<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 Rule 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<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 28, 1999
----------------------------
TO THE STOCKHOLDERS OF NORTHFIELD LABORATORIES INC:
The Annual Meeting of the stockholders of Northfield Laboratories Inc. (the
"Company") will be held on Thursday, October 28, 1999, 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 six directors to hold office until the next Annual Meeting of
the stockholders of the Company;
2. To approve the appointment of KPMG LLP as independent auditors of the
Company to serve for the Company's 2000 fiscal year;
3. To approve a proposal to amend the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of the
Company's Common Stock, par value $.01 per share, from 20,000,000 to
30,000,000; and
4. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on September 1, 1999
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 17, 1999
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 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 Thursday,
October 28, 1999, 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 document is first being mailed to holders of common stock on or about
September 17, 1999.
Our principal executive offices are located at 1560 Sherman Avenue, Suite
1000, Evanston, Illinois 60201-4800. Our telephone number is (847) 864-3500.
VOTING AND RECORD DATE
Only holders of record of common stock as of the close of business on
September 1, 1999, the record date for the annual meeting, are entitled to
notice of and to vote at the annual meeting. As of September 1, 1999, there were
14,239,875 shares of common stock outstanding and entitled to be voted at the
annual meeting.
QUORUM
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.
If a stockholder withholds its vote for the election of directors or
abstains from voting on the other proposals to be considered at the annual
meeting, the shares owned by that stockholder 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 form of
proxy that it does not have discretionary authority as to certain shares to vote
on the proposal to amend our Restated Certificate of Incorporation to authorize
additional shares of our common stock, those shares will be considered to be
present at the annual meeting for purposes of establishing the presence or the
absence of a quorum for the transaction of business.
REQUIRED VOTE
The affirmative vote of a plurality of the votes cast at the annual meeting
will be required for the election of directors. Because directors are elected by
a plurality vote, withheld votes have no impact in the election of directors
once a quorum is established.
The affirmative vote of a majority of the votes cast at the annual meeting
will be required to approve the proposal with respect to the appointment of
independent auditors. Abstentions will be considered as votes cast with respect
to this proposal and will have the same effect as a vote against the proposal.
The affirmative vote of a majority of the outstanding shares of common
stock will be required to approve the proposal to amend our Restated Certificate
of Incorporation to authorize additional shares of our common stock. Because of
this requirement, abstentions and broker non-votes on this proposal will be have
the same effect as a vote against the proposal.
<PAGE> 4
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.
ANNUAL REPORT
A copy of the our Annual Report on Form 10-K for our 1999 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 the nominees
for election as directors, FOR approval of the appointment of KPMG LLP as
independent auditors for Northfield's 2000 fiscal year and FOR the proposal to
amend Northfield's Restated Certificate of Incorporation to authorize additional
shares of our common stock.
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 the substitute nominees unless an indication
to the contrary is included on the proxies.
<TABLE>
<CAPTION>
DIRECTOR
OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ---------- ------ ------------------------
<S> <C> <C> <C>
Richard E. DeWoskin......... 1985 Chairman of the Board of Mr. DeWoskin, age 51, is a founding
Directors and Chief member of Northfield's scientific team
Executive Officer and has served as Chairman of Board of
Directors and Chief Executive Officer
of Northfield 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 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.
Steven A. Gould, M.D. ...... 1993 President and Director Dr. Gould, age 52, is a founding
member of Northfield's scientific team
and has served as President and a
director of Northfield since July
1993. 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.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ---------- ------ ------------------------
<S> <C> <C> <C>
Gerald S. Moss, M.D. ....... 1989 Director Dr. Moss, age 64, 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 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 65, has served as a
director of Northfield since 1989. Mr.
Chelberg has served since May 1992 as
the Chairman and Chief Executive
Officer of Whitman Corporation, a
principal stockholder in Northfield.
From 1982 to 1992, Mr. Chelberg served
in a number of executive positions
with Whitman Corporation. Mr. Chelberg
is also a director of Whitman
Corporation, First Midwest Bancorp,
Inc., Snap-On Tools Corp. and is a
member of the Illinois Bar
Association. Mr. Chelberg received his
LLB degree from the University Of
Illinois College of Law in 1958.
Jack Olshansky.............. 1989 Director Mr. Olshansky, age 70, has served as a
director of Northfield 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 EndiCor, Inc.,
PrisMedical, Inc., Tandem and The
Trylon Corporation. Mr. Olshansky
received his B.A. degree from Brooklyn
College in 1950.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR
OF
NORTHFIELD PRINCIPAL OCCUPATION AND
NAME SINCE OFFICE BUSINESS EXPERIENCE
---- ---------- ------ ------------------------
<S> <C> <C> <C>
David A. Savner............. 1998 Director Mr. Savner, age 55, 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, Northfield's
principal legal counsel. Mr. Savner
received his J.D. degree from
Northwestern University Law School in
1968.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
We currently have two standing committees. The compensation committee,
which met once during the 1999 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 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 once during the 1999 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 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.
MEETING ATTENDANCE
During fiscal 1999, the Board of Directors met five 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, with the
exception of Mr. Chelberg, who attended three of the five meetings of the Board
of Directors.
COMPENSATION OF DIRECTORS
We compensate 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 committees. Mr. Chelberg has
declined this compensation and reimbursement of expenses.
CERTAIN BUSINESS RELATIONSHIPS
Our principal legal counsel is the firm of Jenner & Block, Chicago,
Illinois. Until April 1998, Mr. Savner was a senior partner at Jenner & Block.
5
<PAGE> 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:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Richard E. DeWoskin....................... Chairman of the Board of Directors and Chief Executive
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
Robert L. McGinnis........................ Vice President -- Manufacturing Development
</TABLE>
- -------------------------
A biographical summary of the business experience of Mr. DeWoskin and Dr.
Gould is included under "Election of Directors."
Mr. Kogut, age 52, 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. Grove, age 50, 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 61, 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 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 40, 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 35, 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.
6
<PAGE> 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 OF COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL 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.............. 1999 $255,022 $22,395 40,000 --
Chief Executive Officer 1998 244,213 20,666 20,000 $ 706
1997 232,278 20,204 55,000 1,413
Steven A. Gould, M.D. ........... 1999 270,546 25,594 30,000 --
President 1998 259,079 23,800 15,000 --
1997 246,418 17,681 45,000 --
Jack J. Kogut.................... 1999 213,668 21,197 25,000 --
Vice President -- Finance 1998 204,611 20,481 15,000 578
1997 194,612 18,691 35,000 1,156
John D. Grove.................... 1999 162,559 11,749 10,000 --
Vice President -- Operations 1998 159,242 11,574 5,000 --
1997 153,984 11,456 15,000 --
John A. Dybas, Jr. .............. 1999 162,989 13,961 10,000 --
Vice President -- 1998 156,081 11,960 10,000 --
Regulatory Affairs 1997 178,453 12,686 15,000 --
</TABLE>
- -------------------------
(1) Our fiscal year begins on June 1 and ends on May 31. Our 1999 fiscal year
ended May 31, 1999.
(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) The indicated amounts represent the amortization of below market stock
option grants.
7
<PAGE> 10
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
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION
NUMBER OF GRANTED TO EXERCISE FOR 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....... 40,000 30% $10.81 4/07/09 $271,934 $689,134
Steven A. Gould, M.D. .... 30,000 22 10.81 4/07/09 203,951 516,851
Jack J. Kogut............. 25,000 19 10.81 4/07/09 169,959 430,709
John D. Grove............. 10,000 7 10.81 4/07/09 67,984 172,284
John A. Dybas, Jr. ....... 10,000 7 10.81 4/07/09 67,984 172,284
</TABLE>
- -------------------------
(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if
any, of our stock price. Additionally, these values do not take into
consideration the provisions of the options providing for nontransferability
or termination of the options following termination of employment.
The following table sets forth information regarding stock option exercises
by our Chief Executive Officer and other named executive officers and the
aggregate value as of May 31, 1999 of unexercised stock options held by these
individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. DeWoskin......... -- -- 60,000 66,000 $ 68,915 $104,273
Steven A. Gould, M.D. ...... -- -- 98,750 41,250 56,385 37,590
Jack J. Kogut............... 12,500 46,688 53,750 45,250 129,100 75,632
John D. Grove............... -- -- 47,250 13,750 52,893 12,530
John A. Dybas, Jr. ......... -- -- 23,500 17,500 52,893 12,530
</TABLE>
- -------------------------
(1) These figures are based on a fair market value for our common stock at May
28, 1999 of $12.063 per share, the closing price of the common stock as
reported by the Nasdaq National Market as of that date. May 28, 1999
represents the last trading day in our 1999 fiscal year.
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 Northfield. Mr. DeWoskin did not serve as a director of any other
entity during our 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.
EMPLOYMENT AGREEMENTS
We have employment agreements with Richard E. DeWoskin, our Chief Executive
Officer, Steven A. Gould, M.D., our President, and Jack J. Kogut, our Vice
President -- Finance, Secretary and Treasurer. These employment agreements
provide for terms expiring in December 2000. The annual salaries payable
8
<PAGE> 11
under the employment agreements with Mr. DeWoskin, Dr. Gould and Mr. Kogut are
$262,309, $278,276 and $219,772, 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 certain payments
following a termination of employment occurring after a change in control of
Northfield.
EMPLOYEE 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 may be exercised in accordance with their terms. As of May 31, 1999,
options to purchase a total of 128,000 shares of common stock at prices between
$6.38 and $15.19 per share were outstanding under this plan. These options
expire between 2000 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, 1999, options
to purchase a total of 480,000 shares of common stock at prices between $9.56
and $13.38 were outstanding under the 1996 plan. These options expire between
2006 and 2009, 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. No options have been granted to date under the 1999
plan.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
The 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, 1999, options to purchase a
total of 15,000 shares of common stock at a price of $13.38 per share were
outstanding under this plan. These options expire in 2008.
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 matching contributions to the accounts of plan participants in an
amount equal to 50 percent of each plan participant's before tax contribution,
subject to certain maximum contribution limitations. Our expenses incurred under
this plan for the years ended May 31, 1999, 1998 and 1997 were $118,167, $98,567
and $99,781, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and 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, 1999, 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 the our Chief Executive Officer during our last completed fiscal year.
9
<PAGE> 12
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, gains from the exercise of
stock options and certain other benefits. Stock options to purchase a total of
115,000 shares of common stock were granted to our Chief Executive Officer and
other named executive officers during our most recent fiscal year.
We have employment agreements which provide for specified annual salaries
with Richard E. DeWoskin, our Chief Executive Officer, Steven A. Gould, M.D.,
our President, and Jack J. Kogut, our Vice President -- Finance, Secretary and
Treasurer. See "Management -- Employment Agreements." 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.
Under the Northfield Laboratories Inc. 1996 Stock Option Plan, options to
purchase shares of common stock, at the fair market price of the 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 Northfield in amounts which are
consistent with their responsibilities. Options granted under the 1996 plan
include time vesting provisions intended to provide an incentive for the
recipient to continue in the service of Northfield. There are no predetermined
performance milestones or award levels applicable to the pricing or amount of
options granted under the 1996 plan.
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.
CHIEF EXECUTIVE OFFICER COMPENSATION
During our 1999 fiscal year, our Chief Executive Officer, Richard E.
DeWoskin, received $255,022 in base salary pursuant to his employment agreement.
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 our blood substitute product.
During our 1999 fiscal year, Mr. DeWoskin was also granted options to
purchase 40,000 shares of common stock pursuant to our 1996 stock option plan.
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 our blood substitute product.
Members of the Compensation Committee
Richard E. DeWoskin, Chairman
Bruce S. Chelberg
Jack Olshansky
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common
stock from May 31, 1994 through May 31, 1999 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, 1994 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 28, 1999, 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.
[LINE GRAPH]
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET NASDAQ PHARMACEUTICAL
MEASUREMENT PERIOD (FISCAL YEAR COVERED) NORTHFIELD LABORATORIES INC. (US COMPANIES) STOCK INDEX
- ---------------------------------------- ---------------------------- ------------------- ---------------------
<S> <C> <C> <C>
May 31, 1994 100 100 100
May 31, 1995 193 119 109.8
May 31, 1996 236.8 172.9 202.2
May 30, 1997 138.6 194.8 184.3
May 29, 1998 214.9 247.1 191.6
May 28, 1999 169.3 347.2 253.1
</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.
11
<PAGE> 14
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 May 31, 1999, for (i) each person
who is known by us to be the beneficial owner of more than five percent of the
outstanding common stock, (ii) each of our directors, (iii) each of our
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......................................... 702,715(2) 4.9%
Steven A. Gould, M.D. ...................................... 633,200(3) 4.4%
Jack J. Kogut............................................... 118,560(4) *
John D. Grove............................................... 50,750(5) *
John A. Dybas, Jr. ......................................... 36,500(6) *
Marc D. Doubleday........................................... 25,000(7) *
Robert L. McGinnis.......................................... 3,750(8) *
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........................................... 1,502,345(9) 10.6%
c/o Whitman Corporation
III Crossroad of Commerce
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Jack Olshansky.............................................. 23,017(10) *
c/o Montgomery Medical Ventures, L.P.
3645 Grand Avenue, Suite #302
Oakland, California 94610
Whitman Corporation......................................... 1,502,345 10.6%
III Crossroads of Commerce
3501 Algonquin Road
Rolling Meadows, Illinois 60008
David A. Savner............................................. 12,000(11) *
c/o General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, Virginia 22042
All directors and executive officers as a group (eleven
persons).................................................. 3,696,987 25.4%
</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 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.
12
<PAGE> 15
(2) Includes 60,000 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 66,000 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(3) Includes 98,750 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
41,250 shares acquirable pursuant to stock options not currently
exercisable or exercisable within 60 days.
(4) Includes 53,750 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 45,250 shares acquirable pursuant to stock options not
currently exercisable or exercisable within 60 days.
(5) Includes 47,250 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 13,750 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(6) Includes 23,500 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 17,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(7) Includes 23,500 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 17,500 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(8) Includes 3,750 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 21,250 shares acquirable pursuant to stock
options not currently exercisable or exercisable within 60 days.
(9) Includes shares of common 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 held by Whitman
Corporation. Mr. Chelberg disclaims beneficial ownership of the stock held
by Whitman Corporation.
(10) Includes 15,000 shares of common stock which Mr. Olshansky is entitled to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days.
(11) Includes 10,000 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.
13
<PAGE> 16
ITEM 2. APPROVAL OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as Northfield's independent
auditors for the fiscal year ending May 31, 2000, and has further directed that
the selection of independent auditors be submitted for approval by the
stockholders at the annual meeting.
Representatives of KPMG 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.
ITEM 3. APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
SUMMARY OF THE AMENDMENT
The Board of Directors has determined that our Restated Certificate of
Incorporation should be amended to increase the number of authorized shares of
our common stock from 20,000,000 to 30,000,000. Specifically, Section 4 of our
Restated Certificate of Incorporation will be amended and restated as set forth
in Annex A, which is located at the end of this document. The other terms and
provisions of our Restated Certificate of Incorporation will remain unchanged.
As of the record date for the annual meeting, 14,239,875 shares of our
common stock were outstanding, 1,328,000 shares were reserved for issuance under
our stock option plans, leaving only 4,432,125 shares available for issuance for
other purposes. If this proposed amendment is approved, 10,000,000 additional
shares of our common stock will be available for future issuance or sale without
further stockholder approval. However, stockholder approval of particular
transactions may at the time be required by law or by the rules or policies of
any exchange or market upon which shares of our common stock may be traded or
quoted. Our common stock is presently quoted on The Nasdaq Stock Market, Inc.
under the symbol "NFLD".
PURPOSE AND EFFECT OF THE AMENDMENT
Upon approval of this proposed amendment by our stockholders, 10,000,000
additional shares of our common stock would be authorized but unissued and
unreserved. The Board of Directors believes that it is in the best interest of
Northfield to have additional shares of our common stock available for various
general corporate purposes, financing transactions, including stock splits,
stock dividends, benefit plans or acquisitions. The Board of Directors believes
that the additional authorized common stock would give us greater flexibility by
allowing us to issue shares of our common stock without the expense and delay of
a stockholders meeting to authorize additional shares if and when the need
arises.
We currently have no plans for the issuance of additional shares of common
stock. We have determined, however, that securing stockholder approval of
10,000,000 additional authorized shares of our common stock would be appropriate
in order to provide us with the flexibility to consider possible actions that
might require the future issuance of additional shares of our common stock.
If the Board of Directors deems it to be in the best interest of Northfield
and our stockholders to issue additional shares of common stock in the future,
the Board of Directors generally will not seek further authorization by vote of
our stockholders, unless such authorization is otherwise required by law or
regulations.
The issuance of the additional shares of our common stock may have a
dilutive effect on our earnings per share and, for stockholders that do not
purchase additional shares to maintain their pro rata interest in Northfield, on
their percentage of voting power. In addition, the issuance of additional shares
of our common stock authorized by this proposed amendment could have an
anti-takeover effect. For example, the issuance of the additional shares of our
common stock could discourage a potential acquiror by increasing the number of
shares of our common stock necessary to gain control of Northfield, permitting
us, through the public or private issuance of shares of our common stock, to
dilute the stock ownership of the potential acquiror, or permitting us to
privately place shares of our common stock with purchasers who would side with
our Board of Directors in opposing a takeover bid.
14
<PAGE> 17
This proposed amendment is not being recommended in response to any
specific effort of which our management is aware to accumulate shares or obtain
control of Northfield or for a specific purpose other than general corporate
purposes.
EFFECTIVE DATE
If this proposed amendment is approved by our stockholders, then the
amendment to our Restated Certificate of Incorporation will become effective
upon the filing of a Certificate of Amendment with the Secretary of State of
Delaware, which will occur as soon as practicable following the approval of this
proposed amendment by our stockholders. Our stockholders have no dissenters'
rights with respect to this proposed amendment and will have no preemptive
rights in connection with the issuance of any new shares of our common stock.
EXPENSES OF SOLICITATION
We will bear all expenses of this solicitation, including the cost of
preparing and mailing this document. In addition to solicitation by use of the
mails, proxies may be solicited by our directors, officers and employees in
person or by telephone, telegram or other means of communication. Our directors,
officers and employees will not be additionally compensated, but may be
reimbursed for their reasonable out-of-pocket expenses in connection with 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.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
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 for our next annual meeting, stockholder proposals must be received
by us no later than July 8, 2000, 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 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 the 2000
annual meeting of shareholders will be held on or about October 6, 2000.
Therefore, the deadline for timely submission of a shareholder proposal for
consideration at the 2000 annual meeting is currently expected to be August 7,
2000.
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: 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.
15
<PAGE> 18
ANNEX A
SECTION 4 OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF NORTHFIELD LABORATORIES INC.
AS PROPOSED TO BE AMENDED
"4. Authorized Capital Stock. The total number of shares of stock which the
Corporation shall have authority to issue is 35,000,000 shares, consisting of
30,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 5,000,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock").
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors of the Corporation (the "Board of Directors") is
expressly authorized to provide for the issuance of the Preferred Stock in one
or more series, and to fix the number of shares and to determine or alter for
each such series, such voting powers, full or limited, or no voting powers, and
such designations, preferences, and relative, participating, optional or other
rights, and such qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of such shares and as may be permitted by
the General Corporation Law of the State of Delaware. The Board of Directors is
also expressly authorized to increase or decrease (but not below the number of
shares of such series outstanding) the number of shares of any series subsequent
to the issuance of shares of such series. In case the number of shares of any
such series shall so decrease, the shares constituting such decrease shall
resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
16
<PAGE> 19
PROXY NORTHFIELD LABORATORIES INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS-OCTOBER 28, 1999
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 Thursday, October 28, 1999, 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> <C> <C>
FOR WITHHOLD
ALL ALL FOR ALL (Except Nominee(s) written below)
1. ELECTION OF DIRECTORS --
Nominees: Richard E. DeWoskin, Steven A. Gould, M.D., [ ] [ ] [ ]
Gerald S. Moss, M.D., Bruce S. Chelberg, Jack Olshansky ---------------------------------
and David A. Savner
FOR AGAINST ABSTAIN
2. To approve the appointment of KPMG LLP [ ] [ ] [ ]
as independent auditors of the Company to serve for the
Company's 2000 fiscal year.
FOR AGAINST ABSTAIN
3. To approve the proposal to amend the Company's [ ] [ ] [ ]
Restated Certificate of Incorporation to increase the
number of authorized shares of the Company's Common Stock,
par value $.01 per share, from 20,000,000 to 30,000,000.
4. In their discretion, to act on any other matters which may
Properly come before the Annual Meeting and any
adjournment or postponement thereof.
</TABLE>
20
<PAGE> 20
Dated: , 1999
------------------
Signature(s)
Sign exactly as your name(s) appear hereon.
When signing as attorney, administrator,
trustee, guardian or other representative
capacity, please so indicate.
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED PREPAID ENVELOPE.
21
