EXHIBIT 99.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this January 28, 2005, by and between Xxxxxx X.
Xxxxx, M.D. ("Executive") and Northfield Laboratories Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H :
WHEREAS, Executive is now employed as the Chief Executive Officer of the
Company;
WHEREAS, the Company and Executive now desire to enter into this Agreement
in order to continue such employment for the term set forth herein and subject
to the terms and conditions set forth herein; and
WHEREAS, the Company and Executive desire to continue the Proprietary
Information and Inventions Agreement entered into by and between Executive and
the Company dated September 1, 1985 (the "Proprietary Information and Inventions
Agreement") in full force and effect;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants hereinafter set forth, the parties do hereby agree as follows:
1. Employment. The Company agrees to employ Executive, and Executive
agrees to remain in the employ of the Company, for the period (the "Employment
Period") beginning as of the date of this Agreement and ending on the date as of
which Executive's employment is terminated pursuant to paragraph 5 of this
Agreement. During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company reporting to the Board of Directors of the
Company and shall perform such executive and managerial duties consistent with
such position as the Board of Directors of the Company shall from time to time
direct. Executive shall have such duties and authority as are customarily and
ordinarily exercised by executives in similar positions in similar businesses in
the United States. Executive shall devote his full business time and attention
to the business of the Company and its subsidiaries. Executive may (i)
participate in civic, charitable and industry organizations which do not
materially interfere with his duties and (ii) serve on the board of directors of
one non-competing for-profit business which does not materially interfere with
his duties, it being understood that any additional non-competing for-profit
board memberships shall require the consent of the Board of Directors of the
Company.
2. Location. Executive shall be based at the Company's headquarters in
Evanston, Illinois, or at such other location as may be agreed upon by Executive
and the
Board of Directors of the Company. Executive shall, however, also travel
to other locations at such times as may be reasonably required for the
performance of his duties under this Agreement; provided that the frequency and
duration of such travel shall not be substantially greater than the frequency
and duration of Executive's travel during his employment by the Company prior to
the date of this Agreement.
3. Compensation. During the Employment Period, Executive shall be
compensated as follows:
(a) Salary. Executive shall be paid an annual base salary at a rate
which is not less than $350,000 per year, effective commencing January 1,
2005. Executive's base salary shall be reviewed by the Board of Directors
of the Company on an annual basis and shall be subject to increases from
time to time at the discretion of the Board of Directors. Executive's base
salary as in effect from time to time may not be decreased and shall be
paid in equal, semi-monthly installments.
(b) Bonus.
(i) On the date of this Agreement, Executive shall be paid a
cash bonus of $100,000.
(ii) Executive shall be paid a cash bonus equal to 150% of his
annual base salary, as then in effect, on the date the Company is
granted Food and Drug Administration approval for the commercial
sale of PolyHeme in the United States for any indication.
(iii) Executive shall be entitled to receive an annual cash
bonus for the achievement of performance goals to be determined by
mutual agreement of the Board of Directors and Executive. Executive
and the Board of Directors shall use their good faith efforts to
agree prior to March 31, 2005 on the performance goals to be
applicable for the 2005 calendar year, and shall use their good
faith efforts to agree on the performance goals to be applicable to
each succeeding calendar year prior to January 31 of such year. The
first such bonus shall be payable in January 2006 with respect to
the performance of Executive during the 2005 calendar year. The
target bonus opportunity shall be equal to 50% of Executive's annual
base salary, as in effect for the applicable calendar year for which
Executive's performance is being measured, with a maximum bonus
opportunity for superior performance of 150% of Executive's annual
base salary as so determined. A reduced bonus may be payable at the
discretion of the Board of Directors for partial achievement of
Executive's performance goals.
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(c) Award of Stock Options. On the date of this Agreement, the
Company shall award Executive stock options under the Northfield
Laboratories Inc. 2003 Equity Compensation Plan to acquire 100,000 shares
of the Company's Common Stock at an exercise price per share equal to the
fair market value of the Company's Common Stock as of the date of grant.
The Board of Directors of the Company may in its discretion determine to
award Executive additional stock options or other forms of equity
incentive compensation from time to time during the Employment Period.
(d) Paid Time Off. Executive shall be entitled to a total of 30 days
of paid time off, including vacation, sick days and other absences, during
each calendar year. Unused day of paid time off may be used by Executive
in succeeding calendar years, provided that Executive shall not be
entitled to utilize more than a total of 60 days of paid time off during
any calendar year.
(e) Expenses. Executive shall be reimbursed for all reasonable
business expenses incurred in the performance of his duties pursuant to
this Agreement, to the extent such expenses are substantiated and are
consistent with the general policies of the Company and its subsidiaries
relating to the reimbursement of expenses of senior executive officers.
(f) Fringe Benefits. Executive shall be entitled to participate,
during the Employment Period, in any and all pension, stock option,
relocation, profit sharing, and other Executive benefit plans or fringe
benefit programs which are from time to time maintained by the Company or
its subsidiaries for their senior executive officers, in accordance with
the provisions of such plans or programs as from time to time in effect.
(g) Financial Planning and Other Services. Executive shall be
entitled to reimbursement of up to $3,500 per calendar year for financial
planning and tax preparation assistance. Executive shall additionally be
entitled to reimbursement for up to a total of $10,000 during the
Employment Period for estate planning services.
(h) Annual Physical. Executive shall be entitled to reimbursement
for all costs associated with an annual executive physical at a medical
facility of Executive's choice.
(i) Certain Legal Fees. Executive shall be entitled to reimbursement
for reasonable legal fees incurred by Executive in connection with the
negotiation of this Agreement.
(j) Deduction and Withholding. All compensation and other benefits
payable to or on behalf of Executive pursuant to this Agreement shall be
subject to such deductions and withholding as may be agreed to by
Executive or required by applicable law.
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4. Other Benefits. The compensation provisions of this Agreement shall be
in addition to, and not in derogation or diminution of, any benefits that
Executive or his beneficiaries may be entitled to receive under the provisions
of any pension, stock option, profit sharing, disability, relocation or other
Executive benefit plan now or hereafter maintained by the Company or by any of
its subsidiaries. The Company shall not make any changes in such plans or
arrangements which would adversely affect Executive's rights or benefits
thereunder, unless such change is made uniformly in a plan of general
application to all of the Company's or a subsidiary's eligible Executives.
5. Termination. Executive's employment may be terminated without any
breach of this Agreement only under the following circumstances:
(a) Death. Executive's employment shall terminate upon his death.
(b) Disability. If, as a result of Executive's incapacity due to
physical or mental illness or accident, Executive shall be unable to
perform in all material respects his duties as Chief Executive Officer of
the Company for a period equal to the eligibility waiting period
applicable under the Company's long term disability insurance policy, the
Company may terminate Executive's employment for "disability."
(c) Cause. The Company may terminate Executive's employment
hereunder for "cause." For purposes of this Agreement, "cause" shall mean
the conviction of Executive of any felony or any failure by Executive to
comply in all material respects with any material term of this Agreement
or the Proprietary Information and Inventions Agreement which conduct or
failure is materially injurious to the Company, monetarily or otherwise.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for cause without (i) at least 60 days prior written notice
from the Company to Executive setting forth the reasons for the Company's
intention to terminate for cause, (ii) an opportunity to cure the stated
cause during the 60-day notice period, and (iii) after all of the
preceding procedures have been satisfied or made available, delivery to
Executive of a Notice of Termination from the Board of Directors of the
Company finding that in the good faith opinion of such Board of Directors,
Executive was guilty of the conduct or of the failure described in the
second sentence of this subparagraph, specifying the particulars in
detail, and that Executive has failed to cure the stated cause.
(d) Termination by Executive. Executive may voluntarily terminate
his employment at any time. Executive's termination of employment shall be
for "good reason" if he voluntarily terminates his employment:
(i) upon the occurrence of:
(A) a change in Executive's title, a material diminution
of Executive's duties or authority, the assignment to
Executive of duties materially inconsistent with his position
or the institution of a
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requirement that Executive report to any person other than the
Board of Directors;
(B) a diminution in Executive's base salary or a
material diminution in Executive's benefits;
(C) the institution of a requirement that Executive
relocate his current principal residence or office at a
location other than the Company's principal executive offices;
or
(D) the failure of the Board of Directors to nominate
Executive for election as a director in connection with any
annual or special meeting of the Company's stockholders at
which directors are to be elected (Executive having indicated
his willingness to be nominated as a director and to serve as
a director if elected), the failure of Executive to be elected
as a director by the Company's stockholders in connection with
any annual or special meeting of the Company's stockholders at
which directors are to be elected (Executive having indicated
his willingness to serve as a director if elected), or
Executive is removed from office as a director, without cause,
by vote or consent of the Company's stockholders;
(ii) because of a failure by the Company to comply with any
material provision of this Agreement which has not been cured within
30 days after written notice of such noncompliance has been given by
the Executive to the Company; or
(iii) because of any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of subparagraph 5(e)
hereof (and for purposes of this Agreement no such purported
termination shall be effective).
(e) Notice of Termination. Any termination of Executive's employment
by the Company or by Executive (other than termination because of
Executive's death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision of this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so
indicated.
(f) Date of Termination of Employment. "Date of Termination" shall
mean (i) if Executive's employment is terminated by his death, the date of
his death; (ii) if Executive's employment is terminated for disability
pursuant to subparagraph 5(b) above, 30 days after Notice of Termination
is given (provided that Executive shall not have returned to the
performance of his duties during such
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thirty-day period); (iii) if Executive's employment is terminated for any
other reason, the date specified in the Notice of Termination which shall
not be less than 30 days nor more than 60 days from the date Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
6. Compensation Upon Termination of Employment.
(a) All Terminations. Upon the termination of Executive's employment
with the Company for any reason, Executive shall be entitled to receive
(i) his base salary through the Date of Termination, (ii) the balance of
any earned but unpaid bonus, (iii) up to a maximum of 60 days of accrued
but unused paid time off, (iv) all vested benefits under the Company's
benefit plans and (v) all benefit continuation and conversion rights as
provided under the Company's benefit plans. The foregoing are referred to
collectively as the "Base Termination Benefit."
(b) Death or Disability. If Executive's employment with the Company
terminates as a result of his death or his disability, then Executive
shall be entitled to receive (i) the Base Termination Benefit and (ii) a
cash bonus equal to his target bonus payable with respect to the year in
which the Date of Termination occurs.
(c) Cause. If Executive's employment is terminated by the Company
for cause, then Executive shall be entitled to receive the Base
Termination Benefit and the Company shall have no further obligations to
Executive under this Agreement except as otherwise required by applicable
law.
(d) Breach; Termination for Good Reason. If (i) the Company
terminates Executive's employment other than pursuant to subparagraphs
5(b) or 5(c) or (ii) Executive terminates his employment for good reason,
then Executive shall be entitled to receive:
(i) the Base Termination Benefit;
(ii) a cash bonus equal to his target bonus payable with
respect to the year in which the Date of Termination occurs,
prorated based on the date on which the Date of Termination occurs;
(iii) a lump sum cash payment equal to 200% of his annual base
salary and target bonus payable with respect to the year in which
the Date of Termination occurs;
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(iv) continuation for a period of 24 months after the Date of
Termination of all medical and life insurance and other welfare
benefits for Executive and his eligible dependents at active
Executive contribution rates;
(v) Company-paid executive level career transition assistance
by a firm designated by Executive;
(vi) immediate vesting of all unvested stock options,
restricted stock grants, stock appreciation rights and other equity
compensation awards; and
(vii) the right to exercise all stock options, stock
appreciation rights and other equity compensation awards for a
period of 12 months following the Date of Termination.
(e) Voluntary Termination. If Executive voluntarily terminates his
employment with the Company other than for good reason, then Executive
shall be entitled to receive the Base Termination Benefit and the Company
shall have no further obligations to Executive under this Agreement except
as otherwise required by applicable law.
(f) Termination Following a Change in Control. Notwithstanding
subparagraphs 6(d) and 6(e), if (i) within the 12-month period following a
change in control the Company terminates Executive's employment other than
pursuant to subparagraphs 5(b) or 5(c) or Executive terminates his
employment for good reason or (ii) within the 90-day period following a
change in control Executive voluntarily terminates has employment with the
Company, then Executive shall be entitled to receive:
(i) the Base Termination Benefit;
(ii) a cash bonus equal to his target bonus payable with
respect to the year in which the Date of Termination occurs,
prorated based on the date on which the Date of Termination occurs;
(iii) a lump sum cash payment equal to 300% of his annual base
salary and target bonus payable with respect to the year in which
the Date of Termination occurs;
(iv) continuation for a period of 36 months after the Date of
Termination of all medical and life insurance and other welfare
benefits for Executive and his eligible dependents at active
Executive contribution rates;
(v) Company-paid executive level career transition assistance
by a firm designated by Executive;
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(vi) immediate vesting of all unvested stock options,
restricted stock grants, stock appreciation rights and other equity
compensation awards; and
(vii) the right to exercise all stock options, stock
appreciation rights and other equity compensation awards for a
period of 12 months following the Date of Termination.
For purposes of this Agreement, a "change in control" shall mean a
change in control of the Company of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K, as in
effect as of the date of this Agreement, promulgated pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to the
reporting requirements of the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have occurred if:
(i) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the Company's assets;
(ii) the stockholders of the Company approve any plan or
proposal of liquidation or dissolution of the Company;
(iii) there shall be consummated any consolidation or merger
of the Company in which the Company is not the surviving or
continuing corporation, or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have,
directly or indirectly, at least an 80% ownership interest in the
outstanding Common Stock of the surviving corporation immediately
after the merger;
(iv) any "person" or "group" (as such terms are used in
Section 13(d) and 14(d) of the Exchange Act) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 15% or more
of the combined voting power of the Company's then outstanding
voting securities ordinarily having the right to vote for the
election of directors; provided that no change in control shall be
deemed to occur as a result of any acquisition of voting securities
directly from the Company (or as a result of the exercise,
conversion or exchange of any securities acquired directly from the
Company) if the transaction pursuant to which such voting securities
or exercisable, convertible or exchangeable securities are issued is
approved by vote of at least three-quarters of the directors
comprising the Incumbent Board (as defined below);
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(v) individuals who, as of the date of this Agreement,
constitute the Board of Directors of the Company (the "Board"
generally, and as of the date hereof, the "Incumbent Board") cease
for any reason to constitute a majority of the Board; provided that
any individual becoming a director subsequent to the date of this
Agreement whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board shall
be, for purposes of this Agreement, considered as though such
individual were a member of the Incumbent Board; provided further
that, notwithstanding the foregoing, an individual whose initial
assumption of office as a director is in connection with any actual
or threatened "solicitation" of "proxies" (as such terms are defined
in Rule 14a-1 of Regulation 14A promulgated under the Exchange Act)
by any "person" or "group" (as such terms are used in Section 13(d)
and 14(d) of the Exchange Act) other than the Incumbent Board shall
not be considered as a member of the Incumbent Board for purposes of
this Agreement; or
(vi) the Board fails to nominate Executive for election as a
director in connection with any annual or special meeting of the
Company's stockholders at which directors are to be elected
(Executive having indicated his willingness to be nominated as a
director and to serve as a director if elected), Executive is
nominated for election as a director in connection with any annual
or special meeting of the Company's stockholders at which directors
are to be elected (Executive having indicated his willingness to
serve as a director if elected) but is not elected as a director by
the Company's stockholders at such meeting, or Executive is removed
from office as a director, with or without cause, by vote or consent
of the Company's stockholders, if, in each case, such event occurs
in connection with any actual or threatened "solicitation" of
"proxies" (as such terms are defined in Rule 14a-1 of Regulation 14A
promulgated under the Exchange Act) by any "person" or "group" (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act)
other than the Incumbent Board.
(g) Obligations under Proprietary Information and Inventions
Agreement. Executive understands and agrees that if he materially breaches
any material provision of the Proprietary Information and Inventions
Agreement, the Company shall cease to have any obligation to make any
severance or other post-employment payments under this paragraph 6.
Executive further understands and agrees that the severance and other
post-employment payments to be made to Executive pursuant to this
paragraph 6 may be applied by the Company to satisfy its payment
obligations set forth in Section 5 of the Proprietary Information and
Inventions Agreement for the period during which payments are being made
to Executive in accordance with this paragraph 6.
(h) Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for this paragraph 6 by seeking other
employment or
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otherwise, nor shall the amount of any payments provided in this Agreement
be reduced by any compensation earned by Executive as the result of his
self-employment or his employment by another employer after his Date of
Termination.
7. Excise Tax Payments.
(a) Right to Receive Gross-Up Payment. In the event that any payment
or benefit (within the meaning of Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the "Code")) to Executive or for
Executive's benefit paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with,
or arising out of, Executive's employment with the Company or a change in
ownership or effective control of the Company or of a substantial portion
of its assets (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
herein as the "Excise Tax"), then Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes and the Excise Tax, other than interest
and penalties imposed by reason of Executive's failure to file timely a
tax return or pay taxes shown due on Executive's return, and including any
Excise Tax imposed upon the Gross-Up Payment), Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Determination Relating to Gross-Up Payment. An initial
determination as to whether a Gross-Up Payment is required pursuant to
this Agreement and the amount of such Gross-Up Payment shall be made at
the Company's expense by an accounting firm of recognized national
standing selected by the Company and reasonably acceptable to Executive
(the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation, to the Company and Executive within five
days of the Date of Termination, if applicable, or such other time as
requested by the Company or by Executive (provided Executive reasonably
believes that any of the Payments may be subject to the Excise Tax). If
the Accounting Firm determines that no Excise Tax is payable by Executive
with respect to a Payment or Payments, it shall furnish Executive with an
opinion reasonably acceptable to Executive that no Excise Tax shall be
imposed with respect to any such Payment or Payments. The Gross-Up
Payment, if any, as determined pursuant to this subparagraph 7(b) shall be
paid by the Company to Executive within five days after the receipt of the
Determination. Within ten days after the delivery of the Determination to
Executive, Executive shall have the right to dispute the Determination
(the "Dispute"). The existence of the Dispute shall not in any way affect
Executive's right to receive the Gross-Up Payment in accordance with the
Determination. If there is no Dispute, the Determination shall be binding,
final and conclusive upon the Company and Executive, subject to the
application of the provisions of subparagraph 7(c).
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(c) Excess Payment and Underpayment. As a result of uncertainty in
the application of Sections 280G and 4999 of the Code, it is possible that
a Gross-Up Payment (or a portion thereof) shall be paid which should not
be paid (an "Excess Payment") or that a Gross-Up Payment (or a portion
thereof) which should be paid shall not be paid (an "Underpayment"). An
Underpayment shall be deemed to have occurred (i) upon notice (formal or
informal) to Executive from any governmental taxing authority that
Executive's tax liability (whether in respect of Executive's current
taxable year or in respect of any prior taxable year) may be increased by
reason of the imposition of the Excise Tax on a Payment or Payments with
respect to which the Company has failed to make a sufficient Gross-Up
Payment, (ii) upon a determination by a court, (iii) by reason of a
determination by the Company (which shall include the position taken by
the Company, together with its consolidated group, on its federal income
tax return) or (iv) upon the resolution of the Dispute to Executive's
satisfaction. If an Underpayment occurs, Executive shall promptly notify
the Company and the Company shall promptly, but in any event at least five
days prior to the date on which the applicable government taxing authority
has requested payment, pay to Executive an additional Gross-Up Payment
equal to the amount of the Underpayment plus any interest and penalties
(other than interest and penalties imposed by reason of Executive's
failure to file timely a tax return or pay taxes shown due on Executive's
return) imposed on the Underpayment. An Excess Payment shall deemed to
have occurred upon a Final Determination (as hereinafter defined) that the
Excise Tax shall not be imposed upon a Payment or Payments (or portion
thereof) with respect to which Executive had previously received a
Gross-Up Payment. A "Final Determination" shall be deemed to have occurred
when Executive has received from the applicable government taxing
authority a refund of taxes or other reduction in Executive's tax
liability by reason of the Excise Payment and upon either (i) the date a
determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and conclusively
binds Executive and such taxing authority, or in the event that a claim is
brought before a court of competent jurisdiction, the date upon which a
final determination has been made by such court and either all appeals
have been taken and finally resolved or the time for all appeals has
expired or (ii) the statute of limitations with respect to Executive's
applicable tax return has expired. If an Excess Payment is determined to
have been made, the amount of the Excess Payment shall be treated as a
loan by the Company to Executive and Executive shall pay to the Company on
demand (but not less than 10 days after the determination of such Excess
Payment and written notice has been delivered to Executive) the amount of
the Excess Payment plus interest at an annual rate equal to the Applicable
Federal Rate provided for in Section 1274(d) of the Code from the date the
Gross-Up Payment (to which the Excess Payment relates) was paid to
Executive until the date of repayment to the Company.
(d) Payment of Excise Tax Withholding. Notwithstanding anything
contained in this Agreement to the contrary, in the event that, according
to the Determination, an Excise Tax is imposed on any Payment or Payments,
the Company shall pay to the applicable government taxing authorities as
Excise Tax
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withholding the amount of the Excise Tax that the Company has actually
withheld from the Payment or Payments.
8. Successors; Binding Agreement.
(a) Successors to the Company. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to Executive,
to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Executive to terminate his
employment with the Company for good reason. As used in this Agreement,
"Company" shall mean the Company and any successor to its business and/or
assets which executes and delivers the agreement provided for in this
paragraph 8 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) Assignment. Executive's rights and interests under this
Agreement may not be assigned, pledged or encumbered by him without the
Company's written consent. This Agreement and all rights of Executive
hereunder shall inure to the benefit of and be enforceable by Executive's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive should die while
any amounts would still be payable to him hereunder if he had continued to
live all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's surviving
spouse or, if there is no surviving spouse, to his estate.
9. Proprietary Information. Executive and the Company have entered into
the Proprietary Information and Inventions Agreement, which agreement shall
remain in full force and effect.
10. Payment of Costs and Indemnification.
(a) Payment of Costs. In the event that a dispute arises regarding
termination of Executive's employment or the interpretation or enforcement
of this Agreement, the Company shall promptly pay, or reimburse to
Executive, as and when incurred, all reasonable fees and expenses
(including reasonable legal fees and expenses, court costs, costs of
investigation and similar expenses) incurred by Executive in contesting or
disputing any such termination, in seeking to obtain or enforce any right
or benefit provided for in this Agreement, or in otherwise pursuing his
claim; provided, however, that the Company shall be entitled to recover
from Executive the amount of any such fees and expenses paid by the
Company if the Company obtains a final judgment in its favor on the merits
of such dispute from a court of competent jurisdiction from which no
appeal may be taken, whether because the time to do so has expired or
otherwise.
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(b) Indemnification. The Company shall indemnify and hold Executive
harmless to he maximum extent permitted by law against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys'
fees, incurred by Executive in connection with the defense of, or as a
result of, any action or proceeding (or any appeal from any action or
proceeding) in which Executive is made or is threatened to be made a party
by reason of the fact that Executive is or was an Executive, officer, or
director of the Company or any of its subsidiaries, regardless of whether
such action or proceeding is one brought by or in the right of the Company
to procure a judgment in its favor. The undertaking of subparagraph (a)
above is independent of, and shall not be limited or prejudiced by, the
undertakings of this subparagraph (b). The indemnification provided in
this Agreement is in addition to, and not in derogation of, any rights to
indemnification or advancement of expenses to which Executive may
otherwise be entitled under the Certificate of Incorporation or Bylaws of
the Company, any indemnification contract or agreement, any policy of
insurance or otherwise.
(c) Warranty. The Company hereby represents and warrants that the
undertakings of payment and indemnification set out in (a) and (b) above
are not in conflict with the Certificate of Incorporation or Bylaws of the
Company or with any validly existing agreement or other proper corporate
action of the Company.
11. Registration Rights.
(a) Demand Registration. Upon the terms and subject to the
conditions set forth in this paragraph 11, Executive or his estate or
legal representative may request a single registration (the "Demand
Registration") under the Securities Act of 1933, as amended (the
"Securities Act"), of all or part of the shares of the Company's Common
Stock beneficially owned by Executive or his estate (collectively, the
"Registrable Securities").
(b) Demand Priority. The Company shall not include in the Demand
Registration any securities which are not Registrable Securities without
the prior written consent of Executive or his estate or legal
representative. If the Demand Registration is an underwritten offering and
the managing underwriters advise the Company that in their opinion the
number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities which can be sold in an
orderly manner in such offering within a price range acceptable to
Executive or his estate or legal representative, the Company shall include
in such registration prior to the inclusion of any securities which are
not Registrable Securities the number of Registrable Securities requested
to be included which in the opinion of such underwriters can be sold in an
orderly manner within the price range of such offering.
(c) Postponement Right. The Company may postpone for up to 90 days
the filing or the effectiveness of a registration statement for the Demand
Registration if the Board of Directors of the Company determines in good
faith that
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such Demand Registration would reasonably be expected to have an adverse
effect on any proposal or plan by the Company to engage in any acquisition
of assets (other than in the ordinary course of business), merger,
consolidation or tender offer or to enter into any material license
agreement, joint venture arrangement or similar transaction; provided that
in such event, the holders of Registrable Securities shall be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as the permitted Demand Registration
hereunder and the Company shall pay all registration expenses in
connection with such registration in accordance with subparagraph 11(h).
(d) Piggyback Registrations. Whenever the Company proposes to
register any of its securities under the Securities Act (other than
pursuant to a Demand Registration) and the registration form to be used
may be used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company shall give prompt written notice to Executive
of its intention to effect such a registration and shall include in such
registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 15 days after
the giving of the Company's notice.
(e) Piggyback Priority on Company Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that
in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the Company, the Company
shall include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities and any other
securities requested to be included in such registration by holders
entitled to registration rights in connection therewith, pro rata among
such holders based on the number of shares requested to be included in
such registration, and (iii) third, other securities requested to be
included in such registration
(f) Piggyback Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities, and the managing underwriters advise
the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can
be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the
Company shall include in such registration (i) first, the securities
requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included
therein by the holders thereof, pro rata among such holders based on the
number of shares requested to be included in such registration, and (ii)
second, other securities requested to be included in such registration.
(g) Best Efforts by the Company. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered
pursuant to this Agreement, the Company shall use its reasonable best
efforts to effect the
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registration and the sale of such Registrable Securities in accordance
with the intended method of disposition.
(h) Registration Expenses. The Company shall pay all expenses
incident to the registration and disposition of the Registrable Securities
pursuant to this Agreement, including all registration, filing and
applicable securities exchange fees, all fees and expenses of complying
with state securities or blue sky laws (including fees and disbursements
of counsel to the underwriters or the holders of Registrable Securities in
connection with "blue sky" qualification of the Registrable Securities and
determination of their eligibility for investment under the laws of the
various jurisdictions), all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of counsel for any other person reasonably
requested by the holders of a majority of the Registrable Securities
included in the registration, the fees and expenses of the Company's
independent public accountants and any other independent public
accountants whose opinions are included in the registration statement,
including the expenses of "cold comfort" letters or any special audits
required by, or incident to, such registration, all fees and disbursements
of underwriters (other than underwriting discounts and commissions), all
transfer taxes, and the reasonable fees and expenses of counsel and
accountants to the holders of Registrable Securities; provided that the
holders of Registrable Securities shall be required to pay all
underwriting discounts and commissions in respect of the Registrable
Securities being registered by such holders. In connection with any
registration pursuant to this Agreement, the Company shall not be
obligated to pay the fees and expenses for more than one counsel, other
than local and special counsel, or for more than one firm of accountants
representing the holders of Registrable Securities.
(i) Indemnification by the Company. The Company agrees to indemnify,
to the extent permitted by law, each holder of Registrable Securities, its
officers and directors and each person who controls such holder (within
the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement
of material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of
the same. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each person
who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification
of the holders of Registrable Securities.
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(j) Indemnification by Holders. In connection with any registration
statement in which a holder of Registrable Securities is participating,
each such holder shall furnish to the Company in writing such information
and affidavits as the Company reasonably requests for use in connection
with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers
and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided
that the obligation to indemnify shall be individual to each holder and
shall be limited to the net amount of proceeds received by such holder
from the sale of Registrable Securities pursuant to such registration
statement.
(k) Limitations on Exercise. The registration rights provided in
this paragraph 11 shall be exercisable only after the occurrence of a
change in control of the Company.
12. General Provisions.
(a) Fees and Expenses. The Company shall pay as they become due all
legal fees and related expenses (including the costs of experts) incurred
by Executive as a result of (i) Executive's termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment) and (ii) Executive seeking
to obtain or enforce any right or benefit provided by this Agreement
(including any such fees and expenses incurred in connection with any
Dispute or Gross-Up Payment, whether as a result of any applicable
government taxing authority proceeding, audit or otherwise) or by any
other plan or arrangement maintained by the Company under which Executive
is or may be entitled to receive benefits.
(b) No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including any right
of set-off, counterclaim, recoupment, defense or other right which the
Company may have against Executive or others.
(c) Effect of Headings. The headings of all of the paragraphs and
subparagraphs of this Agreement are inserted for convenience of reference
only and shall not affect the construction or interpretation of this
Agreement.
(d) Modification, Amendment, Waiver. No modification, amendment, or
waiver of any provision of this Agreement shall be effective unless
approved in
16
writing by both parties. The failure at any time to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of either party thereafter
to enforce each and every provision of this Agreement in accordance with
its terms.
(e) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidly,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any person.
(g) Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by the
internal laws of the State of Illinois.
(h) Arbitration. All disputes arising out of or in connection with
this Agreement shall be referred to and finally resolved by binding
arbitration under American Arbitration Association's National Rules for
Resolution of Employment Disputes, which arbitration rules are
incorporated herein by reference. The tribunal shall consist of a sole
arbitrator. The place of arbitration shall be Chicago, Illinois. Process
in any such arbitration proceeding may be served on any party anywhere in
the world by notice given to the party in accordance with paragraph 12(i).
(i) Notices. Any notice to be served under this Agreement shall be
in writing and shall be mailed by registered mail, return receipt
requested, addressed:
If to the Company, to:
Northfield Laboratories Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Board of Directors
If to Executive, to:
c/o Northfield Laboratories Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
or to such other place as either party may specify in writing,
delivered in accordance with the provisions of this subparagraph.
17
(j) Survival. The rights and obligations of the parties shall
survive the term of Executive's employment to the extent that any
performance is required under this Agreement after the expiration or
termination of such term.
(k) Entire Agreement. This Agreement, together with the Proprietary
Information and Inventions Agreement described in paragraph 9 above,
constitutes the entire agreement of the parties with respect to the
subject matter thereof, and supersedes all previous agreements between the
parties relating to the same subject matter (but excluding the Proprietary
Information and Inventions Agreement, which agreement shall remain in full
force and effect).
(l) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same document.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
EXECUTIVE NORTHFIELD LABORATORIES INC.
/s/ Xxxxxx X. Xxxxx, M.D. By: /s/ Xxxx X. Xxxxx
--------------------------- -------------------------------
Xxxxxx X. Xxxxx, M.D. Its: Senior Vice President and Chief
Financial Officer
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