<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 14a-11(c) or Rule 14a-12
Northfield Laboratories Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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.
[ ] 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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<PAGE> 2
NORTHFIELD LABORATORIES INC.
1560 Sherman Avenue, Suite 1000
Evanston, Illinois 60201-4800
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
on October 14, 1997
----------------------------
TO THE STOCKHOLDERS OF NORTHFIELD LABORATORIES INC:
The Annual Meeting of the stockholders of Northfield Laboratories Inc. (the
"Company") will be held on Tuesday, October 14, 1997, at 2:00. P.M., local time,
at the Third Floor, 1560 Sherman Avenue, Evanston, Illinois 60201-4800, for the
following purposes:
1. To elect five directors to hold office until the next Annual Meeting of
the stockholders of the Company;
2. To approve the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company to serve for the Company's 1998 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 August 25, 1997
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
September 12, 1997
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.
<PAGE> 3
NORTHFIELD LABORATORIES INC.
-------------------------------------------------
PROXY STATEMENT
-------------------------------------------------
This Proxy Statement is being furnished to holders of the Common Stock, par
value $.01 per share (the "Common Stock"), of Northfield Laboratories Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by its Board of Directors for use at the Annual Meeting of the Company's
stockholders (the "Annual Meeting") to be held on Tuesday, October 14, 1997,
commencing at 2:00 P.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 Proxy Statement and the accompanying form of proxy are first being
mailed to holders of Common Stock on or about September 12, 1997.
The Company's principal executive offices are located at 1560 Sherman
Avenue, Suite 1000, Evanston, Illinois 60201-4800. The Company's telephone
number is (847) 864-3500.
VOTING AND RECORD DATE
Only holders of record of Common Stock as of the close of business on
August 25, 1997, the record date for the Annual Meeting, are entitled to notice
of and to vote at the Annual Meeting. As of August 25, 1997, there were
14,092,375 shares of Common Stock outstanding and entitled to be voted at the
Annual Meeting.
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 the
stockholders at the Annual Meeting. 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.
REQUIRED VOTE
The affirmative vote of a majority of the votes duly cast is required to
approve all matters to be acted upon at the Annual Meeting. Under the General
Corporation Law of the State of Delaware, the State in which the Company is
incorporated, an abstaining vote is not deemed to be a "vote cast." As a result,
abstentions are not included in the tabulation of the voting results and,
therefore, do not have the effect of votes in opposition in such tabulations.
Shares as to which a stockholder abstains will be included for purposes of
determining whether a quorum of shares is present at the Annual Meeting.
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 (i) by filing
with the Secretary of the Company, 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
<PAGE> 4
dated than the prior proxy relating to the same shares, or (ii) 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: Secretary,
or hand delivered to the Secretary, at or before the taking of the vote at the
Annual Meeting.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the Company's 1997
fiscal year, including financial statements, has been sent simultaneously with
this Proxy Statement 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 the nominees
for election as directors and FOR approval of the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for the Company's 1998 fiscal
year.
-2-
<PAGE> 5
ITEM 1. ELECTION OF DIRECTORS
Directors elected at the Annual Meeting will hold office until the next
Annual Meeting or until their earlier resignation or removal. In the event any
of the nominees should become unavailable for election, the Board of Directors
may designate substitute nominees, in which event shares represented by all
proxies returned will be voted for such substitute nominees unless an indication
to the contrary is included on such proxies.
<TABLE>
<CAPTION>
DIRECTOR
OF THE
COMPANY PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
<S> <C> <C> <C>
Richard E. DeWoskin......... 1985 Chairman of the Board of Mr. DeWoskin, age 49, is a founding
Directors member of the Company's scientific
and Chief Executive team and has served as Chairman of
Officer the Board of Directors and Chief
Executive Officer of the Company
since its inception in 1985. Prior to
1985, Mr. DeWoskin served as the
Assistant Director of Surgical
Research and as a business advisor to
the Department of Surgery at Michael
Reese Hospital and Medical Center
("Michael Reese") in Chicago,
Illinois. In 1979, Mr. DeWoskin
founded and operated Medalease, Inc.,
a medical billing business based at
Michael Reese. From 1973 to 1977, Mr.
DeWoskin served as the Assistant
Administrator of Surgical Research at
the Hektoen Institute of Cook County
Hospital in Chicago, Illinois. Mr.
DeWoskin received his B.S. degree
from Roosevelt University in 1971.
Steven A. Gould, M.D. ...... 1993 President and Director Dr. Gould, age 50, is a founding
member of the Company's scientific
team and has served as President and
a director of the Company since July
1993. Prior to that time, Dr. Gould
served as a Consultant and Principal
Investigator for the Company'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
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
OF THE
COMPANY PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
<S> <C> <C> <C>
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.
Gerald S. Moss, M.D......... 1989 Director Dr. Moss, age 62, is a founding
member of the Company's scientific
team and has served as a director of
the Company 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 of Michael
Reese. 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 63, has served as a
director of the Company since 1989.
Mr. Chelberg has served since May
1992 as the Chairman and Chief
Executive Officer of Whitman
Corporation, a principal stockholder
of the Company. From 1982 to 1992,
Mr. Chelberg served as the Executive
Vice President -- Corporate Planning
and Development and International
Operations of Whitman Corporation.
Mr. Chelberg is also a director of
Whitman Corporation, First Midwest
Bancorp, Inc. and Snap On Tools Corp.
and is a member of the Board of
Higher Education for the State of
Illinois. Mr. Chelberg received his
LLB degree from the University of
Illinois College of Law in 1958.
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR
OF THE
COMPANY PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- -------- ------ ------------------------
<S> <C> <C> <C>
Jack Olshansky.............. 1989 Director Mr. Olshansky, age 68, has served as
a director of the Company since 1989.
Mr. Olshansky has since 1984 been a
founding general partner of
Montgomery Medical Ventures, L.P.
From 1980 to 1983, Mr. Olshansky
served as vice president of the
Medical Division of Cutter
Laboratories. Mr. Olshansky is also a
director of AbTox, Inc.,
PharmaSciences, Inc., The Trylon
Corporation and Prism Medical, Inc.
Mr. Olshansky received his B.A.
degree from Brooklyn College in 1950.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS; MEETING ATTENDANCE.
The Company currently has two standing committees. The Compensation
Committee, which met once during the Company's 1997 fiscal year, is composed of
Messrs. DeWoskin (Chairman), Chelberg and Olshansky. The Compensation Committee
has the authority, as delegated by the Board of Directors, to administer the
Company's executive compensation plans and to determine the salaries and
incentive compensation, including the grant of stock options, to be received by
the executive officers and employees of the Company.
The Audit Committee, which met once during the Company's 1997 fiscal year,
is composed of Messrs. Chelberg (Chairman), Olshansky and Dr. Gould. The
functions of the Audit Committee include the review of the planning and results
of the Company's annual audit, the adequacy of the Company's internal accounting
controls, and the auditing and accounting principles and practices to be used in
the preparation of the Company's financial statements.
During fiscal 1997, the 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.
COMPENSATION OF DIRECTORS
During the last completed fiscal year, the Company instituted a practice of
compensating outside directors for their participation at Board of Directors
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 such committees. Mr. Chelberg has
declined such compensation and reimbursement of expenses.
During the last completed fiscal year, Mr. Olshansky also received a 15,000
share common stock option which was issued at fair market value on the date of
grant and which vested 1/3 on grant date and will vest 1/3 on each of the next
two annual meeting dates if Mr. Olshansky is re-elected to the Board of
Directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Mr. Olshansky consented, without admitting or denying any wrongdoing, to
the entry of an administrative cease and desist order issued by the Securities
and Exchange Commission on June 24, 1996 in connection with allegations that he
did not timely file certain reports required as a result of his indirect
beneficial ownership in Montgomery Medical Ventures I, L.P. and Montgomery
Medical Ventures II, L.P., California limited partnerships ("MMV" and "MMVII"),
under Sections 13 and 16 of the Securities Exchange Act of 1934. Mr. Olshansky
is a general partner of Montgomery Medical Partners I, L.P. and Montgomery
Medical Partners II, L.P., California limited partnerships, and the general
partner of MMV and MMVII. Mr. Olshansky has informed the Company that the
alleged untimely filings were inadvertent, and resulted neither in any economic
harm to any person nor any economic gain either to Mr. Olshansky, MMV or MMVII.
-5-
<PAGE> 8
MANAGEMENT
EXECUTIVE OFFICERS
The Board of Directors will elect the executive officers of the Company at
its first meeting following the Annual Meeting. The executive officers of the
Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Chairman of the Board of Directors and Chief Executive
Richard E. DeWoskin....................... Officer
Steven A. Gould, M.D...................... President
Jack J. Kogut............................. Vice President -- Finance, Secretary and Treasurer
John D. Grove............................. Vice President -- Operations
John A. Dybas, Jr......................... Vice President -- Regulatory Affairs
Marc D. Doubleday......................... Vice President -- Process Engineering
</TABLE>
- -------------------------
A biographical summary of the business experience of Mr. DeWoskin and Dr.
Gould is included under "Election of Directors."
Mr. Kogut, age 50, has served as Vice President -- Finance of the Company
since 1986. Mr. Kogut has also served as the Secretary and Treasurer of the
Company 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. Grove, age 48, joined Northfield in July 1993 as Vice President --
Operations. From 1981 until joining Northfield, Mr. Grove served in various
managerial positions with the Nutrasweet Company. Most recently, Mr. Grove was
the Director of EQUAL Operations for Nutrasweet. Mr. Grove received his B.S.
degree from Purdue University in 1972.
Mr. Dybas, age 59, has served as Vice President -- Regulatory Affairs of
the Company since January 1996. From 1989 to 1996, he served as the Company's
Director of Regulatory Affairs. Prior to 1989, Mr. Dybas was a self-employed
consultant and spent two years as Director of Regulatory Affairs for the
Pharmaceutical Products Division of Abbott Laboratories, Inc. Mr. Dybas received
his M.S. degree from Syracuse University in 1963.
Mr. Doubleday, age 38, has served as the Vice President -- Process
Engineering of the Company since December 1994. Prior to that time, he served as
Plant Manager and as Senior Process Engineer for the Company. Before joining the
Company 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.
-6-
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes all compensation paid for the Company's last
three completed fiscal years to the Company's Chief Executive Officer and the
Company's four other most highly compensated executive officers.
SUMMARY OF COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------- ------------
AWARDS
------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY COMPENSATION(2) OPTIONS(#) COMPENSATION(3)
--------------------------- ------- ------ --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Richard E. DeWoskin.............. 1997 $232,278 $20,204 55,000 $1,413
Chief Executive Officer 1996 216,821 17,721 6,357
1995 206,858 17,619 9,138
Steven A. Gould, M.D............. 1997 246,418 17,681 45,000 0
President 1996 230,020 12,158 0
1995 219,450 19,510 0
Jack J. Kogut.................... 1997 194,612 18,691 35,000 1,156
Vice President -- Finance 1996 181,661 18,102 5,201
1995 173,313 16,432 7,477
John D. Grove.................... 1997 153,984 11,456 15,000 0
Vice President -- Operations 1996 144,495 10,662 0
1995 139,050 11,181 0
John A. Dybas, Jr................ 1997 178,453 12,686 15,000 0
Vice President -- 1996 138,999 11,805 0
Regulatory Affairs(4) 1995 134,832 11,739 0
</TABLE>
- -------------------------
(1) The Company's fiscal year begins on June 1 and ends on May 31. The Company's
1997 fiscal year ended May 31, 1997.
(2) The indicated amounts represent life insurance premiums paid by the Company
and contributions made by the Company to the indicated executive officer's
401(k) plan account.
(3) The indicated amounts represent the amortization of below market stock
option grants.
(4) Mr. Dybas was elected Vice President -- Regulatory Affairs of the Company in
January 1996. The indicated amounts for fiscal 1996 and prior periods
include compensation received by Mr. Dybas in his prior capacity as the
Company's Director of Regulatory Affairs.
-7-
<PAGE> 10
The following table sets forth all options granted to the Company's Chief
Executive Officer and other named executive officers during the Company's last
completed fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENT OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
NUMBER OF GRANTED TO EXERCISE OPTION TERM(1)
SECURITIES UNDERLYING EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
---- --------------------- ------------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard E. DeWoskin....... 55,000 30.6% $10.81 01/23/07 373,909 947,560
Steven A. Gould, M.D...... 45,000 25.0% 10.81 01/23/07 305,926 775,276
Jack J. Kogut............. 35,000 19.4% 10.81 01/23/07 237,942 602,992
John D. Grove............. 15,000 8.3% 10.81 01/23/07 101,975 258,425
John A. Dybas, Jr......... 15,000 8.3% 10.81 01/23/07 101,975 258,425
</TABLE>
- -------------------------
(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if
any, of the Company's stock price. Additionally, these values do not take
into consideration the provisions of the options providing for
nontransferability or termination of the options following termination of
employment.
The following table sets forth information regarding stock option exercises
by the Company's Chief Executive Officer and the Company's other named executive
officers and the aggregate value as of May 31, 1997 of unexercised stock options
held by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($) EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
---- ------------ -------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. DeWoskin........... 51,790 $430,281 0 66,000 0 $30,085
Steven A. Gould, M.D.......... 43,820 366,993 37,500 57,500 0 0
Jack J. Kogut................. 64,805 559,966 20,000 51,500 60,400 50,828
John D. Grove................. -- -- 21,750 24,250 10,485 10,485
John A. Dybas, Jr............. 10,000 37,350 3,000 18,000 10,485 10,485
</TABLE>
- -------------------------
(1) These figures are based on a fair market value for the Company's Common
Stock at May 31, 1997 of $9.875 per share, the closing price of the Common
Stock as reported by the Nasdaq National Market as of such date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
DeWoskin (Chairman), Chelberg and Olshansky. Mr. DeWoskin is the Chief Executive
Officer of the Company. Mr. DeWoskin did not serve as a director of any other
entity during the Company's last completed fiscal year. Mr. Chelberg is the
Chairman and Chief Executive Officer of Whitman Corporation. Mr. Olshansky is a
founding general partner of Montgomery Medical Ventures, L.P.
-8-
<PAGE> 11
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Richard E. DeWoskin, the
Company's Chief Executive Officer, Steven A. Gould, M.D., the Company's
President, and Jack J. Kogut, the Vice President -- Finance, Secretary and
Treasurer of the Company. The Company's employment agreements provide for terms
expiring in 1998. The annual salaries payable under the Company's employment
agreements with Mr. DeWoskin, Dr. Gould and Mr. Kogut are $240,210, $254,832 and
$201,257, respectively. The Company's employment agreements provide that the
salaries of the respective executive officers may be reviewed annually by the
Company's Board of Directors and may be increased but not decreased from the
foregoing amounts. The employment agreements also provide for certain payments
following a termination of employment occurring after a change in control of the
Company.
EMPLOYEE STOCK OPTION PLAN
The Company's Restated Nonqualified Stock Option Plan (the "Employee Stock
Option Plan") lapsed on September 30, 1996. Following the termination of the
Plan, all options which as of the Plan termination had not expired, terminated
or been exercised or surrendered may be exercised in accordance with their
terms. As of September 30, 1996, under the Employee Stock Option Plan, options
have been granted to purchase shares of the Company's Common Stock at prices
between $2.00 and $15.19 per share. These options expire between 1997 and 2004,
ten years after the date of grant. No options were granted under this Plan
during fiscal 1997 or 1996.
With an effective date of October 1, 1996, the Company established the
Northfield Laboratories Inc. 1996 Stock Option Plan (the "1996 Option Plan").
This Plan provides for the granting of stock options to the Company's directors,
officers, key employees and consultants. Stock options to purchase a total of
500,000 shares of Common Stock are available under the 1996 Stock Option Plan.
During the year ended May 31, 1997, the Company granted options to purchase
shares of Common Stock at prices between $10.81 and $11.44 per share, which was
equal to the fair market value of a share of Common Stock at the date of grant.
These options expire in 2006 and 2007, ten years after the date of grant.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
The Company's Nonqualified Stock Option Plan for Outside Directors provides
for the granting of nonqualified stock options to purchase up to an aggregate of
200,000 shares of Common Stock to directors of the Company who are neither
employees of nor consultants to the Company and who were not directors of the
Company on June 1, 1994. To date, no options have been granted under the Stock
Option Plan for Outside Directors.
EMPLOYEE BENEFIT PLANS
The Company sponsors a defined contribution 401(k) savings plan covering
each employee of the Company satisfying certain minimum length of service
requirements. Matching contributions to the accounts of plan participants are
made by the Company in an amount equal to 50 percent of each plan participant's
before tax contribution, subject to certain maximum contribution limitations,
and are made at the discretion of the Company. Expense incurred by the Company
under this plan for the years ended May 31, 1997, 1996 and 1995 amounted to
$99,781, $87,602 and $100,362, respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors, executive officers and persons who beneficially own more
than 10% of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of beneficial ownership of the Common Stock and
reports of changes in such ownership.
To the Company's knowledge, based solely upon a review of copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended May 31, 1997, its officers,
directors and greater than 10% beneficial owners complied during such fiscal
year with all applicable Section 16(a) filing requirements.
-9-
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the Compensation Committee of the Board of Directors
discusses the Company's executive compensation policies and the bases for the
compensation paid to the Company's Chief Executive Officer during the Company's
last completed fiscal year.
COMPENSATION POLICY
The Company's 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 the Company. The
Company has also sought to align the interests of the Company's senior
management with those of the Company's stockholders with respect to long-term
increases in the price of the Company's stock. The Compensation Committee
considers it essential to the success of the Company 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 the Company's business objectives.
COMPONENTS OF COMPENSATION
The components of compensation paid for the Company's last completed fiscal
year to the Company's executive officers consisted of base salary, gains from
the exercise of stock options and certain other benefits. Stock options to
purchase a total of 180,000 shares of Common Stock were granted to the Company's
Chief Executive Officer and other named executive officers during the Company's
most recent fiscal year.
The Company has employment agreements which provide for specified annual
salaries with Richard E. DeWoskin, the Company's Chief Executive Officer, Steven
A. Gould, M.D., the Company's President, and Jack J. Kogut, the Company's Vice
President -- Finance, Secretary and Treasurer. See "Management -- Employment
Agreements." The annual salaries provided in the Company's employment agreements
were determined based on the salaries provided in prior employment agreements
between the Company and such executive officers. The salaries specified in the
current fiscal year are approximately six percent higher than those provided in
the prior fiscal year. The salary levels provided in the Company's prior
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.
Under the Northfield Laboratories Inc. 1996 Stock Option Plan, options to
purchase shares of the Company's Common Stock, at the fair market price of such
shares on the date of grant, may be made to directors, officers, key employees
and consultants. The Compensation Committee determines the timing, pricing and
amount of option awards to provide recipients with the opportunity to share in
increases in the long-term stockholder value of the Company in amounts which are
consistent with their responsibilities. Options granted under the 1996 Stock
Option Plan include time vesting provisions intended to provide an incentive for
the recipient to continue in the service of the Company. There are no
predetermined performance milestones or award levels applicable to the pricing
or amount of options granted under the 1996 Stock Option Plan.
The other benefits provided to the Company's executive officers consist of
enhanced life and disability insurance coverage. The Company's executive
officers are also eligible for coverage under the Company's general medical and
life insurance programs and may participate in the Company's defined
contribution 401(k) savings plan on the same terms as other Company employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
During the Company's 1997 fiscal year, the Company's Chief Executive
Officer, Richard E. DeWoskin, was compensated pursuant to an employment
agreement dated as of January 1, 1996. See "Management -- Employment
Agreements." Mr. DeWoskin received $232,278 in base salary for fiscal 1997. 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
-10-
<PAGE> 13
contributions to the Company and his high level of experience and involvement
with the development and clinical testing of the Company's blood substitute
product.
During the Company's 1997 fiscal year, Mr. DeWoskin was also granted
options to purchase 55,000 shares of Common Stock pursuant to the Company's 1996
Stock Option Plan. Mr. DeWoskin had not received stock option grants since the
Company's 1990 fiscal year. The terms of the stock options granted to Mr.
DeWoskin were determined based on his contributions to the recent advances in
the development and clinical testing of the Company's blood substitute product.
Members of the Compensation Committee
Richard E. DeWoskin, Chairman
Bruce S. Chelberg
Jack Olshansky
-11-
<PAGE> 14
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock from May 26, 1994, the date of which the Company's Common Stock
began trading on The Nasdaq Stock Market, Inc., through May 31, 1997, with the
CRSP Total Return Index for the Nasdaq Stock Market (U.S. Companies) (the
"Market Index") and the Nasdaq Pharmaceutical Index (the "Pharmaceutical
Index"). The total stockholder return assumes that $100 was invested in the
Company's Common Stock, the Market Index and the Pharmaceutical Index on May 26,
1994 and also assumes the reinvestment of any dividends. The Company's index is
calculated using the closing price for the Company's Common Stock on May 31,
1997, 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NORTHFIELD NASDAQ INDEX NASDAQ
(FISCAL YEAR COVERED) LABORATORIES INC. PHARMACEUTICAL
INDEX
<S> <C> <C> <C>
MAY 26, 1994 100.00 100.00 100.00
MAY 31, 1994 109.60 100.50 100.50
MAY 31, 1995 211.50 119.5 110.10
MAY 31, 1996 259.6 173.7 202.8
MAY 30, 1997 151.9 195.8 184.8
</TABLE>
- --------------------------------------------------------------------------------
- -------------------------
The Report of the Compensation Committee on Executive Compensation 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.
-12-
<PAGE> 15
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of May 31,
1997, for (i) each person who is known by the Company to be the beneficial owner
of more than five percent of the outstanding Common Stock, (ii) each of the
Company's directors, (iii) each of the Company's executive officers named under
"Management -- Executive Compensation -- Summary Compensation Table" and (iv)
all 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.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER BENEFICIALLY
NAME OF STOCKHOLDER OF SHARES OWNED(1)
------------------- --------- ------------
<S> <C> <C>
Richard E. DeWoskin......................................... 642,715(2) 4.6%
Steven A. Gould, M.D. ...................................... 584,450(3) 4.1%
Jack J. Kogut............................................... 88,560(4) *
John D. Grove............................................... 33,000(5) *
John A. Dybas, Jr. ......................................... 17,500(6) *
Marc D. Doubleday........................................... 15,250(7) *
Gerald S. Moss, M.D. ....................................... 589,150 4.2%
c/o UIC College of Medicine
1853 West Polk Avenue
Chicago, Illinois 60612
Bruce S. Chelberg........................................... 1,502,345(8) 10.7%
c/o Whitman Corporation
III Crossroad of Commerce
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Jack Olshansky.............................................. 13,017(9) *
c/o Montgomery Medical Ventures, L.P.
600 Montgomery Street
San Francisco, California 94111
Whitman Corporation......................................... 1,502,345 10.7%
III Crossroads of Commerce
3501 Algonquin Road
Rolling Meadows, Illinois 60008
All directors and executive officers
as a group (nine persons)................................. 3,485,987 24.5%
</TABLE>
- -------------------------
* 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 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 such 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) Does not include 66,000 shares acquirable pursuant to stock options not
currently exercisable or exercisable within 60 days.
-13-
<PAGE> 16
(3) Includes 50,000 shares of Common Stock which Dr. Gould is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Also includes an aggregate of 6,000 shares owned by Suzanne
Gould and Jeffrey Gould, the children of Dr. Gould, as to which Dr. Gould
disclaims beneficial ownership. Also includes 484,630 shares held in a
personal trust and 43,820 shares held in a family trust. Does not include
45,000 shares acquirable pursuant to stock options not currently exercisable
or exercisable within 60 days.
(4) Includes 23,750 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 47,750 shares acquirable pursuant to stock options not currently
exercisable or exercisable within 60 days.
(5) Includes 29,500 shares of Common Stock which Mr. Grove is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days. Does not include 16,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(6) Includes 4,500 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 16,500 shares acquirable pursuant to stock options
not currently exercisable or exercisable within 60 days.
(7) Includes 14,500 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 16,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(8) Includes stock held by Whitman Corporation. Mr. Chelberg is the Chairman and
Chief Executive Officer of Whitman Corporation. Under the rules and
regulations of the Securities and Exchange Commission, Mr. Chelberg may be
deemed a beneficial owner of the stock and stock options held by Whitman
Corporation. Mr. Chelberg disclaims beneficial ownership of the stock and
stock options held by Whitman Corporation.
(9) Includes 5,000 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 10,000 shares acquirable pursuant to stock
option not currently exercisable or exercisable within 60 days.
-14-
<PAGE> 17
ITEM 2. APPROVAL OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending May 31, 1998, and has further
directed that the selection of independent auditors be submitted for approval by
the stockholders at the Annual Meeting.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Arrangements will be made with
custodians, nominees and fiduciaries for forwarding proxy solicitation materials
to beneficial owners of shares held of record by such custodians, nominees and
fiduciaries, and the Company will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Stockholders may present proper proposals for inclusion in the Company's
proxy statement and for consideration at the next annual meeting of its
stockholders by submitting their proposals to the Company in a timely manner. In
order to be so included for the Company's next annual meeting, stockholder
proposals must be received by the Company no later than June 8, 1998, and must
otherwise comply with the requirements of the applicable rules of the Securities
and Exchange Commission. In addition, the Company's Restated Bylaws establish an
advance notice procedure with regard to certain matters, including stockholder
proposals not included in the Company's proxy statement, to be brought before
any annual meeting of stockholders. In general, notice must be received by the
Secretary of the Company 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 stockholders of
the Company, 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 such notice of the date of the annual meeting was mailed or such public
disclosure was made.
All notice of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to Northfield Laboratories Inc.,
1560 Sherman Avenue, Suite 1000, Evanston, Illinois 60201-4800, Attention:
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 such matters.
-15-
<PAGE> 18
PROXY PROXY
NORTHFIELD LABORATORIES INC.
ANNUAL MEETING OF STOCKHOLDERS - OCTOBER 14, 1997
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 Tuesday, October 14, 1997, at 2:00
P.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, the shares
represented by this proxy will be voted by each of the above persons for each
of the proposals to be presented at the Annual Meeting and for such other
matters as may properly come before the Annual Meeting as the above persons may
deem advisable.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
NORTHFIELD LABORATORIES INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
The Board of Directors recommends a vote "FOR" each of the listed proposals.
<TABLE>
<S> <C>
1. Election of Directors- FOR WITHHOLD FOR ALL(Except Nominee(s) written below)
Nominees: Richard E. DeWoskin, [ ] [ ] [ ]
Steven A. Gould, M.D., Gerald S.
Moss, M.D., Bruce S. Chelberg
and Jack Olshansky
-------------------------------------------------------------
2. To approve the appointment of KPMG FOR AGAINST ABSTAIN 3. In their discretion, to act in any other matters which
Peat Marwick LLP as independent [ ] [ ] [ ] may properly come before the Annual Meeting and any
auditors of the Company to serve adjournment or postponement thereof.
for the Company's 1998 fiscal year.
Dated:_____________________________, 1997
Signature(s)_________________________________________________
_____________________________________________________________
Sign exactly as your name(s) appear hereon. When signing as
attorney, administrator, trustee, guardian or any other
representative capacity, please so indicate.
</TABLE>
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
