EMPLOYMENT AGREEMENT
Exhibit
10.2
THIS AGREEMENT, originally made as of January 28, 2005, by and between Xxxx X. Xxxxx
(“Executive”) and Northfield Laboratories Inc., a Delaware corporation (the “Company”), is amended
effective as of this 25th day of February, 2008.
W I T N E S S E T H:
WHEREAS, Executive is now, and has been, employed as the Senior Vice President Administration
of the Company;
WHEREAS, the Company and Executive originally entered into an Employment Agreement dated as of
January 28, 2005 in order to continue such employment for the term set forth herein and subject to
the terms and conditions set forth herein;
WHEREAS, the Company and Executive desire to continue the Proprietary Information and
Inventions Agreement entered into by and between Executive and the Company dated October 1, 1986
(the “Proprietary Information and Inventions Agreement”) in full force and effect; and
WHEREAS, the Company and Executive now desire to amend and restate the Agreement to solely
comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).
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 original
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, Employee shall serve as
the Senior Vice President Administration of the Company and shall perform such executive and
managerial duties consistent with such position as the Chief Executive Officer and 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. Employee 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 original 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 $275,625 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 original date of this Agreement, Executive shall be paid a cash
bonus of $50,000.
(ii) Executive shall be paid a cash bonus equal to 100% 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. Such bonus will be paid within 14 days after the Company receives
written notification of such approval.
(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. The annual cash bonus is payable with respect to
performance during the Company’s fiscal year ending each May 31. Executive and the
Board of Directors shall use their good faith efforts to agree prior to June 30 of
each fiscal year on the performance goals to be applicable for such fiscal year.
The target bonus opportunity shall be equal to 40% of Executive’s annual base
salary, as in effect at the beginning of the fiscal year for which Executive’s
performance is being measured, with a maximum bonus opportunity for superior
performance of 100% 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. In no event shall any annual cash
bonus be paid later than the 15th day of the third month following the later of (A)
the end of the Company’s fiscal year, or (B) the end of the calendar year, in which
the annual performance goals are met to the satisfaction of the Board of Directors,
as the case may be, consistent with the short-term deferral rule in Treasury
Regulation Section 1.409A-1(b)(4).
(c) Award of Stock Options. On the original date of this Agreement, the
Company shall award Executive stock options under the Northfield Laboratories Inc. 2003
Equity Compensation Plan to acquire 50,000 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
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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.
The reimbursement of expenses during a calendar year will not affect the expenses eligible
for reimbursement in any other calendar year. In no event shall such an expense be
reimbursed after December 31 of the calendar year following the calendar year in which the
expense was incurred.
(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; provided that any portion of such annual amount not incurred by Executive as of
each December 31 shall be forfeited. In calendar year 2008, Executive shall additionally be
entitled to reimbursement for up to a total of $10,000 for estate planning expenses. In no
event shall an expense incurred pursuant to this paragraph (g) be reimbursed later than
December 31 of the calendar year following the calendar year in which such expense was
incurred.
(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. To the extent such a cost is not paid for or reimbursed under an insurance policy
or benefit plan of the Company and is taxable to the Executive, such cost shall be
reimbursed no later than December 31 of the calendar year following the calendar year in
which the cost was incurred.
(i) 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.
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
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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 Senior Vice President Administration 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 (1)
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, without the Executive’s consent, of any of the
following events:
(A) a material diminution of Executive’s duties or authority, or the
assignment to Executive of duties materially inconsistent with his position,
in either case, with or without a change in Executive’s title;
(B) the institution of a requirement that Executive report to any
person other than the Chief Executive Officer;
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(C) a material diminution in Executive’s base salary or a material
diminution in Executive’s benefits;
(D) a material change in the geographic location at which Executive
must perform services pursuant to this Agreement; or
(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).
Notwithstanding the foregoing, the Executive shall not be deemed to have terminated for
good reason unless, within 45 days after the initial condition giving rise to good reason,
the Executive provides the Company with written notice of such condition. The Company shall
have 30 days following receipt of such notice to cure the condition. If the Company does
not cure such condition within the 30 day period, then Executive’s Date of Termination shall
be the first day after the 30 day cure period expires.
(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 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 (except as provided in subparagraph 5(d)); 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).
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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 payable in accordance with the terms of such 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, with such amounts paid no later
than the 15th day of the third month following the later of (A) the end of the Company’s
fiscal year, or (B) the end of the calendar year, of the Date of Termination.
(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 (A) the Company terminates
Executive’s employment other than pursuant to subparagraphs 5(b) or 5(c), or (B) 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;
(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) reasonable 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
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(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 compliance with Section 409A, the following provisions shall apply.
Payments pursuant to clauses (ii) and (iii) shall be paid to Executive no later than the
15th day of the third month following the later of (A) the end of the Company’s fiscal year
that includes the Date of Termination, or (B) the end of the calendar year that includes the
Date of Termination. To the extent that any payment of medical benefits provided pursuant
to clause (iv) does not qualify for exemption from Section 409A, such payment shall meet the
requirements of Section 409A by satisfying the following conditions: (A) the amount of
payment in any one taxable year may not affect the amount of payment in another taxable
year; and (B) any such payment reimbursing Executive or his eligible dependents for an
expense shall be made on or before the last day of the Executive’s taxable year following
the taxable year in which the expense was incurred. In addition, career transition
assistance provided pursuant to clause (v) shall not be provided beyond December 31 of the
second calendar year after the calendar year that includes 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 30-day period
following a change in control Executive voluntarily terminates his 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) reasonable 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.
Payments and benefits provided pursuant to clauses (ii)-(v) shall be subject to the
Section 409A rules set forth above in subparagraph 5(d).
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 original 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);
or
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(v) individuals who, as of the original 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 original 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.
(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 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.
(i) Exclusive Severance. The severance pay and benefits provided for in this
paragraph 6 will be in lieu of any other severance or termination pay to which the Executive
may be entitled under any Company severance or termination plan, program, practice or
arrangement. The Executive’s entitlement to any other compensation or benefits will be
determined in accordance with the Company’s employee benefit plans and other applicable
programs, policies and practices as in effect from time to time.
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 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
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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).
(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
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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 in Compliance with Section 409A. Notwithstanding the foregoing, if
Executive is a “specified employee” (within the meaning of Code Section 409A) as of the Date
of Termination, the Company shall pay any Gross-Up Payment due as a result of an Excise Tax
or Underpayment no earlier than the first day following the six-month anniversary of the
Date of Termination and no later than December 31 of the calendar year following the
calendar year in which Executive pays such Excise Tax.
(e) 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 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
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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. In no event shall payment of such expenses be
made later than December 31 of the calendar year following the calendar year in which the
expense was incurred.
(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
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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. 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. In no event shall payment of such expenses be made later
than December 31 of the calendar year following the calendar year in which the expense was
incurred.
(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 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.
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(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 11(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
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
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.
(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).
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(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.
(m) Compliance with Section 409A. It is the intention of the Company and
Executive that the provisions of this Agreement comply with Section 409A and all provisions
of this Agreement will be construed and interpreted in a manner consistent with Section
409A. Any mention of “termination” of Executive’s employment contained herein refers to a
separation from service as determined pursuant to Treasury Regulation Section 1.409A-1(h).
* * * * *
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/ Xxxx X. Xxxxx
|
By: | /s/ Xxxxx X. Xxxxxx | ||
Xxxx X. Xxxxx
|
Its: | Director and Compensation Committee Chairman | ||
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