EXHIBIT 10.1
FORM OF SEVERANCE PROTECTION AGREEMENT
SEVERANCE PROTECTION AGREEMENT dated April 14, 2005 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 ____________
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.
"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 April 14,
2005 and will continue in effect until April 14, 2007; provided that commencing
on April 14, 2007 and on each April 14 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 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.
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.
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.
* * * * *
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
NORTHFIELD LABORATORIES INC.
BY___________________________________
ITS__________________________________
_____________________________________
[EXECUTIVE]
