EMPLOYMENT AGREEMENT



         THIS AGREEMENT, made effective as of this 1st day of January, 2003, by

and between STEVEN A. GOULD, M.D. ("Employee") and NORTHFIELD LABORATORIES INC.,

a Delaware corporation (the "Company").



                              W I T N E S S E T H :

                              - - - - - - - - - -



         WHEREAS, Employee is now employed as the Chief Executive Officer of the

Company;



         WHEREAS, the Company and Employee now desire to enter into this

Agreement in order to continue such employment for the term set forth herein and

subject to the terms and conditions set forth herein; and



         WHEREAS, the Company and Employee desire to continue the Proprietary

Information and Inventions Agreement entered into by and between Employee and

the Company dated September 1, 1985 (the "Proprietary Information and Inventions

Agreement") in full force and effect;



         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 Employee, and

Employee agrees to remain in the employ of the Company, for the period (the

"Employment Period") beginning on January 1, 2003 and ending on the earlier to

occur of (a) December 31, 2004 or (b) the date as of which Employee's employment

is terminated pursuant to paragraph 5 of this Agreement. During the Employment

Period, Employee shall serve as the Chief Executive Officer of the Company and

shall perform such executive and managerial duties consistent with such position

as the Board of Directors of the Company shall from time to time direct.

Employee shall devote his full business time and attention to the business of

the Company and its subsidiaries.



         2.       Location. Employee shall be based at the Company's

headquarters in Evanston, Illinois, or at such other location as may be agreed

upon by Employee and the Board of Directors of the Company. Employee 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 Employee's travel during his employment by

the Company prior to the date of this Agreement.



{PAGE}



         3.       Compensation. During the Employment Period, Employee shall be

compensated as follows:



                  (a)      Salary. An "Employment Year" shall be the

         twelve-month period beginning on the first day of the Employment Period

         and on each anniversary of such date during the Employment Period. For

         the first Employment Year, Employee shall be paid an annual base salary

         at a rate which is not less than $315,000 per year. For the second

         Employment Year, Employee shall be paid an annual base salary at a rate

         to be agreed by the Company and Employee, which shall not be less than

         $315,000 per year. Employee's base salary shall be paid in equal,

         bi-weekly installments.



                  (b)      Bonus. Employee shall be paid a cash bonus of

         $315,000 as of the date the Company is granted approval for the

         commercial sale of PolyHeme in the United States for any indication.

         The Board of Directors of the Company may in its discretion determine

         to award Employee additional cash bonuses from time to time during the

         term of this Agreement.



                  (c)      Award of Stock Options. On January 2, 2003, the

         Company shall award Employee stock options under the Northfield

         Laboratories Inc. 1999 Stock Option Plan to acquire 100,000 shares of

         the Company's Common Stock at an exercise price per share equal to the

         fair market value of the Company's Common Stock as of the date of

         grant. On or before January 1, 2004, the Compensation Committee of the

         Board of Directors of the Company shall review the performance of the

         Company and Executive during the first Employment Year and shall

         determine whether the award of additional stock options to Employee is

         appropriate. The Board of Directors of the Company may in its

         discretion determine to award Employee additional stock options or

         other forms of equity incentive compensation from time to time during

         the term of this Agreement.



                  (d)      Paid Vacation. Employee shall be entitled to five

         weeks paid vacation in each calendar year. Any vacation which is not

         used by Employee shall be forfeited at the end of the calendar year.



                  (e)      Expenses. Employee 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

         Company and its subsidiaries relating to the reimbursement of expenses

         of senior executive officers.



                  (f)      Fringe Benefits. In addition to any other

         compensation provided under this Agreement, Employee shall also be

         entitled to participate, during the Employment Period, in any and all

         pension, stock option, relocation, profit sharing, and other employee

         benefit plans or fringe benefit programs which are from time to time

         maintained by the Company or its subsidiaries for their senior

         executive



                                       2



{PAGE}



         officers, in accordance with the provisions of such plans or programs

         as from time to time in effect.



                  (g)      Deduction and Withholding. All compensation and other

         benefits payable to or on behalf of Employee pursuant to this Agreement

         shall be subject to such deductions and withholding as may be agreed to

         by Employee 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 Employee or his beneficiaries may be entitled to receive

         under the provisions of any pension, stock option, profit sharing,

         disability (except as otherwise provided in subparagraph 6(b)),

         relocation or other employee 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 Employee'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 employees.



         5.       Termination. Employee's employment may be terminated without

         any breach of this Agreement only under the following circumstances:



                  (a)      Death. Employee's employment shall terminate upon his

         death.



                  (b)      Disability. If, as a result of Employee's incapacity

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