder which is a partnership to a
partner of such partnership or a retired partner of such partnership or to the
estate of any such partner or retired partner, or a transfer by a Registered
Holder which is a limited liability company to a member of such limited
liability company or a retired member or to the estate of any such member or
retired member, provided that the transferee in each case agrees in writing to
be subject to the terms of this Section 5, or (ii) a transfer made in accordance
with Rule 144 under the Act.
(c) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities
Act of 1933, as amended (the "Act"), and may
not be offered, sold or otherwise transferred,
pledged or hypothecated unless and until such
securities are registered under such Act or an
opinion of counsel satisfactory to the
Company is obtained to the effect
that such registration is not required."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder thereof, at such
time as they become eligible for resale pursuant to Rule 144(k) under the Act.
(d) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change its address as shown on the warrant register by written notice to the
Company requesting such change.
6. Notices of Record Date, etc. In the event:
---------------------------
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or to receive any right to subscribe for or
purchase any shares of stock of any class or any other securities, or to receive
any other right; or
(b) of any capital reorganization of the Company, any reclassification
of the Common Stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the surviving entity and its Common Stock is not converted into
or exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will send or
cause to be sent to the
-5-
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be sent at least 10 days prior to
the record date or effective date for the event specified in such notice.
7. Reservation of Stock. The Company will at all times reserve and keep
---------------------
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this Warrant.
8. Replacement Warrant. Upon receipt of evidence reasonably satisfactory
-------------------
to the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. Agreement in Connection with Public Offering. The Registered Holder
---------------------------------------------
agrees, in connection with an underwritten public offering of the Company's
securities pursuant to a registration statement under the Act, (i) not to sell,
make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock held by the Registered Holder (other than
any shares included in the offering) without the prior written consent of the
Company or the underwriters managing such underwritten public offering of the
Company's securities for a period of 180 days from the effective date of such
registration statement, and (ii) to execute any agreement reflecting clause (i)
above as may be requested by the Company or the managing underwriters at the
time of such offering.
10. Notices. All notices and other communications from the Company to the
-------
Registered Holder in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery, to the address last
furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection
herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next
business day delivery, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the Registered Holder and thereafter all references in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice. All such notices and communications shall be deemed delivered
(i) two business days after being sent by certified or registered mail, return
receipt requested, postage prepaid, or (ii) one business day after being sent
via a reputable nationwide overnight courier service guaranteeing next business
day delivery.
-6-
11. No Rights as Stockholder. Until the exercise of this Warrant, the
------------------------
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
12. Amendment or Waiver. Any term of this Warrant may be amended or waived
-------------------
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
13. Section Headings. The section headings in this Warrant are for the
-----------------
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
14. Governing Law. This Warrant will be governed by and construed in
--------------
accordance with the internal laws of the State of New Jersey (without reference
to the conflicts of law provisions thereof).
15. Facsimile Signatures. This Warrant may be executed by facsimile
---------------------
signature.
EXECUTED as of the Date of Issuance indicated above.
SENESCO TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
- -------------------------
-7-
EXHIBIT I
PURCHASE FORM
-------------
To: Dated:
------------------ ------------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. [ ]), hereby elects to purchase [ ] shares of the Common Stock of
SENESCO TECHNOLOGIES, INC. covered by such Warrant.
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant in lawful money of
the United States in the amount of $[ ].
[If an entity]
Entity Name:
-----------------------------
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Address:
-----------------------------
-----------------------------
Telecopy:
-----------------------------
[If an individual]
-----------------------------------------
Name:
------------------------------------
Address:
--------------------------------
--------------------------------
Telecopy:
--------------------------------
Schedule of Parties
-------------------
to
--
Warrants Issued in Connection with the Private Placement to Certain Accredited Investors
----------------------------------------------------------------------------------------
Warrant Date of Warrant Number of Exercise
No. Issuance Holder Shares Price
- -------------- ----------------- --------------------------------------- ---------------- -----------------
34 12/26/01 Moises Bucay Bissu 83,125 3.25
35 12/26/01 Moises Bucay Bissu 83,125 2.00
36 12/26/01 O'Donnell Capital Group, Inc. 62,500 3.25
37 12/26/01 O'Donnell Capital Group, Inc. 62,500 2.00
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
-------------------------------------------------------
Warrant No.[ ] Number of Shares:[ ]
(subject to adjustment)
Date of Issuance: [ ]
Original Issue Date (as defined in subsection 2(a)): [ ]
SENESCO TECHNOLOGIES, INC.
--------------------------
Common Stock Purchase Warrant
-----------------------------
(Void after [ ])
SENESCO TECHNOLOGIES, INC., a Delaware corporation (the "Company"), for
value received, hereby certifies that [ ] (the "Registered Holder"), is
entitled, subject to the terms and conditions set forth below, to purchase from
the Company, subject to the vesting schedule in subsection 1(a) hereof, at any
time or from time to time on or after the date of issuance and on or before 5:00
p.m. (Eastern time) on [ ], [ ] shares of Common Stock, $.01 par value per
share, of the Company ("Common Stock"), at a purchase price of $[ ] per share.
The shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
1. Exercise.
--------
(a) Vesting. The Warrant Shares shall become exercisable in accordance
-------
with the following schedule (the "Vesting Schedule"):
Date Warrant Shares Number of Warrant Shares
become Exercisable becoming exercisable on such date
------------------ ---------------------------------
[ ] [ ]
(b) Method of Exercise. The Registered Holder may, at its option,
-------------------
elect to exercise this Warrant, subject to the Vesting Schedule, in whole or in
part and at any time or from time to time, by surrendering this Warrant, with
the purchase form appended hereto as Exhibit I duly executed by or on behalf of
---------
the Registered Holder, at the principal office of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full,
in lawful money of the United States, of the Purchase Price payable in respect
of the number of Warrant Shares purchased upon such exercise.
(c) Exercise Date. Each exercise of this Warrant shall be deemed to
--------------
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
subsection 1(b) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(d) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such
certificates.
(d) Issuance of Certificates. As soon as practicable after the
--------------------------
exercise of this Warrant in whole or in part, and in any event within 10 days
thereafter, the Company, at its expense, will cause to be issued in the name of,
and delivered to, the Registered Holder, or as the Registered Holder (upon
payment by the Registered Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise,
which shall include, if applicable, the rounding of any fraction up to the
nearest whole number of shares of Common Stock pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant minus the number of Warrant Shares for which this Warrant
was so exercised.
2. Adjustments.
-----------
(a) Adjustment for Stock Splits and Combinations. If the Company shall
--------------------------------------------
at any time or from time to time after the date on which this Warrant was first
issued (or, if this Warrant was issued upon partial exercise of, or in
replacement of, another warrant of like tenor, then the date on which such
original warrant was first issued) (either such date being referred to as the
"Original Issue Date") effect a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Company shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of Common Stock,
the Purchase Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares
-2-
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
- -------- -------
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Purchase Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
---------------------------------------
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b),
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(d) Adjustments for Other Dividends and Distributions. In the event
---------------------------------------------------
the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
Registered Holder shall receive upon exercise hereof, in addition to the number
of shares of Common Stock issuable hereunder, the kind and amount of securities
of the Company, cash or other property which the Registered Holder would have
been entitled to receive had this Warrant been exercised on the date of such
event and had the Registered Holder thereafter, during the period from the date
of such event to and including the Exercise Date, retained any such securities
receivable during such period, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.
(e) Adjustment for Reorganization. If there shall occur any
---------------------------------
reorganization, recapitalization, reclassification, consolidation or merger
involving the Company in which the Common Stock is converted into or exchanged
for securities, cash or other property (other than a transaction covered by
subsections 2(a), 2(b) or 2(d)) (collectively, a "Reorganization"), then,
following such Reorganization, the Registered Holder shall receive upon exercise
hereof the kind and amount of securities, cash or other property which the
Registered Holder would have been entitled to receive pursuant to such
Reorganization if such exercise had taken place immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Board) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder, to the end that the provisions set forth in this Section 2 (including
provisions with respect to changes in and other adjustments of
-3-
the Purchase Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities, cash or other property thereafter deliverable
upon the exercise of this Warrant.
(f) Certificate as to Adjustments. Upon the occurrence of each
--------------------------------
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall, as promptly as reasonably practicable but in any
event not later than 10 days thereafter, compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at any time of the Registered
Holder (but in any event not later than 10 days thereafter), furnish or cause to
be furnished to the Registered Holder a certificate setting forth (i) the
Purchase Price then in effect and (ii) the number of shares of Common Stock and
the amount, if any, of other securities, cash or property which then would be
received upon the exercise of this Warrant.
3. Fractional Shares. The Company shall not be required upon the exercise
------------------
of this Warrant to issue any fractions of shares of Common Stock or fractional
Warrants; provided, however, that if the Registered Holder exercises this
-------- -------
Warrant, any fractional shares of Common Stock shall be eliminated by rounding
any fraction up to the nearest whole number of shares of Common Stock. The
Registered Holder of this Warrant, by acceptance hereof, expressly waives his
right to receive any fractional share of Common Stock or fractional Warrant upon
exercise of this Warrant.
4. Investment Representations. The initial Registered Holder represents
----------------------------
and warrants to the Company as follows:
(a) Investment. It is acquiring the Warrant, and (if and when it
----------
exercises this Warrant) it will acquire the Warrant Shares, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and the Registered Holder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof;
(b) Federal and State Compliance. The Registered Holder understands
----------------------------
that this Warrant and any Warrant Shares purchased upon its exercise are
securities, the issuance of which requires compliance with federal and state
securities law, including the Securities Act of 1933, as amended (the "Act");
(c) Accredited Investor. The Registered Holder is an "accredited
-------------------
investor" as defined in Rule 501(a) under the Securities Act of 1933, as amended
(the "Act");
(d) Experience. The Registered Holder has made such inquiry
----------
concerning the Company and its business and personnel as it has deemed
appropriate; and the Registered Holder has sufficient knowledge and experience
in finance and business that it is capable of evaluating the risks and merits of
its investment in the Company; and
(e) Restricted Securities. The Registered Holder acknowledges and
---------------------
understands that the Warrant and Warrant Shares constitute restricted securities
under the Act
-4-
and must be held indefinitely unless subsequently registered under the Act or an
exemption from such registration is available.
5. Transfers, etc.
--------------
(a) This Warrant may not be transferred in any manner other than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of the Registered Holder only by the Registered Holder. The terms of
this Warrant shall be binding upon the executors, administrators, heirs,
successor and assigns of the Registered Holder.
(b) The Warrant Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Act, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Act. Notwithstanding the foregoing, no
registration or opinion of counsel shall be required for (i) a transfer by a
Registered Holder which is an entity to a wholly owned subsidiary of such
entity, a transfer by a Registered Holder which is a partnership to a partner of
such partnership or a retired partner of such partnership or to the estate of
any such partner or retired partner, or a transfer by a Registered Holder which
is a limited liability company to a member of such limited liability company or
a retired member or to the estate of any such member or retired member, provided
--------
that the transferee in each case agrees in writing to be subject to the terms of
this Section 5, or (ii) a transfer made in accordance with Rule 144 under the
Act.
(c) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended (the "Act"), and may not be
offered, sold or otherwise transferred, pledged
or hypothecated unless and until such securities
are registered under such Act or an opinion of
counsel satisfactory to the Company is obtained
to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates representing
any Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
(d) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change its address as shown on the warrant register by written notice to the
Company requesting such change.
6. Notices of Record Date, etc. In the event:
---------------------------
(a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right
-5-
to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any reclassification
of the Common Stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the surviving entity and its Common Stock is not converted into
or exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will send or
cause to be sent to the Registered Holder a notice specifying, as the case may
be, (i) the record date for such dividend, distribution or right, and the amount
and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other stock or securities at the time deliverable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be sent at least 10
days prior to the record date or effective date for the event specified in such
notice.
7. Reservation of Stock. The Company will at all times reserve and keep
---------------------
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this Warrant.
-6-
8. Replacement Warrant.
-------------------
(a) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and (in
the case of loss, theft or destruction) upon delivery of an indemnity agreement
(with surety if reasonably required) in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.
9. Agreement in Connection with Public Offering. The Registered Holder
----------------------------------------------
agrees, in connection with an underwritten public offering of the Company's
securities pursuant to a registration statement under the Act, (i) not to sell,
make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock held by the Registered Holder (other than
any shares included in the offering) without the prior written consent of the
Company or the underwriters managing such underwritten public offering of the
Company's securities for a period of 180 days from the effective date of such
registration statement, and (ii) to execute any agreement reflecting clause (i)
above as may be requested by the Company or the managing underwriters at the
time of such offering.
10. Notices. All notices and other communications from the Company to the
-------
Registered Holder in connection herewith shall be mailed by certified or
registered mail, postage prepaid, or sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery, to the address last
furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection
herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next
business day delivery, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the Registered Holder and thereafter all references in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice. All such notices and communications shall be deemed delivered
(i) two business days after being sent by certified or registered mail, return
receipt requested, postage prepaid, or (ii) one business day after being sent
via a reputable nationwide overnight courier service guaranteeing next business
day delivery.
11. No Rights as Stockholder. Until the exercise of this Warrant, the
-------------------------
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
-7-
12. Amendment or Waiver. Any term of this Warrant may be amended or waived
-------------------
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
13. Section Headings. The section headings in this Warrant are for the
-----------------
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
14. Governing Law. This Warrant will be governed by and construed in
--------------
accordance with the internal laws of the State of New Jersey (without reference
to the conflicts of law provisions thereof).
15. Facsimile Signatures. This Warrant may be executed by facsimile
---------------------
signature.
EXECUTED as of the Date of Issuance indicated above.
SENESCO TECHNOLOGIES, INC.
By:
--------------------------------------
Title:
-------------------------------
ATTEST:
- -------------------------
-8-
EXHIBIT I
PURCHASE FORM
-------------
To: Dated:
------------------------- ---------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. [ ]), hereby elects to purchase [ ] shares of the Common Stock of
SENESCO TECHNOLOGIES, INC. covered by such Warrant.
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant in lawful money of
the United States in the amount of $[ ].
Signature:
-------------------------------
Address:
---------------------------------
-9-
Schedule of Parties
-------------------
to
--
Warrants Issued to Certain Third Parties
----------------------------------------
Warrant Date of Warrant Number of Exercise
No. Issuance Holder Shares Price
- -------------- ---------------- --------------------------------------------------- --------------- --------------
30 11/01/01 Hale and Dorr LLP 15,000 2.15
29 11/01/01 Kenyon & Kenyon 15,000 2.15
28 09/04/01 Christenson, Hutchinson, McDowell, LLC 20,000 0.01
31 11/01/01 Forbes, Inc. 80,000 2.15
32 10/15/01 Francois Parenteau 25,000 1.00
33 10/15/01 Ian Markofsky 25,000 1.00
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of November 30,
2001, by and between Senesco Technologies, Inc., a Delaware corporation (the
"Company"), and Stanford Venture Capital Holdings, Inc., a Delaware corporation
(the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to sell, transfer and assign to the Purchaser,
and the Purchaser desires to purchase from the Company, 1,142,858 shares (the
"Shares") of the Company's restricted common stock, $0.01 par value per share
(the "Common Stock"), and warrants to purchase 1,000,000 shares of Common Stock
(the "Warrants"), for an aggregate purchase price of $2,000,000 (the Warrants,
together with the Shares, shall be referred to herein as the "Securities");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION I
PURCHASE, SALE AND REGISTRATION OF THE SECURITIES
-------------------------------------------------
A. Purchase and Sale. Subject to the terms and conditions of this Agreement
-----------------
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company hereby agrees to sell, transfer, assign and convey
the Securities to the Purchaser, and the Purchaser agrees to purchase, acquire
and accept the Securities from the Company.
B. Purchase Price. The Securities are hereby offered at a price of $1.75
---------------
per unit, equal to one share of Common Stock and a Warrant to purchase 0.875
shares of Common Stock. The aggregate purchase price for the Securities to be
paid by the Purchaser to the Company is $2,000,000 (the "Aggregate Purchase
Price"). The Aggregate Purchase Price shall be paid by the Purchaser to the
Company on the Closing Date either via certified bank check or irrevocable wire
transfer. The parties to this Agreement agree that, as soon as reasonably
practicable after the date hereof, they shall allocate, in good faith, the
purchase price between the Shares and Warrants so purchased.
C. Warrants. Fifty percent (50%) of the Warrants shall have an exercise
--------
price of $2.00 per Share and fifty percent (50%) of the Warrants shall have an
exercise price of $3.25 per Share and shall have the terms set forth in the form
of Warrant attached hereto as Exhibit A, which shall each be executed by the
---------
Company on the Closing Date.
D. Placement Fee and Expenses. On the Closing Date, the Company shall pay
--------------------------
to the Purchaser a placement fee of $100,000. In addition, the Company shall
reimburse the Purchaser for its reasonable fees and expenses in connection with
the purchase of the Securities, subject to a maximum reimbursement of $10,000.
Such amounts shall be paid via certified bank check or irrevocable wire
transfer.
E. Registration Rights Agreement. On the Closing Date, the Company and the
-----------------------------
Purchaser shall enter into a Registration Rights Agreement in the form attached
hereto as Exhibit B (the "Registration Rights Agreement").
---------
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE COMPANY
-----------------------------
The Company represents and warrants to, and covenants and agrees with, the
Purchaser, as of the date hereof and as of the Closing Date, that:
A. Organization, Good Standing and Power. The Company is a corporation duly
-------------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
The Company does not have any subsidiaries (as defined in Section II(G)), except
as set forth in the reports, schedules, forms, statements and other documents
required to be filed by the Company and its predecessors with the Securities and
Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including
filings incorporated by reference therein, being referred to herein as the
"Commission Documents"). The Company and each such subsidiary is duly
incorporated or duly qualified as a foreign Company to do business and is in
good standing in every jurisdiction of the United States, or any other country,
state, province, or political subdivision in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect on the Company's financial condition. For purposes of
this Agreement, "Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries, taken as a whole and/or any
condition, circumstance, or situation that would prohibit the ability of the
Company to enter into and perform any of its obligations under this Agreement,
the Warrant or the Registration Rights Agreement.
B. Authorization; Enforcement. The Company has the corporate power and
---------------------------
authority to enter into and perform this Agreement, the Warrant and the
Registration Rights Agreement, and to issue and sell the Shares and the Warrants
in accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement, the Warrant and the Registration Rights Agreement
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or stockholders is required. Each of this Agreement, the
Warrant and the Registration Rights Agreement has been duly executed and
delivered by the Company. Each of this Agreement, the Warrant and the
Registration Rights Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
C. Capitalization. The authorized capital stock of the Company and the
--------------
shares thereof issued and outstanding as of the date hereof, including all
options to acquire shares of capital stock issued as of the date hereof, are set
forth in the Company's Proxy Statement for its 2001
-2-
Annual Meeting. All of the outstanding shares of the Company's capital stock
have been duly and validly authorized. Except as set forth in this Agreement,
the Warrant, the Registration Rights Agreement or the Commission Documents, no
shares of Common Stock are entitled, from the Company, to preemptive rights or
registration rights and there are no outstanding options, warrants, scrip,
rights to subscribe to, call or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the
Company. Furthermore, except as set forth in this Agreement, the Warrant, the
Registration Rights Agreement or the Commission Documents, there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company in order to sell restricted securities or
as provided in the Commission Documents, the Company is not a party to any
agreement granting registration rights to any person with respect to any of its
equity or debt securities. Except as set forth in the Commission Documents, the
offer and sale of all capital stock, convertible securities, rights, warrants,
or options of the Company issued prior to the date hereof complied with all
applicable federal and state securities laws, and no stockholder has a right of
rescission or damages with respect thereto which would have a Material Adverse
Effect. The Company has filed as exhibits to the Commission Documents true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof (the "Certificate"), and the Company's Bylaws as in effect on the
date hereof (the "Bylaws").
D. Issuance of Shares. The Shares to be issued under this Agreement and the
------------------
shares of Common Stock to be issued under each Warrant (the "Warrant Shares"),
have been duly authorized by all necessary corporate action and, when paid for
or issued in accordance with the terms hereof and thereof, the Securities and
the Warrant Shares shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, charges, and encumbrances of any
nature whatsoever, except for restrictions on transfer that may exist under
applicable securities laws, and the Purchaser shall be entitled to all rights
accorded to a holder of Common Stock.
E. No Conflicts. The execution, delivery and performance of this Agreement,
------------
the Warrant and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated herein and therein
do not (i) violate any provision of the Certificate or Bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries are bound or
affected, and except, in all cases, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not required under federal,
-3-
state or local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement, the Warrant and the Registration Rights Agreement, or
issue and sell the Shares and the Warrants in accordance with the terms hereof
(other than any filings which may be required to be made by the Company with the
Commission, the National Association of Securities Dealers, Inc. (the "NASD"),
or state securities administrators subsequent or prior to the Closing Date
hereunder, and, any registration statement which may be filed pursuant hereto);
provided that, for purpose of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser.
F. Commission Documents; Financial Statements. The Common Stock of the
---------------------------------------------
Company is registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and, except as disclosed in the Commission Documents, since January 1999, the
Company has timely filed all Commission Documents. The Company has made
available to the Purchaser true and complete copies of the Commission Documents
filed with the Commission as set forth in Section III(G) hereof. The Company has
not provided to the Purchaser any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by the Company but
which has not been so disclosed, or for which the Purchaser has not executed a
confidentiality agreement, other than with respect to the transactions
contemplated by this Agreement. As of their respective dates, the Form 10-KSB
for the fiscal year ended June 30, 2001 and the Form l0-QSB for the fiscal
quarter ended September 30, 2001 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and, as of their respective dates, none of the Form
l0-KSB and the Form l0-QSB referred to above contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
G. Subsidiaries. The Company's Form 10-KSB for the fiscal year ended June
------------
30, 2001 sets forth each subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person's
ownership of the outstanding capital stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall mean any
Company or other entity of which at least 50% of the securities or other
ownership interest having ordinary voting power (absolutely or contingently) for
the election of directors or other persons performing similar functions are at
the time owned directly or indirectly by the Company and/or any of its other
subsidiaries. Except as set forth in the Commission Documents, none of such
subsidiaries is a "significant subsidiary" as defined in Regulation S-X.
-4-
H. No Material Adverse Change. Since September 30, 2001, the date through
---------------------------
which the most recent quarterly report of the Company on Form l0-QSB has been
filed with the Commission, a copy of which is included in the Commission
Documents, the Company has not experienced or suffered any Material Adverse
Effect.
I. No Undisclosed Liabilities. Except as disclosed in the Commission
----------------------------
Documents, neither the Company nor any of its subsidiaries has any liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary (including the
notes thereto) in conformity with GAAP not disclosed in the Commission
Documents, other than those incurred in the ordinary course of the Company's or
its subsidiaries respective businesses since June 30, 2001 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or its subsidiaries.
J. No Undisclosed Events or Circumstances. Except for the transactions and
--------------------------------------
documents contemplated hereby, no event or circumstance has occurred or exists
with respect to the Company or its subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.
K. Indebtedness. The Company's Form 10-QSB for the period ended September
------------
30, 2001 sets forth, as of the date hereof, all outstanding secured and
unsecured Indebtedness of the Company or any subsidiary, or for which the
Company or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $25,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company's balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $25,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
subsidiary is in default with respect to any Indebtedness.
L. Title to Assets. Each of the Company and the subsidiaries has good and
---------------
marketable title to all of its real and personal property reflected in the
Company's Form 10-KSB for the fiscal year ended June 30, 2001, free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or such that could not
reasonably be expected to cause a Material Adverse Effect on the Company's
financial condition or operating results. All said leases of the Company and
each of its subsidiaries are valid and subsisting and in full force and effect
in all material respects.
M. Actions Pending. There is no action, suit, claim, investigation or
----------------
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement, the
Warrant or the Registration Rights Agreement, or the transactions contemplated
hereby or thereby, or any action taken or to be taken pursuant hereto or
thereto. There is no action, suit, claim, investigation or proceeding pending
or, to the knowledge of the Company, threatened, against or involving the
Company, any subsidiary
-5-
or any of their respective properties or assets and which, if adversely
determined, is reasonably likely to result in a Material Adverse Effect. To the
knowledge of the Company, there are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any subsidiary.
N. Compliance with Law. The business of the Company and the subsidiaries
--------------------
has been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances,
except as set forth in the Company's most recent Form 10-KSB and Form 10-QSB or
except where such failure would not cause a Material Adverse Effect. The Company
and each of its subsidiaries have all franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals necessary for
the conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, the Company's technology does not require the premarket approval
of the United States Food and Drug Administration (the "FDA") or the approval of
or any filing with the FDA or the United States Environmental Protection Agency
(the "EPA") under current rules and regulations of the FDA and EPA,
respectively, when used for their intended use.
O. Certain Fees. Except as otherwise provided herein, no brokers, finders
------------
or financial advisory fees or commissions will be payable by the Company or any
subsidiary with respect to the transactions contemplated by this Agreement.
P. Disclosure. Neither this Agreement or the Exhibits hereto nor any other
----------
documents, certificates or instruments furnished to the Purchaser by or on
behalf of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
Q. Intellectual Property; Operation of Business. The Company and each of
----------------------------------------------
the subsidiaries owns or possesses all patents, trademarks, service marks, trade
names, copyrights, licenses and authorizations as set forth in the Company's
Form 10-KSB for the year ended June 30, 2001 and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted
without any conflict with the rights of others, except to the extent that a
Material Adverse Effect could not reasonably be expected to result from such
conflict. The Company currently owns or possesses adequate rights to use all
inventions subject to pending patent applications and all licenses, copyrights,
inventions, know-how, trade secrets, proprietary technologies, including
trademarks, service marks, trade names, processes and substances described in
the Company's Form 10-KSB for the year ended June 30, 2001 including, without
limitation, the inventions underlying, and the trade names for, the Company's
technology; and the Company is not aware of the granting of any patent rights
to, or the filing of applications therefor by, others, nor is the Company aware
of, or has the Company received notice of, infringement of or conflict with
asserted rights of others with respect to any of the foregoing. All such
licenses, trademarks, service marks, trade names and copyrights are (i) valid
and enforceable and (ii) to the best knowledge of the Company, not being
infringed upon by any third parties. To the knowledge
-6-
of the Company, none of the inventions described and claimed in the pending
patent applications disclosed in the Commission Documents and filed on behalf of
original inventors with respect to the inventions underlying the Company's
technology has been described or suggested in either the relevant patent
literature or the relevant scientific literature. To the knowledgeof the
Company, said inventions are patentable and no other patent is infringed upon by
the subject matter of said inventions. All pertinent prior art references were
disclosed to the United States Patent and Trademark Office (the "PTO") in the
pending patent applications and all information submitted to the PTO in respect
thereof was accurate. The Company has not made any representation or concealed
any material fact from the PTO.
R. Environmental Compliance. The Company and each of its subsidiaries
-------------------------
authorization, certificates, consents, licenses, orders and permits or other
similar authorizations of all governmental authorities, or from any other
person, that are required under any Environmental Laws, except where the failure
to obtain such authorizations would not have a Material Adverse Effect. For
purposes of this Agreement, "Environmental Laws" shall mean all applicable laws
relating to the protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not individually or in the
aggregate have a Material Adverse Effect, there are no past or present events,
conditions, circumstances, incidents, actions or omissions relating to or in any
way affecting the Company or its subsidiaries that violate or would reasonably
be expected to violate any Environmental Law after the Closing Date hereunder or
that would reasonably be expected to give rise to any environmental liability,
or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or (ii) based
on or related to the manufacture, processing, distribution, use, treatment,
storage (including without limitation underground storage tanks), disposal,
transport or handling, or the emission, discharge, release or threatened release
of any hazardous substance.
S. Material Agreements. Except as set forth in the Commission Documents,
--------------------
neither the Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an exhibit to
a registration statement on Form S-3 or applicable form (collectively, "Material
Agreements") if the Company or any subsidiary were registering securities under
the Securities Act of 1933, as amended, (the "Securities Act"), which has not
been previously filed as an exhibit to the Commission Documents. The Company and
each of its subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and, to the best of the Company's
knowledge, are not in default under any Material Agreement now in effect, the
result of which would reasonably be expected to cause a Material Adverse Effect.
T. Transactions with Affiliates. Except as set forth in the Commission
------------------------------
Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or
-7-
arrangements or other continuing transactions with aggregate obligations of any
party exceeding $25,000 between (a) the Company, any subsidiary or any of their
respective customers or suppliers on the one hand, and (b) on the other hand,
any person who would be covered by Item 404(a) of Regulation S-K or any company
or other entity controlled by such stockholder, officer, employee, consultant,
director or person.
U. Securities Act. The Company has complied with all applicable federal and
--------------
state securities laws in connection with the offer, issuance and sale of the
Securities hereunder and the Warrant Shares pursuant to the Warrant. Neither the
Company nor anyone acting on its behalf, directly or indirectly, has sold,
offered to sell or solicited offers to buy the Shares, the Warrants or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any person, so
as to bring the issuance and sale of the Shares under the registration
provisions of the Securities Act and applicable state securities laws. Neither
the Company nor, to the knowledge of the Company, any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Shares or the
Warrants.
V. Employees. Neither the Company nor any subsidiary has any collective
---------
bargaining arrangements or agreements covering any of its employees, except as
set forth in the Commission Documents. Except as set forth in the Commission
Documents, neither the Company nor any subsidiary has any employment contract,
agreement regarding proprietary information, noncompetition agreement,
nonsolicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer, employee
or consultant to be employed or engaged by the Company or such subsidiary. Since
June 30, 2001, except as disclosed in Commission Documents, no officer,
consultant or key employee of the Company or any subsidiary whose termination,
either individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company or any subsidiary.
W. Public Utility Holding Company Act and Investment Company Act Status.
-----------------------------------------------------------------------
The Company is not a "holding company" or a "public utility company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon the Closing Date
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
X. ERISA. No liability to the Pension Benefit Guaranty Company has been
-----
incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be materially adverse to the Company and its subsidiaries. The
execution and delivery of this Agreement, the Warrant and the Registration
Rights Agreement, and the issue and sale of the Shares and the Warrants, will
not involve any transaction which is subject to the prohibitions of Section 406
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), provided
that, if the Purchaser, or any person or entity that owns a beneficial interest
in the Purchaser, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the
-8-
Company is a "party in interest" (within the meaning of Section 3(14) of ERISA),
the requirements of Sections 407(d) (5) and 408(e) of ERISA, if applicable, are
met. As used in this paragraph, the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
Y. Taxes. The Company and each of the subsidiaries has accurately prepared
-----
and filed all federal, state, local, foreign and other tax returns for income,
gross receipts, sales, use and other taxes and custom duties ("Taxes") required
by law to be filed by it, has paid or made provisions for the payment of all
taxes shown to be due and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of the Company and the
subsidiaries for all current taxes and other charges to which the Company or any
subsidiary is subject and which are not currently due and payable, except for
taxes, if unpaid, individually or in the aggregate, do not and would not have a
Material Adverse Effect on the Company or its subsidiaries. None of the federal
income tax returns of the Company or any subsidiary for the last five (5) years
has been audited by the Internal Revenue Service. The Company has no knowledge
of any additional assessments, adjustments or contingent tax liability (whether
federal, state, local or foreign) pending or threatened against the Company or
any subsidiary or any person for whose tax liabilities the Company is or may be
jointly or contingently liable for any period, nor of any basis for any such
assessment, adjustment or contingency.
Z. Books and Records; Internal Accounting Controls. The records and
---------------------------------------------------
documents of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary.
AA. Survival. All representations, warranties, covenants and agreements
--------
made by the Company in this Agreement or in any writing or certificate delivered
in connection with this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby for
a period of one (1) year, except that any representations and warranties related
to taxes shall survive for three (3) years.
-9-
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PURCHASER
-------------------------------
The Purchaser represents and warrants to, and covenants and agrees with,
the Company, as of the date hereof and as of the Closing Date, that:
A. Organization; Good Standing. The Purchaser is, and as of the Closing
-----------------------------
will be, duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization.
B. Authorization. The Purchaser has, and as of the Closing will have, all
-------------
requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes its legal, valid and binding
obligation, enforceable against the Purchaser in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this
------------------------
Agreement, nor the consummation by the Purchaser of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency applicable to the
Purchaser, or violates, or conflicts with, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Purchaser is a party or by
which the Purchaser is bound.
D. No Litigation. No action, suit or proceeding against the Purchaser
--------------
relating to the consummation of any of the transactions contemplated by this
Agreement nor any governmental action against the Purchaser seeking to delay or
enjoin any such transactions is pending or, to the Purchaser's knowledge,
threatened.
E. Investment Intent. The Purchaser: (i) is an accredited investor within
-----------------
the meaning of Rule 501(a) under the Securities Act; (ii) is aware of the limits
on resale imposed by virtue of the nature of the transactions contemplated by
this Agreement, specifically the restrictions imposed by Rule 144 of the Act,
and is aware that the certificates representing the Purchaser's respective
ownership of the Securities will bear related restrictive legends; and (iii)
except as otherwise set forth herein, is acquiring the Securities hereunder
without registration under the Act in reliance on the exemption from
registration contained in Section 4(2) of the Act and/or Rule 506 promulgated
pursuant to Regulation D of the Act, for investment for its own account, and not
with a view toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling such Securities. The
Purchaser has been given the opportunity to ask questions of, and receive
answers from, the officers of the Company regarding the Company, its current and
proposed business operations and the Securities, and the officers of the Company
have made available to the Purchaser all documents and information that the
Purchaser has requested relating to an investment in the Company. The Purchaser
has been given the
-10-
opportunity to retain competent legal counsel in connection with the purchase of
the Securities and acknowledges that the Company has relied upon the Purchaser's
representations in this Section III in offering and selling the Securities to
the Purchaser.
F. Economic Risk; Restricted Securities. The Purchaser recognizes that the
------------------------------------
investment in the Securities involves a number of significant risks. The
foregoing, however, does not limit or modify the representations, warranties and
agreements of the Company in Section II of this Agreement or the right of the
Purchaser to rely thereon. The Purchaser is able to bear the economic risks of
an investment in the Securities for an indefinite period of time, has no need
for liquidity in such investment and, at the present time, can afford a complete
loss of such investment.
G. Access to Information.
---------------------
(i) The Purchaser has received and reviewed a copy of the following
documents of the Company:
1. Private Placement Memorandum dated November 1, 2001;
2. Annual Report on Form 10-KSB for the year ended June 30, 2001;
3. Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders;
4. Quarterly Report on Form 10-QSB for the quarter ended September
30, 2001; and
5. Any press releases issued after the Company's most recently filed
Form 10-QSB.
(ii) The Purchaser represents that it has received the documents set
forth above, and has had the opportunity to ask questions of, and receive
answers from, the Company regarding the foregoing documents.
H. Suitability. The Purchaser has carefully considered, and has, to the
-----------
extent the Purchaser deems it necessary, discussed with the Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Securities for the Purchaser's particular tax and financial situation,
and the Purchaser has determined that the Securities is a suitable investment.
I. Legend. The Purchaser acknowledges that the certificates evidencing the
------
Securities will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT
OR AN OPINION OF COUNSEL TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
-11-
SECTION IV
THE CLOSING AND CONDITIONS TO CLOSING
-------------------------------------
A. Time and Place of the Closing. The closing shall be held at the offices
-----------------------------
of Hale and Dorr LLP, 650 College Road East, Princeton, New Jersey 08540, on
November , 2001 (the "Closing Date"), or such other time and place as the
--
Company and the Purchaser may mutually agree.
B. Delivery by the Company. Delivery of the Securities shall be made by the
-----------------------
Company, or by its transfer agent, as applicable, to the Purchaser as soon as
reasonably practicable after the Closing Date by delivering certificates
representing the Securities, such certificate to be accompanied by any requisite
documentary or transfer tax stamps.
C. Delivery by the Purchaser. On the Closing Date, the Purchaser shall
---------------------------
deliver to the Company the Aggregate Purchase Price, by irrevocable wire
transfer to an account specified in writing to the Purchaser by the Company.
D. Placement Fee and Expenses. As of the Closing Date, the terms and
----------------------------
provisions of Section I(D) above shall have been satisfied.
E. Registration Rights Agreement. The Company shall deliver to the
-------------------------------
Purchaser, and the Purchaser shall deliver to the Company, an executed copy of
the Registration Rights Agreement.
F. Warrant. The Company shall execute and deliver to the Purchaser the
-------
Warrant.
G. Opinion of Counsel. The Purchaser shall receive an opinion from Hale and
------------------
Dorr LLP, counsel for the Company, dated as of the Closing Date, addressed to
the Purchaser and satisfactory in form and substance to the Purchaser.
H. Other Conditions to Closing. As of the Closing Date, all requisite
-----------------------------
action by the Company's Board of Directors and stockholders shall have been
taken pursuant to the Certificate of Incorporation and By-Laws of the Company,
and the representations and warranties made by the Company in Section II hereof
shall be true and correct when made and as of the Closing Date.
-12-
SECTION V
INDEMNIFICATION
---------------
A. General Indemnity. The Company agrees to indemnify and hold harmless the
-----------------
Purchaser and its agents, heirs, successors and assigns (but excluding
consequential damages) from and against any and all actual losses, liabilities,
deficiencies, costs, damages and reasonable expenses (including, without
limitation, reasonable attorney's fees, charges and disbursements) incurred as a
result of any misrepresentation or breach of the warranties and covenants made
by the Company herein, in the Warrant and the Registration Rights Agreement,
except where such misrepresentation or breach is caused by the Purchaser. The
Purchaser agrees to indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and against any and
all actual losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys fees, charges and
disbursements but excluding consequential damages) incurred by the Company as
result of any breach of the representations and covenants made by the Purchaser
herein, in the Warrant and the Registration Rights Agreement, except where such
misrepresentation or breach is caused by the Company.
B. Indemnification Procedure. Any party entitled to indemnification under
--------------------------
this Section (an "indemnified party") will give written notice to the
indemnifying party of any matters giving rise to a claim for indemnification;
provided, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the indemnified party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior
-13-
written consent. Notwithstanding anything in this Section to the contrary, the
indemnifying party shall not, without the indemnified party's prior written
consent (which consent shall not be unreasonably withheld), settle or compromise
any claim or consent to entry of any judgment in respect thereof which imposes
any future obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such claim. The
indemnification required by this Section shall be made by periodic payments of
the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the indemnified party irrevocably agrees to refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION VI
POST CLOSING CONDITIONS
-----------------------
A. Registration of Warrant Shares. The Company shall cause all of the
--------------------------------
Warrant Shares to be registered on a Form S-3 registration statement, or such
similar form, under the Securities Act on or before June 30, 2002.
B. Capitalization of Directors' Loans. In connection with those certain
------------------------------------
promissory notes in the aggregate principal amount of $525,000, made by the
Company payable to certain directors of the Company (the "Director Notes"), such
directors have executed a letter agreement providing that the entire principal
amount outstanding under the Director Notes, plus any interest which has accrued
as of the date of conversion, shall be converted into shares of the Company's
restricted Common Stock and Warrant Shares on or before December 31, 2001 on the
same terms as provided herein, and the Company shall cause such directors to
have the Director Notes converted by that date.
-14-
SECTION VII
MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement contains the entire agreement between
----------------
the parties hereto with respect to the transactions contemplated hereby, and no
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
B. Invalidity, Etc. If any provision of this Agreement, or the application
----------------
of any such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
C. Headings. The headings of this Agreement are for convenience of
--------
reference only and are not part of the substance of this Agreement.
D. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the parties hereto and their respective successors and assigns.
E. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law.
F. Counterparts. This Agreement may be executed in one or more identical
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * *
-15-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
COMPANY:
SENESCO TECHNOLOGIES, INC.
By: /s/ Bruce C. Galton
--------------------------------------
Name: Bruce C. Galton
Title: President and Chief Executive
Officer
PURCHASER:
STANFORD VENTURE CAPITAL HOLDINGS, INC.
By: /s/ James M. Davis
--------------------------------------
Name: James M. Davis
Title: President
EXHIBIT A
---------
FORM OF WARRANT
EXHIBIT B
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January 16,
2002, by and between Senesco Technologies, Inc., a Delaware corporation (the
"Company"), and Stanford Venture Capital Holdings, Inc., a Delaware corporation
(the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company and the Purchaser entered into a Securities Purchase
Agreement, dated November 30, 2001 (the "Original Stanford Securities Purchase
Agreement"), and a Registration Rights Agreement, dated November 30, 2001 (the
"Original Stanford Registration Rights Agreement"), whereby the Company issued
and sold, 1,142,858 shares of the Company's restricted common stock, $0.01 par
value per share (the "Common Stock"), and warrants to purchase 1,000,000 shares
of Common Stock (the "Original Stanford Warrants" and, collectively with the
Original Stanford Securities Purchase Agreement and the Original Stanford
Registration Rights Agreement, shall be referred to herein as the "Original
Stanford Documents"), having an aggregate purchase price of $2,000,000 (the
"Original Stanford Offering"); and
WHEREAS, in connection with the Original Stanford Offering, Christopher
Forbes and Thomas Quick (the "Directors") converted their promissory notes
issued by the Company (the "Notes") into 305,323 shares of the Company's Common
Stock and warrants to purchase 267,158 shares of Common Stock (the "Directors'
Warrants"), for an aggregate purchase price of $356,211 and $178,105,
respectively, which reflects the entire principal amount outstanding under the
Notes, plus accrued interest thereon (the "Conversion"); and
WHEREAS, pursuant to the Conversion, the Directors and the Company entered
into a Securities Purchase Agreement, dated December 3, 2001 (the "Directors'
Securities Purchase Agreement"), and a Registration Rights Agreement, dated
December 3, 2001 (the "Directors' Registration Rights Agreement" and,
collectively with the Directors' Warrants and the Directors' Securities Purchase
Agreement, shall be referred to herein as the "Directors' Documents"); and
WHEREAS, the Company and O'Donnell Capital Group Inc. and Moises Bucay
Bissu (the "Individual Purchasers") entered into a Securities Purchase
Agreement, dated December 26, 2001 (the "Individual Securities Purchase
Agreement"), and a Registration Rights Agreement, dated December 26, 2001 (the
"Individual Registration Rights Agreement"), whereby the Company issued and
sold, 665,714 shares of the Company's Common Stock, and warrants to purchase
291,250 shares of Common Stock (the "Individual Warrants" and, collectively,
with the Individual Securities Purchase Agreement and the Individual
Registration Rights Agreement, shall be referred to herein as the "Individual
Transaction Documents"), having an aggregate purchase price of $1,165,000; and
WHEREAS, the Company desires to sell, transfer and assign to the Purchaser,
and the Purchaser desires to purchase from the Company, an additional 571,429
shares (the "Shares") of the Company's Common Stock, and warrants to purchase
500,000 shares of Common Stock (the "Warrants"), for an aggregate purchase price
of $1,000,000 (the Warrants, together with the Shares, shall be referred to
herein as the "Securities");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION I
PURCHASE, SALE AND REGISTRATION OF THE SECURITIES
-------------------------------------------------
A. Purchase and Sale. Subject to the terms and conditions of this Agreement
-----------------
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company hereby agrees to sell, transfer, assign and convey
the Securities to the Purchaser, and the Purchaser agrees to purchase, acquire
and accept the Securities from the Company.
B. Purchase Price. The Securities are hereby offered at a price of $1.75
---------------
per unit, equal to one share of Common Stock and a Warrant to purchase 0.875
shares of Common Stock. The aggregate purchase price for the Securities to be
paid by the Purchaser to the Company is $1,000,000 (the "Aggregate Purchase
Price"). Fifty percent (50%) of the Aggregate Purchase Price shall be paid by
the Purchaser to the Company on the Closing Date (as defined in Section IVA
below) and the remaining fifty percent (50%) of the Aggregate Purchase Price
shall be paid by the Purchaser to the Company by no later than January 23, 2002
(the "Second Funding Date") either via certified bank check or irrevocable wire
transfer. The parties to this Agreement agree that, as soon as reasonably
practicable after the date hereof, they shall allocate, in good faith, the
purchase price between the Shares and Warrants so purchased.
C. Warrants. Fifty percent (50%) of the Warrants shall have an exercise
--------
price of $2.00 per Share and fifty percent (50%) of the Warrants shall have an
exercise price of $3.25 per Share and shall have the terms set forth in the form
of Warrant attached hereto as Exhibit A, which shall each be executed by the
---------
Company on the Closing Date.
D. Expenses. On the Closing Date, the Company shall reimburse the Purchaser
--------
for its reasonable fees and expenses in connection with the purchase of the
Securities, subject to a maximum reimbursement of $5,000. Such amounts shall be
paid via certified bank check or irrevocable wire transfer.
E. Registration Rights Agreement. On the Closing Date, the Company and the
-----------------------------
Purchaser shall enter into a Registration Rights Agreement in the form attached
hereto as Exhibit B (the "Registration Rights Agreement").
---------
-2-
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE COMPANY
-----------------------------
The Company represents and warrants to, and covenants and agrees with, the
Purchaser, as of the date hereof, as of the Closing Date and as of the Second
Funding Date, that:
A. Organization, Good Standing and Power. The Company is a corporation duly
-------------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
The Company does not have any subsidiaries (as defined in Section II(G)), except
as set forth in the reports, schedules, forms, statements and other documents
required to be filed by the Company and its predecessors with the Securities and
Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including
filings incorporated by reference therein, being referred to herein as the
"Commission Documents"). The Company and each such subsidiary is duly
incorporated or duly qualified as a foreign Company to do business and is in
good standing in every jurisdiction of the United States, or any other country,
state, province, or political subdivision in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect on the Company's financial condition. For purposes of
this Agreement, "Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries, taken as a whole and/or any
condition, circumstance, or situation that would prohibit the ability of the
Company to enter into and perform any of its obligations under this Agreement,
the Warrant or the Registration Rights Agreement.
B. Authorization; Enforcement. The Company has the corporate power and
---------------------------
authority to enter into and perform this Agreement, the Warrant and the
Registration Rights Agreement, and to issue and sell the Shares and the Warrants
in accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement, the Warrant and the Registration Rights Agreement
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or stockholders is required. Each of this Agreement, the
Warrant and the Registration Rights Agreement has been duly executed and
delivered by the Company. Each of this Agreement, the Warrant and the
Registration Rights Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
C. Capitalization. The authorized capital stock of the Company, including
--------------
all options to acquire shares of capital stock issued as of the date hereof, are
set forth in the Company's Form 10-QSB for the period ended September 30, 2001
and the Company's Proxy Statement for its
-3-
2001 Annual Meeting. As of the date hereof and immediately prior to the
transactions contemplated hereby, the Company has 9,987,187 shares of Common
Stock issued and outstanding, and warrants to purchase 1,738,409 shares of
Common Stock issued and outstanding. The Company has no shares of Preferred
Stock issued or outstanding. All of the outstanding shares of the Company's
capital stock have been duly and validly authorized. Except as set forth in the
Original Stanford Documents, the Directors' Documents, the Individual
Transaction Documents, this Agreement, the Warrant, the Registration Rights
Agreement or the Commission Documents, no shares of Common Stock are entitled,
from the Company, to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in the Original Stanford Documents, the Directors'
Documents, the Individual Transaction Documents, this Agreement, the Warrant,
the Registration Rights Agreement or the Commission Documents, there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company in order to sell restricted securities or
as provided in the Commission Documents, the Company is not a party to any
agreement granting registration rights to any person with respect to any of its
equity or debt securities. Except as set forth in the Commission Documents, the
offer and sale of all capital stock, convertible securities, rights, warrants,
or options of the Company issued prior to the date hereof complied with all
applicable federal and state securities laws, and no stockholder has a right of
rescission or damages with respect thereto which would have a Material Adverse
Effect. The Company has filed as exhibits to the Commission Documents true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof (the "Certificate"), and the Company's Bylaws as in effect on the
date hereof (the "Bylaws").
D. Issuance of Shares. The Shares to be issued under this Agreement and the
------------------
shares of Common Stock to be issued under each Warrant (the "Warrant Shares"),
have been duly authorized by all necessary corporate action and, when paid for
or issued in accordance with the terms hereof and thereof, the Securities and
the Warrant Shares shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, charges, and encumbrances of any
nature whatsoever, except for restrictions on transfer that may exist under
applicable securities laws, and the Purchaser shall be entitled to all rights
accorded to a holder of Common Stock.
E. No Conflicts. The execution, delivery and performance of this Agreement,
------------
the Warrant and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated herein and therein
do not (i) violate any provision of the Certificate or Bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment
-4-
or decree (including federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries are bound or affected, and
except, in all cases, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The Company is not required under
federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Warrant and the Registration Rights
Agreement, or issue and sell the Shares and the Warrants in accordance with the
terms hereof (other than any filings which may be required to be made by the
Company with the Commission, the National Association of Securities Dealers,
Inc. (the "NASD"), or state securities administrators subsequent or prior to the
Closing Date hereunder, and, any registration statement which may be filed
pursuant hereto); provided that, for purpose of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser.
F. Commission Documents; Financial Statements. The Common Stock of the
---------------------------------------------
Company is registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and, except as disclosed in the Commission Documents, since January 1999, the
Company has timely filed all Commission Documents. The Company has made
available to the Purchaser true and complete copies of the Commission Documents
filed with the Commission as set forth in Section III(G) hereof. The Company has
not provided to the Purchaser any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by the Company but
which has not been so disclosed, or for which the Purchaser has not executed a
confidentiality agreement, other than with respect to the transactions
contemplated by this Agreement. As of their respective dates, the Form 10-KSB
for the fiscal year ended June 30, 2001 and the Form l0-QSB for the fiscal
quarter ended September 30, 2001 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and, as of their respective dates, none of the Form
l0-KSB and the Form l0-QSB referred to above contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
G. Subsidiaries. The Company's Form 10-QSB for the period ended September
------------
30, 2001 sets forth each subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person's
ownership of the outstanding capital stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall
-5-
mean any Company or other entity of which at least 50% of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other subsidiaries. Except as set forth in the Commission Documents, none
of such subsidiaries is a "significant subsidiary" as defined in Regulation S-X.
H. No Material Adverse Change. Since September 30, 2001, the date through
---------------------------
which the most recent quarterly report of the Company on Form l0-QSB has been
filed with the Commission, a copy of which is included in the Commission
Documents, the Company has not experienced or suffered any Material Adverse
Effect.
I. No Undisclosed Liabilities. Except as disclosed in the Commission
----------------------------
Documents, neither the Company nor any of its subsidiaries has any liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary (including the
notes thereto) in conformity with GAAP not disclosed in the Commission
Documents, other than those incurred in the ordinary course of the Company's or
its subsidiaries respective businesses since June 30, 2001 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or its subsidiaries.
J. No Undisclosed Events or Circumstances. Except for the transactions and
--------------------------------------
documents contemplated hereby, no event or circumstance has occurred or exists
with respect to the Company or its subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.
K. Indebtedness. The Company's Form 10-QSB for the period ended September
------------
30, 2001 sets forth, as of the date hereof, all outstanding secured and
unsecured Indebtedness of the Company or any subsidiary, or for which the
Company or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $25,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company's balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $25,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
subsidiary is in default with respect to any Indebtedness.
L. Title to Assets. Each of the Company and the subsidiaries has good and
---------------
marketable title to all of its real and personal property reflected in the
Company's Form 10-QSB for the period ended September 30, 2001, free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or such that could not
reasonably be expected to cause a Material Adverse Effect on the Company's
financial condition or operating results. All said leases of the Company and
each of its subsidiaries are valid and subsisting and in full force and effect
in all material respects.
-6-
M. Actions Pending. There is no action, suit, claim, investigation or
---------------
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any subsidiary which questions the validity of this Agreement, the
Warrant or the Registration Rights Agreement, or the transactions contemplated
hereby or thereby, or any action taken or to be taken pursuant hereto or
thereto. There is no action, suit, claim, investigation or proceeding pending
or, to the knowledge of the Company, threatened, against or involving the
Company, any subsidiary or any of their respective properties or assets and
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect. To the knowledge of the Company, there are no outstanding
orders, judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any subsidiary.
N. Compliance with Law. The business of the Company and the subsidiaries
--------------------
has been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances,
except as set forth in the Company's most recent Form 10-KSB and Form 10-QSB or
except where such failure would not cause a Material Adverse Effect. The Company
and each of its subsidiaries have all franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals necessary for
the conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, the Company's technology does not require the premarket approval
of the United States Food and Drug Administration (the "FDA") or the approval of
or any filing with the FDA or the United States Environmental Protection Agency
(the "EPA") under current rules and regulations of the FDA and EPA,
respectively, when used for their intended use.
O. Certain Fees. Except as otherwise provided herein, no brokers, finders
------------
or financial advisory fees or commissions will be payable by the Company or any
subsidiary with respect to the transactions contemplated by this Agreement.
P. Disclosure. Neither this Agreement or the Exhibits hereto nor any other
----------
documents, certificates or instruments furnished to the Purchaser by or on
behalf of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
Q. Intellectual Property; Operation of Business. The Company and each of
----------------------------------------------
the subsidiaries owns or possesses all patents, trademarks, service marks, trade
names, copyrights, licenses and authorizations as set forth in the Company's
Form 10-KSB for the year ended June 30, 2001 and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted
without any conflict with the rights of others, except to the extent that a
Material Adverse Effect could not reasonably be expected to result from such
conflict. The Company currently owns or possesses adequate rights to use all
inventions subject to pending patent applications and all licenses, copyrights,
inventions, know-how, trade secrets, proprietary technologies, including
trademarks, service marks, trade names, processes and substances described in
the Company's Form 10-KSB for the year ended June 30, 2001 including, without
-7-
limitation, the inventions underlying, and the trade names for, the Company's
technology; and the Company is not aware of the granting of any patent rights
to, or the filing of applications therefor by, others, nor is the Company aware
of, or has the Company received notice of, infringement of or conflict with
asserted rights of others with respect to any of the foregoing. All such
licenses, trademarks, service marks, trade names and copyrights are (i) valid
and enforceable and (ii) to the best knowledge of the Company, not being
infringed upon by any third parties. To the knowledge of the Company, none of
the inventions described and claimed in the pending patent applications
disclosed in the Commission Documents and filed on behalf of original inventors
with respect to the inventions underlying the Company's technology has been
described or suggested in either the relevant patent literature or the relevant
scientific literature. To the knowledge of the Company, said inventions are
patentable and no other patent is infringed upon by the subject matter of said
inventions. All pertinent prior art references were disclosed to the United
States Patent and Trademark Office (the "PTO") in the pending patent
applications and all information submitted to the PTO in respect thereof was
accurate. The Company has not made any representation or concealed any material
fact from the PTO.
R. Environmental Compliance. The Company and each of its subsidiaries have
------------------------
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws, except where the failure to obtain such authorizations would not have a
Material Adverse Effect. For purposes of this Agreement, "Environmental Laws"
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its subsidiaries that violate or would reasonably be expected to violate any
Environmental Law after the Closing Date hereunder or that would reasonably be
expected to give rise to any environmental liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.
S. Material Agreements. Except as set forth in the Commission Documents,
--------------------
neither the Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an exhibit to
a registration statement on Form S-3 or applicable form (collectively, "Material
Agreements") if the Company or any subsidiary were registering securities under
the Securities Act of 1933, as amended, (the "Securities Act"), which has not
been previously filed as an exhibit to the Commission Documents. The Company and
each of its subsidiaries has in all material respects performed all the
obligations required to be performed by
-8-
them to date under the foregoing agreements, have received no notice of default
and, to the best of the Company's knowledge, are not in default under any
Material Agreement now in effect, the result of which would reasonably be
expected to cause a Material Adverse Effect.
T. Transactions with Affiliates. Except as set forth in the Commission
------------------------------
Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions with aggregate obligations of any party exceeding $25,000 between
(a) the Company, any subsidiary or any of their respective customers or
suppliers on the one hand, and (b) on the other hand, any person who would be
covered by Item 404(a) of Regulation S-K or any company or other entity
controlled by such stockholder, officer, employee, consultant, director or
person.
U. Securities Act. The Company has complied with all applicable federal and
--------------
state securities laws in connection with the offer, issuance and sale of the
Securities hereunder and the Warrant Shares pursuant to the Warrant. Neither the
Company nor anyone acting on its behalf, directly or indirectly, has sold,
offered to sell or solicited offers to buy the Shares, the Warrants or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any person, so
as to bring the issuance and sale of the Shares under the registration
provisions of the Securities Act and applicable state securities laws. Neither
the Company nor, to the knowledge of the Company, any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Shares or the
Warrants.
V. Employees. Neither the Company nor any subsidiary has any collective
---------
bargaining arrangements or agreements covering any of its employees, except as
set forth in the Commission Documents. Except as set forth in the Commission
Documents and that certain Employment Agreement with Bruce Galton, neither the
Company nor any subsidiary has any employment contract, agreement regarding
proprietary information, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such subsidiary. Since June 30, 2001,
except as disclosed in Commission Documents, no officer, consultant or key
employee of the Company or any subsidiary whose termination, either individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any present
intention of terminating his or her employment or engagement with the Company or
any subsidiary.
W. Public Utility Holding Company Act and Investment Company Act Status.
-----------------------------------------------------------------------
The Company is not a "holding company" or a "public utility company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon the Closing Date
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
X. ERISA. No liability to the Pension Benefit Guaranty Company has been
-----
incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be
-9-
materially adverse to the Company and its subsidiaries. The execution and
delivery of this Agreement, the Warrant and the Registration Rights Agreement,
and the issue and sale of the Shares and the Warrants, will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), provided that, if the
Purchaser, or any person or entity that owns a beneficial interest in the
Purchaser, is an "employee pension benefit plan" (within the meaning of Section
3(2) of ERISA) with respect to which the Company is a "party in interest"
(within the meaning of Section 3(14) of ERISA), the requirements of Sections
407(d) (5) and 408(e) of ERISA, if applicable, are met. As used in this
paragraph, the term "Plan" shall mean an "employee pension benefit plan" (as
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any
subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.
Y. Taxes. The Company and each of the subsidiaries has accurately prepared
-----
and filed all federal, state, local, foreign and other tax returns for income,
gross receipts, sales, use and other taxes and custom duties ("Taxes") required
by law to be filed by it, has paid or made provisions for the payment of all
taxes shown to be due and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of the Company and the
subsidiaries for all current taxes and other charges to which the Company or any
subsidiary is subject and which are not currently due and payable, except for
taxes, if unpaid, individually or in the aggregate, do not and would not have a
Material Adverse Effect on the Company or its subsidiaries. None of the federal
income tax returns of the Company or any subsidiary for the last five (5) years
has been audited by the Internal Revenue Service. The Company has no knowledge
of any additional assessments, adjustments or contingent tax liability (whether
federal, state, local or foreign) pending or threatened against the Company or
any subsidiary or any person for whose tax liabilities the Company is or may be
jointly or contingently liable for any period, nor of any basis for any such
assessment, adjustment or contingency.
Z. Books and Records; Internal Accounting Controls. The records and
---------------------------------------------------
documents of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary.
AA. Survival. All representations, warranties, covenants and agreements
--------
made by the Company in this Agreement or in any writing or certificate delivered
in connection with this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby for
a period of one (1) year, except that any representations and warranties related
to taxes shall survive for three (3) years.
-10-
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PURCHASER
-------------------------------
The Purchaser represents and warrants to, and covenants and agrees with,
the Company, as of the date hereof, as of the Closing Date and as of the Second
Funding Date, that:
A. Organization; Good Standing. The Purchaser is, and as of the Closing
-----------------------------
Date will be, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization.
B. Authorization. The Purchaser has, and as of the Closing Date will have,
-------------
all requisite power and authority to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes its legal, valid and binding
obligation, enforceable against the Purchaser in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this
------------------------
Agreement, nor the consummation by the Purchaser of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency applicable to the
Purchaser, or violates, or conflicts with, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Purchaser is a party or by
which the Purchaser is bound.
D. No Litigation. No action, suit or proceeding against the Purchaser
--------------
relating to the consummation of any of the transactions contemplated by this
Agreement nor any governmental action against the Purchaser seeking to delay or
enjoin any such transactions is pending or, to the Purchaser's knowledge,
threatened.
E. Investment Intent. The Purchaser: (i) is an accredited investor within
-----------------
the meaning of Rule 501(a) under the Securities Act; (ii) is aware of the limits
on resale imposed by virtue of the nature of the transactions contemplated by
this Agreement, specifically the restrictions imposed by Rule 144 of the Act,
and is aware that the certificates representing the Purchaser's respective
ownership of the Securities will bear related restrictive legends; and (iii)
except as otherwise set forth herein, is acquiring the Securities hereunder
without registration under the Act in reliance on the exemption from
registration contained in Section 4(2) of the Act and/or Rule 506 promulgated
pursuant to Regulation D of the Act, for investment for its own account, and not
with a view toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling such Securities. The
Purchaser has been given the opportunity to ask questions of, and receive
answers from, the officers of the Company regarding the Company, its current and
proposed business operations and the Securities, and the officers of the Company
have made available to the Purchaser all documents and information that the
Purchaser has requested relating to an investment in the Company. The Purchaser
has been given the
-11-
opportunity to retain competent legal counsel in connection with the purchase of
the Securities and acknowledges that the Company has relied upon the Purchaser's
representations in this Section III in offering and selling the Securities to
the Purchaser.
F. Economic Risk; Restricted Securities. The Purchaser recognizes that the
------------------------------------
investment in the Securities involves a number of significant risks. The
foregoing, however, does not limit or modify the representations, warranties and
agreements of the Company in Section II of this Agreement or the right of the
Purchaser to rely thereon. The Purchaser is able to bear the economic risks of
an investment in the Securities for an indefinite period of time, has no need
for liquidity in such investment and, at the present time, can afford a complete
loss of such investment.
G. Access to Information.
---------------------
(i) The Purchaser has received and reviewed a copy of the following
documents of the Company:
1. Private Placement Memorandum dated November 1, 2001;
2. Annual Report on Form 10-KSB for the year ended June 30, 2001;
3. Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders;
4. Quarterly Report on Form 10-QSB for the quarter ended September
30, 2001; and
5. Any press releases issued after the Company's most recently filed
Form 10-QSB.
(ii) The Purchaser represents that it has received the documents set
forth above, and has had the opportunity to ask questions of, and receive
answers from, the Company regarding the foregoing documents.
H. Suitability. The Purchaser has carefully considered, and has, to the
-----------
extent the Purchaser deems it necessary, discussed with the Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Securities for the Purchaser's particular tax and financial situation,
and the Purchaser has determined that the Securities is a suitable investment.
I. Legend. The Purchaser acknowledges that the certificates evidencing the
------
Securities will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER SUCH ACT OR AN OPINION OF COUNSEL TO
THE ISSUER THAT REGISTRATION IS NOT
NOT REQUIRED UNDER THE ACT.
-12-
SECTION IV
THE CLOSING AND CONDITIONS TO CLOSING
-------------------------------------
A. Time and Place of the Closing. The closing shall be held at the offices
-----------------------------
of Hale and Dorr LLP, 650 College Road East, Princeton, New Jersey 08540, on
January 16, 2002 (the "Closing Date"), or such other time and place as the
Company and the Purchaser may mutually agree.
B. Deliveries by the Company. Delivery of fifty percent (50%) of the
---------------------------
Securities shall be made by the Company, or by its transfer agent, as
applicable, to the Purchaser as soon as reasonably practicable after the Closing
Date, and delivery of the remaining fifty (50%) of the Securities shall be made
by the Company, or by its transfer agent, as applicable, to the Purchaser as
soon as reasonably practicable after the Second Funding Date, in each case by
delivering certificates representing the Securities, such certificates to be
accompanied by any requisite documentary or transfer tax stamps.
C. Deliveries by the Purchaser. On the Closing Date, the Purchaser shall
---------------------------
deliver to the Company fifty percent (50%) of the Aggregate Purchase Price, and
on or before the Second Funding Date, the Purchaser shall deliver to the Company
the remaining fifty percent (50%) of the Aggregate Purchase Price, by
irrevocable wire transfer to an account specified in writing to the Purchaser by
the Company.
D. Expenses. As of the Closing Date, the terms and provisions of Section
--------
I(D) above shall have been satisfied.
E. Registration Rights Agreement. The Company shall deliver to the
-------------------------------
Purchaser, and the Purchaser shall deliver to the Company, an executed copy of
the Registration Rights Agreement.
F. Warrant. On the Closing Date, the Company shall execute and deliver to
-------
the Purchaser fifty percent (50%) of the Warrants, and on the Second Funding
Date, the Company shall execute and deliver to the Purchaser the remaining fifty
percent (50%) of the Warrants.
G. Opinion of Counsel. The Purchaser shall receive an opinion from Hale and
------------------
Dorr LLP, counsel for the Company, dated as of the Closing Date, addressed to
the Purchaser and satisfactory in form and substance to the Purchaser.
H. Other Conditions to Closing. As of the Closing Date and as of the Second
---------------------------
Funding Date, all requisite action by the Company's Board of Directors and
stockholders shall have been taken pursuant to the Certificate of Incorporation
and Bylaws of the Company, and the representations and warranties made by the
Company in Section II hereof shall be true and correct when made, as of the
Closing Date and as of the Second Funding Date.
-13-
SECTION V
INDEMNIFICATION
---------------
A. General Indemnity. The Company agrees to indemnify and hold harmless the
-----------------
Purchaser and its agents, heirs, successors and assigns (but excluding
consequential damages) from and against any and all actual losses, liabilities,
deficiencies, costs, damages and reasonable expenses (including, without
limitation, reasonable attorney's fees, charges and disbursements) incurred as a
result of any misrepresentation or breach of the warranties and covenants made
by the Company herein, in the Warrant and the Registration Rights Agreement,
except where such misrepresentation or breach is caused by the Purchaser. The
Purchaser agrees to indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and against any and
all actual losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys fees, charges and
disbursements but excluding consequential damages) incurred by the Company as
result of any breach of the representations and covenants made by the Purchaser
herein, in the Warrant and the Registration Rights Agreement, except where such
misrepresentation or breach is caused by the Company.
B. Indemnification Procedure. Any party entitled to indemnification under
--------------------------
this Section (an "indemnified party") will give written notice to the
indemnifying party of any matters giving rise to a claim for indemnification;
provided, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the indemnified party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding
-14-
effected without its prior written consent. Notwithstanding anything in this
Section to the contrary, the indemnifying party shall not, without the
indemnified party's prior written consent (which consent shall not be
unreasonably withheld), settle or compromise any claim or consent to entry of
any judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Section shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION VI
POST CLOSING CONDITIONS
-----------------------
A. Registration of Warrant Shares. The Company shall cause all of the
--------------------------------
Warrant Shares to be registered on a Form S-3 registration statement, or such
similar form, under the Securities Act on or before June 30, 2002.
B. Right of First Refusal. The Company hereby grants to Stanford Group
-----------------------
Company, an affiliate of the Purchaser ("SGC"), the right of first refusal to
act as the exclusive managing agent of the Company in the event the Company
proposes to sell, exchange, pledge, hypothecate or dispose of any equity or debt
securities through a private placement or public offering (the "Offering") for a
period of twelve (12) months from the Closing Date or, if the Company does not
consummate an Offering during such twelve (12) month period, until the date of
the next successive Offering following the expiration of the initial twelve (12)
month period. Upon the exercise by SGC of its right of first refusal, SGC and
the Company shall enter into a placement agency agreement upon terms and
conditions to be agreed upon by the parties.
-15-
SECTION VII
MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement contains the entire agreement between
----------------
the parties hereto with respect to the transactions contemplated hereby, and no
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
B. Invalidity, Etc. If any provision of this Agreement, or the application
----------------
of any such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
C. Headings. The headings of this Agreement are for convenience of
--------
reference only and are not part of the substance of this Agreement.
D. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the parties hereto and their respective successors and assigns.
E. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law.
F. Counterparts. This Agreement may be executed in one or more identical
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * *
-16-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
COMPANY:
SENESCO TECHNOLOGIES, INC.
By: /s/ Bruce C. Gelton
--------------------------------------
Name: Bruce C. Galton
Title: President and Chief Executive
Officer
PURCHASER:
STANFORD VENTURE CAPITAL HOLDINGS, INC.
By: /s/ James M. Davis
--------------------------------------
Name: James M. Davis
--------------------------------
Title: Chief Financial Officer
--------------------------------
EXHIBIT A
---------
FORM OF WARRANT
EXHIBIT B
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 3,
2001, by and between Senesco Technologies, Inc., a Delaware corporation (the
"Company"), and [ ] (the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company issued certain promissory notes payable to the
Purchaser in the aggregate principal amount of $[ ] (the "Notes"), and in
connection with such Notes, the Purchaser has executed a letter agreement
providing that the entire principal amount outstanding under the Notes, plus any
interest which has accrued as of the date hereof, shall be converted into shares
of the Company's restricted common stock, $0.01 par value per share (the "Common
Stock") and warrants to purchase shares of Common Stock (the "Warrants") as of
the date hereof, on the same terms as provided in the Securities Purchase
Agreement dated November 30, 2001, made by and between the Company and Stanford
Venture Capital Holdings, Inc.; and
WHEREAS, the Purchaser desires to convert the Notes into the Company's
Common Stock and Warrants and the Company desires to sell, transfer and assign
to the Purchaser, and the Purchaser desires to purchase from the Company, [ ]
shares (the "Shares") of the Company's Common Stock, and Warrants to purchase
[ ] shares of Common Stock, for an aggregate purchase price of $[ ], which
reflects the entire principal amount outstanding under the Notes, plus $[ ] of
interest which has accrued as of the date hereof (the Warrants, together with
the Shares, shall be referred to herein as the "Securities");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION I
PURCHASE, SALE AND REGISTRATION OF THE SECURITIES
-------------------------------------------------
A. Purchase and Sale. Subject to the terms and conditions of this Agreement
-----------------
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company hereby agrees to sell, transfer, assign and convey
the Securities to the Purchaser, and the Purchaser agrees to purchase, acquire
and accept the Securities from the Company.
B. Purchase Price. The Securities are hereby offered at a price of $1.75
---------------
per unit, equal to one share of Common Stock and a Warrant to purchase 0.875
shares of Common Stock. The aggregate purchase price for the Securities to be
paid by the Purchaser to the Company is $[ ] (the "Aggregate Purchase Price").
The Aggregate Purchase Price shall be paid by the Purchaser to the Company on
the Closing Date by cancellation of the original Notes. The parties to this
Agreement agree that, as soon as reasonably practicable after the date hereof,
they shall allocate, in good faith, the purchase price between the Shares and
Warrants so purchased.
C. Warrants. Fifty percent (50%) of the Warrants shall have an exercise
--------
price of $2.00 per Share and fifty percent (50%) of the Warrants shall have an
exercise price of $3.25 per Share and shall have the terms set forth in the form
of Warrant attached hereto as Exhibit A, which shall each be executed by the
---------
Company on the Closing Date.
D. Registration Rights Agreement. On the Closing Date, the Company and the
-----------------------------
Purchaser shall enter into a Registration Rights Agreement in the form attached
hereto as Exhibit B (the "Registration Rights Agreement").
---------
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE COMPANY
-----------------------------
The Company represents and warrants to, and covenants and agrees with, the
Purchaser, as of the date hereof and as of the Closing Date, that:
A. Organization, Good Standing and Power. The Company is a corporation duly
-------------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
The Company does not have any subsidiaries (as defined in Section II(G)), except
as set forth in the reports, schedules, forms, statements and other documents
required to be filed by the Company and its predecessors with the Securities and
Exchange Commission (the "Commission"), pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including
filings incorporated by reference therein, being referred to herein as the
"Commission Documents"). The Company and each such subsidiary is duly
incorporated or duly qualified as a foreign Company to do business and is in
good standing in every jurisdiction of the United States, or any other country,
state, province, or political subdivision in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect on the Company's financial condition. For purposes of
this Agreement, "Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries, taken as a whole and/or any
condition, circumstance, or situation that would prohibit the ability of the
Company to enter into and perform any of its obligations under this Agreement,
the Warrant or the Registration Rights Agreement.
B. Authorization; Enforcement. The Company has the corporate power and
---------------------------
authority to enter into and perform this Agreement, the Warrant and the
Registration Rights Agreement, and to issue and sell the Shares and the Warrants
in accordance with the terms hereof and thereof. The execution, delivery and
performance of this Agreement, the Warrant and the Registration Rights Agreement
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or stockholders is required. Each of this Agreement, the
Warrant and the Registration Rights Agreement has been duly executed and
delivered by the Company. Each of this Agreement, the Warrant and the
Registration Rights Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
-2-
C. Capitalization. The authorized capital stock of the Company and the
--------------
shares thereof issued and outstanding as of the date hereof, including all
options to acquire shares of capital stock issued as of the date hereof, are set
forth in the Company's Proxy Statement for its 2001 Annual Meeting. All of the
outstanding shares of the Company's capital stock have been duly and validly
authorized. Except as set forth in this Agreement, the Warrant, the Registration
Rights Agreement or the Commission Documents, no shares of Common Stock are
entitled, from the Company, to preemptive rights or registration rights and
there are no outstanding options, warrants, scrip, rights to subscribe to, call
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement, the Warrant, the Registration Rights
Agreement or the Commission Documents, there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
Except for customary transfer restrictions contained in agreements entered into
by the Company in order to sell restricted securities or as provided in the
Commission Documents, the Company is not a party to any agreement granting
registration rights to any person with respect to any of its equity or debt
securities. Except as set forth in the Commission Documents, the offer and sale
of all capital stock, convertible securities, rights, warrants, or options of
the Company issued prior to the date hereof complied with all applicable federal
and state securities laws, and no stockholder has a right of rescission or
damages with respect thereto which would have a Material Adverse Effect. The
Company has filed as exhibits to the Commission Documents true and correct
copies of the Company's Certificate of Incorporation as in effect on the date
hereof (the "Certificate"), and the Company's Bylaws as in effect on the date
hereof (the "Bylaws").
D. Issuance of Shares. The Shares to be issued under this Agreement and the
------------------
shares of Common Stock to be issued under each Warrant (the "Warrant Shares"),
have been duly authorized by all necessary corporate action and, when paid for
or issued in accordance with the terms hereof and thereof, the Securities and
the Warrant Shares shall be validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, charges, and encumbrances of any
nature whatsoever, except for restrictions on transfer that may exist under
applicable securities laws, and the Purchaser shall be entitled to all rights
accorded to a holder of Common Stock.
E. No Conflicts. The execution, delivery and performance of this Agreement,
------------
the Warrant and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated herein and therein
do not (i) violate any provision of the Certificate or Bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Company under any agreement or any
commitment to which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its
-3-
subsidiaries are bound or affected, and except, in all cases, for such
conflicts, defaults, terminations, amendments, acceleration, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company is not required under federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Warrant and the Registration Rights Agreement, or issue and sell the Shares and
the Warrants in accordance with the terms hereof (other than any filings which
may be required to be made by the Company with the Commission, the National
Association of Securities Dealers, Inc. (the "NASD"), or state securities
administrators subsequent or prior to the Closing Date hereunder, and, any
registration statement which may be filed pursuant hereto); provided that, for
purpose of the representation made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Purchaser.
F. Commission Documents; Financial Statements. The Common Stock of the
---------------------------------------------
Company is registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and, except as disclosed in the Commission Documents, since January 1999, the
Company has timely filed all Commission Documents. The Company has made
available to the Purchaser true and complete copies of the Commission Documents
filed with the Commission as set forth in Section III(G) hereof. The Company has
not provided to the Purchaser any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by the Company but
which has not been so disclosed, or for which the Purchaser has not executed a
confidentiality agreement, other than with respect to the transactions
contemplated by this Agreement. As of their respective dates, the Form 10-KSB
for the fiscal year ended June 30, 2001 and the Form l0-QSB for the fiscal
quarter ended September 30, 2001 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and, as of their respective dates, none of the Form
l0-KSB and the Form l0-QSB referred to above contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
G. Subsidiaries. The Company's Form 10-KSB for the fiscal year ended June
------------
30, 2001 sets forth each subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person's
ownership of the outstanding capital stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall mean any
Company or other entity of which at least 50% of the securities or other
ownership interest having ordinary voting power (absolutely or contingently) for
the election of directors or
-4-
other persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. Except as set
forth in the Commission Documents, none of such subsidiaries is a "significant
subsidiary" as defined in Regulation S-X.
H. No Material Adverse Change. Since September 30, 2001, the date through
---------------------------
which the most recent quarterly report of the Company on Form l0-QSB has been
filed with the Commission, a copy of which is included in the Commission
Documents, the Company has not experienced or suffered any Material Adverse
Effect.
I. No Undisclosed Liabilities. Except as disclosed in the Commission
----------------------------
Documents, neither the Company nor any of its subsidiaries has any liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary (including the
notes thereto) in conformity with GAAP not disclosed in the Commission
Documents, other than those incurred in the ordinary course of the Company's or
its subsidiaries respective businesses since June 30, 2001 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or its subsidiaries.
J. No Undisclosed Events or Circumstances. Except for the transactions and
--------------------------------------
with respect to the Company or its subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.
K. Indebtedness. The Company's Form 10-QSB for the period ended September
------------
30, 2001 sets forth, as of the date hereof, all outstanding secured and
unsecured Indebtedness of the Company or any subsidiary, or for which the
Company or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $25,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company's balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $25,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
subsidiary is in default with respect to any Indebtedness.
L. Title to Assets. Each of the Company and the subsidiaries has good and
---------------
marketable title to all of its real and personal property reflected in the
Company's Form 10-KSB for the fiscal year ended June 30, 2001, free of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or such that could not
reasonably be expected to cause a Material Adverse Effect on the Company's
financial condition or operating results. All said leases of the Company and
each of its subsidiaries are valid and subsisting and in full force and effect
in all material respects.
M. Actions Pending. There is no action, suit, claim, investigation or
----------------
Company or any subsidiary which questions the validity of this Agreement, the
Warrant or the Registration Rights
-5-
Agreement, or the transactions contemplated hereby or thereby, or any action
taken or to be taken pursuant hereto or thereto. There is no action, suit,
claim, investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company, any subsidiary or any of their
respective properties or assets and which, if adversely determined, is
reasonably likely to result in a Material Adverse Effect. To the knowledge of
the Company, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any subsidiary.
N. Compliance with Law. The business of the Company and the subsidiaries
--------------------
has been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances,
except as set forth in the Company's most recent Form 10-KSB and Form 10-QSB or
except where such failure would not cause a Material Adverse Effect. The Company
and each of its subsidiaries have all franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals necessary for
the conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, the Company's technology does not require the premarket approval
of the United States Food and Drug Administration (the "FDA") or the approval of
or any filing with the FDA or the United States Environmental Protection Agency
(the "EPA") under current rules and regulations of the FDA and EPA,
respectively, when used for their intended use.
O. Certain Fees. Except as otherwise provided herein, no brokers, finders
------------
or financial advisory fees or commissions will be payable by the Company or any
subsidiary with respect to the transactions contemplated by this Agreement.
P. Disclosure. Neither this Agreement or the Exhibits hereto nor any other
----------
documents, certificates or instruments furnished to the Purchaser by or on
behalf of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
Q. Intellectual Property; Operation of Business. The Company and each of
----------------------------------------------
the subsidiaries owns or possesses all patents, trademarks, service marks, trade
names, copyrights, licenses and authorizations as set forth in the Company's
Form 10-KSB for the year ended June 30, 2001 and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted
without any conflict with the rights of others, except to the extent that a
Material Adverse Effect could not reasonably be expected to result from such
conflict. The Company currently owns or possesses adequate rights to use all
inventions subject to pending patent applications and all licenses, copyrights,
inventions, know-how, trade secrets, proprietary technologies, including
trademarks, service marks, trade names, processes and substances described in
the Company's Form 10-KSB for the year ended June 30, 2001 including, without
limitation, the inventions underlying, and the trade names for, the Company's
technology; and the Company is not aware of the granting of any patent rights
to, or the filing of applications therefor by, others, nor is the Company aware
of, or has the Company received notice of, infringement of
-6-
or conflict with asserted rights of others with respect to any of the foregoing.
All such licenses, trademarks, service marks, trade names and copyrights are (i)
valid and enforceable and (ii) to the best knowledge of the Company, not being
infringed upon by any third parties. To the knowledge of the Company, none of
the inventions described and claimed in the pending patent applications
disclosed in the Commission Documents and filed on behalf of original inventors
with respect to the inventions underlying the Company's technology has been
described or suggested in either the relevant patent literature or the relevant
scientific literature. To the knowledge of the Company, said inventions are
patentable and no other patent is infringed upon by the subject matter of said
inventions. All pertinent prior art references were disclosed to the United
States Patent and Trademark Office (the "PTO") in the pending patent
applications and all information submitted to the PTO in respect thereof was
accurate. The Company has not made any representation or concealed any material
fact from the PTO.
R. Environmental Compliance. The Company and each of its subsidiaries have
------------------------
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws, except where the failure to obtain such authorizations would not have a
Material Adverse Effect. For purposes of this Agreement, "Environmental Laws"
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its subsidiaries that violate or would reasonably be expected to violate any
Environmental Law after the Closing Date hereunder or that would reasonably be
expected to give rise to any environmental liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.
S. Material Agreements. Except as set forth in the Commission Documents,
--------------------
neither the Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an exhibit to
a registration statement on Form S-3 or applicable form (collectively, "Material
Agreements") if the Company or any subsidiary were registering securities under
the Securities Act of 1933, as amended, (the "Securities Act"), which has not
been previously filed as an exhibit to the Commission Documents. The Company and
each of its subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and, to the best of the Company's
knowledge, are not in default under any Material Agreement now in effect, the
result of which would reasonably be expected to cause a Material Adverse Effect.
-7-
T. Transactions with Affiliates. Except as set forth in the Commission
------------------------------
Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions with aggregate obligations of any party exceeding $25,000 between
(a) the Company, any subsidiary or any of their respective customers or
suppliers on the one hand, and (b) on the other hand, any person who would be
covered by Item 404(a) of Regulation S-K or any company or other entity
controlled by such stockholder, officer, employee, consultant, director or
person.
U. Securities Act. The Company has complied with all applicable federal and
--------------
state securities laws in connection with the offer, issuance and sale of the
Securities hereunder and the Warrant Shares pursuant to the Warrant. Neither the
Company nor anyone acting on its behalf, directly or indirectly, has sold,
offered to sell or solicited offers to buy the Shares, the Warrants or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any person, so
as to bring the issuance and sale of the Shares under the registration
provisions of the Securities Act and applicable state securities laws. Neither
the Company nor, to the knowledge of the Company, any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Shares or the
Warrants.
V. Employees. Neither the Company nor any subsidiary has any collective
---------
bargaining arrangements or agreements covering any of its employees, except as
set forth in the Commission Documents. Except as set forth in the Commission
Documents, neither the Company nor any subsidiary has any employment contract,
agreement regarding proprietary information, noncompetition agreement,
nonsolicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer, employee
or consultant to be employed or engaged by the Company or such subsidiary. Since
June 30, 2001, except as disclosed in Commission Documents, no officer,
consultant or key employee of the Company or any subsidiary whose termination,
either individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company or any subsidiary.
W. Public Utility Holding Company Act and Investment Company Act Status.
------------------------------------------------------------------------
The Company is not a "holding company" or a "public utility company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon the Closing Date
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
X. ERISA. No liability to the Pension Benefit Guaranty Company has been
-----
incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be materially adverse to the Company and its subsidiaries. The
execution and delivery of this Agreement, the Warrant and the Registration
Rights Agreement, and the issue and sale of the Shares and the Warrants, will
not involve any transaction which is subject to the prohibitions of Section 406
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), provided
that, if the
-8-
Purchaser, or any person or entity that owns a beneficial interest in the
Purchaser, is an "employee pension benefit plan" (within the meaning of Section
3(2) of ERISA) with respect to which the Company is a "party in interest"
(within the meaning of Section 3(14) of ERISA), the requirements of Sections
407(d) (5) and 408(e) of ERISA, if applicable, are met. As used in this
paragraph, the term "Plan" shall mean an "employee pension benefit plan" (as
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any
subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.
Y. Taxes. The Company and each of the subsidiaries has accurately prepared
-----
and filed all federal, state, local, foreign and other tax returns for income,
gross receipts, sales, use and other taxes and custom duties ("Taxes") required
by law to be filed by it, has paid or made provisions for the payment of all
taxes shown to be due and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of the Company and the
subsidiaries for all current taxes and other charges to which the Company or any
subsidiary is subject and which are not currently due and payable, except for
taxes, if unpaid, individually or in the aggregate, do not and would not have a
Material Adverse Effect on the Company or its subsidiaries. None of the federal
income tax returns of the Company or any subsidiary for the last five (5) years
has been audited by the Internal Revenue Service. The Company has no knowledge
of any additional assessments, adjustments or contingent tax liability (whether
federal, state, local or foreign) pending or threatened against the Company or
any subsidiary or any person for whose tax liabilities the Company is or may be
jointly or contingently liable for any period, nor of any basis for any such
assessment, adjustment or contingency.
Z. Books and Records; Internal Accounting Controls. The records and
----------------------------------------------------
documents of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary.
AA. Survival. All representations, warranties, covenants and agreements
--------
made by the Company in this Agreement or in any writing or certificate delivered
in connection with this Agreement shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby for
a period of one (1) year, except that any representations and warranties related
to taxes shall survive for three (3) years.
-9-
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PURCHASER
-------------------------------
The Purchaser represents and warrants to, and covenants and agrees with,
the Company, as of the date hereof and as of the Closing Date, that:
A. Organization; Good Standing (if applicable). The Purchaser is, and as of
-------------------------------------------
the Closing will be, duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
B. Authorization. The Purchaser has, and as of the Closing will have, all
-------------
requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes its legal, valid and binding
obligation, enforceable against the Purchaser in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this
------------------------
Agreement, nor the consummation by the Purchaser of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency applicable to the
Purchaser, or violates, or conflicts with, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Purchaser is a party or by
which the Purchaser is bound.
D. No Litigation. No action, suit or proceeding against the Purchaser
--------------
relating to the consummation of any of the transactions contemplated by this
Agreement nor any governmental action against the Purchaser seeking to delay or
enjoin any such transactions is pending or, to the Purchaser's knowledge,
threatened.
E. Investment Intent. The Purchaser: (i) is an accredited investor within
-----------------
the meaning of Rule 501(a) under the Securities Act; (ii) is aware of the limits
on resale imposed by virtue of the nature of the transactions contemplated by
this Agreement, specifically the restrictions imposed by Rule 144 of the Act,
and is aware that the certificates representing the Purchaser's respective
ownership of the Securities will bear related restrictive legends; and (iii)
except as otherwise set forth herein, is acquiring the Securities hereunder
without registration under the Act in reliance on the exemption from
registration contained in Section 4(2) of the Act and/or Rule 506 promulgated
pursuant to Regulation D of the Act, for investment for its own account, and not
with a view toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling such Securities. The
Purchaser has been given the opportunity to ask questions of, and receive
answers from, the officers of the Company regarding the Company, its current and
proposed business operations and the Securities, and the officers of the Company
have made available to the Purchaser all documents and information that the
Purchaser has requested relating to an investment in the Company. The Purchaser
has been given the
-10-
opportunity to retain competent legal counsel in connection with the purchase of
the Securities and acknowledges that the Company has relied upon the Purchaser's
representations in this Section III in offering and selling the Securities to
the Purchaser.
F. Economic Risk; Restricted Securities. The Purchaser recognizes that the
------------------------------------
investment in the Securities involves a number of significant risks. The
foregoing, however, does not limit or modify the representations, warranties and
agreements of the Company in Section II of this Agreement or the right of the
Purchaser to rely thereon. The Purchaser is able to bear the economic risks of
an investment in the Securities for an indefinite period of time, has no need
for liquidity in such investment and, at the present time, can afford a complete
loss of such investment.
G. Access to Information.
---------------------
(i) The Purchaser has received and reviewed a copy of the following
documents of the Company:
1. Private Placement Memorandum dated November 1, 2001;
2. Annual Report on Form 10-KSB for the year ended June 30, 2001;
3. Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders;
4. Quarterly Report on Form 10-QSB for the quarter ended September
30, 2001; and
5. Any press releases issued after the Company's most recently filed
Form 10-QSB.
(ii) The Purchaser represents that it has received the documents set
forth above, and has had the opportunity to ask questions of, and receive
answers from, the Company regarding the foregoing documents.
H. Suitability. The Purchaser has carefully considered, and has, to the
-----------
extent the Purchaser deems it necessary, discussed with the Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Securities for the Purchaser's particular tax and financial situation,
and the Purchaser has determined that the Securities is a suitable investment.
I. Legend. The Purchaser acknowledges that the certificates evidencing the
------
Securities will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH ACT
OR AN OPINION OF COUNSEL TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
-11-
SECTION IV
THE CLOSING AND CONDITIONS TO CLOSING
-------------------------------------
A. Time and Place of the Closing. The closing shall be held at the offices
-----------------------------
of Hale and Dorr LLP, 650 College Road East, Princeton, New Jersey 08540, on
December 3, 2001 (the "Closing Date"), or such other time and place as the
Company and the Purchaser may mutually agree.
B. Delivery by the Company. Delivery of the Securities shall be made by the
-----------------------
Company, or by its transfer agent, as applicable, to the Purchaser as soon as
reasonably practicable after the Closing Date by delivering certificates
representing the Securities, such certificate to be accompanied by any requisite
documentary or transfer tax stamps.
C. Delivery by the Purchaser. On the Closing Date, the Purchaser shall
--------------------------
deliver to the Company the Aggregate Purchase Price, by delivering the canceled
original Notes to the Company.
D. Registration Rights Agreement. The Company shall deliver to the
--------------------------------
Purchaser, and the Purchaser shall deliver to the Company, an executed copy of
the Registration Rights Agreement.
E. Warrant. The Company shall execute and deliver to the Purchaser the
-------
Warrant.
F. Other Conditions to Closing. As of the Closing Date, all requisite
-----------------------------
action by the Company's Board of Directors and stockholders shall have been
taken pursuant to the Certificate of Incorporation and By-Laws of the Company,
and the representations and warranties made by the Company in Section II hereof
shall be true and correct when made and as of the Closing Date.
-12-
SECTION V
INDEMNIFICATION
---------------
A. General Indemnity. The Company agrees to indemnify and hold harmless the
-----------------
Purchaser and its agents, heirs, successors and assigns (but excluding
consequential damages) from and against any and all actual losses, liabilities,
deficiencies, costs, damages and reasonable expenses (including, without
limitation, reasonable attorney's fees, charges and disbursements) incurred as a
result of any misrepresentation or breach of the warranties and covenants made
by the Company herein, in the Warrant and the Registration Rights Agreement,
except where such misrepresentation or breach is caused by the Purchaser. The
Purchaser agrees to indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and against any and
all actual losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys fees, charges and
disbursements but excluding consequential damages) incurred by the Company as
result of any breach of the representations and covenants made by the Purchaser
herein, in the Warrant and the Registration Rights Agreement, except where such
misrepresentation or breach is caused by the Company.
B. Indemnification Procedure. Any party entitled to indemnification under
--------------------------
this Section (an "indemnified party") will give written notice to the
indemnifying party of any matters giving rise to a claim for indemnification;
provided, that the failure of any party entitled to indemnification hereunder to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified party in respect of which
indemnification is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the indemnified party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior
-13-
written consent. Notwithstanding anything in this Section to the contrary, the
indemnifying party shall not, without the indemnified party's prior written
consent (which consent shall not be unreasonably withheld), settle or compromise
any claim or consent to entry of any judgment in respect thereof which imposes
any future obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such claim. The
indemnification required by this Section shall be made by periodic payments of
the amount thereof during the course of investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred, so long as
the indemnified party irrevocably agrees to refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was
not entitled to indemnification. The indemnity agreements contained herein shall
be in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
-14-
SECTION VI
MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement contains the entire agreement between
---------------
the parties hereto with respect to the transactions contemplated hereby, and no
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
B. Invalidity, Etc. If any provision of this Agreement, or the application
-----------------
of any such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
C. Headings. The headings of this Agreement are for convenience of
--------
reference only and are not part of the substance of this Agreement.
D. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the parties hereto and their respective successors and assigns.
E. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law.
F. Counterparts. This Agreement may be executed in one or more identical
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * *
-15-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
COMPANY:
SENESCO TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
PURCHASER:
-------------------------------------
[ ]
EXHIBIT A
---------
FORM OF WARRANT
EXHIBIT B
---------
FORM OF REGISTRATION RIGHTS AGREEMENT
Schedule of Parties
-------------------
to
--
Securities Purchase Agreements in Connection with the Conversion of Notes by Certain Directors
----------------------------------------------------------------------------------------------
Date of Aggregate Common Stock Warrants
Agreement Director Investment Issued Issued
- ----------------- ---------------------------- --------------------- --------------------- -------------------
12/03/01 Christopher Forbes $356,211 203,549 178,106
12/03/01 Thomas Quick $178,105 101,774 89,053
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of [ ], by
and among Senesco Technologies, Inc., a Delaware corporation (the "Company"),
and those persons listed on the signature pages attached hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to sell, transfer and assign to the
Purchasers, and the Purchasers desire to purchase from the Company: (i) a
minimum of 571,428 shares (the "Shares") of the Company's restricted common
stock, $0.01 par value per share (the "Common Stock"), and warrants to purchase
250,000 shares of Common Stock (the "Warrants") for an aggregate purchase price
of $1,000,000; and (ii) a maximum of 1,714,286 Shares of Common Stock and
Warrants to purchase 750,000 shares of Common Stock for an aggregate purchase
price of $3,000,000 (the Warrants, together with the Shares, shall be referred
to herein as the "Securities");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION I
PURCHASE AND SALE OF THE SECURITIES
-----------------------------------
A. Purchase and Sale. Subject to the terms and conditions of this Agreement
-----------------
and on the basis of the representations, warranties, covenants and agreements
herein contained, the Company hereby agrees to sell, transfer, assign and convey
the respective number of Securities to each Purchaser as set forth on the
signature pages attached hereto, and each Purchaser agrees to purchase, acquire
and accept their respective number of Securities from the Company as set forth
on the signature pages attached hereto.
B. Purchase Price. The Securities are hereby offered at a price of $1.75
---------------
per unit, equal to one share of Common Stock and a Warrant to purchase 0.4375
shares of Common Stock. The aggregate purchase price for the Securities to be
paid by the Purchasers to the Company is a minimum of $1,000,000 and a maximum
of $3,000,000 (the "Aggregate Purchase Price"). The Aggregate Purchase Price
shall be paid by the Purchasers to the Company on the Closing Date either via
certified bank check or irrevocable wire transfer and shall be paid by the
Purchasers in the amounts set forth on the signature pages attached hereto. The
parties to this Agreement agree that, as soon as reasonably practicable after
the date hereof, they shall allocate, in good faith, the purchase price between
the Shares and Warrants so purchased.
C. Warrants. Fifty percent (50%) of the Warrants shall have an exercise
--------
price of $2.00 per share and fifty percent (50%) of the Warrants shall have an
exercise price of $3.25 per share.
SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE COMPANY
-----------------------------
The Company represents and warrants to, and covenants and agrees with, the
Purchasers, as of the date hereof, that:
A. Organization; Good Standing. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own its properties and to
conduct the business in which it is now engaged.
B. Authority. The Company has the full corporate power, authority and legal
---------
right to execute and deliver this Agreement and to perform all of its
obligations and covenants hereunder, and no consent or approval of any other
person or governmental authority is required therefore. The execution and
delivery of this Agreement by the Company, the performance by the Company of its
obligations and covenants hereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action. This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforceability of creditors'
rights in general or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this
------------------------
Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the Certificate of Incorporation, as amended, or
By-Laws of the Company or any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency, or conflicts with or
results in any breach of any of the terms of or constitutes a default under or
results in the termination of or the creation of any lien pursuant to the terms
of any contract or agreement to which the Company is a party or by which the
Company or any of its assets is bound.
D. Non-Assessable Shares. The Securities being issued hereunder have been
----------------------
duly authorized and, the Shares, when issued to the Purchasers for the
consideration herein provided, and the shares of Common Stock issued upon the
proper exercise of the Warrants, will be validly issued, fully paid and
non-assessable.
-2-
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE PURCHASERS
--------------------------------
Each Purchaser, severally, and not jointly, represents and warrants to, and
covenants and agrees with, the Company, as of the date hereof, that:
A. Organization (if applicable). The Purchaser is, and as of the Closing
-----------------------------
will be, duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization.
B. Authorization. The Purchaser has, and as of the Closing will have, all
-------------
requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes its legal, valid and binding
obligation, enforceable against the Purchaser in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights in general
or by general principles of equity.
C. No Legal Bar; Conflicts. Neither the execution and delivery of this
------------------------
Agreement, nor the consummation by the Purchaser of the transactions
contemplated hereby, violates any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency applicable to the
Purchaser, or violates, or conflicts with, any contract, commitment, agreement,
understanding or arrangement of any kind to which the Purchaser is a party or by
which the Purchaser is bound.
D. No Litigation. No action, suit or proceeding against the Purchaser
--------------
relating to the consummation of any of the transactions contemplated by this
Agreement nor any governmental action against the Purchaser seeking to delay or
enjoin any such transactions is pending or, to the Purchaser's knowledge,
threatened.
E. Investment Intent. The Purchaser: (i) is an accredited investor within
-----------------
the meaning of Rule 501(a) under the Securities Act of 1933, as amended (the
"Act"); (ii) is aware of the limits on resale imposed by virtue of the nature of
the transactions contemplated by this Agreement, specifically the restrictions
imposed by Rule 144 of the Act, and is aware that the certificates representing
the Purchaser's respective ownership of the Securities will bear related
restrictive legends; and (iii) except as otherwise set forth herein, is
acquiring the shares of the Company hereunder without registration under the Act
in reliance on the exemption from registration contained in Section 4(2) of the
Act and/or Rule 506 promulgated pursuant to Regulation D of the Act, for
investment for its own account, and not with a view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling such shares. The Purchaser represents that the
Accredited Investor Questionnaire provided to the Company is true and complete
in all respects. The Purchaser has been given the opportunity to ask questions
of, and receive answers from, the officers of the Company regarding the Company,
its current and proposed business operations and the Securities, and the
officers of the Company have made available to the Purchaser all documents and
information that the Purchaser has requested relating
-3-
to an investment in the Company. The Purchaser has been given the opportunity to
retain competent legal counsel in connection with the purchase of the Securities
and acknowledges that the Company has relied upon the Purchaser's
representations in this Section 3 in offering and selling the Securities to the
Purchaser.
F. Economic Risk; Restricted Securities. The Purchaser recognizes that the
------------------------------------
investment in the Securities involves a number of significant risks. The
foregoing, however, does not limit or modify the representations, warranties and
agreements of the Company in Section 2 of this Agreement or the right of the
Purchaser to rely thereon. The Purchaser is able to bear the economic risks of
an investment in the Securities for an indefinite period of time, has no need
for liquidity in such investment and, at the present time, can afford a complete
loss of such investment.
G. Access to Information.
---------------------
(i) The Purchaser has received and reviewed a copy of the following
documents of the Company:
1. Private Placement Memorandum dated November 1, 2001;
2. Annual Report on Form 10-KSB for the year ended June 30, 2001;
3. Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders;
4. Quarterly Report on Form 10-QSB for the quarter ended September
30, 2001; and
5. Any press releases issued after the Company's most recently filed
Form 10-QSB.
(ii) The Purchaser represents that it has not received any information
about the Company other than what has been disclosed in the documents set forth
above, and has had the opportunity to ask questions of, and receive answers
from, the Company regarding the foregoing documents.
H. Suitability. The Purchaser has carefully considered, and has, to the
-----------
extent the Purchaser deems it necessary, discussed with the Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Securities for the Purchaser's particular tax and financial situation,
and the Purchaser has determined that the Securities is a suitable investment.
I. Legend. The Purchaser acknowledges that the certificates evidencing the
------
Securities will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SUCH
ACT OR AN OPINION OF COUNSEL TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
-4-
SECTION IV
THE CLOSING AND CONDITIONS TO CLOSING
-------------------------------------
A. Time and Place of the Closing. The closing shall be held at the offices
-----------------------------
of Hale and Dorr LLP, 650 College Road East, Princeton, New Jersey 08540, on [ ]
(the "Closing Date"), or such other time and place as the Company and the
Purchasers may mutually agree.
B. Delivery by the Company. Delivery of the Securities shall be made by the
-----------------------
Company, or by its transfer agent, as applicable, to the Purchasers as soon as
reasonably practicable after the Closing Date by delivering certificates
representing their respective portion of Securities as set forth on the
signature pages attached hereto, each such certificate to be accompanied by any
requisite documentary or transfer tax stamps.
C. Delivery by the Purchasers. On or before the Closing Date, each
----------------------------
Purchaser shall deliver to the Company its respective portion of the Aggregate
Purchase Price, based on the number of Securities purchased by such Purchaser as
set forth on the signature pages attached hereto, by certified bank check or by
irrevocable wire transfer to the Company's escrow agent as per the escrow
instructions attached hereto as Exhibit A.
---------
D. Minimum Investment. The consummation of the sale and issuance of the
-------------------
Securities hereunder shall be conditioned upon the Company receiving
subscriptions of at least $1,000,000.
E. Registration Rights Agreement. The Company shall deliver to each
-------------------------------
Purchaser, and each Purchaser shall deliver to the Company, an executed copy of
that certain Registration Rights Agreement made by and among the Company and the
Purchasers of even date herewith.
F. Other Conditions to Closing. As of the Closing Date, all requisite
-----------------------------
action by the Company's Board of Directors shall have been taken pursuant to the
By-Laws of the Company.
SECTION V
MISCELLANEOUS
-------------
A. Entire Agreement. This Agreement contains the entire agreement between
----------------
the parties hereto with respect to the transactions contemplated hereby, and no
modification hereof shall be effective unless in writing and signed by the party
against which it is sought to be enforced.
B. Invalidity, Etc. If any provision of this Agreement, or the application
----------------
of any such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
C. Headings. The headings of this Agreement are for convenience of
--------
reference only and are not part of the substance of this Agreement.
-5-
D. Binding Effect. This Agreement shall be binding upon and inure to the
---------------
benefit of the parties hereto and their respective successors and assigns.
E. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law, and the parties hereto hereby submit to the
exclusive jurisdiction of the state and federal courts located in the State of
New Jersey.
F. Counterparts. This Agreement may be executed in one or more identical
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * * *
-6-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
COMPANY:
SENESCO TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
PURCHASERS:
[If an entity]
Entity Name:
-----------------------------
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Address:
------------------------------
--------------------------------------
Telecopy:
-----------------------------
[If an individual]
Name:
--------------------------------
Title:
--------------------------------
Address:
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Telecopy:
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(a) Investment Amount: $
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(b) Number of shares of Common Stock
(line (a) divided by $1.75): shares
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(c) Warrants to purchase shares of Common Stock
(line (b) multiplied by 0.4375):
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warrant shares
Schedule of Parties
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to
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Securities Purchase Agreements in Connection with the Private Placement to Certain Accredited Investors
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Date of Aggregate Common Stock Warrants
Agreement Investor Investment Issued Issued
- ----------------- ------------------------------------ ---------------------- --------------------- -----------------
12/26/01 Moises Bucay Bissu $665,000 380,000 166,250
12/26/01 O'Donnell Capital Group, Inc. $500,000 285,714 125,000
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of [ ] by
and between Senesco Technologies, Inc., a Delaware corporation (the "Company")
and [ ] (the "Purchaser").
RECITALS
--------
WHEREAS, it is a condition precedent to the obligations of the Purchaser
under that certain Securities Purchase Agreement made by and between the
Purchaser and the Company, dated as of the date hereof (the "Securities Purchase
Agreement"), that the Company grant registration rights for the shares of common
stock of the Company, $0.01 par value per share (the "Common Stock") and the
Warrant Shares (as defined below), in connection with resales by the Purchaser
of the Warrant Shares and Common Stock; and
WHEREAS, the Company and the Purchaser now desire to enter into this
Agreement in order to facilitate such resales.
AGREEMENT
---------
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
-----------
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New Jersey are authorized by law to close.
"Common Stock" has the meaning given to it in the recitals to this
Agreement.
"Closing Date" shall mean the Closing Date as defined in the Securities
Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" means Senesco Technologies, Inc., a Delaware corporation.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fahnestock Registration Rights Agreements" means those certain
registration rights agreements executed by the Company and certain investors in
which Fahnestock & Co., Inc. acted as the placement agent.
"Holder" has the meaning given to it in Section 2.1(b) hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Registration Statement" means a Registration Statement of the Company
relating to the registration for sale of Common Stock, including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Restricted Securities" means any Securities until (i) a Registration
Statement covering such Securities has been declared effective by the Commission
and such Securities have been disposed of pursuant to such effective
Registration Statement, (ii) such Securities qualify to be sold under
circumstances in Rule 144(k) (or any similar provisions then in force), (iii)
such Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing a
legend restricting further transfer and such Securities may be resold without
registration under the Securities Act, or (iv) such Securities shall have ceased
to be outstanding.
"Securities" means the shares of Common Stock held by the Purchaser on the
date hereof, or issued upon the proper exercise of the Warrants issued to the
Purchaser on the date hereof, and any securities issued in respect of such
shares upon any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization or similar event.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning given to it in the recitals
to this Agreement.
"Shelf Registration Statement" means the registration statement of the
Company relating to the shelf registration for resale of Warrant Shares (as
defined below) contemplated by Section 2.2 herein, including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Warrants" shall have the meaning set forth in the Securities Purchase
Agreement.
"Warrant Shares" means the shares of Common Stock issued upon the proper
exercise of the Warrants issued to the Purchaser on the date hereof, and any
securities issued in respect of such shares upon any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization or similar
event.
2
As used in this Agreement, words in the singular include the plural, and in
the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
------------------------------------
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each, a
"Holder") whenever such Person is the registered holder of such Restricted
Securities on the Company's books and records.
2.2 Shelf Registration.
------------------
(a) The Company shall:
(i) on or before June 30, 2002, cause to be filed with the Commission
a Shelf Registration Statement on Form S-3 (or, if such form is superseded by a
successor form, such successor form); or if Form S-3 is not available with
respect to the registration of the Warrant Shares, any form which the Company is
permitted to use under the Securities Act, which Shelf Registration Statement
shall provide for resales of all Warrant Shares, the Holders of which shall have
provided to the Company the information required pursuant to Section 2.2(c)
herein; and
(ii) use its best reasonable efforts to cause such Shelf Registration
Statement to be declared effective by the CommissiIon within a reasonable time
after June 30, 2002.
(b) In connection with the Shelf Registration Statement, the Company shall
comply with all the provisions of Section 2.4 below and shall effect such
registration to permit the sale of the Warrant Shares being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 2.2.(c)). Subject to
Section 2.2(d), the Company shall use its best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 2.2(d) to the extent necessary to ensure
that it is available for resales of Warrant Shares by the Holders of Warrant
Shares, and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of one (1) year from the Effective
Time or such longer period as required by Section 2.2(d) or such shorter period
that will terminate when all the Warrant Shares covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or otherwise cease to be Warrant Shares. Upon the occurrence of any
event that would cause any Shelf Registration Statement or the Prospectus
contained therein (i) to contain a material misstatement or omission or (ii) not
to be effective and usable for sale or resale of Warrant Shares during the
period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference, in the case of
clause (i),
3
correcting any such misstatement or omission, and, in the case of either clause
(i) or (ii), use its reasonable efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to become
usable for its intended purpose(s) as soon as practicable thereafter.
(c) No Holder of Warrant Shares may include any of its Warrant Shares in
the Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within ten (10) Business Days
after receipt of a written request therefor, such information specified in Item
507 of Regulation S-K under the Securities Act or such other information as the
Company may reasonably request for use in connection with the Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. Each Holder as to which the Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
(d) Notwithstanding anything to the contrary contained herein, if (x) the
Board determines in good faith that the registration and distribution of Warrant
Shares (or the use of such Shelf Registration Statement or the Prospectus
contained therein) would interfere with any proposed or pending material
corporate transaction involving the Company or any of its subsidiaries or would
require premature disclosure thereof or would require the Company to disclose
information that the Company has not otherwise made public and that the Company
reasonably determines is in the best interests of the Company not to disclose at
such time, and (y) the Company notifies the Holders in writing not later than
three (3) days following such determination (such notice a "Blackout Notice"),
the Company may, with prior consent of the Holders, which shall be in good faith
and which shall not be unreasonably withheld, (A) postpone the filing of such
Shelf Registration Statement or (B) allow such Shelf Registration Statement to
fail to be effective and usable or elect that such Shelf Registration Statement
not be usable for a reasonable period of time, but not in excess of 30 days (a
"Blackout Period"); provided, however, that the Blackout Periods shall not
-------- -------
extend beyond August 15, 2002.
2.3 Piggyback Registration.
----------------------
(a) At any time that the Company proposes to file a Registration Statement
within three (3) years from the date hereof (other than a Registration Statement
filed pursuant to Section 2.2 above), the Company shall give the Holders written
notice of its intention to do so and of the intended method of sale, including
the total number of shares proposed to be the subject of such registration (the
"Registration Notice") within a reasonable time prior to the anticipated filing
date of the Registration Statement effecting such registration but in any event
at least thirty (30) days prior to the filing of such Registration Statement.
Each Holder may request inclusion of any Restricted Securities in such
Registration Statement by delivering to the Company, within ten (10) Business
Days after receipt of the Registration Notice, a written notice (the "Piggyback
Notice") stating the number of Restricted Securities proposed to be included and
that such shares are to be included in any underwriting only on the same terms
and conditions as the shares of Common Stock otherwise being sold through
underwriters under such Registration Statement. The Company shall use its best
efforts to cause all Restricted Securities specified in the Piggyback Notice to
be included in the Registration Statement and any related offering, all to the
4
extent requisite to permit the sale by the Holders of such Restricted Securities
in accordance with the method of sale applicable to the other shares of Common
Stock included in such Registration Statement; provided, however, that if, at
-------- -------
any time after giving written notice of its intention to register any securities
and prior to the effective date of the Registration Statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Holder of
Restricted Securities and, thereupon:
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such cancelled registration (but not from its
obligation to pay the Registration Expenses, as defined in Section
2.7, in connection therewith), and
(ii) in the case of a delay in registering, shall be
permitted to delay registering any Restricted Securities for the same
period as the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Registration Statement pursuant to Section 2.3(a) shall be subject to the
following limitations:
(i) The Company shall not be obligated to include any
Restricted Securities in a Registration Statement filed on Form S-4,
Form S-8 or such other similar successor forms then in effect under
the Securities Act.
(ii) If a Registration Statement involves an underwritten
offering and the managing underwriter advises the Company in writing
that, in its opinion, the number of the Restricted Securities
requested to be included in such Registration Statement exceeds the
number which can be sold in such offering without adversely affecting
the offering, the Company will not include any Restricted Securities
in such Registration Statement, or if some of the requested Restricted
Securities can be included in such Registration Statement, the Company
will only include such number of Restricted Securities which the
Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(A) first, all securities proposed by the Company
to be sold for its own account shall be included in the
Registration Statement;
(B) second, any securities proposed to be sold
pursuant to the Fahnestock Registration Rights Agreements; and
(C) third, any Restricted Securities requested to
be included in such registration on a pari passu basis with any
---- -----
other securities of the Company which have been afforded
registration rights by the Company prior to, or as of the date
hereof.
(c) No Holder of Restricted Securities may include any of its Restricted
Securities in the Registration Statement pursuant to this Agreement unless and
until such Holder furnishes to the Company in writing, within ten (10) Business
Days after receipt of a written request therefor,
5
such information specified in Item 507 of Regulation S-K under the Securities
Act or such other information as the Company may reasonably request for use in
connection with the Registration Statement or Prospectus or preliminary
Prospectus included therein and in any application to the NASD. Each Holder as
to which the Registration Statement is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make all
information previously furnished to the Company by such Holder not materially
misleading.
2.4 Registration Procedures. In connection with any Registration Statement
-----------------------
and any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and post-effective
amendments to such Registration Statement as may be necessary to keep such
Registration Statement effective until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act, and to
comply fully with the applicable provisions of Rules 424 and 430A, as
applicable, under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement or the
Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on the
same day as the Company shall receive notice of effectiveness) advise the
Holders covered by such Registration Statement and, if requested by such
Persons, confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when the
same has become effective, (ii) of any request by the Commission for
post-effective amendments to such Registration Statement or post-effective
amendments to such Registration Statement or post-effective amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of any such Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (iv) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in any such Registration Statement, the related Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
any such Registration Statement or the related Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of such Registration Statement, or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) promptly furnish to each Holder of Restricted Securities covered by any
6
Registration Statement, and each underwriter, if any, without charge, at least
one conformed copy of any Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents incorporated
by reference therein and all exhibits (including exhibits incorporated therein
by reference) and any related correspondence between the Company and its counsel
or accountants and the Commission or staff of the Commission and such other
documents as such Holder may reasonably request;
(d) deliver to each Holder covered by any Registration Statement, and each
underwriter, if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as such
Person reasonably may request;
(e) enter into such customary agreements and take all such other reasonable
action in connection therewith (including those reasonably requested by the
selling Holders or the underwriter(s), if any) required in order to expedite or
facilitate the disposition of such Restricted Securities pursuant to such
Registration Statement, including, but not limited to, dispositions pursuant to
an underwritten registration, and in such connection:
(i) make such representations and warranties to the selling Holders
and underwriter(s), if any, in form, substance and scope as are customarily made
by issuers to underwriters in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company (which counsel and
opinions, in form and substance, shall be reasonably satisfactory to the selling
Holders and the underwriter(s), if any, and their respective counsel) addressed
to each selling Holder and underwriter, if any, covering the matters customarily
covered in opinions requested in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s)) and dated the date of effectiveness of any Registration
Statement (and, in the case of any underwritten sale of securities pursuant to
such Registration Statement, each closing date of sales to the underwriter(s)
pursuant thereto);
(iii) use reasonable efforts to obtain comfort letters dated the date
of effectiveness of any Registration Statement (and, in the case of any
underwritten sale of securities pursuant to such Registration Statement, each
closing date of sales to the underwriter(s), if any, pursuant thereto) from the
independent certified public accountants of the Company addressed to each
selling Holder and underwriter, if any, such letters to be in customary form and
covering matters of the type customarily covered in comfort letters in
connection with underwritten offerings (whether or not sales of securities
pursuant to such Registration Statement are to be made to an underwriter(s));
(iv) provide for the indemnification provisions and procedures of
Section 2.8 hereof with respect to selling Holders and the underwriter(s), if
any, and;
(v) deliver such documents and certificates as may be reasonably
requested by the selling Holders or the underwriter(s), if any, and which are
customarily delivered in
7
underwritten offerings (whether of not sales of securities pursuant to such
Registration Statement are to be made to an underwriter(s), with such documents
and certificates to be dated the date of effectiveness of any Registration
Statement.
The actions required by clauses (i) through (v) above shall be done at each
closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and each selling Holder
promptly, and, if requested by such Person, shall confirm such advice in
writing;
(f) prior to any public offering of Restricted Securities, cooperate with
the selling Holders, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted Securities
under the securities or Blue Sky laws of such U.S. jurisdictions as the selling
Holders or underwriter(s), if any, may reasonably request in writing by the time
any Registration Statement is declared effective by the Commission, and do any
and all other acts or filings necessary or advisable to enable disposition in
such U.S. jurisdictions of the Restricted Securities covered by any Registration
Statement and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required to register or qualify
- -------- -------
as a foreign corporation in any jurisdiction where it is not then so qualified
or as a dealer in securities in any jurisdiction where it would not otherwise be
required to register or qualify but for this Section 2.4, or to take any action
that would subject it to the general service of process in suits or to general
taxation, in any jurisdiction where it is not then so subject;
(g) in connection with any sale of Restricted Securities that will result
in such securities no longer being Restricted Securities, cooperate with the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Securities to
be sold and not bearing any restrictive legends; and enable such Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two (2) Business
Days prior to any sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the Restricted
Securities covered by any Registration Statement to be registered with or
approved by such other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if any,
to consummate the disposition of such Restricted Securities, subject to the
proviso contained in Section 2.4(f);
(i) if any fact or event contemplated by Section 2.4(b) shall exist or have
occurred, prepare a supplement or post-effective amendment to any Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the Purchaser of Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statement therein not misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in
8
accordance with the rules and regulations of the NASD, and use its reasonable
efforts to cause any Registration Statement to become effective and approved by
such U.S. governmental agencies or authorities as may be necessary to enable the
Holders selling Restricted Securities to consummate the disposition of such
Restricted Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve (12)- month period (i) commencing
at the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than the
effective date of any Registration Statement;
(m) use its best efforts to list, not later than the effective date of such
Registration Statement, all Restricted Securities covered by such Registration
Statement on the NASD OTC Electronic Bulletin Board or any other trading market
on which any Common Stock of the Company are then admitted for trading; and
(n) provide promptly to each Holder covered by any Registration Statement
upon request each document filed with the Commission pursuant to the
requirements of Section 12 and Section 14 of the Exchange Act.
Each Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.4(b)(iv), such Holder will forthwith discontinue
disposition of Restricted Securities pursuant to any Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.4(i), or until it is advised in writing, in
accordance with the notice provisions of Section 3.3 herein (the "Advice"), by
the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company all copies, other than permanent file copies, then in
such Holder's possession, of the Prospectus covering such Restricted Securities
that was current at the time of receipt of such notice.
2.5 Preparation; Reasonable Investigation. In connection with the
-----------------------------------------
preparation and filing of each Registration Statement under the Securities Act,
the Company will give the Holders of Restricted Securities registered under such
Registration Statement, their underwriter, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them access to its books and records and such opportunities to discuss the
business, finances and
9
accounts of the Company and its subsidiaries with its officers, directors and
the independent public accountants who have certified its financial statements
as shall be necessary, in the opinion of such Holders and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.6 Certain Rights of Holders. The Company will not file any Registration
-------------------------
Statement under the Securities Act which refers to any Holder of Restricted
Securities by name or otherwise without the prior approval of such Holder, which
consent shall not be unreasonably withheld or delayed.
2.7 Registration Expenses.
---------------------
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the NASD
and reasonable counsel fees in connection therewith); (ii) all reasonable fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws (including all reasonable fees and expenses of one counsel to
the underwriter(s) in any underwriting) in connection with compliance with state
Blue Sky or securities laws for all states in the United States; (iii) all
expenses of printing, messenger and delivery services and telephone calls; (iv)
all fees and disbursements of counsel for the Company; and (v) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance), but excluding from this paragraph, fees and
expenses of counsel to the underwriter(s), if any, unless otherwise set forth
herein.
(b) The Company will not be responsible for any underwriting discounts,
commissions or fees attributable to the sale of Restricted Securities or any
legal fees or disbursements (other than any such fees or disbursements relating
to Blue Sky compliance or otherwise as set forth under Section 2.7(a)) incurred
by any underwriters in any underwritten offering if the underwriter participates
in such underwritten offering at the request of the Holders of Restricted
Securities, or any transfer taxes that may be imposed in connection with a sale
or transfer of Restricted Securities.
(c) The Company shall, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
2.8 Indemnification; Contribution.
-----------------------------
(a) The Company agrees to indemnify and hold harmless (i) each Holder
covered by any Registration Statement, (ii) each other Person who participates
as an underwriter in the offering or sale of such securities, (iii) each Person,
if any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any such Holder or underwriter (any of the
Persons referred to in this clause (iii) being hereinafter referred to as a
10
"controlling Person"), and (iv) the respective officers, directors, partners,
employees, representatives and agents of any such Holder or underwriter or any
controlling Person (any Person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "indemnified Person"), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments or expenses, joint or several (or actions or proceedings,
whether commenced or threatened, in respect thereof) (collectively, "Claims"),
to which such indemnified Person may become subject under either Section 15 of
the Securities Act or Section 20 of the Exchange Act or otherwise, insofar as
such Claims arise out of or are based upon, or are caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
a violation by the Company of the Securities Act or any state securities law, or
any rule or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to any such
registration or qualification, except insofar as such losses, claims, damages,
liabilities, judgments or expenses of any such indemnified Person; (x) are
caused by any such untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to such indemnified Person
furnished in writing to the Company by or on behalf of any of such indemnified
Person expressly for use therein; (y) with respect to the preliminary
Prospectus, result from the fact that such Holder sold Securities to a Person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to such Holder in accordance with
this Agreement and said Prospectus, as amended or supplemented, would have
corrected such untrue statement or omission; or (z) as a result of the use by an
indemnified Person of any Prospectus when, upon receipt of a notice from the
Company of the existence of any fact of the kind described in Section
2.4(b)(iv), the indemnified Person or the related Holder was not permitted to do
so. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified Person and shall survive
the transfer of such securities by such Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defense thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action (including any implied parties) include both
the indemnified Person and the Company and the indemnified Person shall have
been advised in writing by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of the indemnified Person), it being
understood, however, that the Company shall not, in connection with such action
or similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all the indemnified Persons, which firm shall be (x) designated by
such indemnified Persons; and (y)
11
reasonably satisfactory to the Company. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's prior
written consent, which consent shall not be withheld unreasonably, and the
Company agrees to indemnify and hold harmless any indemnified Person from and
against any loss, claim, damage, liability, judgment or expense by reason of any
settlement of any action effected with the written consent of the Company. The
Company shall not, without the prior written consent of each indemnified Person,
settle or compromise or consent to the entry of judgment on or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each indemnified Person from all liability arising out of such action, claim
litigation or proceeding.
(b) Each Holder of Restricted Securities covered by any Registration
Statement agrees, severally and not jointly, to indemnify and hold harmless the
Company and its directors, officers and any Person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each such Person, to the same extent as the
foregoing indemnity from the Company to each of the indemnified Persons, but
only (i) with respect to actions based on information relating to such Holder
furnished in writing by or on behalf of such Holder expressly for use in any
Registration Statement or Prospectus, and (ii) to the extent of the gross
proceeds, if any, received by such Holder from the sale or other disposition of
his or its Restricted Securities covered by such Registration Statement. In case
any action or proceeding shall be brought against the Company or its directors
or officers or any such controlling Person in respect of which indemnity may be
sought against a Holder of Restricted Securities covered by any Registration
Statement, such Holder shall have the rights and duties given the Company in
Section 2.8(a) (except that the Holder may but shall not be required to assume
the defense thereof), and the Company or its directors or officers or such
controlling Person shall have the rights and duties given to each Holder by
Section 2.8(a).
(c) If the indemnification provided for in this Section 2.8 is unavailable
to an indemnified party under Section 2.8(a) or (b) (other than by reason of
exceptions provided in those Sections) in respect of any losses, claims,
damages, liabilities, judgments or expenses referred to therein, then each
applicable indemnifying party (in the case of the Holders severally and not
jointly), in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, judgments or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Holder on the other hand from sale of Restricted Securities, or
(ii) if such allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, judgments or expenses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of such Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Holder and the parties
relative intent,
12
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid to a party as a result of the losses,
claims, damages, liabilities judgments and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 2.8(a), any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The Company and each Holder of Restricted Securities covered by any
Registration Statement agree that it would not be just and equitable if
contribution pursuant to this Section 2.8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.8(c), no Holder (and none of
its related indemnified Persons) shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the dollar amount of
proceeds received by such Holder upon the sale of the Restricted Securities
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution provisions contained in this Section 2.8 are
in addition to any liability which the indemnifying Person may otherwise have to
the indemnified Persons referred to above.
2.9 Participation in Underwritten Registrations. No Holder may participate
--------------------------------------------
in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
2.10 Selection of Underwriters. The Holders of Restricted Securities
---------------------------
covered by any Registration Statement who desire to do so may sell such
Restricted Securities in an underwritten offering. In any such underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Company. Such
investment bankers and managers are referred to herein as the "underwriters."
13
ARTICLE 3
MISCELLANEOUS
3.1 Entire Agreement. This Agreement, together with the Securities Purchase
----------------
Agreement, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreement and understandings,
both oral and written, between the parties with respect to the subject matter
hereof.
3.2 Successors and Assigns and Heirs. This Agreement shall inure to the
--------------------------------
benefit of and be binding upon the successors and assigns and heirs of each of
the parties, including, without limitation and without the need for an express
assignment, subsequent Holders of Restricted Securities; provided, however, that
-------- -------
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign or heirs
acquired Restricted Securities from such Holder at a time when such Holder could
not transfer such Restricted Securities pursuant to any Registration Statement
or pursuant to Rule 144(k) under the Securities Act as contemplated by clause
(ii) of the definition of Restricted Securities.
3.3 Notices. All notices and other communications given or made pursuant
-------
hereto or pursuant to any other agreement between the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three (3) days after mailing:
if to a Holder: to such Holder at the address set forth on the
records of the Company as the record owners of the
Common Stock
if to the Company: Senesco Technologies, Inc.
303 George Street, Suite 420
New Brunswick, New Jersey 08901
Telephone: (732) 296-8400
Telecopy: (732) 296-9292
Attention: Bruce C. Galton
President and Chief Executive Officer
with copies to: Hale and Dorr LLP
650 College Road East
Princeton, New Jersey 08540
Telephone: (609) 750-7600
Telecopy: (609) 750-7700
Attention: Emilio Ragosa, Esq.
14
3.4 Headings. The headings contained in this Agreement are for convenience
--------
only and shall not affect the meaning or interpretation of this Agreement.
3.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
3.6 Applicable Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law.
3.7 Specific Enforcement. Each party hereto acknowledges that the remedies
--------------------
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
3.8 Amendment and Waivers; Subordination. The provisions of this Agreement
------------------------------------
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of the Holders of a majority of the Restricted
Securities affected thereby. It is hereby understood and agreed to by the
parties hereto that the registration rights granted hereunder are subordinate to
the registration rights granted by the Company pursuant to the Fahnestock
Registration Rights Agreements.
3.9 Eligibility under Rule 144. With a view to making available to the
---------------------------
Purchaser the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the Commission that may at any time permit
the Purchaser to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Purchaser so long as such Purchaser owns Restricted
Securities, promptly upon request (i) a written statement by the Company that it
has complied with the reporting requirements of the Exchange Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested to permit the investors to sell such securities pursuant
to Rule 144 without registration.
* * * * * * * *
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY:
SENESCO TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
PURCHASER:
[ ]
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Schedule of Parties
-------------------
to
--
Registration Rights Agreement
-----------------------------
by and between the Company and each of
--------------------------------------
Stanford Venture Capital Holdings, Inc. and Certain Directors of the Company
----------------------------------------------------------------------------
Date of the Agreement Party to the Agreement
--------------------- ----------------------
11/30/01 Stanford Venture Capital Holdings, Inc.
12/03/01 Thomas C. Quick
12/03/01 Christopher Forbes
01/16/02 Stanford Venture Capital Holdings, Inc.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
[ ] by and among Senesco Technologies, Inc., a Delaware
corporation (the "Company"), and those persons listed on the signature pages
attached hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
RECITALS
--------
WHEREAS, it is a condition precedent to the obligations of each Purchaser
under that certain Securities Purchase Agreement made by and among the
Purchasers and the Company, dated as of the date hereof (the "Securities
Purchase Agreement"), that the Company grant registration rights for the shares
of common stock of the Company, $0.01 par value per share (the "Common Stock"),
in connection with resales by the Purchasers of the Common Stock; and
WHEREAS, the Company and the Purchasers now desire to enter into this
Agreement in order to facilitate such resales.
AGREEMENT
---------
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
-----------
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New Jersey are authorized by law to close.
"Common Stock" has the meaning given to it in the recitals to this
Agreement.
"Closing Date" shall mean the Closing Date as defined in the Securities
Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" means Senesco Technologies, Inc., a Delaware corporation.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fahnestock Registration Rights Agreements" means those certain
registration rights agreements executed by the Company and certain investors in
which Fahnestock & Co., Inc. acted as the placement agent.
"Holder" has the meaning given to it in Section 2.1(b) hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Registration Statement" means a Registration Statement of the Company
relating to the registration for sale of Common Stock, including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and materials incorporated by
reference therein.
"Restricted Securities" means any Securities held by the Purchasers until
(i) a Registration Statement covering such Securities has been declared
effective by the Commission and such Securities have been disposed of pursuant
to such effective Registration Statement, (ii) such Securities qualify to be
sold under circumstances in Rule 144(k) (or any similar provisions then in
force), (iii) such Securities are otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for such Securities
not bearing a legend restricting further transfer and such Securities may be
resold without registration under the Securities Act, or (iv) such Securities
shall have ceased to be outstanding.
"Securities" means the shares of Common Stock held by the Purchaser on the
date hereof, or issued upon the proper exercise of the Warrants issued to the
Purchasers on the date hereof, and any securities issued in respect of such
shares upon any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization or similar event.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" has the meaning given to it in the recitals
to this Agreement.
"Warrants" shall have the meaning set forth in the Securities Purchase
Agreement.
As used in this Agreement, words in the singular include the plural, and in
the plural include the singular.
2
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
------------------------------------
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each, a
"Holder") whenever such Person is the registered holder of such Restricted
Securities on the Company's books and records.
2.2 Piggyback Registration.
----------------------
(a) At any time that the Company proposes to file a Registration Statement
within three (3) years from the date hereof, the Company shall give the Holders
written notice of its intention to do so and of the intended method of sale (the
"Registration Notice") within a reasonable time prior to the anticipated filing
date of the Registration Statement effecting such registration. Each Holder may
request inclusion of any Restricted Securities in such Registration Statement by
delivering to the Company, within ten (10) Business Days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice") stating the
number of Restricted Securities proposed to be included and that such shares are
to be included in any underwriting only on the same terms and conditions as the
shares of Common Stock otherwise being sold through underwriters under such
Registration Statement. The Company shall use its reasonable efforts to cause
all Restricted Securities specified in the Piggyback Notice to be included in
the Registration Statement and any related offering, all to the extent requisite
to permit the sale by the Holders of such Restricted Securities in accordance
with the method of sale applicable to the other shares of Common Stock included
in such Registration Statement; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each Holder of Restricted Securities
and, thereupon:
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such registration (but not from its obligation to pay
the Registration Expenses, as defined in Section 2.6, in connection
therewith), and
(ii) in the case of a delay in registering, shall be
permitted to delay registering any Restricted Securities for the same
period as the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Registration Statement pursuant to Section 2.2(a) shall be subject to the
following limitations:
3
(i) The Company shall not be obligated to include any
Restricted Securities in a Registration Statement filed on Form S-4,
Form S-8 or such other similar successor forms then in effect under
the Securities Act.
(ii) If a Registration Statement involves an underwritten
offering and the managing underwriter advises the Company in writing
that, in its opinion, the number of the Restricted Securities
requested to be included in such Registration Statement exceeds the
number which can be sold in such offering without adversely affecting
the offering, the Company will not include any Restricted Securities
in such Registration Statement, or if some of the requested Restricted
Securities can be included in such Registration Statement, the Company
will only include such number of Restricted Securities which the
Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(A) first, all securities proposed by the Company
to be sold for its own account shall be included in the
Registration Statement;
(B) second, any securities proposed to be sold
pursuant to the Fahnestock Registration Rights Agreements; and
(C) third, any Restricted Securities requested to
be included in such registration on a pari passu basis with any
---- -----
other securities of the Company which have been afforded
registration rights by the Company prior to, or as of the date
hereof.
(iii) The Company shall not be obligated to include
Restricted Securities in more than two (2) Registration Statements.
(c) No Holder of Restricted Securities may include any of its Restricted
Securities in the Registration Statement pursuant to this Agreement unless and
until such Holder furnishes to the Company in writing, within ten (10) Business
Days after receipt of a written request therefor, such information specified in
Item 507 of Regulation S-K under the Securities Act or such other information as
the Company may reasonably request for use in connection with the Registration
Statement or Prospectus or preliminary Prospectus included therein and in any
application to the NASD. Each Holder as to which the Registration Statement is
being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make all information previously furnished
to the Company by such Holder not materially misleading.
2.3 Registration Procedures. In connection with any Registration Statement
-----------------------
and any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and post-effective
amendments to such Registration Statement as may be necessary to keep such
Registration Statement effective until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act,
4
and to comply fully with the applicable provisions of Rules 424 and 430A, as
applicable, under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement or the
Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on the
same day as the Company shall receive notice of effectiveness) advise the
Holders covered by such Registration Statement and, if requested by such
Persons, confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when the
same has become effective, (ii) of any request by the Commission for
post-effective amendments to such Registration Statement or post-effective
amendments to such Registration Statement or post-effective amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of any such Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (iv) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in any such Registration Statement, the related Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
any such Registration Statement or the related Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of such Registration Statement, or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) promptly furnish to each Holder of Restricted Securities covered by any
Registration Statement, and each underwriter, if any, without charge, at least
one conformed copy of any Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents incorporated
by reference therein and all exhibits (including exhibits incorporated therein
by reference) and any related correspondence between the Company and its counsel
or accountants and the Commission or staff of the Commission and such other
documents as such Holder may reasonably request;
(d) deliver to each Holder covered by any Registration Statement, and each
underwriter, if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as such
Person reasonably may request;
(e) enter into such customary agreements and take all such other reasonable
action in connection therewith (including those reasonably requested by the
selling Holders or the underwriter(s), if any) required in order to expedite or
facilitate the disposition of such Restricted Securities pursuant to such
Registration Statement, including, but not limited to, dispositions pursuant to
an underwritten registration, and in such connection:
5
(i) make such representations and warranties to the selling Holders
and underwriter(s), if any, in form, substance and scope as are customarily made
by issuers to underwriters in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company (which counsel and
opinions, in form and substance, shall be reasonably satisfactory to the selling
Holders and the underwriter(s), if any, and their respective counsel) addressed
to each selling Holder and underwriter, if any, covering the matters customarily
covered in opinions requested in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s)) and dated the date of effectiveness of any Registration
Statement (and, in the case of any underwritten sale of securities pursuant to
such Registration Statement, each closing date of sales to the underwriter(s)
pursuant thereto);
(iii) use reasonable efforts to obtain comfort letters dated the date
of effectiveness of any Registration Statement (and, in the case of any
underwritten sale of securities pursuant to such Registration Statement, each
closing date of sales to the underwriter(s), if any, pursuant thereto) from the
independent certified public accountants of the Company addressed to each
selling Holder and underwriter, if any, such letters to be in customary form and
covering matters of the type customarily covered in comfort letters in
connection with underwritten offerings (whether or not sales of securities
pursuant to such Registration Statement are to be made to an underwriter(s));
(iv) provide for the indemnification provisions and procedures of
Section 2.7 hereof with respect to selling Holders and the underwriter(s), if
any, and;
(v) deliver such documents and certificates as may be reasonably
requested by the selling Holders or the underwriter(s), if any, and which are
customarily delivered in underwritten offerings (whether of not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s), with such documents and certificates to be dated the date of
effectiveness of any Registration Statement.
The actions required by clauses (i) through (v) above shall be done at each
closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and each selling Holder
promptly, and, if requested by such Person, shall confirm such advice in
writing;
(f) prior to any public offering of Restricted Securities, cooperate with
the selling Holders, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted Securities
under the securities or Blue Sky laws of such U.S. jurisdictions as the selling
Holders or underwriter(s), if any, may reasonably request in writing by the time
any Registration Statement is declared effective by the Commission, and do any
and all other acts or filings necessary or advisable to enable disposition in
such U.S. jurisdictions of the Restricted Securities covered by any Registration
Statement and to file such consents to service of process or other documents as
may be necessary in order to effect such
6
registration or qualification; provided, however, that the Company shall not be
-------- -------
required to register or qualify as a foreign corporation in any jurisdiction
where it is not then so qualified or as a dealer in securities in any
jurisdiction where it would not otherwise be required to register or qualify but
for this Section 2.3, or to take any action that would subject it to the general
service of process in suits or to general taxation, in any jurisdiction where it
is not then so subject;
(g) in connection with any sale of Restricted Securities that will result
in such securities no longer being Restricted Securities, cooperate with the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Securities to
be sold and not bearing any restrictive legends; and enable such Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two (2) Business
Days prior to any sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the Restricted
Securities covered by any Registration Statement to be registered with or
approved by such other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if any,
to consummate the disposition of such Restricted Securities, subject to the
proviso contained in Section 2.3(f);
(i) if any fact or event contemplated by Section 2.3(b) shall exist or have
occurred, prepare a supplement or post-effective amendment to any Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statement therein not misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holders
selling Restricted Securities to consummate the disposition of such Restricted
Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve (12)- month period (i) commencing
at the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than the
effective date of any Registration Statement;
7
(m) use its best efforts to list, not later than the effective date of such
Registration Statement, all Restricted Securities covered by such Registration
Statement on the NASD OTC Electronic Bulletin Board or any other trading market
on which any Common Stock of the Company are then admitted for trading; and
(n) provide promptly to each Holder covered by any Registration Statement
upon request each document filed with the Commission pursuant to the
requirements of Section 12 and Section 14 of the Exchange Act.
Each Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.3(b)(iv), such Holder will forthwith discontinue
disposition of Restricted Securities pursuant to any Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.3(i), or until it is advised in writing, in
accordance with the notice provisions of Section 3.3 herein (the "Advice"), by
the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental fillings that are incorporated by
reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company all copies, other than permanent file copies, then in
such Holder's possession, of the Prospectus covering such Restricted Securities
that was current at the time of receipt of such notice.
2.4 Preparation; Reasonable Investigation. In connection with the
-----------------------------------------
preparation and filing of each Registration Statement under the Securities Act,
the Company will give the Holders of Restricted Securities registered under such
Registration Statement, their underwriter, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them access to its books and records and such opportunities to discuss the
business, finances and accounts of the Company and its subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of such Holders
and such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.5 Certain Rights of Holders. The Company will not file any Registration
-------------------------
Statement under the Securities Act which refers to any Holder of Restricted
Securities by name or otherwise without the prior approval of such Holder, which
consent shall not be unreasonably withheld or delayed.
2.6 Registration Expenses.
---------------------
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the NASD
and reasonable counsel fees in connection therewith); (ii) all reasonable fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws (including all reasonable fees and expenses of one counsel to
the underwriter(s) in any underwriting) in connection with compliance with state
Blue Sky or securities laws for all
8
states in the United States; (iii) all expenses of printing, messenger and
delivery services and telephone calls; (iv) all fees and disbursements of
counsel for the Company; and (v) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance),
but excluding from this paragraph, fees and expenses of counsel to the
underwriter(s), if any, unless otherwise set forth herein.
(b) The Company will not be responsible for any underwriting discounts,
commissions or fees attributable to the sale of Restricted Securities or any
legal fees or disbursements (other than any such fees or disbursements relating
to Blue Sky compliance or otherwise as set forth under Section 2.6(a)) incurred
by any underwriters in any underwritten offering if the underwriter participates
in such underwritten offering at the request of the Holders of Restricted
Securities, or any transfer taxes that may be imposed in connection with a sale
or transfer of Restricted Securities.
(c) The Company shall, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
2.7 Indemnification; Contribution.
-----------------------------
(a) The Company agrees to indemnify and hold harmless (i) each Holder
covered by any Registration Statement, (ii) each other Person who participates
as an underwriter in the offering or sale of such securities, (iii) each Person,
if any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any such Holder or underwriter (any of the
Persons referred to in this clause (iii) being hereinafter referred to as a
"controlling Person"), and (iv) the respective officers, directors, partners,
employees, representatives and agents of any such Holder or underwriter or any
controlling Person (any Person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "indemnified Person"), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments or expenses, joint or several (or actions or proceedings,
whether commenced or threatened, in respect thereof) (collectively, "Claims"),
to which such indemnified Person may become subject under either Section 15 of
the Securities Act or Section 20 of the Exchange Act or otherwise, insofar as
such Claims arise out of or are based upon, or are caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
a violation by the Company of the Securities Act or any state securities law, or
any rule or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to any such
registration or qualification, except insofar as such losses, claims, damages,
liabilities, judgments or expenses of any such indemnified Person; (x) are
caused by any such untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to such indemnified Person
furnished in writing to the Company by or on behalf of any of such indemnified
Person expressly for use therein; (y) with respect to the preliminary
Prospectus, result from the fact that such Holder sold Securities to a Person to
whom there was
9
not sent or given, at or prior to the written confirmation of such sale, a copy
of the Prospectus, as amended or supplemented, if the Company shall have
previously furnished copies thereof to such Holder in accordance with this
Agreement and said Prospectus, as amended or supplemented, would have corrected
such untrue statement or omission; or (z) as a result of the use by an
indemnified Person of any Prospectus when, upon receipt of a notice from the
Company of the existence of any fact of the kind described in Section
2.3(b)(iv), the indemnified Person or the related Holder was not permitted to do
so. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified Person and shall survive
the transfer of such securities by such Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defense thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action (including any implied parties) include both
the indemnified Person and the Company and the indemnified Person shall have
been advised in writing by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of the indemnified Person), it being
understood, however, that the Company shall not, in connection with such action
or similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all the indemnified Persons, which firm shall be (x) designated by
such indemnified Persons; and (y) reasonably satisfactory to the Company. The
Company shall not be liable for any settlement of any such action or proceeding
effected without the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless any
indemnified Person from and against any loss, claim, damage, liability, judgment
or expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written consent
of each indemnified Person, settle or compromise or consent to the entry of
judgment on or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any indemnified Person is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each indemnified Person from all liability
arising out of such action, claim litigation or proceeding.
(b) Each Holder of Restricted Securities covered by any Registration
Statement agrees, severally and not jointly, to indemnify and hold harmless the
Company and its directors, officers and any Person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each, to the same extent as the foregoing
indemnity from the Company to each of the indemnified Persons, but only (i) with
----
respect to actions based on information relating to such Holder furnished in
writing by or on behalf of such Holder
10
expressly for use in any Registration Statement or Prospectus, and (ii) to the
extent of the gross proceeds, if any, received by such Purchaser from the sale
or other disposition of his or its Restricted Securities covered by such
Registration Statement. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling Person
in respect of which indemnity may be sought against a Holder of Restricted
Securities covered by any Registration Statement, such Holder shall have the
rights and duties given the Company in Section 2.7(a) (except that the Holder
may but shall not be required to assume the defense thereof), and the Company or
its directors or officers or such controlling Person shall have the rights and
duties given to each Holder by Section 2.7(a).
(c) If the indemnification provided for in this Section 2.7 is unavailable
to an indemnified party under Section 2.7(a) or (b) (other than by reason of
exceptions provided in those Sections) in respect of any losses, claims,
damages, liabilities, judgments or expenses referred to therein, then each
applicable indemnifying party (in the case of the Holders severally and not
jointly), in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims damages, liabilities, judgments or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Holder on the other hand from sale of Restricted Securities, or
(ii) if such allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, judgments or expenses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of such Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Holder and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid to a party as a result of
the losses, claims, damages, liabilities judgments and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 2.7(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and each Holder of Restricted Securities covered by any
Registration Statement agree that it would not be just and equitable if
contribution pursuant to this Section 2.7(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.7(c), no Holder (and none of
its related indemnified Persons) shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the dollar amount of
proceeds received by such Holder upon the sale of the Restricted Securities
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
11
The indemnity and contribution provisions contained in this Section 2.7 are
in addition to any liability which the indemnifying Person may otherwise have to
the indemnified Persons referred to above.
2.8 Participation in Underwritten Registrations. No Holder may participate
-------------------------------------------
in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
2.9 Selection of Underwriters. The Holders of Restricted Securities covered
-------------------------
by any Registration Statement who desire to do so may sell such Restricted
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Company. Such investment bankers
and managers are referred to herein as the "underwriters."
ARTICLE 3
MISCELLANEOUS
3.1 Entire Agreement. This Agreement, together with the Securities Purchase
----------------
Agreement, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreement and understandings,
both oral and written, between the parties with respect to the subject matter
hereof.
3.2 Successors and Assigns and Heirs. This Agreement shall inure to the
--------------------------------
benefit of and be binding upon the successors and assigns and heirs of each of
the parties, including, without limitation and without the need for an express
assignment, subsequent Holders of Restricted Securities; provided, however, that
-------- -------
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign or heirs
acquired Restricted Securities from such Holder at a time when such Holder could
not transfer such Restricted Securities pursuant to any Registration Statement
or pursuant to Rule 144(k) under the Securities Act as contemplated by clause
(ii) of the definition of Restricted Securities.
3.3 Notices. All notices and other communications given or made pursuant
-------
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three (3) days after mailing:
12
if to a Holder: to such Holder at the address set forth on the
records of the Company as the record owners of the
Common Stock
if to the Company: Senesco Technologies, Inc.
303 George Street, Suite 420
New Brunswick, New Jersey 08901
Telephone: (732) 296-8400
Telecopy: (732) 296-9292
Attention: Bruce C. Galton
President and Chief Executive Officer
with copies to: Hale and Dorr LLP
650 College Road East
Princeton, New Jersey 08540
Telephone: (609) 750-7600
Telecopy: (609) 750-7700
Attention: Emilio Ragosa, Esq.
3.4 Headings. The headings contained in this Agreement are for convenience
--------
only and shall not affect the meaning or interpretation of this Agreement.
3.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
3.6 Applicable Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of Delaware applicable in the case of
agreements made and to be performed entirely within such State, without regard
to principles of conflicts of law, and the parties hereto hereby submit to the
exclusive jurisdiction of the state and federal courts located in the State of
New Jersey.
3.7 Specific Enforcement. Each party hereto acknowledges that the remedies
--------------------
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
3.8 Amendment and Waivers; Subordination. The provisions of this Agreement
------------------------------------
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of the Holders of a majority of the Restricted
Securities affected thereby. It is hereby understood and agreed to by the
parties hereto that the registration rights granted hereunder are subordinate to
the registration rights granted by the Company pursuant to the Fahnestock
Registration Rights Agreements.
13
3.9 Eligibility under Rule 144. With a view to making available to the
---------------------------
Purchasers the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the Commission that may at any time permit
the Purchasers to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Purchaser so long as such Purchaser owns Restricted
Securities, promptly upon request (i) a written statement by the Company that it
has complied with the reporting requirements of the Exchange Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested to permit the investors to sell such securities pursuant
to Rule 144 without registration.
* * * * * * * *
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY:
By:
-------------------------------------
Name:
Title:
PURCHASERS:
[If an entity]
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Address:
------------------------------
--------------------------------------
Telecopy:
------------------------------
[If an individual]
--------------------------------------
Name:
---------------------------------
Address:
------------------------------
--------------------------------------
Telecopy:
------------------------------
Schedule of Parties
-------------------
to
--
Registration Rights Agreement
-----------------------------
by and between the Company and each of
--------------------------------------
Certain Accredited Investors
----------------------------
Date of the Agreement Party to the Agreement
--------------------- ----------------------
12/26/01 O'Donnell Capital Group Inc.
12/26/01 Moises Bucay Bissu
SENESCO TECHNOLOGIES, INC.
1998 STOCK INCENTIVE PLAN
(AS AMENDED ON NOVEMBER 29, 2001)
1. Purposes of the Plan. The purposes of this Plan are to attract and
---------------------
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, non-Employee members of the Board
and Consultants of the Company and its Subsidiaries and to promote the success
of the Company's business. Options granted under the Plan may be incentive stock
options (as defined under Section 422 of the Code) or non-statutory stock
options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder. Stock purchase rights may also be
granted under the Plan.
2. Certain Definitions. As used herein, the following definitions shall
--------------------
apply:
(a) "Administrator" means the Board or any of its Committees appointed
-------------
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
-----
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" means the Committee appointed by the Board of
---------
Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
------------
(f) "Company" means Senesco Technologies, Inc., a Delaware
-------
corporation.
(g) "Consultant" means any person, including an advisor, who is
----------
engaged by the Company or any Parent or subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.
(h) "Continuous Status as an Employee" means the absence of any
-----------------------------------
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Board, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor.
(i) "Employee" means any person, including officers and directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
-------------
amended.
(k) "Fair Market Value" means, as of any date, the value of Common
------------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market
Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange
for the last market trading day prior to the time of determination as
reported in the Wall Street Journal or such other source as the
Administrator deems reliable or;
(ii) If the Common Stock is quoted on Nasdaq (but not on the
National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low asked prices for the
Common Stock or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code.
(m) "Nonstatutory Stock Option" means an Option not intended to
---------------------------
qualify as an Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to the Plan.
------
(o) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(p) "Optionee" means an Employee or Consultant who receives an Option.
--------
(q) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 1998 Stock Incentive Plan, as amended.
----
-2-
(s) "Restricted Stock" means shares of Common Stock acquired pursuant
-----------------
to a grant of stock purchase rights under Section 11 below.
(t) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 13 of the Plan.
(u) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
--------------------------
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is two million (2,000,000) shares of Common Stock. The shares may
be authorized, but unissued, or reacquired Common Stock.
If an option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Administration With Respect to Directors and Officers.
-------------------------------------------------------
With respect to grants of Options or stock purchase rights to
Employees who are also officers or directors of the Company, the
Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3")
with respect to a plan intended to allow transactions between the
Company and the Optionee to be exempt for Section 16(b) of the
Exchange Act, or (B) a Committee designated by the Board to
administer the Plan, which Committee shall be constituted in such
a manner as to permit the Plan to comply with Rule 16b-3 with
respect to a plan intended to allow transactions between the
Company and the Optionee to be exempt for Section 16(b) of the
Exchange Act. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Plan, all
to the extent permitted by Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule
--------------------------------
16b-3, the Plan may be administered by different bodies with
respect to directors, non-director officers and Employees who are
neither directors nor officers.
-3-
(iii) Administration With Respect to Consultants and Other
-----------------------------------------------------
Employees. With respect to grants of Options or stock icers of
---------
the Company or to Consultants, the Plan shall be administered by
(A) the Board, if the Board may administer the Plan in compliance
with Rule 16b-3, or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner as to
satisfy the legal requirements relating to the administration of
incentive stock option plans, if any, of Idaho corporate law and
applicable securities laws and of the Code (the "Applicable
Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board.
From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Plan, all
to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan
---------------------------
and in the case of a Committee, the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(k) of the Plan;
(ii) to select the officers, Consultants and Employees to
whom Options and stock purchase rights may from time to time be
granted hereunder;
(iii) to determine whether and to what extent Options and
stock purchase rights or any combination thereof, are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, the share price and any restriction or limitation
or waiver of forfeiture restrictions regarding any Option or other
award and/or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator shall determine, in its
sole discretion);
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common
Stock;
-4-
(viii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to
an award under this Plan shall be deferred either automatically or at
the election of the participant (including providing for and
determining the amount, if any, of any deemed earnings on any deferred
amount during any deferral period);
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option
was granted; and
(x) to determine the terms and restrictions applicable to
stock purchase rights and the Restricted Stock purchased by exercising
such stock purchase rights.
(c) Effect of Committee's Decision. All decisions, determinations and
------------------------------
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
------------
of its adoption by the Board of Directors or its approval by the shareholders of
the Company as
-5-
described in Section 19 of the Plan. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 15 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in the
--------------
Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the
date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110%
of the Fair Market Value per Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the
date of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist
-6-
entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x)
in the case of Shares acquired upon exercise of an Option either have been owned
by the Optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (5) authorization from the
Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the option is exercised, (6) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(7) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (8)
any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
----------------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
-7-
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment. In the event of termination of an
---------------------------
Optionee's consulting relationship or Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, but only within ninety (90)
days (or such other period of time as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option and not exceeding ninety (90) days) after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his Option to the extent
that Optionee was entitled to exercise it at the date of such termination. To
the extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
----------------------
9(b) above, in the event of termination of an Optionee's consulting relationship
or Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section 16(b) of
----------
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(f) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out for a payment in cash or Shares, an Option previously granted, based on such
terms and
-8-
conditions as the Administrator shall establish and communicate to the Optionee
at the time that such offer is made.
10. Non-Transferability of Options. The Option may not be sold, pledged,
-------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. The terms of the Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.
11. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock purchase rights may be issued either
------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer stock purchase rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid (which price shall not be less than 50% of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the stock purchase right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
-----------------
the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Committee
may determine.
(c) Other Provisions. The Restricted Stock purchase agreement shall
-----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Shareholder. Once the stock purchase right is
--------------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock purchase right is exercised, except as provided in Section 13
of the Plan.
-9-
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
-------------------------------------------------------------
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or stock purchase right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold from the Shares to be issued upon exercise of the
Option, or the Shares to be issued in connection with the stock purchase right,
if any, that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option or Right as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
(d) if the Optionee is subject to Rule 16b-3, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or stock purchase
right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. Adjustments Upon Changes in Capitalization or Merger. Subject to any
-----------------------------------------------------
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common
-10-
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a merger or consolidation of the Company with or into
another corporation or the sale of all or substantially all of the Company's
assets (hereinafter, a "merger"), the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that such successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Board shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger, the Option or right confers the
right to purchase, for each Share of stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger was not solely common stock of the
successor corporation or its Parent, the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to be
received upon the exercise of the Option, for each Share of stock subject to the
Option, to be solely common stock of the successor corporation or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.
14. Time of Granting Options. The date of grant of an Option shall, for all
------------------------
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each
-11-
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
--------------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
16. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
----------------------------------
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
17. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect
-12-
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. Agreements. Options and stock purchase rights shall be evidenced by
----------
written agreements in such form as the Board shall approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be subject to
---------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
20. Information to Optionees. The Company shall provide to each Optionee,
------------------------
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
* * * * * * * *
-13-
- -------------------------------------------------------------------------------
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
- -------------------------------------------------------------------------------
DEVELOPMENT AND LICENSE AGREEMENT
This License Agreement ("Agreement") dated as of November 19, 2001
(the "Effective Date") is entered into by and between Senesco Technologies,
Inc., a Delaware corporation with principal offices at 303 George Street, Suite
420, New Brunswick, NJ 08901 ("STI") and Harris Moran Seed Company, a California
corporation with principal offices at 555 Codoni Avenue, Modesto, CA 95357
("HMS").
RECITALS
WHEREAS, STI owns and controls technology, know-how and United
States and foreign patent applications concerning methods for controlling plant
senescence involving altering the expression of plant genes and their cognate
expressed proteins that are induced during or coincident with the onset of
senescence;
WHEREAS, HMS is in the business of breeding innovative vegetable
varieties and distributing vegetable seeds worldwide;
WHEREAS, STI desires to grant rights under the STI Patents and
provide access to STI Confidential Information to HMS to enable STI and HMS to
develop and commercialize Licensed Products in the Field with STI Technology;
and
WHEREAS, HMS desires to have access to STI Confidential Information
and to acquire rights under the STI Patents to manufacture, develop, use, sell,
offer to sell and import Licensed Products in the Field;
NOW THEREFORE, in consideration of the premises and the faithful
performance of the mutual covenants hereinafter set forth, the parties hereto
hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following defined terms shall have the
respective meanings set forth below:
1.1 "Field" means the plant species and types as set forth in Appendix A.
1.2 "Licensed Product" means any product developed pursuant to this Agreement
within the Licensed Field, including the particular plant species and
types listed in Appendix A.
-1-
1.3 "STI Patents" means (i) all pending (as of the Effective Date of this
Agreement) U.S. and foreign patent applications owned or controlled by STI
or its Affiliates pertaining to controlling senescence, including original
applications, provisionals, divisions, continuations, continuations in
part, extensions, PCT applications, renewals, reissues, or reexamination
applications or supplemental prosecution certificates, including, but not
limited to, all applications listed in Appendix B; (ii) all U.S. and
foreign patents that have issued or will issue from any application
identified in Section (i) of this paragraph; and (iii) all U.S. and
foreign applications that claim priority in any way from any application
or patent identified in subparagraphs (i) or (ii) of this paragraph.
1.4 "HMS Patents" means (i) all pending (as of the Effective Date of this
Agreement) U.S. and foreign patent applications owned or controlled by HMS
or its Affiliates pertaining to plant germ plasm, including original
applications, provisionals, divisions, continuations, continuations in
part, extensions, PCT applications, renewals, reissues, or reexamination
applications or supplemental prosecution certificates, including, but not
limited to, all applications listed in Appendix C; (ii) all U.S. and
foreign patents that have issued or will issue from any application
identified in Section (i) of this paragraph; and (iii) all U.S. and
foreign applications that claim priority in any way from any application
or patent identified in subparagraphs (i) or (ii) of this paragraph.
1.5 "Confidential Information" means any information received by either party
(STI or HMS) from the other, including all business, technical and other
information, whether disclosed in writing, orally or in any other form,
tangible or intangible, including but not limited to: information
concerning inventions (including patent applications and related
documents), discoveries, techniques, processes, designs, specifications,
algorithms, data, finances and plans, customer lists, business plans,
contracts, marketing plans, production plans, distribution plans, system
implementations plans, business concepts, supplier information, business
procedures, business operations; all know-how and trade secrets; and all
other unpublished copyrightable material. Confidential Information does
not include information which:
(i) is known to the receiving party prior to the time of disclosure by
the disclosing party, as evidenced by contemporaneous dated written
records,
(ii) is received by STI or HMS (as applicable) from independent sources
having the right to such information without an obligation of
confidence or non-disclosure, and without the information having
been solicited or obtained by any use of the Confidential
Information;
(iii) the disclosing party gives written consent for disclosure to a third
party; or
(iv) is subsequently and independently developed by the receiving party
without use of the Confidential Information and by persons who have
not had access to the Confidential Information.
1.6 "STI Technology" means the STI Patents, STI Confidential information, and
all STI know-how, materials, information and methods (whether developed by
STI or acquired
-2-
from a third party), including, but not limited to methods for controlling
plant senescence involving altering the expression of plant genes and
their cognate expressed proteins that are induced during or coincident
with the onset of senescence.
1.7 "HMS Technology" means the HMS Patents, HMS Confidential Information, and
all HMS know-how (whether developed by HMS or acquired from a third
party), including but not limited to the proprietary breeding technology
relating to lettuce and melon varieties, protected as defined under the
appropriate provisions of the Plant Variety Protection Act.
1.8 "STI Development" means any improvement or development, whether or not
patentable or protectable as a trade secret, relating to or deriving from
the STI Technology, made by STI and/or HMS, pursuant to and during the
term of this Agreement, including all patents and patent applications to
be filed relating to any such improvements or developments.
1.9 "Affiliate" means any entity which controls, is controlled by, or is under
common control with another entity. An entity is deemed to be in control
of another entity (controlled entity) if such company directly or
indirectly owns more than 50% in nominal value of the issued equity share
capital of such other company, or more than 50% of the shares entitled to
vote upon the election of:
(i) the directors;
(ii) persons performing functions similar to those performed by
directors; or
(iii) persons otherwise having the right to elect or appoint (a) directors
having the majority vote of the Board of Directors, or (b) other
persons having the majority vote of the highest and most
authoritative directive body of such other company.
1.10 "Distributor" means a [**] or [**] that will market, distribute and sell
Licensed Products in the Field.
1.11 "Timeline" means the product development timetable for STI and HMS
development of technology relating to Licensed Products in the Field, as
set forth in Appendix D.
1.12 "Net Sales" means the total consideration in any form, received by the
Distributor, in connection with the sale or other disposition of Licensed
Products by Distributor to a third party, [**].
1.13 "Minimum Royalties" means the annual royalty payment due from the
Distributor in any year in which actual royalties, calculated pursuant to
Paragraph 7.2, does not meet a minimum, as specified in Appendix E.
1.14 "Third Party" means all persons and entities other than STI and HMS, and
their respective Affiliates.
-3-
2. LICENSE GRANT
2.1 STI hereby grants HMS and its Affiliates an exclusive worldwide license in
the Field under the STI Technology and the STI Developments to develop,
make, have made, use, sell, offer to sell, and import Licensed Products.
[**]
2.2 STI grants HMS full freedom to operate under the STI Technology and the
STI Developments to practice the rights granted in Paragraph 2.1.
3. TERM
This Agreement is effective as of the Effective Date, and shall continue
indefinitely unless earlier terminated pursuant to Article 13, below.
Royalty and development/ benchmark payment obligations under Article 7 and
8 for sales of Licensed Products for each country, shall continue in
effect until the expiration of the last to expire patent among the STI
Patents, a claim of which covers a Licensed Product or the method of
making or method of using said Licensed Product, unless sooner terminated
as provided herein. As used in this Agreement, the "expiration" of a
patent in a country includes (i) expiration of the patent's statutory
term; (ii) irrevocable lapse for failure to pay maintenance fees or the
like, (iii) final revocation of the applicable claims by a national patent
office and the exhaustion or expiration of all appeals of such revocation,
and (iv) final adjudication by a court of competent jurisdiction that the
applicable claims of the patent are invalid or unenforceable and the
exhaustion or expiration of all appeals from said adjudication.
4. PRODUCT DEVELOPMENT
4.1 STI agrees to carry out its development obligations in each of the Phases
as set forth in the Timeline attached hereto as Appendix D.
4.2 HMS agrees to carry out its development obligations in each of the Phases
as set forth in the Timeline attached hereto as Appendix D.
4.3 STI agrees during the term of this agreement to provide HMS access to the
STI Technology, pursuant to the terms set forth herein. STI shall promptly
apprise HMS of new advances or developments in the STI Technology.
4.4 STI shall provide technical support to HMS, as necessary to enable HMS to
meet its development obligations as set forth in the Timeline attached
hereto as Appendix D. STI technical support shall be provided [**], travel
expenses for any HMS or STI technical personnel and any disbursements
necessary for such technical support shall be paid by HMS, [**].
4.5 Pursuant to the provisions herein, STI and HMS each agree to promptly
provide to each other all relevant Confidential Information, technical
data, and know how relevant to development of Licensed Products in the
Field.
-4-
4.6 STI and HMS agree that they will [**] developed as a result of the
application of STI Technology and STI Developments. STI agrees to provide
all Confidential Information known to STI relating to STI technology as
may be required [**].
4.7 HMS shall be responsible and STI shall fully cooperate with HMS to obtain
any required de-regulation, approval or other state, federal, national or
international legal and/or regulatory approval prior to marketing Licensed
Products.
5. PATENTS, PATENT APPLICATIONS AND PATENT ENFORCEMENT
5.1 HMS acknowledges that all the STI Technology is and shall remain the
property of STI, and except as provided herein, all right, title and
interest in the STI Technology is and shall remain with STI.
5.2 STI acknowledges that all the HMS Technology is and shall remain the
property of HMS, and except as provided herein, all right, title and
interest in the HMS Technology is and shall remain with HMS.
5.3 HMS and STI agree that all STI Developments are and shall remain the
property of STI, and except as provided herein, all right, title and
interest in the STI Developments is and shall remain with STI. HMS assigns
all patentable inventions relating to any STI Development to STI and
agrees to execute all documents, provide all materials and information,
and do all acts, at STI's sole expense, necessary to perfect and maintain
STI's rights to all patentable STI Developments.
5.4 STI shall retain the sole right to prosecute and maintain any and all
patents and patent applications relating to STI Technology and STI
Developments in its sole and absolute discretion.
5.5 HMS shall retain the sole right to obtain protection under the Plant
Variety Protection Act and to prosecute and maintain any patents or patent
applications related to HMS Technology in its sole and absolute
discretion.
5.6 Rights to enforce the STI Patents shall be as follows:
(i) Except as set forth herein, STI shall have sole and absolute
discretion over whether to bring any claims for patent infringement
under the STI Patents and have complete control of any suits, claims
or counterclaims it asserts. If STI brings any such claim for patent
infringement and HMS is not a party to the suit, STI shall retain
[**]% of any monies received (after deducting legal costs),
including all damage awards and settlement payments, and shall pay
the remaining [**]% to HMS.
(ii) HMS shall have no right to enforce the STI Patents licensed
hereunder against any Third Party, except as set forth herein. In
the event STI, in a reasonable time, but promptly after notice of
infringement, declines to enforce the STI Patents in the Field, HMS
may enforce the STI Patents in the Field against a Third Party,
subject to STI's approval, such approval not to be unreasonably
withheld. In such
-5-
event, STI agrees, upon the request of HMS, to join as a party in
such suit or claim, and HMS shall have complete control of any
suits, claims or counterclaims it asserts, and HMS shall retain
[**]% of any monies received, including all damage awards and
settlement payments, and shall pay STI any royalties which would
have been due on the damage award. In the event STI is required to
join such suit as a necessary or indispensable party, STI shall have
a right to retain counsel of its choosing and HMS shall bear all
reasonable legal costs associated with STI's involvement in said
suit.
(iii) If STI and HMS desire jointly to assert the STI Patents in the Field
and to assert claims or counterclaims, STI shall have complete
control of any suits, claims or counterclaims asserted. Each party
agrees to bear its own legal costs. Any monies received, including
all damage awards and settlement payments shall be shared between
HMS and STI in a fashion to be negotiated at the time of such suit,
claim or counterclaim.
6. DISTRIBUTOR
6.1 [**] agree that, [**], as set forth in the [**], either [**] and [**]
under the terms set forth herein, or [**]
6.2 If [**], is identified, [**] in accordance with the terms set forth herein
[**]
7. BENCHMARK PAYMENTS TO STI
7.1 HMS shall make the following payments to STI:
(i) $125,000 in U.S. dollars to STI upon execution of this Agreement;
and
(ii) $[**] in U.S. dollars to STI upon HMS and STI entering into an
agreement [**].
7.2 After HMS and STI enter into an agreement [**], such Distributor shall
make the following payments to STI at the conclusion of the Phases as set
forth in the Timeline attached as Appendix D
(i) $[**] in U.S. dollars at the end of Phase I (and not later than [**]
after the execution of this Agreement, unless extended by mutual
written agreement of the
parties);
(ii) $[**] in U.S. dollars at the end of Phase II (and not later than
[**] after completion of Phase I, unless extended by mutual written
agreement of the parties);
(iii) $[**] in U.S. dollars at the end of Phase III (and not later than
[**] after completion of Phase II, unless extended by mutual written
agreement of the parties); and
-6-
(iv) $[**] in U.S. dollars at the end of Phase IV (and not later than
[**] after completion of Phase III, unless extended by mutual
written agreement of the parties)
(v) These payments in 7.2(i)-(iv) may be reduced or increased by mutual
agreement of the parties.
7.3 In the event that STI and HMS enter into an agreement with a [**] which
provides for development payments beyond those specified in Paragraphs 7.1
and 7.2, those payments will be [**] between STI and HMS.
7.4 The Distributor shall have the right [**] the Benchmark payments made by
it as set for in Paragraphs 7.1 and 7.2 [**] as set forth in Section 8,
[**] to be as follows:
(i) The [**] shall be [**] the total Benchmark payments made; and
(ii) The [**] will be applied annually, and that annual amount will be
limited so as it shall [**] for that year and shall [**] the
Minimum Royalty amount due for that year.
8. [**]
8.1 Upon commercialization of any Licensed Products within the Field, the [**]
shall make [**] payments to STI and HMS, to be [**] between STI and HMS.
8.2 [**] shall be calculated as [**] percent of Net Sales. The Distributor
must make annual payments of the greater of actual annual [**], as set
forth in the attached Appendix E.
8.3 [**] shall be paid quarterly, [**] days after the close of the quarter.
8.4 [**] shall be accompanied by a [**].
8.5 STI shall have a right to conduct an annual audit of the Distributor's
books and records upon thirty (30) days' notice. The Distributor shall
provide reasonable access to its relevant business records for purposes of
such audit.
8.6 In the event that the Distributor is required to [**] to any [**] for
[**], Distributor [**]
9. NO COMPETE
Other than products under development prior to the effective date of this
Agreement, Distributor agrees not to make, sell, offer for sale, license,
or import any product which competes with a commercial Licensed Product in
the Field of this Agreement.
10. ASSIGNMENT
10.1 All rights granted under this Agreement are personal to HMS. Except as
provided in Paragraph 10.2, HMS may not assign this Agreement or its
rights or obligations hereunder.
-7-
10.2 HMS may assign this Agreement to any successor by merger, consolidation,
or sale of substantially all of its lettuce and/or melon business to which
this Agreement relates without the consent of STI.
10.3 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and permitted assigns.
11. CONFIDENTIALITY
11.1 HMS and STI each agree that it will respect the other's Confidential
Information. Such Confidential Information shall not be disclosed by the
receiving party to any third person or entity or to the public except as
provided herein.
11.2 HMS and STI shall designate their Confidential Information, when disclosed
in writing, by stating that such information is confidential. When
disclosed orally or visually, the disclosing party shall use its best
efforts to orally state that such information is considered confidential
at the time of the disclosure, and shall use its best efforts to reduce to
writing a notice regarding said confidentiality within thirty (30) days of
such disclosure.
11.3 HMS and STI each agree to treat and hold as confidential and not disclose
to or provide access to any third person or entity or to the public all
Confidential Information received pursuant to this Agreement and will
cause its respective agents, representatives, Affiliates and employees to
do likewise.
11.4 HMS and STI shall use the other's Confidential Information only for the
uses as agreed upon in this Agreement and only in connection with the
development of Licensed Products in the Field, the development of
processes for the production of such Licensed Products; and any other
purpose incidental or convenient to the foregoing or mutually agreeable to
the parties.
11.5 HMS or STI, as the case may be, may disclose Confidential Information
received, to the extent it is required to do so pursuant to a final court
order; provided, however, that the receiving party (i) promptly notifies
the disclosing party upon its receipt of any pleading, discovery request,
interrogatory, motion or other paper that requests or demands disclosure
of the Confidential Information, (ii) opposes any request for disclosure,
and that failing, seeks to have access and use limited by a protective
order, and (iii) provides the disclosing party a reasonable opportunity to
contest and assist in opposing any requirement of disclosure, to seek
judicial protection against the disclosure and to have such disclosure as
is required made under a protective secrecy order.
11.6 HMS and STI each agree that, at any time upon the request of the
disclosing party, the receiving party will return or destroy any materials
containing Confidential Information (and destroy its notes and copies
related thereto). If destroyed, the receiving party shall provide the
disclosing party with written certification of destruction of the
materials containing said Confidential Information, said certification to
be signed by an officer of the receiving party.
-8-
11.7 HMS and STI each agree that only those of its employees who need to know
the Confidential Information will have access to same, and then only to
the extent necessary to carry out their respective tasks. Each employee to
which Confidential Information will be disclosed in which the employee
agrees to be bound to the terms of the Confidentiality provisions of this
Agreement in accordance with this Section 11 as if he or she were a party
hereto. HMS and STI each agree to be responsible for any use by its
respective employees of the Confidential Information of the disclosing
party.
11.8 In the event HMS or STI wishes to use a Third Party contractor or
consultant and disclose to that contractor or consultant the other party's
Confidential Information, the receiving party shall, prior to disclosure,
(i) secure written permission from the disclosing party (which shall not
be unreasonably withheld) and (ii) secure from the Third Party a signed
undertaking in which the Third Party agrees to be bound to the terms of
the Confidentiality provisions of this Agreement in accordance with this
Section 11 as if he or she were a party hereto.
11.9 HMS and STI each acknowledge that the other's Confidential Information is
of a unique character, contains trade secrets and has other substantial
proprietary value such that, if the receiving party does not uphold its
obligations, the disclosing party will be irreparably harmed. The parties
therefore agree that the disclosing party shall have the right to have the
courts specifically enforce this Paragraph and seek injunctive relief to
prevent unauthorized disclosure of the disclosing party's Confidential
Information.
11.10 STI and HMS each agree not to disclose the terms of this Agreement other
than as required by law to any regulatory or judicial body, or as
necessary to potential investors or financiers (provided such potential
investors or financiers are subject to confidentiality undertakings)
without the express prior written consent of the other party, which
consent shall not be unreasonably withheld. The parties, however, shall be
permitted to prepare press releases disclosing the existence of the
Agreement in accordance with the provisions of Paragraph 11.11.
11.11 Prior to issuing any reports, statements, press releases or other
disclosures to third parties regarding this Agreement or the transactions
contemplated herein, STI and HMS shall exchange copies of such documents
and shall consult with each other regarding their content. Except as
otherwise required by law, neither STI nor HMS shall issue any such
disclosure without the prior approval of the other.
12. REPRESENTATIONS AND WARRANTIES
12.1 STI represents to the best of its knowledge that it is legally entitled to
disclose the STI Confidential Information disclosed by it, and that to the
best of its knowledge the disclosure of the STI Confidential Information
under this Agreement does in no event violate any right of any Third
Party. No other warranties concerning the STI Confidential Information are
made, whether express or implied, and STI expressly disclaims all other
warranties concerning, including without limitation, merchantability,
fitness for a particular purpose, and non-infringement.
-9-
12.2 HMS represents to the best of its knowledge that it is legally entitled to
disclose the HMS Confidential Information disclosed by it, and that to the
best of its knowledge the disclosure of the HMS Confidential Information
under this Agreement does in no event violate any right of any Third
Party. No other warranties concerning the HMS Confidential Information are
made, whether express or implied, and HMS expressly disclaims all other
warranties concerning, including without limitation, merchantability,
fitness for a particular purpose, and non-infringement.
12.3 STI warrants, to the best of its knowledge, that it has no knowledge of
any third party intellectual property which is infringed by the practice
or use of the STI Technology or STI Developments. STI shall promptly
apprise HMS of any existing or potential third party intellectual property
which may be infringed by the practice of use by HMS of STI Technology or
STI Developments.
12.4 During the term of this agreement, STI shall be solely responsible to
defend, indemnify and hold Distributor harmless from and against any and
all demands, claims, causes of action or damages arising out of, resulting
from or related to third party claims that the practice or use of the STI
Technology or STI Developments infringes such third party's patent rights.
13. DEFAULT AND TERMINATION
13.1 HMS may terminate this Agreement at any time, without cause, upon sixty
(60) days' notice.
13.2 STI may terminate this Agreement upon thirty (30) days notice for the
following:
(i) if HMS fails to materially fulfill or perform any one or more of its
duties, obligations, or responsibilities pursuant to this Agreement
and does not cure said failure within [**] after receiving notice
from STI of said failure;
(ii) if HMS markets a product which competes with a Licensed Product in
the Field of this Agreement;
(iii) if HMS submits to STI any fraudulent or materially false reports or
statements, including, but not limited to, claims for any refund,
credit, rebate, incentive, allowance, discount, reimbursement, or
other payment by STI; or
(iv) if HMS declares or petitions for bankruptcy, is the subject of a
bankruptcy petition filed against it, makes an assignment for the
benefit of creditors or seeks similar relief under state law, or
becomes insolvent.
13.3 Upon termination of this Agreement pursuant to this Section 13, (i) HMS
shall cease to be licensed under the STI Patents and will not be
authorized to distribute Licensed Products in the Field; provided,
however, that (contingent upon compliance with this Agreement) HMS may
sell, within a reasonable amount of time, all Licensed Product on hand,
including Licensed Product which is seed, growing seed, lettuce, melon or
growing lettuce or melon; (ii) all moneys owed by HMS to STI shall become
immediately due and
-10-
payable; (iii) all Confidential Information exchanged pursuant to this
Agreement shall be returned immediately to the disclosing party; (iv)
neither party to this Agreement shall be responsible to the other for any
damages arising from the termination of this Agreement, including any
claim for lost or anticipated profits, expenditures, reliance, or other
damages.
14. CHOICE OF LAW; CHOICE OF FORUM
This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York without reference to its choice of law
principles. The state and federal courts in Southern District of New York
shall have exclusive jurisdiction of any dispute arising under this
Agreement.
15. ENTIRE AGREEMENT; NO ORAL MODIFICATIONS; WAIVER
15.1 This Agreement contains the entire understanding and agreement between STI
and HMS with respect to the subject matter hereof, and supersedes all
prior oral or written understandings and agreements relating thereto.
Neither party shall be bound by any conditions, definitions, warranties,
understandings, or representations concerning the subject matter hereof
except as are (i) provided in this Agreement, (ii) contained in any prior
existing written agreement between the parties, or (iii) duly set forth on
or after the Effective Date of this Agreement in a written instrument
subscribed by an authorized representative of the party to be bound
thereby.
15.2 No waiver by either party, whether express or implied, of any provision of
this Agreement, or of any breach or default thereof, shall constitute a
continuing waiver of such provision or of any other provision of this
Agreement. Either party's acceptance of payments by the other under this
Agreement shall not be deemed a waiver of any violation of or default
under any of the provisions of this Agreement.
16. RELATIONSHIP OF THE PARTIES
Nothing herein contained shall be construed to constitute the parties
hereto as partners or as joint venturers, or either as agent or employee
of the other. Neither party shall take any action that purports to bind
the other.
17. SEVERABILITY
If any provision or any portion of any provision of this Agreement shall
be held to be void or unenforceable, the remaining provisions of this
Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.
18. CONSTRUCTION
This Agreement shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Agreement
to be drafted. If any words or phrases in this Agreement shall have been
stricken out or otherwise eliminated,
-11-
whether or not any other words or phrases have been added, this Agreement
shall be construed as if those words or phrases were never included in
this Agreement, and no implication or inference shall be drawn from the
fact that the words or phrases were so stricken out or otherwise
eliminated.
19. HEADINGS
The captions and paragraph headings appearing in this Agreement are
inserted for convenience and reference only and in no way define, limit or
describe the scope or intent of this Agreement or any of the provisions
thereof.
20. NOTICES
All reports, approvals, requests, demands and notices required or
permitted by this Agreement to be given to a party (hereafter "Notices")
shall be in writing. Notices shall be hand delivered, sent by certified or
registered mail, return receipt requested, or sent via a reputable private
express service which requires the addressee to acknowledge receipt
thereof. Notices may also be transmitted by fax, provided that a
confirmation copy is also sent by one of the above methods. Except as
otherwise provided in this Agreement, Notices shall be effective upon
dispatch. Notices shall be sent to the party concerned as follows (or at
such other address as a party may specify by notice to the other):
-12-
As to STI:
Senesco Technologies, Inc.
303 George Street, Suite 420
New Brunswick, NJ 08901
Facsimile: (732) 296-9292
Attn: Bruce C. Galton, President and Chief Executive Officer
As to HMS:
Harris Moran Seed Company
555 Codoni Avenue
Modesto, CA 95357
Facsimile: (209) 548-9973
Attn: Bruno Carette, President and Chief Operating Officer
21. SURVIVAL OF TERMS
The obligations set forth in Section 11 shall survive the termination of
this Agreement.
22. APPENDICES
All Appendices referenced herein are hereby made a part of this
Agreement.
-13-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
by its duly authorized representative as of the day and year first above
written.
SENESCO TECHNOLOGIES, INC. HARRIS MORAN SEED Company
By: /s/Bruce C. Galton By: /s/Bruno Carette
--------------------------------- -----------------------------
Title: President & CEO Title: President & COO
------------------------------ --------------------------
-14-
APPENDIX A
Field of License
Lettuce, defined as Lactuca sativa, including:
[**]
Melon, defined as Cucumis melo, including:
[**]
-15-
APPENDIX B
LIPASE APPLICATIONS:
[**]
Title: "Plant Lipase Gene Exhibiting Senescence-induced Expression and A
Method for Controlling Senescence in A Plant"
Filing Date: June 26, 1998
[**]
[**]
Title: "DNA Encoding A Plant Lipase, Transgenic Plants and a Method for
Controlling Senescence in Plants"
[**]
Filing Date: Feb. 16, 1999
[**]
[**]
Title: "DNA Encoding A Plant Lipase, Transgenic Plants and a Method
for Controlling Senescence in Plants"
Filing Date: Feb. 14, 2000
[**]
[**]
[**]
Title: "DNA Encoding A Plant Lipase, Transgenic Plants and A Method for
Controlling Senescence in Plants"
[**]
Filing Date: June 19, 2000
[**]
[**]
Title: "DNA Encoding A Plant Lipase, Transgenic Plants and A Method for
Controlling Senescence in Plants"
[**]
Filing Date: July 5, 2000
[**]
[**]
Title: "DNA Encoding A Plant Lipase, Transgenic Plants and A Method
for Controlling Senescence in Plants"
Filing Date: June 19, 2001
[**]
-16-
DHS APPLICATIONS:
[**]
Title: "DNA Encoding A Plant Deoxyhpusine Synthase Transgenic Plants and A
Method for Controlling Cell Death in Plants"
Filing Date: July 6, 1999
[**]
[**]
Title: "DNA Encoding A Plant Deoxyhpusine Synthase, a Plant Eukaryotic
Initiation Factor 5A, Transgenic Plants and a Method for Controlling
Senescence Programmed Cell Death in Plants"
[**]
Filing Date: June 19, 2000
[**]
[**]
Title: "DNA Encoding A Plant Deoxyhpusine Synthase, a Plant
Eukaryotic Initiation Factor 5A, Transgenic Plants and a
Method for Controlling Senescence Programmed Cell Death in
Plants"
Filing Date: July 6, 2000
[**]
[**]
Title: "DNA Encoding A Plant Deoxyhpusine Synthase, a Plant Eukaryotic
Initiation Factor 5A, Transgenic Plants and A Method For Controlling
Senescence Programmed Cell Death in Plants"
[**]
Filing Date: November 29, 2000
[**]
-17-
APPENDIX C
HMS Lactuca sativa Patents and Plant Varity Protection Certificates
A/ Plant Variety Protection Certificates
[**]
B/ Utility Patents
[**]
HMS Cucumis melo Patents and Plant Variety Protection Certificates
A/ Plant Variety Protection Certificates
[**]
B/ Utility Patents
[**]
-18-
APPENDIX D
Senesco Technology
Timelines and Technical Steps for License Benchmarks
Developed by Senesco and Harris Moran
Four Phases are defined.
Phase 1 - Proof of Concept
[**]
Contingency Tasks and Times (may overlap or add to the above time, or may not be
necessary)
[**]
End Phase 1 - Proof of Concept
Phase 2 - Scaled Trials
[**]
End Phase 2 - Scaled Trials
Phase 3 - Technology Selection and Pre-commercial Staging
[**]
End Phase 3 - Technology Selection and Pre-commercial Staging
Phase 4 - Commercial Development and Preparation
[**]
End Phase 4 - Commercial Development and Preparation
-19-
APPENDIX E
Annual Minimum Royalties Due
Annual Minimum Royalty patent amounts are as follows:
Year Amount
- ---- ------
1 $[**]
2 $[**]
3 $[**]
4 $[**]
5 $[**]
6 $[**]
7 $[**]
8 $[**]
9 $[**]
10 $[**]
-20-
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of the 4th day of
October, 2001, and is by and between Senesco, Inc., a New Jersey corporation
with an office for purposes of this Agreement at 303 George Street, Suite 420,
New Brunswick, New Jersey 08901 (hereinafter the "Company" or "Employer"), and
Bruce C. Galton with an address at 8 Holden Lane, Madison, New Jersey 07940
(hereinafter the "Employee").
W I T N E S S E T H:
WHEREAS:
(a) Company wishes to retain the services of Employee to render
services for and on its behalf in accordance with the following terms,
conditions and provisions; and
(b) Employee wishes to perform such services for and on behalf of the
Company, in accordance with the following terms, conditions and provisions.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained the parties hereto intending to be legally bound hereby agree
as follows:
1. EMPLOYMENT. Company hereby employs Employee and Employee accepts such
----------
employment and shall perform his duties and the responsibilities provided for
herein in accordance with the terms and conditions of this Agreement.
2. EMPLOYMENT STATUS. Employee shall at all times be Company's Employee
------------------
subject to the terms and conditions of this Agreement.
3. TERM. Unless earlier terminated pursuant to terms and provisions of this
----
Agreement, this Agreement shall have a term (the "Term") of three (3) years
following the date hereof. The Term shall automatically renew for successive one
(1)-year terms thereafter unless
either party delivers written notice of termination to the other at least 120
days prior to the end of the initial three (3)-year term or any succeeding one
(1)-year term.
4. POSITION. During Employee's employment hereunder, Employee shall serve
--------
as President and Chief Executive Officer of the Company. In such position,
Employee shall have the customary powers, responsibilities and authorities of
officers in such position of corporations of the size, type and nature of the
Company including being generally responsible for the day-to-day operations of
Employer's business. Employee shall perform such duties and exercise such powers
commensurate with his positions and responsibilities as shall be determined from
time to time by the Board of Directors of the Company (the "Board") and shall
report directly to the Board and to no other person, entity or committee.
Neither Employee's title nor any of his functions nor the manner in which he
shall report shall be changed, diminished or adversely affected during the Term
without his written consent. Employee shall be provided with an office, staff
and other working facilities at the executive offices of the Company consistent
with his positions and as required for the performance of his duties.
5. COMPENSATION.
------------
(a) For the performance of all of Employee's services to be rendered
pursuant to the terms of this Agreement, Company will pay and Employee will
accept the following compensation:
Base Salary. During the Term, Company shall pay the Employee an
-----------
initial base annual salary of $200,000 (the "Base Salary") commencing January 1,
2002 payable in bi-monthly installments, and such Base Salary shall not be
decreased during the Term. Employee shall be entitled to such further increases,
if any, in his Base Salary as may be determined from
2
time to time in the sole discretion of the Board. Employee's Base Salary, as in
effect from time to time, is hereinafter referred to as the "Employee's Base
Salary."
(b) Employee shall be eligible to receive bonuses at such times and in
such amounts as the Board shall determine in its sole and absolute discretion on
the basis of the performance of the Employee; provided, that, Employee shall
participate in all bonus plans available to executive officers generally at a
level commensurate with his position.
(c) Company shall deduct and withhold from Employee's compensation all
necessary or required taxes, including but not limited to Social Security,
withholding and otherwise, and any other applicable amounts required by law or
any taxing authority.
6. EMPLOYEE BENEFITS.
-----------------
(a) During the Term hereof and so long as Employee is not terminated
for cause (as such term is defined herein), Employee shall receive and be
provided health insurance, and during Employee's employment hereunder, such
other employee benefits including, without limitation, life insurance, fringe
benefits, vacation, automobile, retirement plan participation and life, health,
accident and disability insurance, etc. on the same basis as those benefits are
generally made available to senior executives of the Company, if ever. The
parties acknowledge that the benefits to be provided pursuant to this Section
shall commence as soon as practicable following the date hereof, but in any case
within six (6) months following the date hereof.
(b) Employee shall be entitled to receive four (4) weeks paid vacation
per year. If such vacation time is not taken by Employee in the then current
year, Employee at his option may accrue vacation or receive compensation in lieu
thereof at the then current level of Employee's Base Salary.
3
(c) Reasonable travel, entertainment and other business expenses
incurred by Employee in the performance of his duties hereunder shall be
reimbursed by the Company in accordance with Company policies as in effect from
time to time.
7. TERMINATION.
-----------
(a) For Cause by the Company.
------------------------
Employee's employment hereunder may be terminated by the Company for
cause. For purposes of this Agreement, "cause" shall mean:
(i) Employee's failure to substantially perform duties hereunder
consistent with the terms hereof within twenty (20) business days following
Employee's receipt of written notice of such failure (which notice shall have
been authorized by the Board of Directors and shall set forth in reasonable
detail the purported failure to perform and the specific steps to cure such
failure, which shall be consistent with the terms hereof);
(ii) misappropriation of Company funds or willful misconduct
which results in material damage to the Company;
(iii) Employee's conviction of, or plea of nolo contendere to,
any crime constituting a felony under the laws of the United States or any State
thereof, or any crime constituting a misdemeanor under any such law involving
moral turpitude; or
(iv) Employee's material breach of any of the material provisions
of this Agreement, which breach Employee has failed to cure within twenty (20)
business days after receipt of written notice by Employee of such breach or
which breach Employee has failed to begin to attempt to cure during said twenty
(20)-day period if the breach requires more than the twenty (20)-day period to
cure. Any termination of Employee's employment pursuant to this Subsection 7(a)
shall be made by delivery to Employee of a copy of a resolution duly adopted by
4
the affirmative vote of not less than a majority of the Board at an actual
meeting of the Board called and held for that purpose (after twenty (20) days
prior written notice to Employee and a reasonable opportunity for Employee to be
heard before the Board prior to such vote) finding that in the good faith
judgment of the Board, Employee was guilty of conduct set forth in any of
clauses (i) through (iv) above and specifying the particulars thereof; and
(v) If Employee is terminated for cause, he shall be entitled to
receive Employee's Base Salary from Company through the date of termination and
Employee shall be entitled to no other payments of Employee's Base Salary under
this Agreement. All other benefits, if any, due Employee following Employee's
termination of employment pursuant to this Subsection 7(a) shall be determined
in accordance with the plans, policies and practices of the Company for most
senior executives.
(b) Disability or Death.
-------------------
(i) Employee's employment hereunder shall terminate upon his
death or if Employee becomes physically or mentally incapacitated and is
therefore unable (or will, as a result thereof, be unable) to perform his duties
for a period of nine (9) consecutive months or for an aggregate of fifteen (15)
months in any twenty-four (24) consecutive month period (such incapacity is
hereinafter referred to as "Disability"). If Company terminates Employee's
employment under the terms of this Agreement and Employee does not receive
disability insurance payments under the terms hereof in an amount at least equal
to the then effective Employee's Base Salary pursuant to a policy maintained and
paid for by the Company, Company shall be responsible to continue to pay
Employee's Base Salary during the then remaining Term to the extent required to
bring the Employee's annual compensation (together with disability payments) up
to the amount equal to the Employee's Base Salary immediately prior to the
5
termination for Disability. The Employee shall also receive a pro rata bonus
payment with respect to the portion of the year lapsed prior to the termination
based on the bonus paid to the Employee for the prior year. Any question as to
the existence of the Disability of Employee as to which Employee and the Company
cannot agree shall be determined in writing by a qualified independent physician
mutually acceptable to Employee and the Company. If Employee and the Company
cannot agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the
Company and Employee shall be final and conclusive for all purposes of this
Agreement.
(ii) Upon termination of Employee's employment hereunder during
the Term as a result of death, Employee's estate or named beneficiary(ies) shall
receive from the Company (x) Employee's Base Salary at the rate in effect at the
time of Employee's death through the end of the third month following his death
occurs and pro rata bonus payment with respect to that portion of the year
--- ----
lapsed prior to his death based on the bonus paid to the Employee for the prior
year, and (y) the proceeds of any life insurance policy maintained for his
benefit by the Company pursuant to this Agreement (or the Plans and Policies of
the Company generally).
(iii) All other benefits, if any, due Employee following
Employee's termination of employment pursuant to this Subsection 7(b) shall be
determined in accordance with the plans, policies and practices of the Company
and shall be at least equal to those received by the most senior executives and
no senior executive shall receive any fringe benefit that Employee does not
receive.
6
(c) Without Cause by the Company or For Good Reason.
-----------------------------------------------
(i) If Employee's employment is terminated by the Company
without cause (other than by reason of Disability or death) or Employee resigns
for Good Reason, in either case prior to a Change of Control, then Employee
shall be entitled to a lump sum cash payment from the Company, payable within
ten (10) days after such termination of employment, in an amount equal to one
and one-half (1.5) times the Employee's Base Salary (as in effect as of the date
of such termination) and the prior year's bonus. All other benefits, if any, due
Employee following Employee's termination of employment pursuant to this
Subsection 7(c)(i) shall be determined in accordance with the plans, policies
and practices of the Company and shall be at least equal to those received by
the most senior executives.
(ii) If there is a Change of Control within one (1) year of the
termination of this Agreement without cause by the Company, Employee shall be
entitled to receive the difference between those monies he actually received
upon such termination and one and one-half (1.5) times Employee's base amount as
defined in Section 280G(b)(3) of the Internal Revenue code of 1986, as amended
(the "Code") (the "Employee Base Amount").
(iii) If Employee's employment is terminated by the Company
without cause pursuant to Subsection 7(c)(i) above, or a termination within one
(1) year of Change in Control pursuant to Subsection 7(c)(ii) above, all of the
Employee's stock options previously granted by the Company shall vest
immediately and may be exercised by the Employee through a non-recourse
promissory note secured by the underlying shares of the option grants.
(iv) Subject to Subsection 7(f), if Employee's employment is
terminated by the Company without cause or by Employee for Good Reason during
the Term and coincident with or following a Change of Control, Employee shall be
entitled to a lump sum
7
payment, payable within ten (10) days after such termination of employment,
equal to the product of (x) 1.5 times (y) the Employee Base Amount.
(v) For purposes of this Agreement "Good Reason" shall
mean:
(a) Any material breach by the Company of
this Agreement; or
(b) The failure of the Board of Directors to
elect the Employee as an officer of the
Company with the position set forth in
Section 4 hereof during the Term; or
(c) any action by the Company which results
in a material diminution of the
Employee's position set forth in Section
4 hereof or Employee's authority, duties
or responsibilities,
provided, that, the foregoing events shall not be deemed to constitute Good
- --------
Reason unless Employee shall have notified the Board in writing of the
occurrence of such event(s) and the Board shall have failed to have cured or
remedied such event(s) within twenty (20) business days of its receipt of such
written notice or which breach Employer has failed to begin to attempt to cure
during said twenty (20)-day period if the breach is not curable during the
twenty (20)-day period.
(d) Termination by Employee. If Employee terminates his employment
------------------------
with the Company for any reason (other than for Good Reason) during the Term,
Employee shall be entitled to the same payments he would have received if his
employment had terminated by the Company for cause.
(e) Change of Control. For purposes of this Agreement, "Change of
------------------
Control" shall mean:
8
(i) any transaction or series of transactions (including, without
limitation, a tender offer, merger or consolidation) the result of which is that
any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes
the "beneficial" owners (as defined in Rule 13(d)(3) promulgated under the
Exchange Act) of more than fifty percent (50%) of the total aggregate voting
power of all classes of the voting stock of the Company and/or warrants or
options to acquire such voting stock, calculated on a fully diluted basis;
(ii) during any period of two (2) consecutive calendar years,
individuals who at the beginning of such period constituted the Board (together
with any new directors whose election by the Board or whose nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors then in office; or
(iii) a sale of assets constituting all or substantially all of
the assets of the Company (determined on a consolidated basis). In the event of
such Change of Control, the new entity shall be obligated to assume the terms
and conditions of this Agreement.
(f) Limitation on Certain Payments.
------------------------------
(i) In the event it is determined pursuant to clause (ii) below,
that part or all of the consideration, compensation or benefits to be paid to
Employee under this Agreement in connection with Employee's termination of
employment following a Change of Control or under any other plan, arrangement or
agreement in connection therewith, constitutes a "parachute payment" (or
payments) under Section 280G(b)(2) of the Code, then, of the aggregate
9
present value of such parachute payments (the "Parachute Amount") exceeds three
(3) times the Employee Base Amount, the amounts constituting "parachute
payments" which would otherwise be payable to or for the benefit of Employee
shall be reduced to the extent necessary such that the Parachute Amount is equal
to three (3) times the Employee Base Amount. Employee shall have the right to
choose which amounts that would otherwise be due him but for the limitations
described in this paragraph shall be subject to reduction. Notwithstanding the
foregoing, if it is determined that stockholder approval of the payment of such
compensation and benefits will reduce the applicability of Section 280G of the
Code to such payment, promptly after request by Employee, Company will undertake
reasonable efforts to hold such a meeting to obtain such approval or to solicit
such approval by written consent, and to obtain such approval.
(ii) Any determination that a payment constitutes a parachute
payment and any calculation described in this Subsection 7(f) ("determination")
shall be made by the independent public accountants for the Company, and may, at
Company's election, be made prior to termination of Employee's employment where
Company determines that a Change in Control, as provided in this Section 7, is
imminent. Such determination shall be furnished in writing no later than thirty
(30) days following the date of the Change in Control by the accountants to
Employee. If Employee does not agree with such determination from the
accountants and within fifteen (15) days thereafter, accountants of Employee's
choice must deliver to the Company their determination that in their judgment
complies with the Code. If the two accountants cannot agree upon the amount to
be paid to Employee pursuant to this Section 7 within ten (10) days of the
delivery of the statement of Employee's accountants to the Company, the two
accountants shall choose a third accountant who shall deliver their
determination of the appropriate amount to be paid to Employee pursuant to this
Subsection 7(f), which determination shall be final. If the
10
final determination provides for the payment of a greater amount than that
proposed by the accountants of the Company, then the Company shall pay all of
Employee's costs incurred in contesting such determination and all other costs
incurred by the Company with respect to such determination.
(iii) If the final determination made pursuant to clause (ii) of
this Subsection 7(f) results in a reduction of the payments that would otherwise
be paid to Employee except for the application of clause (i) of this Subsection
7(f), Employee may then elect, in his sole discretion, which and how much of any
particular entitlement shall be eliminated or reduced and shall advise the
Company in writing of his election within ten (10) days of the final
determination of the reduction in payments. If no such election is made by
Employee within such ten (10)-day period, the Company may elect which and how
much of any entitlement shall be eliminated or reduced and shall notify Employee
promptly of such election. Within ten (10) days following such determination and
the elections hereunder, the Company shall pay to or distribute to or for the
benefit of Employee such amounts as become due to Employee under this Agreement.
(iv) As a result of the uncertainty in the application of Section
280G of the Code at the time of a determination hereunder, it is possible that
payments will be made by the Company which should not have been made under
clause (i) of this Subsection 7(f) ("Overpayment") or that additional payments
which are not made by the Company pursuant to clause (i) of this Subsection 7(f)
should have been made ("Underpayment"). In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Employee which
Employee shall repay to the Company
11
together with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code. In the event that there is a final determination by the
Internal Revenue Service, a final determination by a court of competent
jurisdiction or a change in the provisions of the Code or regulations pursuant
to which an Underpayment arises under this Agreement, any such Underpayment
shall be promptly paid by the Company to or for the benefit of Employee,
together with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
(v) This Subsection 7(f) is intended to ensure that any payments
made to the Employee shall comply with Section 280G of the Code, and shall not
have the effect of increasing the payments otherwise due to the Employee under
this Agreement.
8. NON-DISCLOSURE OF INFORMATION.
-----------------------------
(a) Employee acknowledges that by virtue of his position he will be
privy to the Company's confidential information and trade secrets, as they may
exist from time to time, and that such confidential information and trade
secrets may constitute valuable, special, and unique assets of the Company
(hereinafter collectively "Confidential Information"). Accordingly, Employee
shall not, during the Term and for a period of five (5) years thereafter,
intentionally disclose all or any part of the Confidential Information to any
person, firm, corporation, association or any other entity for any reason or
purpose whatsoever, nor shall Employee and any other person by, through or with
Employee, during the Term and for a period of five (5) years thereafter,
intentionally make use of any of the Confidential Information for any purpose or
for the benefit of any other person or entity, other than Company, under any
circumstances.
12
(b) Company and Employee agree that a violation of the foregoing
covenants will cause irreparable injury to the Company, and that in the event of
a breach or threatened breach by Employee of the provisions of this Section 8,
Company shall be entitled to an injunction restraining Employee from disclosing,
in whole or in part, any Confidential Information, or from rendering any
services to any person, firm, corporation, association or other entity to whom
any such information, in whole or in part, has been disclosed or is threatened
to be disclosed in violation of this Agreement. Nothing herein stated shall be
construed as prohibiting the Company from pursuing any other rights and
remedies, at law or in equity, available to the Company for such breach or
threatened breach, including the recovery of damages from the Employee.
(c) Notwithstanding anything contained in this Section 8 to the
contrary, "Confidential Information" shall not include (i) information in the
public domain as of the date hereof, (ii) information which enters the public
domain hereafter through no fault of the Employee, (iii) information known to
the Employee prior to his employment with the Company, or (iv) information
created, discovered or developed by the Employee independent of his association
with the Company. Nothing contained in this Section 8 shall be deemed to
preclude the proper use by the Employee of Confidential Information in the
exercise of his duties hereunder or the disclosure of Confidential Information
required by law.
9. RESTRICTIVE COVENANT.
--------------------
(a) During the term hereof and for a period of one (1) year after the
termination of this Agreement, Employee covenants and agrees that he shall not
own, manage, operate, control, be employed by, participate in, or be connected
in any manner with the ownership, management, operation, or control, whether
directly or indirectly, as an individual on
13
his own account, or as a partner, member, joint venturer, officer, director or
shareholder of a corporation or other entity, of any business which competes
with the business conducted by Company at the time of the termination or
expiration of this Agreement. Notwithstanding the foregoing, (i) nothing in this
Section 9 shall prohibit Employee from owning up to five percent (5%) of the
outstanding voting capital stock of any corporation or other entity listed on
Nasdaq or traded on any national securities exchange, and (ii) in the event of a
termination by the Company without cause or a termination by the Employee for
Good Reason, such restriction shall apply only if the Company has paid to the
Employee all amounts required and is otherwise in compliance with Section 7
hereof.
(b) Employee acknowledges that the restrictions contained in this
Section 9 are reasonable. In that regard, it is the intention of the parties to
this Agreement that the provisions of this Section 9 shall be enforced to the
fullest extent permissible under the law and public policy applied in each
jurisdiction in which enforcement is sought. Accordingly, if any portion of this
Section 9 shall be adjudicated or deemed to be invalid or unenforceable, the
remaining portions shall remain in full force and effect, and such invalid or
unenforceable portion shall be limited to the particular jurisdiction in which
such adjudication is made.
10. BREACH OR THREATENED BREACH OF COVENANTS. In the event of Employee's
-----------------------------------------
actual or threatened breach of his obligations under either Sections 8 or 9, or
both, of this Agreement, or Company's breach or threatened breach of its
obligations under this Agreement, in addition to any other remedies either party
may have, such party shall be entitled to obtain a temporary restraining order
and a preliminary and/or permanent injunction restraining the other from
violating these provisions. Nothing in this Agreement shall be construed to
prohibit Company or Employee, as the case may be, from pursuing and obtaining
any other
14
available remedies which Company or Employee, as the case may be, may have for
such breach or threatened breach, whether at law or in equity, including the
recovery of damages from the other.
11. DISCLOSURE OF INNOVATIONS. The Employee hereby agrees to disclose in
--------------------------
writing to the Company all inventions, improvements and other innovations of any
kind that the Employee makes, conceives, develops or reduces to practice, alone
or jointly with others, during the Term, to the extent they are related to the
Employee's work for the Company and whether or not they are eligible for patent,
copyright, trademark, trade secret or other legal protection ("Innovations").
Examples of Innovations shall include, but are not limited to, discoveries,
research, inventions, formulas, techniques, processes, tools, know-how,
marketing plans, new product plans, production processes, advertising, packaging
and marketing techniques.
12. ASSIGNMENT OF OWNERSHIP OF INNOVATIONS. The Employee hereby agrees that
--------------------------------------
all Innovations will be the sole and exclusive property of the Company and the
Employee hereby assigns all of his rights, title or interest in the Innovations
and in all related patents, copyrights, trademarks, trade secrets, rights of
priority and other proprietary rights to the Company to the extent they are
related to the Employee's work for the Company. At the Company's request and
expense, during and after the Term, the Employee will assist and cooperate with
the Company in all respects and will execute documents, and, subject to his
reasonable availability, give testimony and take further acts requested by the
Company to obtain, maintain, perfect and enforce for the Company patent,
copyright, trademark, trade secret and other legal protection for the
Innovations. The Employee hereby appoints the Chief Financial
15
Officer of the Company as his attorney-in-fact to execute documents on his
behalf for this purpose.
13. REPRESENTATIONS AND WARRANTIES BY EMPLOYEE. Employee hereby warrants
-------------------------------------------
and represents that he is not subject to or a party to any restrictive covenants
or other agreements that in any way preclude, restrict, restrain or limit him
(a) from being an employee of Company, (b) from engaging in the business of
Company in any capacity, directly or indirectly, and (c) from competing with any
other persons, companies, businesses or entities engaged in the business of
Company.
14. NOTICES. Any notice required, permitted or desired to be given under
-------
this Agreement shall be sufficient if it is in writing and (a) personally
delivered to Employee or an authorized member of Company, (b) sent by overnight
delivery or (c) sent by registered or certified mail, return receipt requested,
to Employer's or Employee's address as provided in this Agreement or to a
different address designated in writing by either party. In all instances of
notices to be given to Company, a copy by like means shall be delivered to
Company's counsel care of Hale and Dorr LLP, 650 College Road East, Princeton,
New Jersey 08540, Attention: Emilio Ragosa, Esq. In all instances of notices to
be given to Employee, a copy by like means shall be delivered to Employee's
counsel at the address supplied by the Employee. Notice is deemed given on the
day it is delivered personally or by overnight delivery, or five (5) business
days after it is mailed, if transmitted by the United States Post Office.
15. ASSIGNMENT. Employee acknowledges that his services are unique and
----------
personal. Accordingly, Employee may not assign his rights or delegate his duties
or obligations under this Agreement. Company's rights and obligations under this
Agreement shall inure to the
16
benefit of and shall be binding upon the Company's successors and assigns.
Company has the absolute right to assign its rights and benefits under the terms
of this Agreement.
16. WAIVER OF BREACH. Any waiver of a breach of a provision of this
------------------
Agreement, or any delay or failure to exercise a right under a provision of this
Agreement, by either party, shall not operate or be construed as a waiver of
that or any other subsequent breach or right.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
----------------
parties. It may not be changed orally but only by an agreement in writing which
is signed by the parties. The parties hereto agree that any existing employment
agreement between them shall terminate as of the date of this Agreement.
18. GOVERNING LAW. This Agreement shall be construed in accordance with and
-------------
governed by the internal laws of the State of New Jersey.
19. SEVERABILITY. The invalidity or non-enforceability of any provision of
------------
this Agreement or application thereof shall not affect the remaining valid and
enforceable provisions of this Agreement or application thereof.
20. CAPTIONS. Captions in this Agreement are inserted only as a matter of
--------
convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.
21. GRAMMATICAL USAGE. In construing or interpreting this Agreement,
------------------
masculine usage shall be substituted for those feminine in form and vice versa,
and plural usage shall be substituted or singular and vice versa, in any place
in which the context so requires.
22. CAPACITY. Employee has read and is familiar with all of the terms and
--------
conditions of this Agreement and has the capacity to understand such terms and
conditions
17
hereof. By executing this Agreement, Employee agrees to be bound by this
Agreement and the terms and conditions hereof.
23. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
24. LEGAL FEES. Company agrees to reimburse Employee for all legal expenses
----------
incurred by Employee in connection with the negotiation and execution of this
Agreement.
* * * * * * *
18
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first herein above written.
SENESCO TECHNOLOGIES, INC.
By: /s/ Sascha P. Fedyszyn
-------------------------------------
Sascha P. Fedyszyn, Vice President of
Corporate Development and Secretary
EMPLOYEE
/s/ Bruce C. Galton
----------------------------------------
Bruce C. Galton
SENESCO TECHNOLOGIES, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of October 4, 2001
by and between Senesco Technologies, Inc., a Delaware corporation (the
"Company"), and Bruce C. Galton ("Indemnitee").
WHEREAS, Indemnitee is an officer and a director of the Company and
performs valuable services in such capacities for the Company;
WHEREAS, the Company and Indemnitee recognize the substantial increase in
corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance may be limited;
WHEREAS, the Company and Indemnitee further recognize the difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to continue to serve in such capacities without additional protection;
and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company as a
director, the Company wishes to provide for the indemnification and advancing of
expenses to Indemnitee to the maximum extent permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
---------------
(a) Indemnification of Expenses. The Company shall indemnify
-------------------------------
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is
or was a director, officer, employee, agent or fiduciary of the Company, or any
subsidiary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action or inaction on the part of Indemnitee while serving in such capacity
(hereinafter an "Indemnifiable Event") against any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate
in, any such action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines, penalties and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of such Claim and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement (collectively,
hereinafter "Expenses"), including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses. Such payment
of Expenses shall be made by the Company as soon as practicable but in any event
no later than thirty (30) days after written demand by Indemnitee therefor is
presented to the Company.
(b) Reviewing Party. Notwithstanding the foregoing, (i) the
-----------------
obligations of the Company under Section l(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section l(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents
-2-
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change
-----------------
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or By-laws as now or hereafter in effect,
the Company shall seek legal advice only from Independent Legal Counsel (as
defined in Section 10(d) hereof) selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld). Such counsel, among
other things, shall render its written opinion to the Company and Indemnitee as
to whether and to what extent Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
(d) Mandatory Payment of Expenses. Notwithstanding any other provision
-----------------------------
of this Agreement other than Section 9 hereof, to the extent that Indemnitee has
been successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (1)(a) hereof or in
the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by Indemnitee in connection therewith.
2. Expenses; Indemnification Procedure.
-----------------------------------
(a) Advancement of Expenses. The Company shall advance all Expenses
------------------------
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
(5) days after written demand by Indemnitee therefor to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
--------------------------------
precedent to Indemnitee's right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
---------------------------------
the termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall
---- ----------
-3-
not create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the
failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that Indemnitee has
not met such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a judicial
determination that Indemnitee should be indemnified under applicable law, shall
be a defense to Indemnitee's claim or create a presumption that Indemnitee has
not met any particular standard of conduct or did not have any particular
belief. In connection with any determination by the Reviewing Party or otherwise
as to whether the Indemnitee is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Indemnitee is not so
entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company
------------------
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such action,
suit, proceeding, inquiry or investigation in accordance with the terms of such
policies. Nothing in this Section 2(d) shall limit the Company's obligations as
otherwise provided for herein, including the Company's obligation to pay
Expenses under Section 1(b) or to advance Expenses under Section 2(a).
(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
hereunder to pay the Expenses of any action, suit, proceeding, inquiry or
investigation, the Company, if appropriate, shall be entitled to assume the
defense of such action, suit, proceeding, inquiry or investigation with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same action, suit,
proceeding, inquiry or investigation; provided that, (i) Indemnitee shall have
the right to employ Indemnitee's counsel in any such action, suit, proceeding,
inquiry or investigation at Indemnitee's expense and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
action, suit, proceeding, inquiry or investigation, then the fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.
-4-
3. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------
(a) Scope. The Company hereby agrees to indemnify the Indemnitee to
-----
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's By-laws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the rights of the corporation to indemnify a
member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the rights of this
Company to indemnify a member of its board of directors or an officer, employee,
agent or fiduciary, such change, to the extent not otherwise required by such
law, statute or rule to be applied to this Agreement, shall have no effect on
this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its By-laws, any agreement, any vote of
shareholders or disinterested directors, the relevant business corporation law
of the Company's state of incorporation, or otherwise. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity even though
Indemnitee may have ceased to serve in such capacity.
4. No Duplication of Payments. The Company shall not be liable under this
---------------------------
Agreement to make any payment in connection with any action, suit, proceeding,
inquiry or investigation made against Indemnitee to the extent Indemnitee has
otherwise actually received payment (under any insurance policy, Certificate of
Incorporation, By-laws or otherwise) of the amounts otherwise indemnifiable
hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any provision
------------------------
of this Agreement to indemnification by the Company for some or a portion of
Expenses in the investigation, defense, appeal or settlement of any civil or
criminal action, suit, proceeding, inquiry or investigation, but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that
---------------------
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
-5-
7. Liability Insurance. To the extent the Company maintains liability
--------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
8. Exceptions. Any other provision herein to the contrary notwithstanding,
----------
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
-----------------------------
omissions or transactions from which Indemnitee may not be relieved of liability
under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
-------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except (i) with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or By-laws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such suit, or (iii) as
otherwise required under the applicable provisions of the business corporation
law of the Company's state of incorporation, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
-------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any similar successor statute.
9. Period of Limitations. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two (2) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such two (2)-year period; provided, however, that if any
-------- -------
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
-6-
10. Construction of Certain Phrases.
-------------------------------
(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its beneficiaries; and if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
(c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as determined in accordance with Rule
13d-3 under said Exchange Act), directly or indirectly, of securities of the
Company representing more than twenty percent (20%) of the total voting power
represented by the Company's then outstanding Voting Securities, (ii) during any
period of two (2) consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new director
whose election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving
-7-
entity outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all of the
Company's assets.
(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, a "Reviewing Party" shall mean any
appropriate person or body consisting of a member or members of the Company's
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.
(f) For purposes of this Agreement, "Voting Securities" shall mean any
securities of the Company that vote generally in the election of directors.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be binding
--------------------------------------
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director of the Company or of any other enterprise at the Company's request.
13. Attorneys' Fees. In the event that any action is instituted by
----------------
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action the
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous. In the event of an action instituted by or in
the name of
-8-
the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement Expenses with respect to such action,
unless as a part of such action the court having jurisdiction over such action
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications under
------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
------------------------
irrevocably consent to the jurisdiction of the courts of the State of New Jersey
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Superior
Court of the State of New Jersey in and for Mercer County, which shall be the
exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed and enforced in accordance with the laws of the State of New Jersey,
as applied to contracts between New Jersey residents, entered into and to be
performed entirely within the State of New Jersey, without regard to the
conflict of laws principles thereof.
18. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties
-9-
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth the entire
--------------------------------
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
------------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.
**********
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SENESCO TECHNOLOGIES, INC.
/s/ Sascha P. Fedyszyn
----------------------------------------
By: Sascha P. Fedyszyn
Title: Vice President of Corporate
Development and Secretary
AGREED TO AND ACCEPTED:
INDEMNITEE:
/s/ Bruce C. Galton
- ------------------------------------
(signature)
- ------------------------------------
Bruce C. Galton
8 Holden Lane, Madison, NJ 07940
- ------------------------------------
(address)
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Consulting Agreement"), is effective November
1, 2001 by and between Senesco Technologies, Inc., a Delaware corporation with a
place of business at 303 George Street, Suite 420, New Brunswick, NJ 08901
("SENESCO"), and Alan B. Bennett Ph.D., whose address is Mann Laboratories,
University of California, Davis, CA 95616 ("Bennett");
WHEREAS, SENESCO is engaged in the business of research and development on
plant genes and their cognate expressed proteins that are induced during or
coincident with the onset of senescence, which may initiate or facilitate
senescence of plants or plant tissues, together with methods for controlling
senescence that involve altering the expression of these genes;
WHEREAS, Bennett may possess useful knowledge and technical expertise
relating to SENESCO research and product development;
WHEREAS, SENESCO wishes to retain Bennett for professional consulting
services;
WHEREAS, Bennett may receive, disclose, learn or acquire valuable and
proprietary technical and commercial trade secrets and confidential information
of SENESCO (collectively, the "Confidential Information"), from SENESCO or
otherwise as a result of performing his consulting services under this
Consulting Agreement;
WHEREAS, SENESCO and Bennett wish to assure that such information be held
in secrecy and confidence by Bennett;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties agree as follows:
I. DEFINITIONS.
------------
"Technology and Inventions" shall mean any and all discoveries, inventions,
conceived inventions and know-how, whether or not patentable, and whether or not
reduced to practice, including any and all methods or processes, test data,
findings, designs, machines, devices, apparatus, manufactures, and any
improvements and/or any utility for the foregoing, which are made, conceived,
discovered or developed by Bennett, whether alone or in conjunction with others,
which arise in any way from, during or as a result of the performance of
Bennett's consulting services to SENESCO under this Consulting Agreement and
which relate to the scope of this Consulting Agreement under Article II. This
includes Technology and Inventions arising from any research and development by
Bennett within the scope of Article 11(a) as well as any technology identified
by Bennett of interest to SENESCO within the scope of Article II(b) Such
Technology and Inventions may or may not be protectable in the form of a patent,
a copyright or as a trade secret.
II. SCOPE OF THE CONSULTING AND EXPERT SERVICES.
--------------------------------------------
Bennett will provide consulting and expert services relating to: (a)
research and development on plant genes and their cognate expressed proteins
that are induced during or coincident with the onset of senescence, which may
initiate or facilitate senescence of plants or plant tissues, together with
methods for controlling senescence that involve altering the expression of these
genes; (b) the review of new technologies for potential acquisition, license,
investment, and related activities for SENESCO; and (c) the identification of
commercial partners and assistance in negotiation of business relationships for
SENESCO.
III. SERVICES AND COMPENSATION.
---------------------------
In consideration for a monthly payment of $2,400 (payable at the beginning
of each monthly period, Bennett agrees to provide SENESCO with professional
consulting and expert services within the scope provided under Article II for 2
to 4 days per month, and under the terms and conditions specified in this
Consulting Agreement.
IV. NO USE OF THIRD PARTY'S INFORMATION.
-----------------------------------
Bennett represents that he can and will perform all services under this
Consulting Agreement independent of any proprietary information or know-how
received from or belonging to others, including, but not limited to proprietary
information of the University of California. Bennett represents that he is
empowered by the University of California to perform all services under this
Consulting Agreement independent of any obligations to the University of
California including, but not limited to, rights of assignment and rights of
first refusal within the scope of Article II. Bennett agrees under no
circumstances to disclose or use proprietary information or know-how of any
third party in performing services for SENESCO. Bennett will not represent as
unrestricted any processes, designs plans, models, samples or other writings or
products that Bennett knows are either covered by a third party's valid patent,
copyright, or other forms of intellectual property protection, or are under an
obligation of assignment to a third party. Bennett represents and warrants that
he is not rendering any service relating to the scope of this Consulting
Agreement under Article II hereof and that he is not presently employed or
engaged as a consultant to render any such services other than as a consultant
to SENESCO.
V. CONFIDENTIAL INFORMATION.
-------------------------
A. Confidential Information includes all information disclosed by SENESCO
directly or indirectly to Bennett whether said disclosure is made in writing, by
submission of samples, orally, or otherwise, including without limitation
information relating to the matters which are within the scope and are the
subject of this Agreement and all other information regarding SENESCO's past,
present, or future research, technology, know-how, ideas, concepts, designs,
products, prototypes, processes, machines, business plans, technical
information, drawings, specifications and the like, and any knowledge or
information, including but not limited to Technology and Inventions, developed
by Bennett as a result of work in connection with this Agreement, except
information which, at the time of disclosure to Bennett or development under
this Agreement:
1. is established by written records to be in the public domain
other than as a consequence of an act of Bennett;
2. was in Bennett's possession prior to the disclosure and is
demonstrated through written records that such information was in
Bennett's possession prior to disclosure from SENESCO, and was
not the subject of an earlier confidential relationship with
SENESCO; or
3. was rightfully acquired by Bennett from a third party, who was
lawfully in possession of such information after the disclosure
and was under no obligation to SENESCO to maintain its
confidentiality.
B. All Confidential Information of SENESCO disclosed to Bennett shall
remain the sole property of SENES CO. Bennett agrees that the Confidential
Information will be kept in strict confidence until such Confidential
Information becomes readily and conveniently available in the trade. Bennett
agrees that he will not directly or indirectly disclose, furnish, disseminate,
make available or use the Confidential Information except as necessary to
perform the consulting and expert services under the provisions of this
Agreement.
C. Bennett will promptly inform SENESCO if Bennett discovers that a third
party is making or threatening to make unauthorized use of Confidential
Information.
D. Bennett acknowledges that the agreements contained herein are of a
special nature and that any material breach of this Agreement by Bennett will
result in irreparable harm or injury to SENESCO. Accordingly, SENESCO shall be
entitled to seek an injunction for specific performance, as well as any other
legal or equitable remedy which may be available.
VI. DISCLOSURE OF INVENTIONS.
------------------------
Bennett shall disclose fully and promptly to SENESCO in writing any and all
Technology and Inventions pursuant to Articles I and II either: made or
conceived of as set forth in Article 11(a) or identified for potential
acquisition, license, or investment as set forth Article 11(b), or otherwise
arising under this Consulting Agreement
VII. TECHNOLOGY AND INVENTIONS.
--------------------------
A. Bennett hereby assigns and agrees to assign to SENESCO all right, title
and interest in any of the Technology and Inventions made, conceived of,
identified or otherwise arising under this Consulting Agreement. All information
and know-how relating to the Technology and Inventions is also deemed
Confidential Information and shall be kept in confidence by Bennett pursuant to
this Agreement.
B. SENESCO has control of all right, title and interest to any patent or
patent application drawn to the Technology and Inventions made, conceived of,
identified or otherwise arising during the performance of this Agreement SENESCO
has the right to decide whether or not to pursue patent protection on any
Technology and Inventions conceived of or made under this Agreement
C. Bennett agrees that SENESCO has the right to select an attorney or
patent counsel to help secure patent protection to any Technology and Inventions
made, conceived of, identified, or otherwise arising out of this Agreement.
Bennett agrees that SENESCO has the right to select an attorney and/or other
professionals necessary to evaluate and/or secure any technology identified by
Bennett arising under this Agreement.
D. Designation of inventors in a patent application is a matter of patent
law and shall be solely within the discretion of qualified patent counsel or
other legal representatives for SENESCO.
E. Bennett shall, at the request and expense of SENESCO, at any time during
or after the termination of the Agreement, execute all documents and perform all
such acts as SENESCO may deem necessary or advisable to confirm SENESCO's sole
and exclusive ownership right, title and interest in such Technology and
Inventions in any country. Bennett agrees to do all acts and execute all
documents at the expense and request of SENESCO that SENESCO may deem necessary
to enforce its rights to the Technology and Inventions, including but not
limited to assisting in the preparation of patent applications, assisting in
litigation, appearing for depositions, and appearing as trial witnesses.
F. Nothing contained herein shall be considered as granting any license,
immunity or other right with respect to any invention, patent trade secret,
know-how or confidential information of SENESCO (apart from the right to make
necessary use of the same in rendering Bennett's services hereunder) or as
requiring either SENESCO or Bennett to enter into any subsequent agreement.
VIII. INDEPENDENT CONTRACTOR.
-----------------------
Bennett's relationship to SENESCO during the term of this Consulting
Agreement shall be that of an independent contractor, and not as an employee or
agent Bennett may not make any commitments, or bind or purport to bind or
represent. SENESCO or any of its affiliates in any manner either as its agent or
in any other capacity.
IX. NO CONFLICTING OBLIGATIONS.
---------------------------
Bennett represents and warrants that he has the full power to enter into
and perform the services pursuant to this Consulting Agreement, and that Bennett
is under no obligation or restriction and will not assume any obligation or
restriction that would in any way interfere with, be inconsistent with, or
present a conflict of interest concerning his services in connection with this
Consulting Agreement.
In view of the highly confidential nature of the services to be rendered by
Bennett under this Consulting Agreement, Bennett hereby agrees that he will not
conduct any research, act as a consultant, or perform any other services, either
directly or indirectly, for any entity in the world which is competitive with
SENESCO relating to the subject matter provided in Article II herein during the
term of work under this Consulting Agreement and for a period of one (1) year
after the termination of this Agreement with regard to subject matter within the
scope of Article II. The parties hereby agree that the period of time and scope
of the restrictions specified herein are both reasonable and justifiable to
prevent harm to the legitimate business interests of SENESCO, including but not
limited to preventing transfer of Confidential Information to SENESCO's
competitors and/or preventing other unauthorized disclosure or use of SENESCO's
Technology and Inventions.
X. RETURN OF CONFIDENTIAL INFORMATION AND TANGIBLE PROPERTY.
---------------------------------------------------------
The parties agree that all tangible property provided to or generated by
Bennett in connection with this Consulting Agreement, including without
limitation all samples, Confidential Information, reports, communications,
analyses, memoranda, notes, contact lists, and any other information produced in
connection with this Consulting Agreement (collectively "SENESCO Property")
shall, upon the expiration or termination of the consulting work, be returned to
SENESCO unless otherwise directed in writing.
XI. EFFECTIVE DATE AND LENGTH OF OBLIGATION.
----------------------------------------
This Consulting Agreement shall terminate one (1) year from its effective
date. However, if Bennett dies or becomes incapacitated to the extent that he
cannot perform the services specified in this Consulting Agreement, SENESCO has
the right to terminate this Consulting Agreement. Bennett's obligation of
confidentiality and non-use of Confidential Information shall continue from the
effective date, or the date that SENESCO discloses such Confidential Information
to Bennett, and shall survive the expiration or termination of this Consulting
Agreement until the Confidential Information becomes part of the public domain
through no action of Bennett. SENESCO's rights under Articles V, VI, VII, and IX
shall survive termination of this Consulting Agreement.
XII. SEVERABILITY.
-------------
If any provision of this Consulting Agreement should be determined by any
court of competent jurisdiction to be invalid, illegal or unenforceable in whole
or in part, and such determination should become final, such provision or
portion thereof shall be deemed to be severed or limited to the extent required
to render the remaining provisions and portions of this Consulting Agreement
enforceable, and the Consulting Agreement shall be enforced to give effect to
the intention of the parties insofar as possible.
XIII. APPLICABLE LAW.
---------------
This Consulting Agreement shall be interpreted and construed, and the legal
relations created herein shall be determined in accordance with the laws of the
State of New Jersey. Any provision or provisions of this Agreement which in any
way contravenes the laws of any state or country in which this Agreement is
effective shall, in such state or country as the case may be, and to the extent
of such contravention of local law, be deemed separable and shall not affect any
other provision or provisions of this Agreement.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have executed and delivered this Consulting Agreement as of the day and year
first above written.
SENESCO TECHNOLOGIES, INC.
By /s/Alan B. Bennett By: /s/Bruce C. Galton
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Alan B Bennett PhD Bruce C. Galton
President and CEO