SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
NORTHFIELD LABORATORIES INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NORTHFIELD LABORATORIES INC.
1560 Sherman Avenue, Suite 1000
Evanston, Illinois 60201-4800
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
September 13, 2002
----------------------------
TO THE STOCKHOLDERS OF NORTHFIELD LABORATORIES INC:
The Annual Meeting of the stockholders of Northfield Laboratories Inc. (the
"Company") will be held on Friday, September 13, 2002 at 10:00 A.M., local time,
at the Third Floor, 1560 Sherman Avenue, Evanston, Illinois 60201-4800, for the
following purposes:
1. To elect seven directors to hold office until the next Annual Meeting of
the stockholders of the Company;
2. To ratify the appointment of KPMG LLP as independent auditors of the
Company to serve for the Company's 2003 fiscal year; and
3. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on July 22, 2002 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement thereof.
Stockholders are requested to complete and sign the enclosed Proxy, which
is solicited by the Board of Directors, and promptly return it in the
accompanying envelope.
By Order of the Board of Directors
JACK J. KOGUT
Secretary
Evanston, Illinois
August 7, 2002
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE
ANNUAL MEETING. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON
OR TO ATTEND THE ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU
CANNOT ATTEND. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
NORTHFIELD LABORATORIES INC.
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PROXY STATEMENT
-------------------------------------------------
This document is being furnished to holders of the common stock of
Northfield Laboratories Inc. in connection with the solicitation of proxies for
use at Northfield's annual meeting of stockholders to be held on Friday,
September 13, 2002, commencing at 10:00 A.M., local time, at the Third Floor,
1560 Sherman Avenue, Evanston, Illinois 60201-4800, and at any adjournment or
postponement thereof, for the purpose of considering and acting upon the matters
set forth in the accompanying Notice of Annual Meeting of Stockholders.
This document is first being mailed to holders of common stock on or about
August 7, 2002.
Our principal executive offices are located at 1560 Sherman Avenue, Suite
1000, Evanston, Illinois 60201-4800. Our telephone number is (847) 864-3500. We
also maintain an Internet web site at www.northfieldlabs.com. The information
contained on our web site is not deemed to be soliciting material and is not
incorporated by reference in this document.
VOTING AND RECORD DATE
Only holders of record of common stock as of the close of business on July
22, 2002, the record date for the annual meeting, are entitled to notice of and
to vote at the annual meeting. As of July 22, 2002, there were 14,265,875 shares
of common stock outstanding and entitled to be voted at the annual meeting.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock entitled to vote at the annual meeting is
necessary to constitute a quorum at the annual meeting. Shares that are present
and entitled to vote on any of the proposals to be considered at the annual
meeting will be considered to be present at the annual meeting for purposes of
establishing the presence or absence of a quorum for the transaction of
business. If a broker indicates on the enclosed proxy that it does not have
discretionary authority as to certain shares to vote on a particular proposal,
but otherwise has authority to vote, those shares will also be considered as
present for purposes of determining the presence or absence of a quorum at the
annual meeting.
REQUIRED VOTE
Each holder of record of shares who is entitled to vote may cast one vote
per share held on all matters properly submitted for the vote of our
stockholders at the annual meeting. The affirmative vote of a majority of the
shares present at the annual meeting will be required to approve the proposals
with respect to the election of directors and the ratification of the
appointment of our independent auditors.
Shares that are present and entitled to vote, but which withhold their
votes or abstain from voting on a proposal, will have the effect of votes
against the proposal. If a broker indicates on the enclosed proxy that it does
not have discretionary authority as to certain shares to vote on a particular
proposal, those shares will not be considered as votes cast with respect to the
proposal, but will be considered as present for purposes of determining the
number of votes required to approve the proposal.
The number of directors comprising our full board of directors is currently
fixed at seven. If for any reason fewer than seven nominees for director receive
the affirmative vote of a majority of shares present at the annual meeting, it
is our intention that all nominees elected by the required majority vote will
take office as directors and those incumbent directors receiving the greatest
number of votes will continue to serve in the remaining available director
positions until our next annual meeting of stockholders.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received, and not revoked, prior to the annual meeting will be voted at the
annual meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the board of
directors.
If any other matters are properly presented at the annual meeting for
consideration, including, among other things, consideration of a motion to
adjourn the annual meeting to another time or place, the persons named in the
enclosed form of proxy will have discretion to vote on those matters in
accordance with their best judgment to the same extent as the person signing the
proxy would be entitled to vote. It is not currently anticipated that any other
matters will be raised at the annual meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked by filing with
Northfield's Corporate Secretary, at or before the taking of the vote at the
annual meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares. A
proxy may also be revoked by attending the annual meeting and voting in person,
although attendance at the annual meeting will not itself revoke a proxy. Any
written notice of revocation or subsequent proxy should be sent so as to be
delivered to Northfield Laboratories Inc., 1560 Sherman Avenue, Suite 1000,
Evanston, Illinois 60201-4800, Attention: Corporate Secretary, or hand delivered
to the Corporate Secretary, at or before the taking of the vote at the annual
meeting.
SOLICITATION OF PROXIES
Northfield will bear all of the expenses of this solicitation. We estimate
that we will spend approximately $200,000 in connection with this solicitation,
of which approximately $50,000 has been spent to date. We have engaged Innisfree
M&A Incorporated to assist in this solicitation. We have agreed to pay Innisfree
a fee of $10,000 and to reimburse Innisfree for its reasonable out-of-pocket
expenses. We have also agreed to indemnify Innisfree against liabilities arising
in connection with its engagement, including liabilities arising under the
federal securities laws.
Innisfree may employ up to 75 people in connection with this solicitation.
Proxies may be solicited by mail, courier service, Internet, advertising,
telephone, telegram, telecopier or in person. Other than Steven A. Gould, M.D.
and Jack J. Kogut, no employees of Northfield are expected to participate in
this solicitation.
Arrangements will be made for forwarding proxy solicitation materials to
beneficial owners of shares held of record by custodians, nominees and
fiduciaries, and we will reimburse these custodians, nominees and fiduciaries
for their reasonable expenses incurred in connection with this solicitation.
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the Securities and Exchange Commission,
each member of our board of directors, each of our director nominees and one of
our executive officers may be deemed to be "participants" as defined in Schedule
14A under the Securities Exchange Act of 1934 in Northfield's solicitation of
proxies for the annual meeting. Additional information regarding each of the
participants is included in Annex A to this document.
ANNUAL REPORT
A copy of our Annual Report on Form 10-K for our 2002 fiscal year,
including financial statements, has been sent simultaneously with this document
or has been previously provided to all stockholders entitled to vote at the
annual meeting.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The board of directors recommends a vote FOR the election of Northfield's
nominees for election as directors and FOR ratification of the appointment of
KPMG LLP as independent auditors for Northfield's 2003 fiscal year.
2
ITEM 1. ELECTION OF DIRECTORS
The number of directors comprising our full board of directors is currently
fixed at seven. All of our directors stand for election each year at our annual
meeting. Directors elected at this year's annual meeting will hold office until
the next annual meeting or until their earlier resignation or removal.
Northfield's board of directors, based on the recommendation of its
nominating committee composed of independent directors, has nominated the
following current directors for reelection at the annual meeting. In the event
any of the nominees should become unavailable for election, the nominating
committee may designate substitute nominees, in which event shares represented
by all proxies returned will be voted for the substitute nominees unless an
indication to the contrary is included on the proxies.
DIRECTOR PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
Steven A. Gould, M.D........ 1993 Chairman of the Board Dr. Gould, age 55, is a founding
of Directors and member of Northfield's scientific team
Chief Executive and has served as the Chairman and
Officer Chief Executive Officer of Northfield
since July 2002. From July 1993 to
July 2002, Dr. Gould served as
President and a director of
Northfield. Prior to that time, Dr.
Gould served as a Consultant and
Principal Investigator for
Northfield's clinical trials. From
1989 to 1993, Dr. Gould served as
Chief of the Department of Surgery of
Michael Reese. Since 1990, Dr. Gould
has also served as Professor of
Surgery, nonsalaried, at the
University of Illinois College of
Medicine. From 1979 through 1989, Dr.
Gould was Assistant Professor and then
Associate Professor in the Department
of Surgery at The University of
Chicago School of Medicine. Dr. Gould
has been involved in development of
national transfusion policy through
his participation in the activities of
the National Heart Lung Blood
Institute, the National Blood Resource
Education Panel, the Department of
Defense, the American Association of
Blood Banks, the American College of
Surgeons and The American Red Cross.
Dr. Gould received his M.D. degree
from the Boston University School of
Medicine in 1973.
3
DIRECTOR PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
Gerald S. Moss, M.D......... 1989 Director Dr. Moss, age 67, is a founding member
of Northfield's scientific team and
has served as a director of Northfield
since 1989. Since 1989, Dr. Moss has
been the Dean of the University of
Illinois College of Medicine. From
1977 until 1989, Dr. Moss was a
Professor in the Department of Surgery
of The University of Chicago School of
Medicine and Chairman of the
Department of Surgery at Michael Reese
Hospital. Dr. Moss has been involved
in development of national transfusion
policy through his participation in
the activities of the National Heart
Lung Blood Institute, the National
Blood Resource Education Panel, the
Department of Defense, the American
Association of Blood Banks, the
American Blood Commission, the
American College of Surgeons and The
American Red Cross. Dr. Moss received
his M.D. degree from the Ohio State
University College of Medicine in
1960.
Bruce S. Chelberg........... 1989 Director Mr. Chelberg, age 68, has served as a
director of Northfield since 1989. Mr.
Chelberg served from May 1992 through
November 2000 as the Chairman and
Chief Executive Officer of
PepsiAmericas, Inc., formerly known as
Whitman Corporation, a principal
stockholder of Northfield. Mr.
Chelberg is also a director of First
Midwest Bancorp, Inc., Snap-On
Incorporated, Actuant Corporation and
Nortrax Incorporated. Mr. Chelberg
received his LLB degree from the
University Of Illinois College of Law
in 1958.
Jack Olshansky.............. 1989 Director Mr. Olshansky, age 73, has served as a
director of Northfield since 1989. Mr.
Olshansky is an independent consultant
to companies in the healthcare
industry. From 1983 to July 2000, Mr.
Olshansky was a founding general
partner of Montgomery Medical
Ventures, L.P. Prior to that time, Mr.
Olshansky served as president of McGaw
Laboratories, a division of American
Hospital Supply Corporation, and vice
president of the Medical Division of
Cutter Laboratories. Mr. Olshansky is
also a director of PrisMedical, Inc.,
Tandem Medical and Medstone, Inc. Mr.
Olshansky received his B.A. degree
from Brooklyn College in 1950.
4
DIRECTOR PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
David A. Savner............. 1998 Director Mr. Savner, age 58, has served as a
director of Northfield since April
1998. Mr. Savner has since April 1998
been the Senior Vice President and
General Counsel of General Dynamics
Corporation. From 1987 to 1998, Mr.
Savner was a senior partner in the law
firm of Jenner & Block. Mr. Savner
received his J.D. degree from
Northwestern University Law School in
1968.
Our board of directors, based on the recommendation of its nominating
committee, has additionally nominated the following individuals, who have not
previously served as Northfield directors, for election as directors at the
annual meeting. In the event any of the nominees should become unavailable for
election, the nominating committee may designate substitute nominees, in which
event shares represented by all proxies returned will be voted for the
substitute nominees unless an indication to the contrary is included on the
proxies.
PRINCIPAL OCCUPATION AND
NAME OFFICE BUSINESS EXPERIENCE
---- ------ ------------------------
John F. Bierbaum............... Director Mr. Bierbaum, age 58, has served since 2000 as Executive
Vice President and a director of PepsiAmericas, Inc.,
formerly known as Whitman Corporation, a principal
stockholder of Northfield. From 1988 to 2000, Mr.
Bierbaum served as Senior Vice President, Chief
Financial Officer and a director of PepsiAmericas, Inc.
Mr. Bierbaum received his B.S. degree is Business
Administration -- Accounting from the University of
Minnesota in 1967.
5
PRINCIPAL OCCUPATION AND
NAME OFFICE BUSINESS EXPERIENCE
---- ------ ------------------------
Paul M. Ness, M.D.............. Director Dr. Ness, age 56, is Professor of Pathology, Medicine
and Oncology at the Johns Hopkins University School of
Medicine and has been director of the School's
Transfusion Medicine Division since 1979. Dr. Ness is
the scientific director of the American Red Cross Blood
Services Greater Chesapeake and Potomac Region, where he
previously served as Chief Executive Officer and senior
medical director. Dr. Ness has been involved in the
development of national transfusion policy through
multiple activities. He served on the Blood Products
Advisory Committee of the Food and Drug Administration
from 1996 to 1998 and has also served on numerous FDA
advisory panels. Dr. Ness has also participated in many
scientific panels for the National Heart Lung Blood
Institute. He was the president of the American
Association of Blood Banks in 1999 and has held multiple
leadership positions in that organization. Dr. Ness has
also been a member of the United States Pharmacopoeia
Blood Products Expert Advisory Panel since 1996. He
received his M.D. degree from the State University of
New York in 1971.
STOCKHOLDER NOMINATION
We have received letters from C. Robert ("Bob") Coates nominating himself
and Bert R. Williams III for election as directors at our annual meeting. We
have also received and complied with a request by Mr. Coates for a list of our
stockholders. On June 24, 2002, Mr. Coates filed a definitive proxy statement
with the Securities and Exchange Commission indicating his intention to solicit
proxies for the election of himself and Mr. Williams in connection with our
annual meeting. The proxy statement is available on the SEC's web site at
www.sec.gov.
Information regarding Mr. Coates' director nominees, including their ages,
business addresses, family relationships and business and educational
experience, is included in the proxy statement filed by Mr. Coates with the SEC.
Certain information regarding these director nominees included in this document
has been taken from, and is based upon, the information contained in the
definitive proxy statement filed by Mr. Coates.
Mr. Coates has stated that he is the beneficial owner of 644,200 shares
representing approximately 4.5% of Northfield's outstanding common stock. Mr.
Williams has stated that he is the beneficial owner of 500 shares of Northfield
common stock.
None of Mr. Coates' director nominees is or has been a director, officer or
employee of Northfield, is or has been indebted to Northfield or is or has been
a party, directly or through any other firm or entity, to any transaction to
which Northfield was also a party. None of the director nominees nor any of
their respective associates is a party adverse to Northfield, or has a material
interest adverse to Northfield, in connection with any pending litigation or
other proceeding. None of the director nominees has been required to comply with
the requirements of Section 16(a) of the Securities Exchange Act with respect to
their ownership of Northfield common stock.
In June 2000, Mr. Coates sent a letter to our stockholders that was
critical of our management. In August 2000, Mr. Coates filed a proxy statement
with the SEC indicating his intention to solicit proxies in favor of the
election of himself and three other individuals as directors at our 2000 annual
meeting of stockholders. In September 2000, Mr. Coates met with members of our
senior management to discuss his proposals with respect to Northfield. As a
result of this meeting, Northfield agreed with Mr. Coates on the actions we
would take with respect to certain of Mr. Coates' proposals and Mr. Coates
withdrew his proposed slate of directors and announced his intention not to
solicit proxies in connection with our 2000 annual meeting.
6
In August 2001, Mr. Coates filed an action against us and our directors in
Delaware court. The suit alleged that we advanced the date of our 2001 annual
meeting of stockholders in order to prevent Mr. Coates from waging a proxy
contest to elect himself and three other individuals as directors at the annual
meeting. Mr. Coates withdrew his lawsuit following our announcement on August
16, 2001 that we were preparing to file our Biologics License Application for
our PolyHeme(TM) blood substitute product with the FDA.
In May 2002, we received a letter from Mr. Coates requesting that he be
permitted to meet with our board of directors to present the credentials of his
nominees for election as directors. We invited Mr. Coates to meet with our
nominating committee to discuss his director nominations. Mr. Coates met
individually by telephone with the members of our nominating committee and was
given an opportunity to provide information regarding his background and
experience and his reasons for seeking to serve on Northfield's board of
directors. Following the telephonic meetings with Mr. Coates, the nominating
committee met to consider Mr. Coates' nominations. Based on the information
presented by Mr. Coates, his actions in connection with Northfield's 2000 and
2001 annual meetings, and his conduct in connection with actual or threatened
proxy contests involving several other companies, the nominating committee
determined that Mr. Coates' nominees should not be included in the list of
individuals recommended by the committee for nomination by Northfield's board
for election at our 2002 annual meeting. On July 24, 2002, we notified Mr.
Coates of the nominating committee's determination.
COMMITTEES OF THE BOARD OF DIRECTORS
We currently have three standing committees. The compensation committee,
which met once during our 2002 fiscal year, is composed of Messrs. Chelberg and
Olshansky. The compensation committee has the authority, as delegated by the
board of directors, to administer our executive compensation plans and to
determine the salaries and incentive compensation, including the grant of stock
options, to be received by our executive officers and employees.
The audit committee, which met three times during our 2002 fiscal year, is
composed of Messrs. Savner, Chelberg and Olshansky. The functions of the audit
committee include the review of the planning and results of our annual audit,
the adequacy of our internal accounting controls, and the auditing and
accounting principles and practices to be used in the preparation of our
financial statements. Each of the members of Northfield's audit committee is an
independent director as defined in the applicable listing standards of the
National Association of Securities Dealers, Inc.
Our board of directors adopted a written charter for the audit committee in
June 2000. In July 2002, our board of directors amended the audit committee
charter to delegate to the audit committee the sole power and authority to
appoint and replace Northfield's independent auditors and to determine what, if
any, non-audit services are to be provided by our independent auditors. A copy
of our amended audit committee charter is attached as an appendix to this
document.
The nominating committee is composed of Messrs. Chelberg and Savner. The
nominating committee makes recommendations to our board of directors regarding
the size and composition of the board, establishes procedures for the nomination
process and recommends candidates for election to the board. The nominating
committee was established in July 2002 and accordingly did not meet during our
2002 fiscal year. The nominating committee will consider nominees recommended by
Northfield stockholders. The procedures to be followed for stockholders wishing
to recommend director nominees for consideration by the nominating committee are
described below under "Procedure for Submitting Stockholder Proposals and
Nominations."
MEETING ATTENDANCE
During fiscal 2002, our board of directors met four times, and no incumbent
director attended fewer than 75 percent of the total number of meetings of the
board of directors and the committees of which he was a member, except that Mr.
Savner attended two of the four meetings of the board of directors.
7
COMPENSATION OF DIRECTORS
We compensate outside directors for their participation at board of
director meetings and at committee meetings of the board of directors at a rate
of $1,000 per meeting. Directors are also reimbursed for their expenses for
attending meetings of the board of directors and committees. In addition,
non-employee directors receive grants of stock options under our Nonqualified
Stock Option Plan for Outside Directors.
Dr. Moss and Dr. Ness have provided consulting services to Northfield and
have received compensation from Northfield for their services. Dr. Moss is a
party to a consulting agreement under which he reviews and advises Northfield on
research activities relating to PolyHeme. Dr. Moss's consulting agreement
expires in August 2002, and it is expected the agreement will be extended for an
additional year. Dr. Moss received $60,000 from Northfield under his consulting
agreement during our 2002 fiscal year. Dr. Ness has provided consulting services
to Northfield relating to FDA regulatory matters and the sourcing of red blood
cells from major blood banking organizations. Northfield expects to enter into
an agreement with Dr. Ness under which he will agree to continue to provide such
services to Northfield. Dr. Ness received $80,000 from Northfield as payment for
his consulting services during our 2002 fiscal year.
ADOPTION OF CODE OF BUSINESS CONDUCT
Northfield has adopted a written code of business conduct that includes
policies applicable to our directors, officers and employees relating to
compliance with law, conflicts of interest, protection of confidential
information, acceptance of gifts and entertainment, accuracy and integrity of
books and records, political contributions, equal employment opportunity,
workplace harassment and other matters. In connection with its approval of the
code of business conduct, our board of directors has adopted a resolution
requiring prior approval by our audit committee of any waivers of compliance
with respect to the code granted to any Northfield director, officer or
employee.
8
MANAGEMENT
EXECUTIVE OFFICERS
The board of directors will elect our executive officers at its first
meeting following the annual meeting. Our executive officers are as follows:
NAME POSITION
---- --------
Steven A. Gould, M.D...................... Chairman of the Board of Directors and Chief Executive
Officer
Jack J. Kogut............................. Vice President -- Finance, Secretary and Treasurer
John A. Dybas, Jr......................... Vice President -- Regulatory Affairs
Marc D. Doubleday......................... Vice President -- Process Engineering
Robert L. McGinnis........................ Vice President -- Manufacturing Development
-------------------------
A biographical summary of the business experience of Dr. Gould is included
under "Election of Directors."
Mr. Kogut, age 55, has served as Vice President -- Finance since 1986. Mr.
Kogut has also served as Northfield's Secretary and Treasurer since January
1994. From 1982 to 1986, he was the Group Controller-Health Products for Sybron
Corporation and also served as President of Sybron Asia. Mr. Kogut received his
M.B.A. degree from Loyola University of Chicago in 1972.
Mr. Dybas, age 64, has served as Vice President -- Regulatory Affairs since
January 1996. From 1989 to 1996, he served as Northfield's Director of
Regulatory Affairs. Prior to 1989, Mr. Dybas was a Director of Regulatory
Affairs for the Pharmaceutical Products Division of Abbott Laboratories, Inc.
and was a self-employed consultant. Mr. Dybas received his M.S. degree from
Syracuse University in 1963.
Mr. Doubleday, age 43, has served as the Vice President -- Process
Engineering since December 1994. Prior to that time, he served as Northfield's
Plant Manager and Senior Process Engineer. Before joining Northfield in 1988,
Mr. Doubleday was employed in various capacities with Davy McKee, Millipore
Corporation and Abbott Laboratories, Inc. Mr. Doubleday received his M.M. degree
from Northwestern University in 1991.
Mr. McGinnis, age 38, has served as the Vice President -- Manufacturing
Development since August 1997. From 1995 to 1997, Mr. McGinnis was a Project
Manager for Raytheon Engineering and Construction. Prior to 1995, Mr. McGinnis
was employed by the John Brown division of Trafalgar House as a Project Manager
and Engineer. Mr. McGinnis received his MBA degree from the University of
Chicago in 1995.
9
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid for our last three
completed fiscal years to our Chief Executive Officer and four other most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
----------------------------- OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS COMPENSATION(2) OPTIONS(#)
--------------------------- ------- ------ ----- --------------- ----------
Richard E. DeWoskin................ 2002 $281,525 $139,024 $27,306 --
Chief Executive Officer(3) 2001 268,867 -- 25,838 18,000
2000 262,309 -- 24,209 --
Steven A. Gould, M.D............... 2002 298,682 147,487 30,830 --
President(4) 2001 285,233 -- 27,554 15,000
2000 278,276 -- 26,292 --
Jack J. Kogut...................... 2002 235,888 116,479 25,052 --
Vice President -- Finance 2001 225,266 -- 24,663 12,000
2000 219,772 -- 22,790 --
John A. Dybas, Jr. ................ 2002 184,369 47,426 15,044 10,000
Vice President -- Regulatory 2001 174,771 -- 14,650 10,000
Affairs 2000 167,646 -- 14,741 --
Marc D. Doubleday.................. 2002 163,604 39,423 11,259 10,000
Vice President -- Process 2001 153,509 15,000 9,841 12,000
Engineering 2000 143,354 -- 9,617 --
-------------------------
(1) Our fiscal year begins on June 1 and ends on May 31. Our 2002 fiscal year
ended May 31, 2002.
(2) The indicated amounts represent life insurance premiums paid by Northfield
and contributions made by Northfield to the indicated executive officer's
401(k) plan account.
(3) Mr. DeWoskin resigned as our Chief Executive Officer in July 2002.
(4) Dr. Gould was elected as our Chief Executive Officer in July 2002.
The following table sets forth all options granted to our Chief Executive
Officer and other named executive officers during our last completed fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- --------- ----------
Richard E. DeWoskin.......... -- -- -- -- -- --
Steven A. Gould, M.D. ....... -- -- -- -- -- --
Jack J. Kogut................ -- -- -- -- -- --
John A. Dybas, Jr. .......... 10,000 18% 14.17 9/21/2011 $89,271 $225,303
Marc D. Doubleday............ 10,000 18% 14.17 9/21/2011 89,271 225,303
-------------------------
(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if
any, of our stock price. Additionally, these
10
values do not take into consideration the provisions of the options providing
for nontransferability or termination of the options following termination of
employment.
Our Chief Executive Officer and other named executive officers did not
exercise any stock options during our 2002 fiscal year. The following table sets
forth information regarding the aggregate value as of May 31, 2002 of
unexercised stock options held by these individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Richard E. DeWoskin.......... -- -- 109,500/23,500 $--/--
Steven A. Gould, M.D. ....... -- -- 136,250/18,750 --/--
Jack J. Kogut................ -- -- 86,750/15,250 --/--
John A. Dybas, Jr. .......... -- -- 41,000/20,000 --/--
Marc D. Doubleday............ -- -- 41,500/21,500 --/--
-------------------------
(1) These figures are based on a fair market value for our common stock at May
31, 2002 of $4.12 per share, the closing price of the common stock as
reported by the Nasdaq National Market as of that date. May 31, 2002
represents the last trading day in our 2002 fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the board of directors consists of Messrs.
Chelberg and Olshansky. Neither of the members of the compensation committee is
a current or former Northfield officer or employee or was a party to any
disclosable related party transaction involving Northfield during our 2002
fiscal year.
EMPLOYMENT AGREEMENTS
We have employment agreements with Steven A. Gould, M.D., our Chief
Executive Officer, and Jack J. Kogut, our Vice President -- Finance, Secretary
and Treasurer. These employment agreements provide for terms expiring in
December 2002. The annual salaries payable under the employment agreements with
Dr. Gould and Mr. Kogut are $303,822 and $239,947, respectively. The employment
agreements provide that the salaries of the respective executive officers may be
reviewed annually by the board of directors and may be increased but not
decreased from the foregoing amounts. The employment agreements also provide for
cash bonus payments upon our filing of a Biologic License Application for
PolyHeme with the FDA as well as for the approval of the application by the FDA.
Filing bonuses of $147,487 and $116,479, respectively, were paid to Dr. Gould
and Mr. Kogut during our 2002 fiscal year. The employment agreements also permit
the executive officers to participate in all other employee benefit plans and
programs we make available generally to our employees.
Each of the employment agreements provides that if the term of the
agreement is not extended beyond December 31, 2002 and the executive officer
subsequently ceases to be employed by Northfield for any reason other than his
death, disability or discharge for cause, we will be obligated to continue to
pay the executive officer his full base salary for a specified period. If, at
the time of the executive officer's termination of employment, Northfield has
extended a written offer of continuing employment to the executive officer
providing for employment terms and compensation substantially equivalent to
those provided in his current employment agreement, the specified salary
continuation period ends on December 31, 2003. If such an offer has not been
extended, the specified salary continuation period ends on December 31, 2004.
The employment agreements also provide for certain payments following a
termination of employment of the executive officer in connection with a change
in control of Northfield. Upon the involuntary termination of the employment of
11
either of the executive officers by us in connection with a change in control,
or upon the voluntary termination of employment by any of the executive officers
for "good reason" following a change in control, we will generally be obligated
to continue to pay the executive officer his full base salary until the second
anniversary of the date of the termination of his employment. We are also
obligated to continue to provide medical insurance and other benefits to the
executive officer and his dependents during this period. If Dr. Gould and Mr.
Kogut were each to terminate their employment in connection with a change in
control of Northfield, we would be obligated to make payments to the two
executive officers totaling approximately $1,100,000 and would incur additional
costs relating to providing continuing employee benefits to the executive
officers for a two-year period.
SEPARATION ARRANGEMENTS
Richard E. DeWoskin resigned as our Chairman and Chief Executive Officer in
July 2002, following the end of our 2002 fiscal year. In connection with Mr.
DeWoskin's resignation, we entered into a separation agreement and a consulting
agreement with Mr. DeWoskin. These agreements were entered into by mutual
agreement between the parties and are in lieu of the post-employment payments
and benefits to which Mr. DeWoskin would have been entitled under the terms of
his employment agreement with Northfield.
The separation agreement with Mr. DeWoskin provides for the termination of
his employment agreement with Northfield, with the exception that he will
continue to be entitled to receive a bonus of $278,048 if Northfield receives
FDA approval for the commercial sale of PolyHeme in the United States for any
indication on or prior to December 31, 2004. We agreed pursuant to the
separation agreement to assign certain individual life insurance policies to Mr.
DeWoskin and continue to provide Mr. DeWoskin and his eligible dependents with
coverage under our group medical and dental insurance plans (or substantially
equivalent plans) through December 31, 2004. The separation agreement also
provides for the waiver of certain vesting requirements and exercise
restrictions applicable to the stock options held by Mr. DeWoskin.
Under the terms of his consulting agreement, Mr. DeWoskin has agreed to
provide consulting services to Northfield with respect to certain scientific,
regulatory, manufacturing, intellectual property and other matters. Mr.
DeWoskin's consulting agreement provides for the payment of a monthly consulting
fee of $26,962 and the reimbursement of certain reasonable out-of-pocket
business and travel expenses incurred by Mr. DeWoskin on behalf of Northfield.
The consulting agreement expires on December 31, 2004 unless extended by mutual
agreement of the parties.
INDEMNIFICATION AGREEMENTS
We have written indemnification agreements with each of our directors and
executive officers. These agreements require us to indemnify our directors and
executive officers to the maximum extent permitted by law and to advance all
expenses they may reasonably incur in connection with the defense of any claim
or proceeding in which they may be involved as a party or witness. The
agreements specify certain procedures and assumptions applicable in connection
with requests for indemnification and advancement of expenses and also require
us to continue to maintain directors and officers and fiduciary liability
insurance for a six-year period following any change in control transaction. The
rights provided to our directors and executive officers under their
indemnification agreements are in addition to any other rights such individuals
may have under our restated certificate of incorporation or bylaws, applicable
law or otherwise.
12
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We have four equity compensation plans under which shares of our common
stock are authorized for issuance. The following table sets forth certain
information regarding these plans as of May 31, 2002, the end of our last
completed fiscal year.
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES TO BE ISSUED NUMBER OF SHARES REMAINING
UPON EXERCISE OF OUTSTANDING WEIGHTED-AVERAGE EXERCISE PRICE AVAILABLE FOR FUTURE ISSUANCE
PLAN CATEGORY STOCK OPTIONS OF OUTSTANDING STOCK OPTIONS UNDER EQUITY COMPENSATION PLANS
------------- ----------------------------- ------------------------------- -------------------------------
Equity compensation
plans approved by
stockholders....... -- -- --
Equity compensation
plans not approved
by stockholders.... 694,000 11.81 563,000
------- ----- -------
Total................ 694,000 11.81 563,000
Each of our equity compensation plans is a stock option plan that provides
for the issuance of stock options at prices not less than the per share fair
market value of our common stock on the date of grant. Individual grants to
directors, officers and employees under our plans have generally been made
pursuant to individual grant agreements that contain additional terms and
conditions, such as vesting requirements and restrictions on exercise of the
granted options after termination of employment. The compensation committee of
our board of directors acts as the administrator of each of our stock option
plans.
Our Restated Nonqualified Stock Option Plan lapsed on September 30, 1996.
Following termination of this plan, all options outstanding prior to plan
termination continue to be exercisable in accordance with their terms. As of May
31, 2002, options to purchase a total of 77,000 shares of common stock at prices
of $6.38 and $15.19 per share were outstanding under this plan. These options
expire in 2003 and 2004, ten years after the date of grant.
The Northfield Laboratories Inc. 1996 Stock Option Plan provides for the
granting of stock options to purchase up to 500,000 shares of common stock to
directors, officers, key employees and consultants. As of May 31, 2002, options
to purchase a total of 472,500 shares of common stock at prices between $9.56
and $15.41 were outstanding under the 1996 plan. These options expire between
2006 and 2010, ten years after the date of grant.
The Northfield Laboratories Inc. 1999 Stock Option Plan was established
effective June 1, 1999. The 1999 plan provides for the granting of stock options
to purchase up to 500,000 shares of common stock to directors, officers, key
employees and consultants. As of May 31, 2002, options to purchase a total of
114,500 shares of common stock at prices between $7.83 and $14.17 were
outstanding under the 1999 plan. These options expire in 2011 and 2012, ten
years after the date of grant.
Our Nonqualified Stock Option Plan for Outside Directors provides for the
granting of stock options to purchase up to 200,000 shares of common stock to
directors who are neither employees of nor consultants to Northfield and who
were not directors on June 1, 1994. As of May 31, 2002, options to purchase a
total of 30,000 shares of common stock at prices of $11.18 and $13.38 per share
were outstanding under this plan. These options expire in 2008 and 2011.
EMPLOYEE BENEFIT PLANS
We sponsor a defined contribution 401(k) savings plan covering each of our
employees satisfying certain minimum length of service requirements. We make
discretionary contributions to this plan subject to certain maximum contribution
limitations. Our expenses incurred under this plan for the years ended May 31,
2002, 2001 and 2000 were $157,294, $145,051 and $129,496, respectively.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
directors, executive officers and persons who beneficially own more than 10% of
our common stock file with the Securities and Exchange Commission initial
reports of beneficial ownership of the common stock and reports of changes in
their beneficial ownership.
To our knowledge, based solely upon a review of copies of reports furnished
to us and written representations that no other reports were required during the
fiscal year ended May 31, 2002, our officers, directors and greater than 10%
beneficial owners complied during our last fiscal year with all applicable
Section 16(a) filing requirements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the compensation committee of the board of directors
discusses our executive compensation policies and the bases for the compensation
paid to our Chief Executive Officer during our last completed fiscal year.
COMPENSATION POLICY
Our policy with respect to executive compensation has been designed to
compensate executive officers fairly and adequately in relation to their
responsibilities, capabilities and contributions to Northfield. We have also
sought to align the interests of senior management with those of our
stockholders with respect to long-term increases in the price of our stock. The
compensation committee considers it essential to our success that the
compensation paid to executive officers remain competitive with similar or
competitive companies in order to attract and retain the talented senior
management necessary to achieve our business objectives.
COMPONENTS OF COMPENSATION
The components of compensation paid for our last completed fiscal year to
our executive officers consisted of base salary, stock option grants, cash
bonuses and certain other benefits. During our last completed fiscal year, we
had employment agreements which provided for specified annual salaries with
Richard E. DeWoskin, our former Chief Executive Officer, Steven A. Gould, M.D.,
our current Chief Executive Officer, and Jack J. Kogut, our Vice
President -- Finance, Secretary and Treasurer. See "Management -- Employment
Agreements" and " -- Separation Arrangements." The annual salaries provided in
these employment agreements were determined based principally on the
compensation levels for similar or competitive companies, including companies in
the pharmaceutical and biomedical industries, as well as the levels of
responsibility and experience of the individual executive.
During our last completed fiscal year, we issued stock options to acquire
20,000 shares of common stock to two of our named executive officers. These
options were issued in recognition of these officers' significant contributions
to the clinical development of PolyHeme. The other benefits provided to our
executive officers consist of enhanced life and disability insurance coverage.
Executive officers are also eligible for coverage under our general medical and
life insurance programs and may participate in our defined contribution 401(k)
savings plan on the same terms as other employees.
14
CHIEF EXECUTIVE OFFICER COMPENSATION
During our 2002 fiscal year, our former Chief Executive Officer, Richard E.
DeWoskin, received $281,525 in base salary and a bonus of $139,024 pursuant to
the terms of his employment agreement. The bonus became payable upon the filing
with the FDA of Northfield's Biologics License Application for PolyHeme. The
terms of Mr. DeWoskin's employment agreement were determined based principally
on compensation levels applicable to the chief executive officers of similar or
competitive companies and secondarily on Mr. DeWoskin's prior contributions to
Northfield and his high level of experience and involvement with the development
and clinical testing of PolyHeme.
Members of the Compensation Committee
Bruce S. Chelberg
Jack Olshansky
AUDIT COMMITTEE REPORT
Our audit committee has (i) reviewed and discussed our audited financial
statements with management, (ii) discussed with our independent auditors the
matters required to be discussed by SAS 61 (Codification of Statements of
Auditing Standards, AU Section 380), as amended, (iii) received the written
disclosures and the letter from our independent accountants required by
Independence Standards Board Standard No. 1 (Independence Standards Board No. 1,
Independence Discussions with Audit Committees), as amended, and (iv) discussed
with our independent accountants the accountants' independence. Based on the
review and discussions referred to above, the audit committee has recommended to
our board of directors that our audited financial statements be included in its
Annual Report on Form 10-K for the fiscal year ended May 31, 2002 for filing
with the Securities and Exchange Commission.
Members of the Audit Committee
David A. Savner, Chairman
Bruce S. Chelberg
Jack Olshansky
15
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common
stock from May 31, 1997 through May 31, 2002 with the CRSP Total Return Index
for the Nasdaq Stock Market (U.S. Companies) and the Nasdaq Pharmaceutical
Index. The total stockholder return assumes that $100 was invested in our common
stock and each of the two indexes on May 31, 1997 and also assumes the
reinvestment of any dividends. The return on our common stock is calculated
using the closing price for the common stock on May 31, 2002, as quoted on The
Nasdaq Stock Market, Inc. Past financial performance may not be a reliable
indicator of future performance, and investors should not use historical trends
to anticipate results or trends in future periods.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE REPORT FOR
NORTHFIELD LABORATORIES INC.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
PRODUCED ON 06/19/2002 INCLUDING DATA TO 05/31/2002
[COMPARISON OF CUMULATIVE TOTAL RETURN]
NASDAQ PHARMACEUTICAL NASDAQ STOCK MARKET (US
STOCK INDEX NORTHFIELD LABORATORIES INC. COMPANIES)
--------------------- ---------------------------- -----------------------
May 30, 1997 100.000 100.000 100.000
May 29, 1998 103.744 155.063 126.822
May 28, 1999 137.575 122.152 178.868
May 31, 2000 254.047 112.658 245.135
May 31, 2001 270.221 168.203 152.112
May 31, 2002 185.419 41.722 117.102
-------------------------
The Report of the Compensation Committee on Executive Compensation, the
Audit Committee Report and the Stock Performance Graph are not deemed to be
soliciting material or to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or Securities Exchange Act of
1934, as amended, or incorporated by reference in any document so filed.
16
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of July 31, 2002, for (i) each of
our executive officers named under "Management -- Executive
Compensation -- Summary Compensation Table," (ii) each of our current directors,
(iii) each of our director nominees who is not a current director, (iv) each
other person who is known by us to be the beneficial owner of more than five
percent of our outstanding common stock and (v) all of our current directors and
executive officers as a group. Except as otherwise indicated, the address of
each person named in the following table is c/o Northfield Laboratories Inc.,
1560 Sherman Avenue, Suite 1000, Evanston, Illinois 60201-4800.
PERCENTAGE
NUMBER BENEFICIALLY
NAME OF STOCKHOLDER OF SHARES OWNED(1)
------------------- --------- ------------
Steven A. Gould, M.D........................................ 664,700(2) 4.6%
Jack J. Kogut............................................... 151,560(3) 1.1%
John A. Dybas, Jr........................................... 59,000(4) *
Marc D. Doubleday........................................... 48,500(5) *
Robert L. McGinnis.......................................... 31,000(6) *
Gerald S. Moss, M.D......................................... 589,150 4.1%
c/o UIC College of Medicine
1853 West Polk Avenue
Chicago, Illinois 60612
Bruce S. Chelberg........................................... 10,000(7) *
300 Park Boulevard
Suite 201
Itasca, Illinois 60143
Jack Olshansky.............................................. 38,017(8) *
78305 Sunrise Canyon Avenue
Palm Desert, California 92211-2601
David A. Savner............................................. 27,000(9) *
c/o General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042
John F. Bierbaum............................................ 1,502,345(10) 10.5%
c/o PepsiAmericas, Inc.
60 South Sixth Street
Minneapolis, Minnesota 55402
Paul M. Ness, M.D........................................... 0 *
1018 Brooklandwood Road
Lutherville, MD 21093
PepsiAmericas, Inc.......................................... 1,502,345(11) 10.5%
60 South Sixth Street
Suite 3880
Minneapolis, Minnesota 55402
Richard E. DeWoskin......................................... 775,715(12) 5.4%
P.O. Box 3264
St. Charles, Illinois 60174
All current directors and executive officers as a group
(nine persons)............................................ 1,618,927 11.0%
-------------------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of
17
common stock subject to stock options and warrants currently exercisable or
exercisable within 60 days are deemed outstanding for computing the
percentage ownership of the person holding the options and the percentage
ownership of any group of which the holder is a member, but are not deemed
outstanding for computing the percentage ownership of any other person.
Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Includes 136,250 shares of common stock which Dr. Gould is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Also includes 484,630 shares held in a personal trust and
43,820 shares held in a family trust. Does not include 18,750 shares
acquirable pursuant to stock options not currently exercisable or
exercisable within 60 days.
(3) Includes 86,750 shares of common stock which Mr. Kogut is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Also includes 64,805 shares held in a personal trust. Does
not include 15,250 shares acquirable pursuant to stock options not
currently exercisable or exercisable within 60 days.
(4) Includes 46,000 shares of common stock which Mr. Dybas is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 15,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(5) Includes 47,000 shares of common stock which Mr. Doubleday is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 16,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(6) Includes 31,000 shares of common stock which Mr. McGinnis is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 16,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(7) Includes 10,000 shares of common stock which Mr. Chelberg is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 5,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(8) Includes 30,000 shares of common stock which Mr. Olshansky is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include any shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(9) Includes 25,000 shares of common stock which Mr. Savner is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 5,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(10) Includes shares of common stock held by PepsiAmericas, Inc. Mr. Bierbaum is
Executive Vice President and a director of PepsiAmericas, Inc. Under the
rules and regulations of the Securities and Exchange Commission, Mr.
Bierbaum may be deemed a beneficial owner of the stock held by
PepsiAmericas, Inc. Mr. Bierbaum disclaims beneficial ownership of the
stock held by PepsiAmericas, Inc.
(11) Based on the information reported in the Schedule 13G filed with the
Securities and Exchange Commission by PepsiAmericas, Inc., formerly known
as Whitman Corporation.
(12) Includes 133,000 shares of common stock which Mr. DeWoskin is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include any shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
18
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Our board of directors has selected KPMG LLP as Northfield's independent
auditors for the fiscal year ending May 31, 2003 and has further directed that
the selection of independent auditors be submitted for approval by our
stockholders at the annual meeting. KPMG LLP has served as Northfield's
independent auditors since 1985. During fiscal 2002, we paid KPMG LLP the
following fees:
Audit Fees $51,800
Non-Audit Fees $18,150
We expect a representative of KPMG LLP to attend the annual meeting. The
representative will have an opportunity to make a statement if he or she desires
and also will be available to respond to appropriate questions. The board of
directors recommends a vote FOR ratification of the appointment of KPMG LLP as
independent auditors for fiscal 2003.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders may present proper proposals for inclusion in Northfield's
proxy statement and for consideration at the next annual meeting of our
stockholders by submitting their proposals to us in a timely manner. In order to
be included in our proxy statement for our next annual meeting, stockholder
proposals must be received by us no later than April 9, 2003, and must otherwise
comply with the requirements of the applicable rules of the Securities and
Exchange Commission.
In addition, our restated bylaws establish an advance notice procedure with
regard to certain matters, including stockholder nominations for director and
stockholder proposals not included in our proxy statement, to be brought before
any annual meeting of stockholders. In general, notice must be received by our
corporate secretary not less than 60 days nor more than 90 days prior to the
date of the annual meeting, except if less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to our stockholders, in
which event notice by the stockholders to be timely must be received no later
than the close of business on the tenth day following the date on which notice
of the date of the annual meeting was mailed or public disclosure was made. It
is currently expected that our 2003 annual meeting of stockholders will be held
on or about September 15, 2003. Therefore, the deadline under our restated
bylaws for timely submission of director nominations and stockholder proposals
for consideration at our 2003 annual meeting is currently expected to be July
l7, 2003. Stockholder nominations for director are also required under our
restated bylaws to include certain information regarding the director nominee
and the stockholder making the nomination.
All notice of proposals by stockholders, whether or not to be included in
our proxy materials, should be sent to Northfield Laboratories Inc., 1560
Sherman Avenue, Suite 1000, Evanston, Illinois 60201-4800, Attention: Corporate
Secretary.
GENERAL
The board of directors does not know of any other matters to be presented
at the annual meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on these matters.
19
ANNEX A
PARTICIPANT INFORMATION
Northfield and certain other persons named below may be deemed to be
participants in the solicitation of proxies in connection with Northfield's 2002
annual meeting of stockholders. The participants in this solicitation may
include Northfield's current directors, Steven A. Gould, M.D., Gerald S. Moss,
M.D., Bruce S. Chelberg, Jack Olshansky and David A. Savner, Northfield's
director nominees who are not current directors, John F. Bierbaum and Paul M.
Ness, M.D., and Jack J. Kogut, Northfield's Vice President of Finance.
Information regarding the business address, the present principal
occupation or employment, and the name, principal business and address of any
corporation or other organization in which such employment is carried on with
respect to each the named participants is set forth in Northfield's proxy
statement. The business address of Mr. Kogut is Northfield Laboratories Inc.,
1560 Sherman Avenue, Suite 1000, Evanston, Illinois 60201-4800.
The number of shares of Northfield's common stock beneficially owned by
each of the named participants is set forth in Northfield's proxy statement. All
of the shares owned of record by any of the named participants are beneficially
owned by such participant. No part of the purchase price or market value of the
shares of Northfield's common stock beneficially owned by the named participants
is represented by funds borrowed or otherwise obtained for the purpose of
acquiring or holding such shares. None of the named participants has purchased
or sold any shares of Northfield's common stock within the past two years.
None of the named participants is, or was within the past year, a party to
any contract, arrangement or understanding with any person with respect to any
securities of Northfield, including, but not limited to, joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies.
None of the named participants has been convicted during the past ten years in a
criminal proceeding (excluding traffic violations and similar misdemeanors).
Steven A. Gould, M.D., Northfield's Chairman and Chief Executive Officer,
and Jack J. Kogut, Northfield's Vice President -- Finance, are parties to
employment agreements with Northfield. The principal terms of these employment
agreements are described in Northfield's proxy statement under "Management --
Employment Agreements." Gerald S. Moss, M.D. is a party to a consulting
agreement under which he reviews and advises Northfield on research activities
relating to PolyHeme. Paul M. Ness, M.D. has provided consulting services to
Northfield relating to FDA regulatory matters and the sourcing of red blood
cells from major blood banking organizations. Northfield expects to enter into
an agreement with Dr. Ness under which he will agree to continue to provide such
services to Northfield. Further information regarding the consulting services
provided to Northfield by Dr. Moss and Dr. Ness is provided in Northfield's
proxy statement under "Item 1. Election of Directors -- Compensation of
Directors." Except for the foregoing agreements, none of the named participants
or any of their respective associates has any arrangement or understanding with
any person with respect to any future employment by Northfield or any of its
affiliates or with respect to any future transaction to which Northfield or any
of its affiliates will or may be a party.
APPENDIX A
NORTHFIELD LABORATORIES INC.
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
JULY 24, 2002
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
- Exercise sole responsibility for hiring and firing the Company's
independent auditor, and for approving any significant non-audit work by
the auditor.
- Monitor the independence and performance of the Company's independent
auditors.
- Provide an avenue of communication among the independent auditors,
management and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to
the independent auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems necessary in
the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the Nasdaq Exchange.
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent nonexecutive
directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee
shall have a basic understanding of finance and accounting and be able to
read and understand fundamental financial statements, and at least one
member of the Committee shall have accounting or related financial
management expertise.
Audit Committee members shall be appointed by the Board. If an audit
committee Chair is not designated or present, the members of the Committee
may designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or
approve an agenda in advance of each meeting. The Committee shall meet
privately in executive session at least annually with management, the
independent auditors and as a committee to discuss any matters that the
Committee or each of these groups believe should be discussed. In addition,
the Committee shall communicate with management and the independent
auditors quarterly to review the Company's financial statements and
significant findings based upon the auditor's limited review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1.Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
A-1
AUDIT COMMITTEE CHARTER
JULY 24, 2002
2.Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting
principles, practices, and judgments.
3.In consultation with the management and the independent auditors
consider the integrity of the Company's financial reporting processes
and controls. Discuss significant financial risk exposures and the steps
management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors
together with management's responses.
4.Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with Statement on Auditing Standards
61 Communicating with Audit Committees (SAS 61). The Chair of the
Committee may represent the entire Audit Committee for purposes of this
review.
INDEPENDENT AUDITORS
The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and maintains sole
responsibility for the hiring and firing of the Company's independent
auditors. The Audit Committee should also approve any significant non-audit
work by the auditor.
5.Approve the fees and other significant compensation to be paid to the
independent auditors.
6.On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
7.Review, as needed, the independent auditors' audit plan -- discuss
scope, staffing, locations, reliance upon management and general audit
approach.
8.Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required to
be communicated to audit committees in accordance with AICPA SAS 61.
9.Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
10.On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
11.Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
annual proxy statement.
12.Perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
13.Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-2
NORTHFIELD LABORATORIES INC.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
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1. ELECTION OF DIRECTORS - Nominees
Steven A. Gould, M.D., Gerald S. Moss, M.D., Bruce S. Chelberg, Jack Olshansky,
David A. Savner, John F. Bierbaum, Paul M. Ness, M.D.
FOR WITHHOLD FOR ALL,
ALL ALL EXCEPT
NOMINEE(S) LISTED TO THE RIGHT.
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[ ] [ ] [ ]
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Date Signature
----------------------------
Signature
---------------------------
Title(s)
FOR AGAINST ABSTAIN
NOTE: Sign exactly as your name(s) appear hereon.
2. To ratify the appointment of KPMG LLP as When signing as attorney, administrator, trustee,
independent auditors of the Company to serve [ ] [ ] [ ] guardian or any other representative capacity, please
for the Company's 2003 fiscal year. so indicate.
3. In their discretion, to act on any other
matters which may properly come before the
Annual Meeting and any adjournment or
postponement thereof.
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
PROXY NORTHFIELD LABORATORIES INC.
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 13, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Northfield Laboratories Inc. hereby
appoints Jack J. Kogut and Carmen Wilcox, and each of them, attorneys and
proxies with full power of substitution, to vote at the Annual Meeting of the
Stockholders of Northfield Laboratories Inc. to be held on Friday, September 13,
2002, at 10:00 A.M., local time, at 1560 Sherman Avenue, Evanston, Illinois
60201-4800, and at any adjournment or postponement thereof, in the name of the
undersigned and with the same force and effect as if the undersigned were
present and voting such shares, on the following matters and in the following
manner.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE HEREON. IF NO SPECIFICATION IS MADE WITH RESPECT TO A
PROPOSAL, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH SUCH
PROPOSAL AND UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING, AS THE ABOVE PERSONS MAY DEEM ADVISABLE.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SEE REVERSE SIDE SEE REVERSE SIDE
(Continued and to be signed on reverse side.)