Document:

exv10w3

 

Exhibit
10.3

EMPLOYMENT AGREEMENT

     THIS AGREEMENT, originally made as of February 25, 2008, by and between Robert L. McGinnis
(“Executive”) and Northfield Laboratories Inc., a Delaware corporation (the “Company”).

W I T N E S S E T H:

     WHEREAS, Executive is now, and has been, employed as the Senior Vice President – Operations of
the Company;

     WHEREAS, the Company and Executive now desire to enter into an Employment Agreement in order
to continue such employment for the term set forth herein and subject to the terms and conditions
set forth herein;

     WHEREAS, the Company and Executive desire to continue the Proprietary Information and
Inventions Agreement entered into by and between Executive and the Company dated July 24, 1997 (the
“Proprietary Information and Inventions Agreement”) in full force and effect; and

     NOW, THEREFORE, in consideration of the premises, and of the mutual covenants hereinafter set
forth, the parties do hereby agree as follows:

     1. Employment. The Company agrees to employ Executive, and Executive agrees to remain
in the employ of the Company, for the period (the “Employment Period”) beginning as of the date of
this Agreement and ending on the date as of which Executive’s employment is terminated pursuant to
paragraph 5 of this Agreement. During the Employment Period, Employee shall serve as the Senior
Vice President — Operations of the Company and shall perform such executive and managerial duties
consistent with such position as the Chief Executive Officer and Board of Directors of the Company
shall from time to time direct. Executive shall have such duties and authority as are customarily
and ordinarily exercised by executives in similar positions in similar businesses in the United
States. Employee shall devote his full business time and attention to the business of the Company
and its subsidiaries. Executive may (i) participate in civic, charitable and industry
organizations which do not materially interfere with his duties and (ii) serve on the board of
directors of one non-competing for-profit business which does not materially interfere with his
duties, it being understood that any additional non-competing for-profit board memberships shall
require the consent of the Board of Directors of the Company.

     2. Location. Executive shall be based at the Company’s headquarters in Evanston,
Illinois, or at such other location as may be agreed upon by Executive and the Chief Executive
Officer of the Company. Executive shall, however, also travel to other locations at such times as
may be reasonably required for the performance of his duties under this Agreement; provided that
the frequency and duration of such travel shall not be substantially greater than the frequency and
duration of Executive’s travel during his employment by the Company prior to the date of this
Agreement.

 

 

     3. Compensation. During the Employment Period, Executive shall be compensated as
follows:

     (a) Salary. Executive shall be paid an annual base salary at a rate which is
not less than $255,000 per year, effective commencing February 25, 2008. Executive’s base
salary shall be reviewed by the Board of Directors of the Company on an annual basis and
shall be subject to increases from time to time at the discretion of the Board of Directors.
Executive’s base salary as in effect from time to time may not be decreased and shall be
paid in equal, bi-weekly installments.

     (b) Bonus.

     (i) Executive shall be paid a cash bonus equal to 100% of his annual base
salary, as then in effect, on the date the Company is granted Food and Drug
Administration approval for the commercial sale of PolyHeme in the United States for
any indication. Such bonus will be paid within 14 days after the Company receives
written notification of such approval.

     (ii) Executive shall be entitled to receive an annual cash bonus for the
achievement of performance goals to be determined by mutual agreement of the Board
of Directors and Executive. The annual cash bonus is payable with respect to
performance during the Company’s fiscal year ending each May 31. Executive and the
Board of Directors shall use their good faith efforts to agree prior to June 30 of
each fiscal year on the performance goals to be applicable for such fiscal year.
The target bonus opportunity shall be equal to 40% of Executive’s annual base
salary, as in effect at the beginning of the fiscal year for which Executive’s
performance is being measured, with a maximum bonus opportunity for superior
performance of 100% of Executive’s annual base salary as so determined. A reduced
bonus may be payable at the discretion of the Board of Directors for partial
achievement of Executive’s performance goals. In no event shall any annual cash
bonus be paid later than the 15th day of the third month following the later of (A)
the end of the Company’s fiscal year, or (B) the end of the calendar year, in which
the annual performance goals are met to the satisfaction of the Board of Directors,
as the case may be, consistent with the short-term deferral rule in Treasury
Regulation Section 1.409A-1(b)(4).

     (c) Paid Time Off. Executive shall accrue a total of 30 days of paid time off,
including vacation, sick days and other absences, during each calendar year. Unused day of
paid time off may be used by Executive in succeeding calendar years, provided that Executive
shall not be entitled to utilize more than a total of 60 days of paid time off during any
calendar year.

     (d) Expenses. Executive shall be reimbursed for all reasonable business
expenses incurred in the performance of his duties pursuant to this Agreement, to the extent
such expenses are substantiated and are consistent with the general policies of the

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Company and its subsidiaries relating to the reimbursement of expenses of senior
executive officers. The reimbursement of expenses during a calendar year will not affect
the expenses eligible for reimbursement in any other calendar year. In no event shall such
an expense be reimbursed after December 31 of the calendar year following the calendar year
in which the expense was incurred.

     (e) Fringe Benefits. Executive shall be entitled to participate, during the
Employment Period, in any and all pension, stock option, relocation, profit sharing, and
other Executive benefit plans or fringe benefit programs which are from time to time
maintained by the Company or its subsidiaries for their senior executive officers, in
accordance with the provisions of such plans or programs as from time to time in effect.

     (f) Financial Planning and Other Services. Executive shall be entitled to
reimbursement of up to $3,500 per calendar year for financial planning and tax preparation
assistance; provided that any portion of such annual amount not incurred by Executive as of
each December 31 shall be forfeited. In calendar year 2008, Executive shall additionally be
entitled to reimbursement for up to a total of $10,000 for estate planning expenses. In no
event shall an expense incurred pursuant to this paragraph (f) be reimbursed later than
December 31 of the calendar year following the calendar year in which such expense was
incurred.

     (g) Annual Physical. Executive shall be entitled to reimbursement for all
costs associated with an annual executive physical at a medical facility of Executive’s
choice. To the extent such a cost is not paid for or reimbursed under an insurance policy
or benefit plan of the Company and is taxable to the Executive, such cost shall be
reimbursed no later than December 31 of the calendar year following the calendar year in
which the cost was incurred.

     (h) Deduction and Withholding. All compensation and other benefits payable to
or on behalf of Executive pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by Executive or required by applicable law.

     4. Other Benefits. The compensation provisions of this Agreement shall be in addition
to, and not in derogation or diminution of, any benefits that Executive or his beneficiaries may be
entitled to receive under the provisions of any pension, stock option, profit sharing, disability,
relocation or other Executive benefit plan now or hereafter maintained by the Company or by any of
its subsidiaries. The Company shall not make any changes in such plans or arrangements which would
adversely affect Executive’s rights or benefits thereunder, unless such change is made uniformly in
a plan of general application to all of the Company’s or a subsidiary’s eligible Executives.

     5. Termination. Executive’s employment may be terminated without any breach of this
Agreement only under the following circumstances:

     (a) Death. Executive’s employment shall terminate upon his death.

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     (b) Disability. If, as a result of Executive’s incapacity due to physical or
mental illness or accident, Executive shall be unable to perform in all material respects
his duties as Senior Vice President — Operations of the Company for a period equal to the
eligibility waiting period applicable under the Company’s long term disability insurance
policy, the Company may terminate Executive’s employment for “disability.”

     (c) Cause. The Company may terminate Executive’s employment hereunder for
“cause.” For purposes of this Agreement, “cause” shall mean the conviction of Executive of
any felony or any failure by Executive to comply in all material respects with any material
term of this Agreement or the Proprietary Information and Inventions Agreement which conduct
or failure is materially injurious to the Company, monetarily or otherwise. Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for cause without (1)
at least 60 days prior written notice from the Company to Executive setting forth the
reasons for the Company’s intention to terminate for cause, (ii) an opportunity to cure the
stated cause during the 60-day notice period, and (iii) after all of the preceding
procedures have been satisfied or made available, delivery to Executive of a Notice of
Termination from the Board of Directors of the Company finding that in the good faith
opinion of such Board of Directors, Executive was guilty of the conduct or of the failure
described in the second sentence of this subparagraph, specifying the particulars in detail,
and that Executive has failed to cure the stated cause.

     (d) Termination by Executive. Executive may voluntarily terminate his
employment at any time. Executive’s termination of employment shall be for “good reason” if
he voluntarily terminates his employment:

     (i) upon the occurrence, without the Executive’s consent, of any of the
following events:

     (A) a material diminution of Executive’s duties or authority, or the
assignment to Executive of duties materially inconsistent with his position,
in either case, with or without a change in Executive’s title;

     (B) the institution of a requirement that Executive report to any
person other than the Chief Executive Officer or the Board of Directors;

     (C) a material diminution in Executive’s base salary or a material
diminution in Executive’s benefits; or

     (D) a material change in the geographic location at which Executive
must perform services pursuant to this Agreement;

     (ii) because of a failure by the Company to comply with any material provision
of this Agreement which has not been cured within 30 days after written notice of
such noncompliance has been given by the Executive to the Company; or

     (iii) because of any purported termination of the Executive’s employment by the
Company which is not effected pursuant to a Notice of

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Termination satisfying the requirements of subparagraph 5(e) hereof (and for
purposes of this Agreement no such purported termination shall be effective).

     Notwithstanding the foregoing, the Executive shall not be deemed to have terminated for
good reason unless, within 45 days after the initial condition giving rise to good reason,
the Executive provides the Company with written notice of such condition. The Company shall
have 30 days following receipt of such notice to cure the condition. If the Company does
not cure such condition within the 30 day period, then Executive’s Date of Termination shall
be the first day after the 30 day cure period expires.

     (e) Notice of Termination. Any termination of Executive’s employment by the
Company or by Executive (other than termination because of Executive’s death) shall be
communicated by written Notice of Termination to the other party hereto. For purposes of
this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the
specific termination provision of this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated.

     (f) Date of Termination of Employment. “Date of Termination” shall mean (i) if
Executive’s employment is terminated by his death, the date of his death; (ii) if
Executive’s employment is terminated for disability pursuant to subparagraph 5(b) above, 30
days after Notice of Termination is given (provided that Executive shall not have returned
to the performance of his duties during such thirty-day period); (iii) if Executive’s
employment is terminated for any other reason, the date specified in the Notice of
Termination which shall not be less than 30 days nor more than 60 days from the date Notice
of Termination is given (except as provided in subparagraph 5(d)); provided that if within
30 days after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and final arbitration award or by a
final judgment, order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).

     6. Compensation Upon Termination of Employment.

     (a) All Terminations. Upon the termination of Executive’s employment with the
Company for any reason, Executive shall be entitled to receive (i) his base salary through
the Date of Termination, (ii) the balance of any earned but unpaid bonus, (iii) up to a
maximum of 60 days of accrued but unused paid time off, (iv) all vested benefits under the
Company’s benefit plans payable in accordance with the terms of such plans and (v) all
benefit continuation and conversion rights as provided under the Company’s benefit plans.
The foregoing are referred to collectively as the “Base Termination Benefit.”

     (b) Death or Disability. If Executive’s employment with the Company terminates
as a result of his death or his disability, then Executive shall be entitled to

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receive (i) the Base Termination Benefit and (ii) a cash bonus equal to his target
bonus payable with respect to the year in which the Date of Termination occurs, with such
amounts paid no later than the 15th day of the third month following the later of (A) the
end of the Company’s fiscal year, or (B) the end of the calendar year, of the Date of
Termination.

     (c) Cause. If Executive’s employment is terminated by the Company for cause,
then Executive shall be entitled to receive the Base Termination Benefit and the Company
shall have no further obligations to Executive under this Agreement except as otherwise
required by applicable law.

     (d) Breach; Termination for Good Reason. If (A) the Company terminates
Executive’s employment other than pursuant to subparagraphs 5(b) or 5(c), or (B) Executive
terminates his employment for good reason, then Executive shall be entitled to receive:

     (i) the Base Termination Benefit;

     (ii) a cash bonus equal to his target bonus payable with respect to the year in
which the Date of Termination occurs, prorated based on the date on which the Date
of Termination occurs;

     (iii) a lump sum cash payment equal to 200% of his annual base salary and
target bonus payable with respect to the year in which the Date of Termination
occurs;

     (iv) continuation for a period of 24 months after the Date of Termination of
all medical and life insurance and other welfare benefits for Executive and his
eligible dependents at active Executive contribution rates;

     (v) reasonable Company-paid executive level career transition assistance by a
firm designated by Executive;

     (vi) immediate vesting of all unvested stock options, restricted stock grants,
stock appreciation rights and other equity compensation awards; and

     (vii) the right to exercise all stock options, stock appreciation rights and
other equity compensation awards for a period of 12 months following the Date of
Termination.

     For purposes of compliance with Section 409A, the following provisions shall apply.
Payments pursuant to clauses (ii) and (iii) shall be paid to Executive no later than the
15th day of the third month following the later of (A) the end of the Company’s fiscal year
that includes the Date of Termination, or (B) the end of the calendar year that includes the
Date of Termination. To the extent that any payment of medical benefits provided pursuant
to clause (iv) does not qualify for exemption from Section 409A, such payment shall meet the
requirements of Section 409A by satisfying the following conditions: (A) the amount of
payment in any one taxable year may not affect the amount

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of payment in another taxable year; and (B) any such payment reimbursing Executive or
his eligible dependents for an expense shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense was incurred. In
addition, career transition assistance provided pursuant to clause (v) shall not be provided
beyond December 31 of the second calendar year after the calendar year that includes the
Date of Termination.

     (e) Voluntary Termination. If Executive voluntarily terminates his employment
with the Company other than for good reason, then Executive shall be entitled to receive the
Base Termination Benefit and the Company shall have no further obligations to Executive
under this Agreement except as otherwise required by applicable law.

     (f) Termination Following a Change in Control. Notwithstanding subparagraphs
6(d) and 6(e), if (i) within the 12-month period following a change in control the Company
terminates Executive’s employment other than pursuant to subparagraphs 5(b) or 5(c) or
Executive terminates his employment for good reason or (ii) within the 30-day period
following a change in control Executive voluntarily terminates his employment with the
Company, then Executive shall be entitled to receive:

     (i) the Base Termination Benefit;

     (ii) a cash bonus equal to his target bonus payable with respect to the year in
which the Date of Termination occurs, prorated based on the date on which the Date
of Termination occurs;

     (iii) a lump sum cash payment equal to 300% of his annual base salary and
target bonus payable with respect to the year in which the Date of Termination
occurs;

     (iv) continuation for a period of 36 months after the Date of Termination of
all medical and life insurance and other welfare benefits for Executive and his
eligible dependents at active Executive contribution rates;

     (v) reasonable Company-paid executive level career transition assistance by a
firm designated by Executive;

     (vi) immediate vesting of all unvested stock options, restricted stock grants,
stock appreciation rights and other equity compensation awards; and

     (vii) the right to exercise all stock options, stock appreciation rights and
other equity compensation awards for a period of 12 months following the Date of
Termination.

     Payments and benefits provided pursuant to clauses (ii)-(v) shall be subject to the
Section 409A rules set forth above in subparagraph 5(d).

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     For purposes of this Agreement, a “change in control” shall mean a change in control of
the Company of a nature that would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K, as in effect as of the date of this Agreement, promulgated
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not the Company is then subject to the reporting requirements of
the Exchange Act; provided that, without limitation, such a change in control shall be
deemed to have occurred if

     (i) there shall be consummated any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all of
the Company’s assets;

     (ii) the stockholders of the Company approve any plan or proposal of
liquidation or dissolution of the Company;

     (iii) there shall be consummated any consolidation or merger of the Company in
which the Company is not the surviving or continuing corporation, or pursuant to
which shares of the Company’s Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of the
Company’s Common Stock immediately prior to the merger have, directly or indirectly,
at least an 80% ownership interest in the outstanding Common Stock of the surviving
corporation immediately after the merger;

     (iv) any “person” or “group” (as such terms are used in Section 13(d) and 14(d)
of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing
15% or more of the combined voting power of the Company’s then outstanding voting
securities ordinarily having the right to vote for the election of directors;
provided that no change in control shall be deemed to occur as a result of any
acquisition of voting securities directly from the Company (or as a result of the
exercise, conversion or exchange of any securities acquired directly from the
Company) if the transaction pursuant to which such voting securities or exercisable,
convertible or exchangeable securities are issued is approved by vote of at least
three-quarters of the directors comprising the Incumbent Board (as defined below);
or

     (v) individuals who, as of the date of this Agreement, constitute the Board of
Directors of the Company (the “Board” generally, and as of the date hereof, the
“Incumbent Board”) cease for any reason to constitute a majority of the Board;
provided that any individual becoming a director subsequent to the date of this
Agreement whose election, or nomination for election by the Company’s stockholders,
was approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board shall be, for purposes of this Agreement, considered as though such
individual were a member of the Incumbent Board; provided further that,
notwithstanding the foregoing, an individual whose initial assumption of office as a
director is in connection with

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any actual or threatened “solicitation” of “proxies” (as such terms are defined
in Rule 14a-1 of Regulation 14A promulgated under the Exchange Act) by any “person”
or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
other than the Incumbent Board shall not be considered as a member of the Incumbent
Board for purposes of this Agreement.

     (g) Obligations under Proprietary Information and Inventions Agreement.
Executive understands and agrees that if he materially breaches any material provision of
the Proprietary Information and Inventions Agreement, the Company shall cease to have any
obligation to make any severance or other post-employment payments under this paragraph 6.
Executive further understands and agrees that the severance and other post-employment
payments to be made to Executive pursuant to this paragraph 6 may be applied by the Company
to satisfy its payment obligations set forth in Section 5 of the Proprietary Information and
Inventions Agreement for the period during which payments are being made to Executive in
accordance with this paragraph 6.

     (h) Mitigation. Executive shall not be required to mitigate the amount of any
payment provided for this paragraph 6 by seeking other employment or otherwise, nor shall
the amount of any payments provided in this Agreement be reduced by any compensation earned
by Executive as the result of his self-employment or his employment by another employer
after his Date of Termination.

     (i) Exclusive Severance. The severance pay and benefits provided for in this
paragraph 6 will be in lieu of any other severance or termination pay to which the Executive
may be entitled under any Company severance or termination plan, program, practice or
arrangement. The Executive’s entitlement to any other compensation or benefits will be
determined in accordance with the Company’s employee benefit plans and other applicable
programs, policies and practices as in effect from time to time.

     7. Excise Tax Payments.

     (a) Right to Receive Gross-Up Payment. In the event that any payment or
benefit (within the meaning of Section 280G(b)(2) of the Code) to Executive or for
Executive’s benefit paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise in connection with, or arising out of, Executive’s employment
with the Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a “Payment”), would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to herein as the “Excise Tax”), then Executive shall
be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes and the Excise Tax, other than interest and penalties imposed by
reason of Executive’s failure to file timely a tax return or pay taxes shown due on
Executive’s return, and including any Excise Tax imposed upon the Gross-Up Payment),
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

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     (b) Determination Relating to Gross-Up Payment. An initial determination as to
whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such
Gross-Up Payment shall be made at the Company’s expense by an accounting firm of recognized
national standing selected by the Company and reasonably acceptable to Executive (the
“Accounting Firm”). The Accounting Firm shall provide its determination (the
“Determination”), together with detailed supporting calculations and documentation, to the
Company and Executive within five days of the Date of Termination, if applicable, or such
other time as requested by the Company or by Executive (provided Executive reasonably
believes that any of the Payments may be subject to the Excise Tax). If the Accounting Firm
determines that no Excise Tax is payable by Executive with respect to a Payment or Payments,
it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise
Tax shall be imposed with respect to any such Payment or Payments. The Gross-Up Payment, if
any, as determined pursuant to this subparagraph 7(b) shall be paid by the Company to
Executive within five days after the receipt of the Determination. Within ten days after
the delivery of the Determination to Executive, Executive shall have the right to dispute
the Determination (the “Dispute”). The existence of the Dispute shall not in any way affect
Executive’s right to receive the Gross-Up Payment in accordance with the Determination. If
there is no Dispute, the Determination shall be binding, final and conclusive upon the
Company and Executive, subject to the application of the provisions of subparagraph 7(c).

     (c) Excess Payment and Underpayment. As a result of uncertainty in the
application of Sections 280G and 4999 of the Code, it is possible that a Gross-Up Payment
(or a portion thereof) shall be paid which should not be paid (an “Excess Payment”) or that
a Gross-Up Payment (or a portion thereof) which should be paid shall not be paid (an
“Underpayment”). An Underpayment shall be deemed to have occurred (i) upon notice (formal
or informal) to Executive from any governmental taxing authority that Executive’s tax
liability (whether in respect of Executive’s current taxable year or in respect of any prior
taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or
Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment,
(ii) upon a determination by a court, (iii) by reason of a determination by the Company
(which shall include the position taken by the Company, together with its consolidated
group, on its federal income tax return) or (iv) upon the resolution of the Dispute to
Executive’s satisfaction. If an Underpayment occurs, Executive shall promptly notify the
Company and the Company shall promptly, but in any event at least five days prior to the
date on which the applicable government taxing authority has requested payment, pay to
Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any
interest and penalties (other than interest and penalties imposed by reason of Executive’s
failure to file timely a tax return or pay taxes shown due on Executive’s return) imposed on
the Underpayment. An Excess Payment shall deemed to have occurred upon a Final
Determination (as hereinafter defined) that the Excise Tax shall not be imposed upon a
Payment or Payments (or portion thereof) with respect to which Executive had previously
received a Gross-Up Payment. A “Final Determination” shall be deemed to have occurred when
Executive has received from the applicable government taxing authority a refund of taxes or
other reduction in Executive’s tax liability by reason of the Excise Payment and upon either
(i) the date a determination is made by, or an agreement is entered into with, the

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applicable governmental taxing authority which finally and conclusively binds Executive
and such taxing authority, or in the event that a claim is brought before a court of
competent jurisdiction, the date upon which a final determination has been made by such
court and either all appeals have been taken and finally resolved or the time for all
appeals has expired or (ii) the statute of limitations with respect to Executive’s
applicable tax return has expired. If an Excess Payment is determined to have been made,
the amount of the Excess Payment shall be treated as a loan by the Company to Executive and
Executive shall pay to the Company on demand (but not less than 10 days after the
determination of such Excess Payment and written notice has been delivered to Executive) the
amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal
Rate provided for in Section 1274(d) of the Code from the date the Gross-Up Payment (to
which the Excess Payment relates) was paid to Executive until the date of repayment to the
Company.

     (d) Payment in Compliance with Section 409A. Notwithstanding the foregoing, if
Executive is a “specified employee” (within the meaning of Code Section 409A) as of the Date
of Termination, the Company shall pay any Gross-Up Payment due as a result of an Excise Tax
or Underpayment no earlier than the first day following the six-month anniversary of the
Date of Termination and no later than December 31 of the calendar year following the
calendar year in which Executive pays such Excise Tax.

     (e) Payment of Excise Tax Withholding. Notwithstanding anything contained in
this Agreement to the contrary, in the event that, according to the Determination, an Excise
Tax is imposed on any Payment or Payments, the Company shall pay to the applicable
government taxing authorities as Excise Tax withholding the amount of the Excise Tax that
the Company has actually withheld from the Payment or Payments.

     8. Successors; Binding Agreement.

     (a) Successors to the Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in form and
substance satisfactory to Executive, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to terminate his employment with the Company for good reason. As
used in this Agreement, “Company” shall mean the Company and any successor to its business
and/or assets which executes and delivers the agreement provided for in this paragraph 8 or
which otherwise becomes bound by all the terms and provisions of this Agreement by operation
of law.

     (b) Assignment. Executive’s rights and interests under this Agreement may not
be assigned, pledged or encumbered by him without the Company’s written consent. This
Agreement and all rights of Executive hereunder shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors, administrators,

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successors, heirs, distributees, devisees and legatees. If Executive should die while
any amounts would still be payable to him hereunder if he had continued to live all such
amounts, unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive’s surviving spouse or, if there is no surviving spouse, to his
estate.

     9. Proprietary Information. Executive and the Company have entered into the
Proprietary Information and Inventions Agreement, which agreement shall remain in full force and
effect.

     10. Payment of Costs and Indemnification.

     (a) Payment of Costs. In the event that a dispute arises regarding termination
of Executive’s employment or the interpretation or enforcement of this Agreement, the
Company shall promptly pay, or reimburse to Executive, as and when incurred, all reasonable
fees and expenses (including reasonable legal fees and expenses, court costs, costs of
investigation and similar expenses) incurred by Executive in contesting or disputing any
such termination, in seeking to obtain or enforce any right or benefit provided for in this
Agreement, or in otherwise pursuing his claim; provided, however, that the Company shall be
entitled to recover from Executive the amount of any such fees and expenses paid by the
Company if the Company obtains a final judgment in its favor on the merits of such dispute
from a court of competent jurisdiction from which no appeal may be taken, whether because
the time to do so has expired or otherwise. In no event shall payment of such expenses be
made later than December 31 of the calendar year following the calendar year in which the
expense was incurred.

     (b) Indemnification. The Company shall indemnify and hold Executive harmless
to he maximum extent permitted by law against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys’ fees, incurred by Executive in connection with
the defense of, or as a result of, any action or proceeding (or any appeal from any action
or proceeding) in which Executive is made or is threatened to be made a party by reason of
the fact that Executive is or was an Executive, officer, or director of the Company or any
of its subsidiaries, regardless of whether such action or proceeding is one brought by or in
the right of the Company to procure a judgment in its favor. The undertaking of
subparagraph (a) above is independent of, and shall not be limited or prejudiced by, the
undertakings of this subparagraph (b). The indemnification provided in this Agreement is in
addition to, and not in derogation of, any rights to indemnification or advancement of
expenses to which Executive may otherwise be entitled under the Certificate of Incorporation
or Bylaws of the Company, any indemnification contract or agreement, any policy of insurance
or otherwise.

     (c) Warranty. The Company hereby represents and warrants that the undertakings
of payment and indemnification set out in (a) and (b) above are not in conflict with the
Certificate of Incorporation or Bylaws of the Company or with any validly existing agreement
or other proper corporate action of the Company.

12

 

     11. General Provisions.

     (a) Fees and Expenses. The Company shall pay as they become due all legal fees
and related expenses (including the costs of experts) incurred by Executive as a result of
(i) Executive’s termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) and (ii) Executive
seeking to obtain or enforce any right or benefit provided by this Agreement (including any
such fees and expenses incurred in connection with any Dispute or Gross-Up Payment, whether
as a result of any applicable government taxing authority proceeding, audit or otherwise) or
by any other plan or arrangement maintained by the Company under which Executive is or may
be entitled to receive benefits. In no event shall payment of such expenses be made later
than December 31 of the calendar year following the calendar year in which the expense was
incurred.

     (b) No Set-Off. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by
any circumstances, including any right of set-off, counterclaim, recoupment, defense or
other right which the Company may have against Executive or others.

     (c) Effect of Headings. The headings of all of the paragraphs and
subparagraphs of this Agreement are inserted for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.

     (d) Modification, Amendment, Waiver. No modification, amendment, or waiver of
any provision of this Agreement shall be effective unless approved in writing by both
parties. The failure at any time to enforce any of the provisions of this Agreement shall
in no way be construed as a waiver of such provisions and shall not affect the right of
either party thereafter to enforce each and every provision of this Agreement in accordance
with its terms.

     (e) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition or
invalidly, without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

     (f) No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any person.

     (g) Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal laws of the State of
Illinois.

     (h) Arbitration. All disputes arising out of or in connection with this
Agreement shall be referred to and finally resolved by binding arbitration under American
Arbitration Association’s National Rules for Resolution of Employment

13

 

Disputes, which arbitration rules are incorporated herein by reference. The tribunal
shall consist of a sole arbitrator. The place of arbitration shall be Chicago, Illinois.
Process in any such arbitration proceeding may be served on any party anywhere in the world
by notice given to the party in accordance with paragraph 11(i).

     (i) Notices. Any notice to be served under this Agreement shall be in writing
and shall be mailed by registered mail, return receipt requested, addressed:

     If to the Company, to:

Northfield Laboratories Inc.

1560 Sherman Avenue

Evanston, Illinois 60201-4422

Attention: Board of Directors

     If to Executive, to:

c/o Northfield Laboratories Inc.

1560 Sherman Avenue

Evanston, Illinois 60201-4422

     or to such other place as either party may specify in writing, delivered in accordance
with the provisions of this subparagraph.

     (j) Survival. The rights and obligations of the parties shall survive the term
of Executive’s employment to the extent that any performance is required under this
Agreement after the expiration or termination of such term.

     (k) Entire Agreement. This Agreement, together with the Proprietary
Information and Inventions Agreement described in paragraph 9 above, constitutes the entire
agreement of the parties with respect to the subject matter thereof, and supersedes all
previous agreements between the parties relating to the same subject matter (but excluding
the Proprietary Information and Inventions Agreement, which agreement shall remain in full
force and effect).

     (l) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall together constitute one and
the same document.

     (m) Compliance with Section 409A. It is the intention of the Company and
Executive that the provisions of this Agreement comply with Section 409A and all provisions
of this Agreement will be construed and interpreted in a manner consistent with Section
409A. Any mention of “termination” of Executive’s employment contained herein refers to a
separation from service as determined pursuant to Treasury Regulation Section 1.409A-1(h).

14

 

* * * * *

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day
and year first above written.

	 	 	 	 	 	 	 
	EXECUTIVE	 	NORTHFIELD LABORATORIES INC.	 	 
	 
	 	 	 	 	 	 
	/s/ Robert L. McGinnis

	 	By:	 	/s/ David A. Savner	 	 
	 

	 	 	 	 

	 	 
	Robert L. McGinnis

	 	Its:	 	Director and Compensation Committee Chairman	 	 
	 

	 	 	 	 

	 	 

15exv10w4

 

Exhibit
10.4

SEVERANCE PROTECTION AGREEMENT

     SEVERANCE PROTECTION AGREEMENT dated February 25, 2008 by and between Northfield Laboratories
Inc., a Delaware corporation (the “Company”), and                                         (the
“Executive”), and is amended and restated solely to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (“Code Section 409A”) effective as of this 25th day of
February, 2008.

     The Board of Directors of the Company (the “Board”) recognizes that the possibility of
a Change in Control (as hereinafter defined) of the Company exists and that the threat or
occurrence of a Change in Control may result in the distraction of its key management personnel
because of the uncertainties inherent in such a situation.

     The Board has determined that it is essential and in the best interests of the Company and its
stockholders to retain the services of the Executive in the event of the threat or occurrence of a
Change in Control and to ensure the Executive’s continued dedication and efforts in such event
without undue concern for the Executive’s personal financial and employment security.

     In order to induce the Executive to remain in the employ of the Company, particularly in the
event of the threat or occurrence of a Change in Control, the Company desires to enter into this
Agreement to provide the Executive with certain benefits in the event the Executive’s employment is
terminated as a result of, or in connection with, a Change in Control.

     NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein,
it is agreed as follows:

     Section 1. Definitions. For purposes of this Agreement, the following terms
have the meanings set forth below:

     “Board” means the Board of Directors of the Company.

     “Cause” for the termination of the Executive’s employment with the Company will be
deemed to exist if the Executive is convicted of any felony or the Executive fails to comply in all
material respects with any material term of the Proprietary Information and Inventions Agreement
dated as of December 5, 2005 between the Company and the Executive, which conduct or failure is
materially injurious to the Company, monetarily or otherwise.

     “Change in Control” means a change in control of the Company of a nature that would be
required to be reported in response to Item 1(a) of the Current Report on Form 8- K, as in effect
as of the original date of this Agreement, promulgated pursuant to Section 13 or 15(d) of the
Securities Exchange Act, whether or not the Company is then subject to the reporting requirements
of the Securities Exchange Act; provided that, without limitation, such a change in control will be
deemed to have occurred if:

     (a) there is consummated any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of the
Company’s assets;

 

 

     (b) the stockholders of the Company approve any plan or proposal of liquidation or
dissolution of the Company;

     (c) there is consummated any consolidation or merger of the Company in which the
Company is not the surviving or continuing corporation, or pursuant to which shares of the
Company’s Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company’s Common Stock immediately
prior to the merger have, directly or indirectly, at least an 80% ownership interest in the
outstanding Common Stock of the surviving corporation immediately after the merger;

     (d) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act), directly or indirectly, of securities of the Company representing 15% or more
of the combined voting power of the Company’s then outstanding voting securities ordinarily
having the right to vote for the election of directors; provided that no change in control
will be deemed to occur as a result of any acquisition of voting securities directly from
the Company (or as a result of the exercise, conversion or exchange of any securities
acquired directly from the Company) if the transaction pursuant to which such voting
securities or exercisable, convertible or exchangeable securities are issued is approved by
vote of at least three-quarters of the directors comprising the Incumbent Board (as defined
below); or

     (e) individuals who, as of the original date of this Agreement, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute a majority of the Board;
provided that any individual becoming a director subsequent to the original date of this
Agreement whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least three-quarters of the directors comprising the Incumbent
Board will be, for purposes of this Agreement, considered as though such individual were a
member of the Incumbent Board; provided further that, notwithstanding the foregoing, an
individual whose initial assumption of office as a director is in connection with any actual
or threatened “solicitation” of “proxies” (as such terms are defined in Rule 14a-1 of
Regulation 14A promulgated under the Securities Exchange Act) by any “person” or “group” (as
such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act) other than
the Incumbent Board will not be considered as a member of the Incumbent Board for purposes
of this Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” means Northfield Laboratories Inc., a Delaware corporation, and includes its
Successors.

     “Continuation Period” has the meaning set forth in Section 3.1(b)(iii).

     “Disability” means the Executive’s incapacity due to physical or mental illness or
accident such that the Executive is absent from his duties for the Company on a full-time basis for
the entire period of six consecutive months or for 270 days in any 365-day period.

2

 

     “Good Reason” for the Executive’s termination of employment with the Company will be
deemed to exist if, within 24 months after the occurrence of a Change in Control one of the
following events occurs without the Executive’s consent and the event is not cured by the Company
subject to the rules below:

     (a) the Executive is reassigned to a position of lesser rank or status whereby the
Executive’s duties or authorities are materially inconsistent with his position immediately
before the reassignment;

     (b) there is a material change in the geographic location at which the Executive must
perform services; or

     (c) the Executive’s annual base salary is materially reduced.

     The Executive shall not be deemed to have terminated for Good Reason unless (i) within 45 days
of the initial condition giving rise to Good Reason, the Executive provides the Company with
written notice of such condition, (ii) the Company does not cure the condition within 30 days
following receipt of such notice to cure the condition, and (iii) such 30 day cure period expires
within 24 months after the Change in Control. If the Company does not cure such condition within
the 30 day period, then the Executive’s Termination Date shall be the first day after the 30 day
cure period expires.

     “Notice of Termination” means a written notice from the Company of the termination of
the Executive’s employment which indicates the specific termination provision in this Agreement
relied upon and which sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the provision so indicated.

     “Person” has the meaning as used in Section 13(d) or 14(d) of the Securities Exchange
Act and will include any “group” as such term is used in such sections.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Successor” means a corporation or other entity acquiring all or substantially all the
assets and business of the Company, whether by operation of law, by assignment or otherwise.

     “Termination Date” means (a) in the case of the Executive’s death, the Executive’s
date of death, (b) in the case of the termination of the Executive’s employment with the Company by
the Executive for Good Reason, the first day after the Company’s 30 day cure period expires
(referenced above under “Good Reason”), and (c) in all other cases, the date specified in the
Notice of Termination; provided that if the Executive’s employment is terminated by the Company for
Cause or due to Disability, the date specified in the Notice of Termination will be at least 30
days after the date the Notice of Termination is given to the Executive.

     Section 2. Term of Agreement. This Agreement will commence as of October 4,
2002 and will continue in effect until September 30, 2004; provided that commencing on September
30, 2004 and on each September 30 thereafter, the term of this Agreement will automatically be
extended for one year unless either the Company or the Executive gives written

3

 

notice to the other at least 90 days prior to such date that the term of this Agreement will
not be so extended. Notwithstanding any such notice by the Company, the term of this Agreement
will in any case not expire prior to the expiration of 24 months after the occurrence of a Change
in Control.

     Section 3. Termination of Employment.

     3.1 If, during the term of this Agreement, the Executive’s employment with the Company is
terminated within 24 months following a Change in Control, the Executive will be entitled to the
following compensation and benefits:

     (a) If the Executive’s employment with the Company is terminated (i) by the Company for
Cause or Disability, (ii) by reason of the Executive’s death or (iii) by the Executive other
than for Good Reason, the Company will pay to the Executive all compensation, including all
accrued vacation pay, earned by the Executive through and including the Termination Date;

     (b) If the Executive’s employment with the Company is terminated for any reason other
than as specified in Section 3.1(a), the Executive will be entitled to the following:

     (i) the Company will pay the Executive all compensation, including all accrued
vacation pay, earned by the Executive through and including the Termination Date;

     (ii) the Company will pay the Executive as severance pay, and in lieu of any
further compensation for periods subsequent to the Termination Date, in a single
payment an amount in cash equal to one time the average of the Executive’s annual
base salary for the Company’s two most recently completed fiscal years preceding the
Termination Date;

     (iii) for a period of 12 months (the “Continuation Period”), the
Company will at its expense continue on behalf of the Executive and the Executive’s
dependents and beneficiaries the medical, dental and hospitalization benefits
provided (A) to the Executive at any time during the 180-day period prior to the
Change in Control or at any time thereafter or (B) to other similarly situated
executives who continue in the employ of the Company during the Continuation Period.
The coverage and benefits (including deductibles and costs) provided in this
Section 3.1(b)(iii) during the Continuation Period will be no less favorable to the
Executive and the Executive’s dependents and beneficiaries than the most favorable
of such coverages and benefits during any of the periods referred to in clauses (A)
and (B) above. The Company’s obligation hereunder with respect to the foregoing
benefits will be limited to the extent that the Executive obtains any such benefits
pursuant to a subsequent employer’s benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to provide the Executive
hereunder as long as the coverages and benefits of the combined benefit plans are no
less favorable to the Executive than the coverages and

4

 

benefits required to be provided hereunder. This Section 3.1(b) will not be
interpreted so as to limit any benefits to which the Executive or the Executive’s
dependents or beneficiaries may be entitled under any of the Company’s medical,
dental and hospitalization plans, programs or practices following the Executive’s
termination of employment; and

     (iv) all stock options issued by the Company to the Executive will become fully
vested and the Executive will be permitted to exercise such stock options at any
time during the remaining exercise period applicable to such stock options (without
giving effect to any requirement that such stock options be exercised within a
specified period following the termination of the Executive’s employment with the
Company).

     (c) The amount provided for in Section 3.1(a) will be paid in a single lump sum cash
payment within fourteen days after the Termination Date. The amount provided for in Section
3.1(b)(i) may be paid within fourteen days after the Termination Date or, if the Company
determines, with the amount provided for in Section 3.1(b)(ii), which will be paid in a
single lump sum cash payment by the Company within fourteen days after the Executive
executes and does not revoke a general release, in the form provided by the Company, of all
claims relating to the Executive’s employment with the Company and the termination of such
employment. The release shall be furnished to the Executive on or as soon as practical
following the Termination Date, but in no event later than the latest date that will insure
that any revocation period provided for in the release will expire no later than fourteen
days before the applicable short-term deferral deadline provided in Section 15. If the
Executive fails to execute the release within a reasonable period of time (21 days, at a
minimum, for an individual termination) or revokes the signed release, the Company’s
obligations under Sections 3.1(b)(ii)-(iv) shall terminate and no severance benefits shall
be payable. In no event shall failure to execute a release or revocation of such release
impact the amount payable under Section 3.1(b)(i).

     (d) The Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, and no such payment will be
offset or reduced by the amount of any compensation or benefits provided to the Executive in
any subsequent employment except as specifically provided in Section 3.1(b)(iii).

     3.2 Notwithstanding anything contained in this Agreement to the contrary, if the Executive’s
employment with the Company is terminated prior to a Change in Control and the Executive reasonably
demonstrates that such termination (a) was at the request of a Person who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control and who subsequently
effects a Change in Control or (b) otherwise occurred in connection with, or in anticipation of, a
Change in Control which subsequently occurs, then for all purposes of this Agreement, the date of
such Change in Control with respect to the Executive will mean the date immediately prior to the
date of such termination of the Executive’s employment.

     3.3 The severance pay and benefits provided for in this Section 3 will be in lieu of any other
severance or termination pay to which the Executive may be entitled under any

5

 

Company severance or termination plan, program, practice or arrangement. The Executive’s
entitlement to any other compensation or benefits will be determined in accordance with the
Company’s employee benefit plans and other applicable programs, policies and practices as in effect
from time to time.

     Section 4. Notice of Termination. Following a Change in Control, any
purported termination of the Executive’s employment by the Company will be communicated by a Notice
of Termination to the Executive. For purposes of this Agreement, no such purported termination
will be effective without such Notice of Termination.

     Section 5. Successors; Binding Agreement. This Agreement will be binding upon
and will inure to the benefit of the Company and its Successors, and the Company will require any
Successors to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession or assignment
had taken place. Neither this Agreement nor any right or interest hereunder will be assignable or
transferable by the Executive or by the Executive’s beneficiaries or legal representatives, except
by will or by the laws of descent and distribution. This Agreement will inure to the benefit of
and be enforceable by the Executive’s legal representatives.

     Section 6. Fees and Expenses. The Company will pay as they become due all
legal fees and related expenses (including the costs of experts) incurred by the Executive as a
result of the Executive seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under which the Executive
is or may be entitled to receive benefits. In no event shall payment of such expenses be made
later than December 31 of the calendar year following the calendar year in which the expense was
incurred.

     Section 7. Notices. All notices, demands and other communications provided
for in the Agreement, including the Notice of Termination, will be in writing and will be deemed to
have been duly given when delivered personally to the recipient or when sent to the recipient by
telecopy (receipt confirmed), one business day after the date when sent to the recipient by
reputable express courier service (charges prepaid) or three business days after the date when
mailed to the recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications will be sent to the Company and the
Executive at the addresses indicated below:

	 	 	 	 	 	 	 
	 

	 	If to the Company:
	 	 	 	Northfield Laboratories Inc.

1560 Sherman Avenue

Suite 1000

Evanston, Illinois 60201-4800

Attention: Corporate Secretary
	 
	 	 	 	 	 	 
	 

	 	If to the Executive:	 	 	 	 

or to such other address or to the attention of such other party as the recipient party has
specified by prior written notice to the sending party.

6

 

     Section 8. Nonexclusivity of Rights. Nothing in this Agreement will prevent
or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or
other plan or program provided by the Company (except for any severance or termination policies,
plans, programs or practices) for which the Executive may qualify, nor will anything herein limit
or reduce such rights as the Executive may have under any other agreements with the Company (except
for any severance or termination agreement). Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the Company will be payable
in accordance with such plan or program, except as specifically modified by this Agreement.

     Section 9. No Set-Off. The Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder will not be affected by
any circumstances, including any right of set-off, counterclaim, recoupment, defense or other right
which the Company may have against the Executive or others.

     Section 10. No Change in Employment Relationship. This Agreement and the
rights granted to the Executive hereunder are not intended to (a) provide Executive with any
severance or other rights prior to the occurrence of a Change in Control or (b) provide the
Executive with any right of continuing employment with the Company or otherwise modify the “at
will” employment relationship between the Company and the Executive.

     Section 11. Modification and Waiver. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

     Section 12. Severability. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof.

     Section 13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the subject matter
hereof. No agreement or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not expressly set forth in this
Agreement.

     Section 14. Governing Law. This Agreement will be governed by and construed
and enforced in accordance with the laws of the State of Illinois without giving effect to the
conflict of laws principles thereof. Any action brought by any party to this Agreement will be
brought and maintained in a court of competent jurisdiction in Cook County in the State of
Illinois.

     Section 15. Compliance with Section 409A. It is the intention of the Company
and Executive that the provisions of this Agreement comply with Section 409A and all provisions of
this Agreement will be construed and interpreted in a manner consistent with Section 409A. Any

7

 

mention of “termination” of Executive’s employment contained herein refers to a separation
from service as determined pursuant to Treasury Regulation Section 1.409A-1(h). Further, any
payments (other than those under Section 6) required hereunder shall in no event be paid later than
the 15th day of the third month following the later of (A) the end of the Company’s fiscal year in
which the Termination Date occurs, or (B) the end of the calendar year in which the Termination
Date occurs.

*****

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	NORTHFIELD LABORATORIES INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

8

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