EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of this 1st day of January, 2003, by
and between XXXXXX X. XXXXX, M.D. ("Employee") and NORTHFIELD LABORATORIES INC.,
a Delaware corporation (the "Company").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Employee is now employed as the Chief Executive Officer of the
Company;
WHEREAS, the Company and Employee 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 Employee desire to continue the Proprietary
Information and Inventions Agreement entered into by and between Employee 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 Employee, and
Employee agrees to remain in the employ of the Company, for the period (the
"Employment Period") beginning on January 1, 2003 and ending on the earlier to
occur of (a) December 31, 2004 or (b) the date as of which Employee's employment
is terminated pursuant to paragraph 5 of this Agreement. During the Employment
Period, Employee shall serve as the Chief Executive Officer 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.
Employee shall devote his full business time and attention to the business of
the Company and its subsidiaries.
2. Location. Employee shall be based at the Company's
headquarters in Evanston, Illinois, or at such other location as may be agreed
upon by Employee and the Board of Directors of the Company. Employee 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 Employee's travel during his employment by
the Company prior to the date of this Agreement.
3. Compensation. During the Employment Period, Employee shall be
compensated as follows:
(a) Salary. An "Employment Year" shall be the
twelve-month period beginning on the first day of the Employment Period
and on each anniversary of such date during the Employment Period. For
the first Employment Year, Employee shall be paid an annual base salary
at a rate which is not less than $315,000 per year. For the second
Employment Year, Employee shall be paid an annual base salary at a rate
to be agreed by the Company and Employee, which shall not be less than
$315,000 per year. Employee's base salary shall be paid in equal,
bi-weekly installments.
(b) Bonus. Employee shall be paid a cash bonus of
$315,000 as of the date the Company is granted approval for the
commercial sale of PolyHeme in the United States for any indication.
The Board of Directors of the Company may in its discretion determine
to award Employee additional cash bonuses from time to time during the
term of this Agreement.
(c) Award of Stock Options. On January 2, 2003, the
Company shall award Employee stock options under the Northfield
Laboratories Inc. 1999 Stock Option 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. On or before January 1, 2004, the Compensation Committee of the
Board of Directors of the Company shall review the performance of the
Company and Executive during the first Employment Year and shall
determine whether the award of additional stock options to Employee is
appropriate. The Board of Directors of the Company may in its
discretion determine to award Employee additional stock options or
other forms of equity incentive compensation from time to time during
the term of this Agreement.
(d) Paid Vacation. Employee shall be entitled to five
weeks paid vacation in each calendar year. Any vacation which is not
used by Employee shall be forfeited at the end of the calendar year.
(e) Expenses. Employee 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. In addition to any other
compensation provided under this Agreement, Employee shall also be
entitled to participate, during the Employment Period, in any and all
pension, stock option, relocation, profit sharing, and other employee
benefit plans or fringe benefit programs which are from time to time
maintained by the Company or its subsidiaries for their senior
executive
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officers, in accordance with the provisions of such plans or programs
as from time to time in effect.
(g) Deduction and Withholding. All compensation and other
benefits payable to or on behalf of Employee pursuant to this Agreement
shall be subject to such deductions and withholding as may be agreed to
by Employee or required by applicable law.
4. Other Benefits. The compensation provisions of this Agreement
shall be in addition to, and not in derogation or diminution of, any
benefits that Employee or his beneficiaries may be entitled to receive
under the provisions of any pension, stock option, profit sharing,
disability (except as otherwise provided in subparagraph 6(b)),
relocation or other employee 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 Employee'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 employees.
5. Termination. Employee's employment may be terminated without
any breach of this Agreement only under the following circumstances:
(a) Death. Employee's employment shall terminate upon his
death.
(b) Disability. If, as a result of Employee's incapacity
due to physical or mental illness or accident, (i) Employee shall have
been absent from his duties for the Company on a full-time basis for
the entire period of six consecutive months and (ii) within thirty days
after written Notice of Termination is given (which may occur before or
after the end of such six-month period) shall not have returned to the
performance of his duties, the Company may terminate Employee's
employment for "disability."
(c) Cause. The Company may terminate Employee's
employment hereunder for "cause." For purposes of this Agreement,
"cause" shall mean the conviction of Employee of any felony or any
failure by Employee 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,
Employee shall not be deemed to have been terminated for cause without
(i) at least 60 days prior written notice from the Company to Employee
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 Employee 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, Employee was guilty
of the conduct or of the failure described in the second sentence of
this subparagraph, specifying the particulars in detail, and that
Employee has failed to cure the stated cause.
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(d) Termination by Employee. Employee may voluntarily
terminate his employment at any time. Employee's termination of
employment shall be for "good reason" if he voluntarily terminates his
employment:
(i) within 90 days after a "change in control"
(as defined below) of the Company for any reason;
(ii) at any time after a "change in control" of
the Company because:
(A) he has been reassigned to a
position of lesser rank or status or to a location
other than Evanston, Illinois (or such other location
as Employee may agree), without his consent; or
(B) his annual base salary has been
reduced; or
(C) his benefits have been reduced;
(iii) because of a failure by the Company to
comply with any material provision of this Agreement which has
not been cured within ten days after written notice of such
noncompliance has been given by the Employee to the Company;
or
(iv) because of any purported termination of the
Employee'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).
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
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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 will 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);
(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 Employee 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 (Employee having indicated his
willingness to be nominated as a director and to serve as a
director if elected), Employee 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 (Employee 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 Employee is removed
from office as a director, with or without cause, by vote or
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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.
(e) Notice of Termination. Any termination of Employee's
employment by the Company or by Employee (other than termination
because of Employee'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 Employee's employment under the
provision so indicated.
(f) Date of Termination of Employment. "Date of
Termination" shall mean (i) if Employee's employment is terminated by
his death, the date of his death; (ii) if Employee's employment is
terminated for disability pursuant to subparagraph 5(b) above, 30 days
after Notice of Termination is given (provided that Employee shall not
have returned to the performance of his duties during such thirty-day
period); (iii) if Employee's employment is terminated for any other
reason, the date specified in the Notice of Termination which shall not
be less than 10 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 or During
Disability.
(a) Death. If Employee's employment is terminated by his
death, the Company shall continue to pay his full base salary at the
rate then in effect to Employee's surviving spouse or, if he has no
surviving spouse, to his estate as a death benefit for a period of one
month following his Date of Termination.
(b) Disability. During any period that Employee fails to
perform his duties hereunder as a result of incapacity due to physical
or mental illness or accident, the Company shall continue to pay him
his full base salary at the rate then in effect for such period until
his Date of Termination and shall pay him any bonus that becomes
payable prior to his Date of Termination. Notwithstanding the preceding
sentence any salary payments made to Employee during such period of
incapacity shall be reduced (but not below zero) by amounts actually
paid to the Employee for the same period and at or prior to the time of
any such salary
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payment under disability benefit plans maintained by the Company;
provided such disability benefit amounts were not previously applied to
reduce any such salary payment.
(c) Cause. If Employee's employment is terminated for
cause, the Company shall pay Employee his full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given and, except for other compensation or benefits
accrued through his Date of Termination, the Company shall have no
further obligations to Employee under this Agreement except as
otherwise required by applicable law.
(d) Breach; Termination for Good Reason. If (i) in breach
of this Agreement, the Company shall terminate Employee's employment
other than pursuant to subparagraphs 5(a), 5(b) or 5(c) hereof (it
being understood that a purported termination pursuant to subparagraphs
5(b) or 5(c) hereof which is disputed and finally determined not to
have been proper shall be a termination of Employee's employment by the
Company in breach of this Agreement) or (ii) Employee shall terminate
his employment for good reason, then:
(i) the Company shall make a lump sum payment to
Employee, not later that five business days after the Notice of
Termination is given by the Company or Employee, as applicable, in an
amount equal to two times Employee's highest annual base salary as in
effect at any time during the twelve months preceding the date such
Notice of Termination is given;
(ii) the Company shall pay to Employee, not later
than five business days after the date [they] become due and payable,
any bonus that would have been payable to Employee pursuant to
subparagraph 3(b) had Employees employment with the Company continued
through the expiration of the Employment Period;
(iii) if the termination of Employee's employment
occurs after the date of a change in control of the Company, any stock
options held by Executive that did not become fully vested and
exercisable as of the date of such change in control shall become fully
vested and exercisable as of the Date of Termination; and
(iv) until the second anniversary of the date the
Notice of Termination is given by the Company or Employee, as
applicable, Employee shall continue to be eligible to participate in
any accident, health, disability, life or similar employee welfare
benefit plans maintained by the Company or its subsidiaries, to the
same extent he was eligible to participate in such plans at any time
during the twelve months preceding the date such Notice of Termination
is given and at no cost to him; provided that if such continued
participation is precluded by the provisions of such plans or by
applicable law, the Company shall provide Employee with comparable
benefits of equivalent value.
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Employee 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
payment under this subparagraph 6(d).
(e) Voluntary Termination. If Employee voluntarily
terminates his employment other than for good reason or in accordance
with the provision of subparagraph 6(f), he shall not be entitled to
receive any compensation or benefits pursuant to this Agreement, other
than compensation or benefits accrued through the Date of Termination
or as otherwise required by law.
(f) Termination at End of First Employment Year. If the
Company and Employee are unable to reach agreement pursuant to
subparagraph 3(a) on or prior to December 31, 2003 with respect to the
base salary payable to Employee during the second Employment Year, then
Employee may elect to terminate the Employment Period as of December
31, 2003 and the Company shall be obligated to continue to pay Employee
his full base salary, at a rate equal to the rate in effect immediately
prior to December 31, 2003, until December 31, 2004, and to continue to
provide Employee and his eligible dependents with coverage, at the
Company's expense, under the Company's group medical insurance plan
until December 31, 2004.
(g) Post-Employment Period Severance. If Employee's
employment with the Company terminates at any time after December 31,
2004 for any reason other than Employee's death, disability or
discharge for cause and an "employment offer" (as defined below) by the
Company is not outstanding as of the date of the termination of
Employee's employment, then the Company shall continue to pay Employee
his full base salary, at a rate equal to the rate in effect immediately
prior to December 31, 2004, until December 31, 2006. If Employee's
employment with the Company terminates at any time after December 31,
2004 for any reason other than Employee's death, disability or
discharge for cause and an "employment offer" by the Company is
outstanding as of the date of the termination of Employee's employment,
then the Company shall continue to pay Employee his full base salary,
at a rate equal to the rate in effect immediately prior to December 31,
2004, until December 31, 2005. An "employment offer" shall be deemed to
be outstanding as of the date of the termination of Employee's
employment with the Company if, as of such date, there is outstanding a
written offer by the Company to enter into an employment agreement with
Employee in substantially the form of this Agreement providing for a
term of employment ending on or after December 31, 2006 and an annual
base salary at least equal to Employee's base salary in effect
immediately prior to December 31, 2004. The Company shall notify
Employee in writing at least 30 days prior to the expiration of the
Employment Period as to whether the Company plans to extend an
employment offer to Employee. Employee shall not be entitled to receive
any severance payments under this subparagraph 6(g) if Employee and the
Company enter into an employment or severance agreement after the date
of this Agreement (including any renewal or extension of this
Agreement) that includes severance arrangements relating to the
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termination of Employee's employment with the Company after December
31, 2004.
(h) Obligations under Proprietary Information and
Inventions Agreement. Employee 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. Employee further understands and agrees that
the severance and other post-employment payments to be made to Employee
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 Employee in accordance with this paragraph
6.
(i) Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for this paragraph 6 by
seeking other employment or otherwise, nor shall the amount of any
payments provided in this Agreement be reduced by any compensation
earned by Employee 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 Employee or
for Employee'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, Employee'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 Employee 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
Employee shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Employee 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 Employee's failure to file timely a tax return or
pay taxes shown due on Employee's return, and including any Excise Tax
imposed upon the Gross-Up Payment), Employee 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 Employee (the "Accounting Firm"). The Accounting Firm
shall provide its determination (the "Determination"),
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together with detailed supporting calculations and documentation, to
the Company and Employee within five days of the Date of Termination,
if applicable, or such other time as requested by the Company or by
Employee (provided Employee 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 Employee with respect to a
Payment or Payments, it shall furnish Employee with an opinion
reasonably acceptable to Employee 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 Employee within five days after the receipt of the
Determination. Within ten days after the delivery of the Determination
to Employee, Employee shall have the right to dispute the Determination
(the "Dispute"). The existence of the Dispute shall not in any way
affect Employee'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 Employee, subject
to the application of the provisions of subparagraph 7(c).
(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 Employee from any governmental
taxing authority that Employee's tax liability (whether in respect of
Employee'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 Employee's satisfaction. If an
Underpayment occurs, Employee 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 Employee 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 Employee's
failure to file timely a tax return or pay taxes shown due on
Employee'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 Employee had
previously received a Gross-Up Payment. A "Final Determination" shall
be deemed to have occurred when Employee has received from the
applicable government taxing authority a refund of taxes or other
reduction in Employee'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 Employee and such taxing
authority, or in the event that a claim is brought before a court of
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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 Employee'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 Employee and Employee 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 Employee) 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
Employee 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 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 Employee, 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 Employee 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. Employee'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
Employee hereunder shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If Employee 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 Employee's surviving spouse or, if there is no
surviving spouse, to his estate.
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9. Proprietary Information. Employee 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 Employee's employment or the interpretation or
enforcement of this Agreement, the Company shall promptly pay, or
reimburse to Employee, 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 Employee 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 Employee 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.
(b) Indemnification. The Company shall indemnify and hold
Employee harmless to the maximum extent permitted by law against
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred by Employee 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 Employee is made or is
threatened to be made a party by reason of the fact that Employee is or
was an employee, 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, Employee 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
12
Company's Common Stock beneficially owned by Employee 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 Employee 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
Employee 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 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 Employee 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
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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 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 will 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 will 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.
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(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.
(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 Employee as a result of (i) Employee's termination
of employment (including all such fees and expenses, if any, incurred
in contesting or disputing any such
15
termination of employment) and (ii) Employee 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 Employee 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 Employee 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 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) 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
16
If to Employee, 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.
(i) Survival. The rights and obligations of the parties
shall survive the term of Employee's employment to the extent that any
performance is required under this Agreement after the expiration or
termination of such term.
(j) 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).
(k) 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.
* * * * *
17
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
EMPLOYEE NORTHFIELD LABORATORIES INC.
/s/ Xxxxxx X. Xxxxx, M.D. /s/ Xxxx Xxxxxxxxx
--------------------------- By -----------------------
Xxxxxx X. Xxxxx, M.D. Compensation Committee
Its ----------------------
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