EXHIBIT 10.17
FORM OF SEVERANCE PROTECTION AGREEMENT
SEVERANCE PROTECTION AGREEMENT dated October 4, 2002 by and between
Northfield Laboratories Inc., a Delaware corporation (the "Company"), and
******* ******* (the "Executive").
The Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control (as hereinafter defined) of the Company
exists and that the threat or occurrence of a Change in Control may result in
the distraction of its key management personnel because of the uncertainties
inherent in such a situation.
The Board has determined that it is essential and in the best interests
of the Company and its stockholders to retain the services of the Executive in
the event of the threat or occurrence of a Change in Control and to ensure the
Executive's continued dedication and efforts in such event without undue concern
for the Executive's personal financial and employment security.
In order to induce the Executive to remain in the employ of the
Company, particularly in the event of the threat or occurrence of a Change in
Control, the Company desires to enter into this Agreement to provide the
Executive with certain benefits in the event the Executive's employment is
terminated as a result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
Section 1. Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below:
"Board" means the Board of Directors of the Company.
"Cause" for the termination of the Executive's employment with the
Company will be deemed to exist if the Executive is convicted of any felony or
the Executive fails to comply in all material respects with any material term of
the Proprietary Information and Inventions Agreement dated as of July 19, 1988
between the Company and the Executive, which conduct or failure is materially
injurious to the Company, monetarily or otherwise.
"Change in Control" means 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,
whether or not the Company is then subject to the reporting requirements of the
Securities Exchange Act; provided that, without limitation, such a change in
control will be deemed to have occurred if:
(a) there is 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;
(b) the stockholders of the Company approve any plan or
proposal of liquidation or dissolution of the Company;
(c) there is 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;
(d) 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 Securities 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); or
(e) individuals who, as of the date of this Agreement,
constitute the Board (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 will 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 Securities Exchange Act) by any "person" or "group" (as such
terms are used in Section 13(d) and 14(d) of the Securities Exchange
Act) other than the Incumbent Board will not be considered as a member
of the Incumbent Board for purposes of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" means Northfield Laboratories Inc., a Delaware corporation,
and includes its Successors.
"Continuation Period" has the meaning set forth in Section 3.1(b)(iii).
"Disability" means the Executive's incapacity due to physical or mental
illness or accident such that the Executive is absent from his duties for the
Company on a full-time basis for the entire period of six consecutive months or
for 270 days in any 365-day period.
"Good Reason" for the Executive's termination of employment with the
Company will be deemed to exist if, at any time after the occurrence of a Change
in Control:
(a) the Executive is reassigned to a position of lesser rank
or status or to a location other than Evanston, Illinois or Mt.
Prospect, Illinois (or such other location as the Executive may agree)
without his consent;
(b) the Executive's annual base salary is reduced; or
(c) the Executive's employment benefits are materially
reduced.
"Notice of Termination" means a written notice from the Company of the
termination of the Executive's employment which indicates the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
"Person" has the meaning as used in Section 13(d) or 14(d) of the
Securities Exchange Act and will include any "group" as such term is used in
such sections.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Successor" means a corporation or other entity acquiring all or
substantially all the assets and business of the Company, whether by operation
of law, by assignment or otherwise.
"Termination Date" means (a) in the case of the Executive's death, the
Executive's date of death, (b) in the case of the termination of the Executive's
employment with the Company by the Executive for Good Reason, the last day of
the Executive's employment, and (c) in all other cases, the date specified in
the Notice of Termination; provided that if the Executive's employment is
terminated by the Company for Cause or due to Disability, the date specified in
the Notice of Termination will be at least 30 days after the date the Notice of
Termination is given to the Executive.
Section 2. Term of Agreement. This Agreement will commence as of
October 4, 2002 and will continue in effect until September 30, 2004; provided
that commencing
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on September 30, 2004 and on each September 30 thereafter, the term of this
Agreement will automatically be extended for one year unless either the Company
or the Executive gives written notice to the other at least 90 days prior to
such date that the term of this Agreement will not be so extended.
Notwithstanding any such notice by the Company, the term of this Agreement will
in any case not expire prior to the expiration of 24 months after the occurrence
of a Change in Control.
Section 3. Termination of Employment.
3.1. If, during the term of this Agreement, the Executive's employment
with the Company is terminated within 24 months following a Change in Control,
the Executive will be entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company is
terminated (i) by the Company for Cause or Disability, (ii) by reason
of the Executive's death or (iii) by the Executive other than for Good
Reason, the Company will pay to the Executive all compensation,
including all accrued vacation pay, earned by the Executive through and
including the Termination Date;
(b) If the Executive's employment with the Company is
terminated for any reason other than as specified Section 3.1(a), the
Executive will be entitled to the following:
(i) the Company will pay the Executive all
compensation, including all accrued vacation pay, earned by
the Executive through and including the Termination Date;
(ii) the Company will pay the Executive as severance
pay, and in lieu of any further compensation for periods
subsequent to the Termination Date, in a single payment an
amount in cash equal to one time the average of the
Executive's annual base salary for the Company's two most
recently completed fiscal years preceding the Termination
Date;
(iii) for a period of 12 months (the "Continuation
Period"), the Company will at its expense continue on behalf
of the Executive and the Executive's dependents and
beneficiaries the medical, dental and hospitalization benefits
provided (A) to the Executive at any time during the 180-day
period prior to the Change in Control or at any time
thereafter or (B) to other similarly situated executives who
continue in the employ of the Company during the Continuation
Period. The coverage and benefits (including deductibles and
costs) provided in this Section 3.1(b)(iii) during the
Continuation Period will be no less favorable to the Executive
and the Executive's dependents and beneficiaries than the most
favorable of such coverages and benefits during any of the
periods referred to in clauses (A) and (B) above. The
Company's obligation hereunder with respect to the foregoing
benefits will be limited to the extent that the Executive
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obtains any such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the
Executive hereunder as long as the coverages and benefits of
the combined benefit plans are no less favorable to the
Executive than the coverages and benefits required to be
provided hereunder. This Section 3.1(b) will not be
interpreted so as to limit any benefits to which the Executive
or the Executive's dependents or beneficiaries may be entitled
under any of the Company's medical, dental and hospitalization
plans, programs or practices following the Executive's
termination of employment; and
(iv) all stock options issued by the Company to the
Executive will become fully vested and the Executive will be
permitted to exercise such stock options at any time during
the remaining exercise period applicable to such stock options
(without giving effect to any requirement that such stock
options be exercised within a specified period following the
termination of the Executive's employment with the Company).
(c) The amounts provided for in Section 3.1(a) and Sections
3.1(b)(i) and (ii) will be paid in a single lump sum cash payment by
the Company to the Executive within five days after the Termination
Date.
(d) The Executive will not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment will be offset or reduced
by the amount of any compensation or benefits provided to the Executive
in any subsequent employment except as specifically provided in Section
3.1(b)(iii).
3.2 Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment with the Company is terminated prior to
a Change in Control and the Executive reasonably demonstrates that such
termination (a) was at the request of a Person who has indicated an intention or
taken steps reasonably calculated to effect a Change in Control and who
subsequently effects a Change in Control or (b) otherwise occurred in connection
with, or in anticipation of, a Change in Control which subsequently occurs, then
for all purposes of this Agreement, the date of such Change in Control with
respect to the Executive will mean the date immediately prior to the date of
such termination of the Executive's employment.
3.3. The severance pay and benefits provided for in this Section 3 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.
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Section 4. Notice of Termination. Following a Change in Control, any
purported termination of the Executive's employment by the Company will be
communicated by a Notice of Termination to the Executive. For purposes of this
Agreement, no such purported termination will be effective without such Notice
of Termination.
Section 5. Successors; Binding Agreement. This Agreement will be
binding upon and will inure to the benefit of the Company and its Successors,
and the Company will require any Successors 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 or assignment had
taken place. Neither this Agreement nor any right or interest hereunder will be
assignable or transferable by the Executive or by the Executive's beneficiaries
or legal representatives, except by will or by the laws of descent and
distribution. This Agreement will inure to the benefit of and be enforceable by
the Executive's legal representatives.
Section 6. Fees and Expenses. The Company will pay as they become due
all legal fees and related expenses (including the costs of experts) incurred by
the Executive as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under which the Executive is or may be entitled to
receive benefits.
Section 7. Notices. All notices, demands and other communications
provided for in the Agreement, including the Notice of Termination, will be in
writing and will be deemed to have been duly given when delivered personally to
the recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or three business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Company and the Executive at the addresses indicated below:
If to the Company: Northfield Laboratories Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Secretary
If to the Executive:
******* *******
**** ******
*******, ** *****
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
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Section 8. Nonexclusivity of Rights. Nothing in this Agreement will
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company
(except for any severance or termination policies, plans, programs or practices)
for which the Executive may qualify, nor will anything herein limit or reduce
such rights as the Executive may have under any other agreements with the
Company (except for any severance or termination agreement). Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company will be payable in accordance with such plan
or program, except as specifically modified by this Agreement.
Section 9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder will not be affected by any circumstances, including any right of
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.
Section 10. No Change in Employment Relationship. This Agreement and
the rights granted to the Executive hereunder are not intended to (a) provide
Executive with any severance or other rights prior to the occurrence of a Change
in Control or (b) provide the Executive with any right of continuing employment
with the Company or otherwise modify the "at will" employment relationship
between the Company and the Executive.
Section 11. Modification and Waiver. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and the Company. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
Section 12. Severability. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions hereof.
Section 13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
Section 14. Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Illinois
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement will be brought and maintained in a court
of competent jurisdiction in Xxxx County in the State of Illinois.
* * * * *
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
NORTHFIELD LABORATORIES INC.
BY
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ITS
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******* *******
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