Exhibit 10.3

 

Amended and Restated Executive Employment Agreement

 

This Amended and Restated Executive Employment Agreement (the “Employment
Agreement” or “Agreement”) is made and entered by and between Kathleen P. Bloch
(the “Executive”), and CytoSorbents Medical, Inc., on behalf of itself, its
parent CytoSorbents Corporate, and all other affiliates and subsidiaries thereof
(collectively, the “Company”), effective as of January 1, 2019.

 

WHEREAS, the Company and Executive are parties to that certain Executive
Employment Agreement effective as of January 1, 2015 (the “Prior Agreement”),
pursuant to which the Company currently employs Executive;

 

WHEREAS, the parties wish to enter into this Employment Agreement on the
mutually agreed-upon terms and conditions set forth herein in order for the
Company and its affiliates to continue to engage the unique services of
Executive and Executive desires to serve the Company on the terms and conditions
stated herein.

 

NOW, THEREFORE, in consideration of the mutual covenants, promises and
obligations set forth herein, the parties agree as follows:

 

1.          Term. The term of the Executive’s employment under this Agreement
shall be from January 1, 2019 through December 31, 2021, unless terminated
earlier pursuant to Section 6 of this Agreement (“Initial Term”). Thereafter,
the Executive’s employment hereunder shall automatically renew for additional
terms of one year (each a “Renewal Term” and together, the Initial Term and the
Renewal Term, the “Term”), unless either party provides written notice of
non-renewal on the other party at least sixty (60) days prior to commencement of
a Renewal Term.

 

2.          Position and Duties.

 

2.1           Position. During the Term, the Executive shall serve as Chief
Financial Officer of the Company, reporting to the Board of Directors of the
Company (the “Board”). In such position, the Executive shall have such duties,
authority and responsibility as shall be determined from time to time by the
Board, which duties, authority and responsibility are consistent with the
Executive’s position.

 

2.2           Duties. During the Term, the Executive shall devote substantially
all of her business time and attention to the performance of her duties as Chief
Financial Officer and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict or interfere with
the performance of such services either directly or indirectly without the prior
written consent of the Board.

 

3.          Place of Performance. The principal place of the Executive’s
employment shall be at the Company’s principal office currently located in
Monmouth Junction, New Jersey; provided that, the Executive may be required to
travel from time to time on Company business.

 

 

 

 

4.          Compensation.

 

4.1           Base Salary. The Company shall pay the Executive a base salary at
an annualized rate of $323,025, payable in equal biweekly installments in
accordance with the Company’s customary payroll practices. The Executive’s base
salary, option grants, and total bonus shall be reviewed annually by the
Compensation Committee of the Board. The Executive’s annual base salary, as in
effect from time to time, is hereinafter referred to as “Base Salary.”

 

4.2           Stock Options. The Executive shall be eligible to participate in
any equity incentive plan that the Company may adopt for its management team, on
such terms and conditions as determined by the Compensation Committee of the
Board.

 

4.3            Change of Control Incentive Compensation. The Executive shall be
entitled to an incentive compensation award in the event of Change of Control of
the Company (as defined in Section 6.6(b)), on such terms and conditions as
determined by the Compensation Committee of the Board.

 

4.4           Treatment of Stock Options and Restricted Stock. The Executive’s
stock options and restricted shares will be adjusted on the same basis as all
other shareholders to account for any stock split, stock dividend or
recapitalization.

 

4.5           Bonus. The Executive shall be eligible to receive an annual cash
bonus equal to a percentage of Executive’s Base Salary to be determined in good
faith by the Board in its reasonable discretion (the “Target Bonus”). In
consultation with the Chief Executive Officer and guided by third party
compensation analysis, the Board shall use commercially reasonable efforts to
notify the Executive by no later than March 15th each year of the amount of the
Target Bonus together with the performance milestones and objectives necessary
for the Executive to achieve the Target Bonus for that calendar year.
Achievement of the Target Bonus, if any, shall be determined by the Board and
payable no later than March 15 of the year after the year in which the
performance relates so long as Executive is employed by the Company through
December 31 of the applicable calendar year to which the bonus is attributable.

 

5.          Benefits. During the Term, the Executive shall be entitled to
participate in all employee benefit plans, practices and programs maintained by
the Company, as in effect from time to time (collectively, “Employee Benefit
Plans”), on a basis which is no less favorable than is provided to other
similarly situated executives of the Company, to the extent consistent with
applicable law and the terms of the applicable Employee Benefit Plans. The
Company reserves the right to amend or cancel any Employee Benefit Plans at any
time in its sole discretion, subject to the terms of such Employee Benefit Plan
and applicable law.

 

5.1           Vacation, Sick and Personal Days. During the Term, the Executive
shall be entitled to four (4) weeks of paid vacation days per calendar year
(prorated for partial years) in accordance with the Company’s vacation policies,
as in effect from time to time for executive employees. In addition to paid
vacation days, the Executive shall be entitled to paid sick days and paid
personal days in accordance with the Company’s applicable policies, as in effect
from time to time for executive employees. Unless otherwise required by
applicable law or as may otherwise be provided in applicable Company policy,
Executive may carry over up to five (5) days of accrued by unused paid vacation
from one year to the next.

 

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5.2           Business Expenses. The Executive shall be entitled to
reimbursement for all reasonable and necessary out-of-pocket business,
entertainment and travel expenses incurred by the Executive in connection with
the performance of her duties in accordance with the Company’s expense
reimbursement policies and procedures and upon presentation to the Company of
reasonable documentation (including receipts) substantiating such expenses.

 

5.3           Liability Insurance. With respect to the Executive’s acts or
failures to act while employed by the Company in the Executive’s capacity as a
director, officer, employee or agent of the Company, the Executive shall be
entitled to: (i) indemnification from the Company; and (ii) liability insurance
coverage, in each case on the same basis as other directors and officers of the
Company.

 

5.4           Indemnification. With respect to the Executive’s acts or failures
to act while employed by the Company in the Executive’s capacity as a director,
officer, employee or agent of the Company, the Executive shall be entitled to:
(i) indemnification from the Company pursuant to the Company’s Bylaws; and (ii)
liability insurance coverage, in each case on the same basis as other directors
and officers of the Company.   In addition, the Company shall advance to
Executive any expense incurred in defending any such indemnification-eligible
proceeding or claim (or threatened indemnification-eligible proceeding or claim)
to the maximum extent permitted by law; provided, however, that the Company may
decline to advance expenses to Executive in connection with any claim or
proceeding between Executive and the Company or its subsidiary or affiliates. 
If Executive has any knowledge of any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, as to
which Executive may request indemnity under this provision, Executive shall give
the Company prompt written notice thereof. The Company shall be entitled to
assume the defense of any such proceeding, and Executive shall cooperate fully
with such defense

 

6.          Termination of Employment. This Agreement and the Executive’s
employment hereunder may be terminated as provided for in this Section 6.

 

6.1           Termination for Cause or Upon Notice of Non-Renewal.  Without
prior notice to the Executive, the Company may terminate the Executive’s
employment effective immediately for Cause (as defined below). If the
Executive’s employment is terminated either by the Company for Cause, or at the
end of the Term as a result of either party’s having provided written notice to
the other party of non-renewal in accordance with Section 1 above, the Executive
shall be entitled to receive only:

 

(i)any accrued but unpaid Base Salary and accrued but unused vacation date as of
the date of termination of Executive’s employment (“Termination Date”);

 

(ii)reimbursement for unreimbursed business expenses properly incurred by the
Executive through the Termination Date, which shall be subject to and paid in
accordance with the Company’s expense reimbursement policy; and

 

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(iii)such employee benefits (including equity compensation), if any, to which
the Executive may be entitled under the Company’s Employee Benefit Plans as of
the Termination Date; provided that, in no event shall the Executive be entitled
to any payments in the nature of severance or termination payments except as
specifically provided herein.

 

Items 6.1(i) through 6.1(iii) are referred to herein collectively as the
“Accrued Obligations.”

 

6.2           Termination without Cause. Without prior notice to the Executive,
the Company may terminate the Executive’s employment at any time without Cause.

 

(a)          If the Company terminates the Executive’s employment without Cause,
then the Executive shall be entitled to:

 

(i)The Accrued Obligations;

 

(ii)An amount equal to nine (9) months Base Salary, payable in equal
installments in accordance with the Company’s regular payroll practices; and

 

(iii)Full payment of the premiums for continued health insurance coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”),
provided that the Executive timely elects and remains eligible for COBRA, until
the earlier of (x) twelve (12) months following the Termination Date, or (y)
until the Executive becomes eligible to participate in another employer’s group
health plan.

 

(iv)Notwithstanding the terms of any applicable stock option or equity incentive
plan and/or agreement, (x) any and all service-vesting stock options and/or
service-vesting restricted stock and/or service-vesting restricted stock units
or other service-vesting equity or equity-based awards granted to the Executive
will become fully vested and exercisable (to the extent any such award is
exercisable) on the Termination Date and (y) Executive shall have (i) until the
expiration date noted in the applicable stock option agreement to exercise any
stock options previously granted to the Executive prior to July 14, 2015, and
(ii) one (1) year from the Termination Date to exercise any stock options
granted to the Executive on or after July 14, 2015 (but in no event later than
the expiration date noted in the applicable stock option agreement unless an
extension beyond such expiration date would be permitted under the applicable
stock option plan and applicable law and would not result in an “additional tax”
as defined in Section 409A(a)(1)(B) of the Internal Revenue Code of 1986, as
amended); and

 

(v)Any Target Bonus due for the calendar year of such termination, pro-rated
based on the number of days Executive was actively employed by the Company
during such year, payable at the same time such bonus would otherwise be paid in
accordance with Section 4.5.

 

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(b)      The Executive’s receipt of the payments and benefits under Section 6.2
(ii), (iii) and (iv) are subject to the Executive’s execution of a release of
claims in favor of the Company, its parent and affiliates and their respective
officers and directors in a form provided by and reasonably satisfactory to the
Company (the “Release”) and further subject to such Release becoming effective
within sixty (60) days following the Termination Date (such 60-day period, the
“Release Execution Period”); provided that if the Release Execution Period
begins in one taxable year and ends in another taxable year, any payment which
is “nonqualified deferred compensation” under Section 409A of the Internal
Revenue Code shall not be made until the beginning of the second taxable year;
provided further that, the first installment payment shall include all amounts
that would otherwise have been paid to the Executive during the period beginning
on the Termination Date and ending on the first payment date if no delay had
been imposed.

 

6.3           Termination for Good Reason. The Executive may terminate her
employment hereunder for Good Reason (as defined below), in accordance with
Section 6.6(d) herein. If the Executive terminates her employment for Good
Reason, then the Executive shall be entitled to the payments and benefits
described in Section 6.2(a), subject to the same terms and conditions thereof
and as set forth in Section 6.2(b).

 

6.4           Termination for Death or Disability or Retirement. The Executive’s
employment hereunder shall terminate automatically upon the Executive’s death
during the Term, and the Company may terminate the Executive’s employment on
account of the Executive’s Disability (as defined below). In the case of a
termination for Disability, such termination shall be effective as of the last
day of the month in which the Company shall have given notice to the Executive
of its intention to terminate the Executive’s employment for Disability. In the
event of termination of employment due to death or Disability, the Executive (or
the Executive’s estate, as applicable) shall be entitled to the payments and
benefits described in Section 6.2(a), subject to the same terms and conditions
thereof and as set forth in Section 6.2(b); provided, however, that if
Executive’s employment is terminated due to Disability, any payments described
in Section 6.2(a) shall be reduced by amounts received by Executive pursuant to
any applicable disability benefits plan. If the Executive gives at least six
months written notice of her intent to retire upon or after attainment of age
sixty-five (65), the Executive shall be entitled to have (i) until the
expiration date noted in the applicable stock option agreement to exercise any
stock options previously granted to the Executive prior to July 14, 2015, and
(ii) eighteen (18) months from the Termination Date to exercise any stock
options granted to the Executive on or after July 14, 2015 (but in no event
later than the expiration date noted in the applicable stock option agreement
unless an extension beyond such expiration date would be permitted under the
applicable stock option plan and applicable law and would not result in an
“additional tax” as defined in Section 409A(a)(1)(B) of the Internal Revenue
Code of 1986, as amended).

 

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6.5           Change of Control.

 

(a)          In the event that the Executive is terminated without Cause, the
Executive terminates her employment for Good Reason, in each case within twelve
(12) months following a Change of Control (as defined below), then the Executive
shall be entitled to the following rather than the benefits provided under
Section 6.2:

 

(i)The Accrued Obligations;

 

(ii)An amount equal to eighteen (18) months’ Base Salary, payable in lump sum;

 

(iii)Full payment of the premiums for continued health insurance coverage
pursuant to COBRA, provided the Executive timely elects and remains eligible for
COBRA, until the earlier of (x) twelve (12) months following the Termination
Date, or (y) until the Executive becomes eligible to participate in another
employer’s group health plan;

 

(iv)Notwithstanding the terms of any applicable stock option or equity incentive
plan and/or agreement, (x) any and all stock options and/or restricted stock
and/or restricted stock units or other equity or equity-based awards granted to
the Executive will become fully vested and exercisable (to the extent any such
award is exercisable) on the Termination Date and (y) Executive shall have (i)
until the expiration date noted in the applicable stock option agreement to
exercise any stock options previously granted to the Executive prior to July 14,
2015, and (ii) one (1) year from the Termination Date to exercise any stock
options granted to the Executive on or after July 14, 2015 (but in no event
later than the expiration date noted in the applicable stock option agreement
unless an extension beyond such expiration date would be permitted under the
applicable stock option plan and applicable law and would not result in an
“additional tax” as defined in Section 409A(a)(1)(B) of the Internal Revenue
Code of 1986, as amended); and .

 

(v)Any Target Bonus due for the calendar year of such termination, pro-rated
based on the number of days Executive was actively employed by the Company
during such year, payable at the same time such bonus would otherwise be paid in
accordance with Section 4.5.

 

(b)       The Executive’s receipt of the payments and benefits under Section
6.5(a)(ii) and (iii) are subject to the Executive’s execution of a Release
during the Release Execution Period; provided that if the Release Execution
Period begins in one taxable year and ends in another taxable year, payment
under Section 6.5(a)(ii) shall not be made until the beginning of the second
taxable year. Subject to the foregoing, the payment set forth in Section
6.5(a)(ii) shall be made no later than thirty (30) days after the Company’s
receipt of the Release executed by the Executive. Notwithstanding anything
contained in this Agreement to the contrary, the Company shall commence payment
of the COBRA premiums in accordance with Section 6.5(a)(iii) upon the
effectiveness of the Release.

 

(c)       For avoidance of doubt, and notwithstanding anything in this Agreement
to the contrary, in the event the Executive is terminated without Cause or the
Executive terminates her employment for Good Reason, in each case after the
twelve (12) month anniversary of a Change of Control, the Executive shall be
entitled to the payments and benefits set forth in Section 6.2 hereof rather
than the benefits provided under this Section 6.5.

 

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(d)       A non-renewal of the Initial Term or Renewal Term by the Company at
any time following a Change of Control shall entitle the Executive to the
payments and benefits set forth in Section 6.2 hereof; provided, however, that
in no event shall such a notice operate to provide less than 18 months of
continued entitlement to salaried benefits from the date of a Change of Control
(e.g., if a Change of Control occurred on August 1, 2021 and Buyer provided
Executive with a notice of non-renewal on November 1, 2021 date, then Executive
would be entitled to continued salaried benefits through January 31, 2023).

 

6.6           Definitions. For purposes of this Agreement, the following
definitions apply:

 

(a)          “Cause” shall mean:

 

(i)the Executive’s failure to perform the Executive’s duties (other than any
such failure resulting from incapacity due to physical or mental illness);

 

(ii)the Executive’s failure to comply with any valid and legal directive of the
Board;

 

(iii)the Executive’s engagement in dishonesty, illegal conduct or other
misconduct, which is, in each case, materially injurious to the Company or its
affiliates;

 

(iv)the Executive’s embezzlement, misappropriation or fraud, whether or not
related to the Executive’s employment with the Company;

 

(v)the Executive’s conviction of or plea of guilty or nolo contendere to a crime
that constitutes a felony (or state law equivalent) or a crime that constitutes
a misdemeanor involving moral turpitude;

 

(vi)the Executive’s violation of a material policy of the Company; or

 

(vii)the Executive’s material breach of any material obligation under this
Agreement or any other written agreement between the Executive and the Company
(including any parent, subsidiary, or affiliate thereof).

 

Cause shall not be deemed to exist pursuant to Section 6.6(a)(i) and (ii) unless
the Company provides the Executive with written notice of the circumstances
providing ground for cause under Section 6.6(a)(i) and (ii) the circumstances
constituting such Cause (if able to be cured) recur and/or fail to be cured
within thirty (30) days of receipt of notice from the Company.

 

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(b)       “Change of Control” shall mean the occurrence of any of the following
after the Effective Date:

  

(i)one person (or more than one person acting as a group) acquires ownership of
stock of the Company that, together with the stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of such corporation; provided that, a Change of Control shall not
occur if any person (or more than one person acting as a group) owns more than
50% of the total fair market value or total voting power of the Company’s stock
and acquires additional stock;

 

(ii)one person (or more than one person acting as a group) acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition) ownership of the Company’s stock possessing 50% or more of the
total voting power of the stock of such corporation;

 

(iii)a majority of the members of the Board are replaced during any twelve-month
period by directors whose appointment or election is not endorsed by a majority
of the Board before the date of appointment or election; or

 

(iv)the sale of all or substantially all of the Company’s assets.

 

Notwithstanding the foregoing, a Change of Control shall not occur unless such
transaction constitutes a change in the ownership of the Company, a change in
effective control of the Company, or a change in the ownership of a substantial
portion of the Company’s assets under Section 409A. For purposes of this Change
of Control definition, the Company shall include the Company’s parent,
CytoSorbents Corporation.

 

(c)        “Disability” shall mean the Executive’s inability, due to physical or
mental incapacity, to substantially perform the Executive’s duties and
responsibilities under this Agreement for one hundred eighty (180) days out of
any three hundred sixty-five (365) day period and/or any one hundred twenty
(120) consecutive day period.

 

(d)       “Good Reason” shall mean the occurrence of any of the following, in
each case without the Executive’s written consent:

 

(i)a material reduction in the Executive’s Base Salary, other than a general
reduction in Base Salary that affects all similarly situated executives in
substantially the same proportions;

 

(ii)a requirement by the Company not consented to by the Executive that the
Executive’s principal place of employment relocates by more than fifty (50)
miles from her current principal place of employment, further provided that such
relocation results in a longer commute for the Executive;

 

(iii)any material breach by the Company of any material provision of this
Agreement; or

 

(iv)a material, adverse change in the Executive’s title, duties or
responsibilities (other than temporarily while the Executive is physically or
mentally incapacitated or as required by applicable law), excluding, however,
any such change that results due to the Company becoming a subsidiary or
division of another entity, provided Executive maintains his existing title in
the subsidiary or division.

 

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Notwithstanding the foregoing, the Executive cannot terminate her employment for
Good Reason unless the Executive has provided written notice to the Company of
the existence of the circumstances providing grounds for termination for Good
Reason within sixty (60) days of the initial existence of such grounds and the
Company has had at least sixty (60) days from the date on which such notice is
provided to cure such circumstances. If the Executive does not terminate her
employment for Good Reason within one hundred twenty-five (125) days after the
first occurrence of the applicable grounds, then the Executive will be deemed to
have waived the right to terminate for Good Reason with respect to such grounds.

 

6.7           Resignation of All Other Positions. Upon termination of the
Executive’s employment hereunder for any reason and/or pursuant to any
provision(s) herein, the Executive shall be deemed to have resigned from all
positions that the Executive holds as an officer or member of the board of
directors (or a committee thereof) of the Company or any of its affiliates, if
any.

 

7.          Section 280G.  If any of the payments or benefits received or to be
received by the Executive (including, without limitation, any payment or
benefits received in connection with a Change of Control or the Executive’s
termination of employment, whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement, or otherwise) (all such payments
collectively referred to herein as the “280G Payments”) constitute “parachute
payments” within the meaning of Section 280G of the Code and would, but for this
Section 7, be subject to the excise tax imposed under Section 4999 of the Code
(the “Excise Tax”), then Executive shall be entitled to receive 280G Payments
only up to the 280G Threshold (2.99 times the Base Amount as defined in Code
section 280G(b)(3)), unless, the Executive would receive a greater net after tax
benefit through payment of the full amount of the 280G Payments (taking into
account the 20% excise tax), in which case the Executive shall receive the full
amount of the 280G Payments otherwise payable. Any reduction of the 280G
Payments shall be conducted in compliance with Code section 409A, and such
reduction will be designed to deliver those 280G Payments that provide greatest
overall economic value to the Executive.

 

8.          Cooperation. The parties agree that certain matters in which the
Executive will be involved in connection with her employment may necessitate the
Executive’s cooperation in the future. Accordingly, during the Term hereof and
following the termination of the Executive’s employment for any reason, to the
extent reasonably requested by the Board or its representatives (including legal
counsel), the Executive agrees to cooperate with the Company in connection with
matters arising out of the Executive’s service to the Company or employment
therewith; provided that, the Company shall make reasonable efforts to minimize
disruption of the Executive’s other activities. The Company shall reimburse the
Executive for reasonable out-of-pocket expenses actually incurred by Executive
in connection with such cooperation in accordance with the Company’s expense
reimbursement policies then in effect. In addition, if Executive’s cooperation
is requested after the time period during which Executive is receiving severance
from the Company, to the extent permitted by applicable law, the Company shall
pay the Executive reasonable compensation for the Executive’s loss of time in
connection with such cooperation.

 

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9.          Confidential Information. The Executive understands and acknowledges
that during the Term, the Executive will continue to have access to and learn
about the Company’s Confidential Information.

 

9.1           Definition. For purposes of this Agreement, “Confidential
Information” includes, but is not limited to, all information of the Company,
its parent, subsidiaries, and/or affiliates, or any of their respective clients,
customers, suppliers, investors, or other business relations, that is not
generally known to the public, whether in spoken, printed, electronic or any
other form or medium, relating directly or indirectly to: business processes,
methods, policies, plans, publications, documents, research, operations,
services, techniques, transactions, know-how, trade secrets, computer programs,
databases, records, financial information, marketing information, pricing
information, design information, developments, market studies, sales
information, revenue, costs, formulae, algorithms, product plans, designs,
models, client information, client lists, of the Company or its businesses or
any existing or prospective customer, supplier, investor or other associated
third party, or of any other person or entity that has entrusted information to
the Company in confidence, and/or all other information of a proprietary,
confidential, and/or sensitive nature. The Executive understands that the above
list is not exhaustive, and that Confidential Information also includes other
information that is marked or otherwise identified as confidential or
proprietary, or that would otherwise appear to a reasonable person to be
confidential or proprietary in the context and circumstances in which the
information is known or used. The Executive understands and agrees that
Confidential Information includes information received, accessed, learned,
and/or developed by the Executive during the Term hereof, of the Prior
Agreement, and any prior period(s) of Executive’s employment with the Company.
Confidential Information shall not include information that is generally
available to and known by the public at the time of disclosure to the Executive;
provided that, such disclosure is through no direct or indirect fault of the
Executive or person(s) either acting on the Executive’s behalf or under similar
contractual or other obligations to not use or disclose Confidential
Information.

 

9.2           Disclosure and Use Restrictions. The Executive agrees and
covenants: (i) to treat all Confidential Information as strictly confidential;
(ii) not to directly or indirectly disclose, publish, communicate or make
available Confidential Information, or allow it to be disclosed, published,
communicated or made available, in whole or part, to any entity or person
whatsoever (including other employees of the Company not having a need to know
and authority to know and use the Confidential Information in connection with
the business of the Company and, in any event, not to anyone outside of the
direct employ of the Company) except as required in the performance of the
Executive’s authorized employment duties or with the prior written consent of
the Board; and (iii) not to access or use any Confidential Information, and not
to copy any documents, records, files, media or other resources containing any
Confidential Information, or remove any such documents, records, files, media or
other resources from the premises or control of the Company, except as required
in the performance of her employment duties or with the prior consent of the
Board. Nothing herein shall be construed to prevent or prohibit the Executive
from providing truthful testimony on any non-privileged subject matter in
response to a valid and lawful subpoena, court order, regulatory or governmental
agency request, or other judicial, administrative, or legal process or as
otherwise required by law, in which event the Executive shall notify the Company
of such subpoena, court order, regulatory or governmental request, or other
judicial, administrative or legal process or legal requirement (as applicable)
in writing, unless prohibited to do so by law, as promptly as practicable after
receiving any such request and at least ten (10) business days prior to
providing such testimony (or, if such notice is not possible under the
circumstances, with as much prior notice as is feasible) so that the Company may
seek a protective order or other appropriate remedy; provided that the
disclosure does not exceed the extent of disclosure required by such law,
regulation or order. The Executive understands and acknowledges that the
obligations under this Agreement with regard to any particular Confidential
Information shall continue after her employment by the Company.

 

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9.3           Exceptions; Defend Trade Secrets Act. Notwithstanding the
foregoing and for the avoidance of doubt, nothing herein shall prohibit or
restrict the Executive from reporting, without prior authorization from or
notification to the Company, possible violations of federal law or regulation to
any governmental agency or entity, or making other disclosures that are
protected under the whistleblower provisions of applicable federal or state law
or regulation. The Executive is hereby notified that, pursuant to 18 U.S.C. §
1833(b) of the Defend Trade Secrets Act of 2016, an individual may not be held
criminally or civilly liable under any federal or state trade secret law for the
disclosure of a trade secret that: (i) is made (A) in confidence to a federal,
state or local government official, either directly or indirectly, or to an
attorney, and (B) solely for the purpose of reporting or investigating a
suspected violation of law or (ii) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal.
Additionally, the Executive is further notified that an individual who files an
action or lawsuit for retaliation by an employer for reporting a suspected
violation of law may disclose a trade secret to the individual’s attorney and
use the trade secret information in a proceeding if the individual: (x) files
any document containing the trade secret under seal, and (y) does not disclose
the trade secret except pursuant to court order.

 

10.         Restrictive Covenants.

 

10.1         Acknowledgment. The Executive understands and acknowledges that the
nature of the Executive’s position gives the Executive access to and knowledge
of Confidential Information and places the Executive in a position of trust and
confidence with the Company, and that the Executive has obtained and will obtain
knowledge and skill relevant to the Company’s industry, methods of doing
business, and marketing strategies by virtue of the Executive’s employment and
continued employment with the Company. The Executive further understands and
acknowledges that the Company’s ability to reserve the use of Confidential
Information for the exclusive knowledge and use of the Company is of great
competitive importance and commercial value to the Company, and that improper
use or disclosure by the Executive is likely to result in unfair or unlawful
competitive activity. The Executive acknowledges and agrees that the restrictive
covenants herein are reasonable and reasonably necessary to protect the
legitimate business interests of the Company, including its Confidential
Information, customer relationships and goodwill.

 

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10.2         Non-competition. Because of the Company’s legitimate business
interest as described herein and the good and valuable consideration offered to
the Executive, during the Term and for the period of twelve (12) months after
the termination of Executive’s employment for any reason, the Executive agrees
and covenants not to engage in a Competing Business, as an employee, employer,
owner, operator, manager, advisor, consultant, agent, employee, partner,
director, stockholder, officer, or any other similar capacity, except on behalf
of the Company. A “Competing Business” is an entity engaged in the same or
similar business as the Company or its parent, and their respective
subsidiaries, which is the use of polymeric sorbents to purify blood, blood
products, and bodily fluids to prevent or treat inflammation or organ
dysfunction. Executive acknowledges and agrees that a Competing Business of the
Company also includes any business or activity in which the Company is engaged,
in research and development, or is demonstrably planning to conduct, each as of
the Termination Date. Nothing herein shall prohibit the Executive from
purchasing or owning less than three percent (3%) of the publicly traded
securities of any corporation, provided that such ownership represents a passive
investment and that the Executive is not a controlling person of, or a member of
a group that controls, such corporation.

 

10.3         Non-solicitation of Employees. During the Term and for a period of
twelve (12) months after the termination of the Executive’s employment for any
reason, the Executive agrees and covenants not to directly or indirectly
solicit, hire, recruit, attempt to hire or recruit, or induce (or attempt to
induce) any person to terminate his or her employment with the Company
(including its parent or any affiliate or subsidiary thereof), provided that
such person was employed by the Company (or any parent, affiliate, or subsidiary
thereof) as of and/or at any time during the twelve (12) month period prior to
the Termination Date.

 

10.4         Non-solicitation of Customers. The Executive understands and
acknowledges that because of the Executive’s experience with and relationship to
the Company, the Executive has accessed and learned about, and will continue to
have access to and learn about, much or all of the Company’s customer
information, and will have formed customer relationships. The Executive
understands and acknowledges that loss of this customer relationship and/or
goodwill will cause significant and irreparable harm to the Company. Therefore,
Executive agrees and covenants, during the Term and for a period of twelve (12)
months after the termination of Executive’s employment for any reason, not to
directly or indirectly solicit, contact, attempt to contact, or meet with, (i)
any Company customers who the Executive directly or indirectly (including by way
of Company employees whom Executive managed or supervised) contracted with or
solicited at any time in the two (2) year period prior to the Termination Date
or about whom Executive accessed or received Confidential Information at any
time during Executive’s employment, or (ii) any potential customers who the
Executive solicited or contacted within the six (6) month period before the
Termination Date; in either case, for purposes of or in any way relating to the
offering or providing of products, goods or services similar to or competitive
with those offered by the Company.

 

11.         Non-disparagement. The Executive agrees and covenants that the
Executive will not during and after the Term, directly or indirectly make,
publish or communicate to any person or entity or in any public forum any
defamatory or disparaging remarks, comments or statements concerning the Company
or its businesses, or any of its employees, officers or directors.
Notwithstanding the foregoing, nothing in this Agreement shall preclude the
Executive or any directors or officers of the Company from making truthful
statements that are required by applicable law, regulation or legal process, or
interfere with any rights the Executive may have under Section 7 of the National
Labor Relations Act.

 

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12.         Remedies. The Executive acknowledges that he has carefully read and
considered all the terms and conditions of this Agreement, including the
restraints imposed upon him pursuant to Sections 9, 10 and/or 11 hereof. The
Executive agrees without reservation that each of the restraints contained
herein may be necessary for the reasonable and proper protection of the
relationships (client, customer, personnel, and business), goodwill,
Confidential Information and other legitimate interests of the Company
(including its parent, affiliates, and subsidiaries), and that each of these
restraints, individually or in the aggregate, will not impose upon Executive any
undue hardship or prevent him from pursuing a livelihood or obtaining other
suitable employment during the period in which the Executive is bound by them.
In the event of a breach or threatened breach by the Executive of Section 9,
Section 10 or Section 11 of this Agreement, the Executive hereby consents and
agrees that the Company shall be entitled to seek, in addition to all other
available remedies, a temporary or permanent injunction or other equitable
relief against such breach or threatened breach from any court of competent
jurisdiction, without the necessity of showing any actual damages or that money
damages would not afford an adequate remedy, and without the necessity of
posting any bond or other security. The aforementioned equitable relief shall be
in addition to, not in lieu of, legal remedies, monetary damages or other
available forms of relief. Should the Executive violate any of the terms of the
restrictive covenant obligations articulated herein, the obligation at issue
will run from the first date on which the Executive ceases to be in violation of
such obligation. The Executive agrees that the length and/or time period of each
of the restraints herein shall be tolled, and shall not run, during any period
of time in which Executive is in violation of the terms thereof, in order that
the Company shall have all the agreed-upon temporal protection recited herein.

 

13.         Proprietary Rights.

 

13.1         Work Product. The Executive acknowledges and agrees that all
writings, works of authorship, technology, inventions, discoveries, ideas and
other work product of any nature whatsoever, that are created, prepared,
produced, authored, edited, amended, conceived or reduced to practice by the
Executive individually or jointly with others during Executive’s employment
and/or continued employment and during the Term, and relating in any way to the
business or contemplated business, research or development of the Company
(regardless of when or where the Work Product is prepared or whose equipment or
other resources is used in preparing the same) and all printed, physical and
electronic copies, all improvements, rights and claims related to the foregoing,
and other tangible embodiments thereof (collectively, “Work Product”), as well
as any and all rights in and to copyrights, trade secrets, trademarks (and
related goodwill), patents and other intellectual property rights therein
arising in any jurisdiction throughout the world and all related rights of
priority under international conventions with respect thereto, including all
pending and future applications and registrations therefor, and continuations,
divisions, continuations-in-part, reissues, extensions and renewals thereof
(collectively, “Intellectual Property Rights”), shall be the sole and exclusive
property of the Company. Work Product includes, but is not limited to, Company
publications, research, strategies, discoveries, techniques, know-how, results,
developments, algorithms, product designs, inventions, trade secrets, original
works of authorship, and discoveries.

 

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13.2         Work Made for Hire; Assignment. The Executive acknowledges that, by
reason of being employed by the Company at the relevant times, to the extent
permitted by law, all of the Work Product consisting of copyrightable subject
matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights
are therefore owned by the Company. To the extent that the foregoing does not
apply, the Executive hereby irrevocably assigns to the Company, for no
additional consideration, the Executive’s entire right, title and interest in
and to all Work Product and Intellectual Property Rights therein, including the
right to sue, counterclaim and recover for all past, present and future
infringement, misappropriation or dilution thereof, and all rights corresponding
thereto throughout the world. Nothing contained in this Agreement shall be
construed to reduce or limit the Company’s rights, title or interest in any Work
Product or Intellectual Property Rights so as to be less in any respect than
that the Company would have had in the absence of this Agreement.

 

13.3         Further Assurances; Power of Attorney. During and after the Term,
the Executive agrees to reasonably cooperate with the Company to (a) apply for,
obtain, perfect and transfer to the Company the Work Product as well as an
Intellectual Property Right in the Work Product in any jurisdiction in the
world; and (b) maintain, protect and enforce the same, including, without
limitation, executing and delivering to the Company any and all applications,
oaths, declarations, affidavits, waivers, assignments and other documents and
instruments as shall be requested by the Company. The Executive hereby
irrevocably grants the Company power of attorney to execute and deliver any such
documents on the Executive’s behalf in the Executive’s name and to do all other
lawfully permitted acts to transfer the Work Product to the Company and further
the transfer, issuance, prosecution and maintenance of all Intellectual Property
Rights therein, to the full extent permitted by law, if the Executive does not
promptly cooperate with the Company’s request (without limiting the rights the
Company shall have in such circumstances by operation of law). The power of
attorney is coupled with an interest and shall not be effected by the
Executive’s subsequent incapacity.

 

14.         Governing Law: Jurisdiction and Venue. This Agreement, for all
purposes, shall be construed in accordance with the laws of the State of New
Jersey without regard to conflicts of law principles. Any action or proceeding
by either of the parties to enforce this Agreement shall be brought only in a
state or federal court located in New Jersey. The parties hereby irrevocably
submit to the exclusive jurisdiction of such courts and waive the defense of
inconvenient forum to the maintenance of any such action or proceeding in such
venue.

 

15.         Entire Agreement. Unless specifically provided herein, this
Agreement contains all of the understandings and representations between the
Executive and the Company pertaining to the subject matter hereof and supersedes
all prior and contemporaneous understandings, agreements, representations and
warranties, both written and oral, with respect to such subject matter. The
parties mutually agree that the Agreement can be specifically enforced in court
and can be cited as evidence in legal proceedings alleging breach of the
Agreement.

 

16.         Modification and Waiver. No provision of this Agreement may be
amended or modified unless such amendment or modification is agreed to in
writing and signed by the Executive and by the Chair of the Board. No waiver by
either of the parties of any breach by the other party hereto of any condition
or provision of this Agreement to be performed by the other party hereto shall
be deemed a waiver of any similar or dissimilar provision or condition at the
same or any prior or subsequent time, nor shall the failure of or delay by
either of the parties in exercising any right, power or privilege hereunder
operate as a waiver thereof to preclude any other or further exercise thereof or
the exercise of any other such right, power or privilege.

 

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17.         Severability. Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable and thus stricken, such
holding shall not affect the validity of the remainder of this Agreement, the
balance of which shall continue to be binding upon the parties with any such
modification to become a part hereof and treated as though originally set forth
in this Agreement. The parties further agree that any such court is expressly
authorized to modify and/or reform any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement,
whether by rewriting the offending provision, deleting any or all of the
offending provision, adding additional language to this Agreement or by making
such other modifications as it deems warranted, to carry out the intent and
agreement of the parties as embodied herein to the maximum extent permitted by
law.

 

18.         Captions; Ambiguities. Captions and headings of the sections and
paragraphs of this Agreement are intended solely for convenience and no
provision of this Agreement is to be construed by reference to the caption or
heading of any section or paragraph. Any rule or principle of law that provides
that ambiguities are to be construed against the drafting party shall not apply
to this Agreement or the interpretation of any provision hereof.

 

19.         Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

20.         Section 409A.

 

20.1         General Compliance. This Agreement is intended to comply with or be
exempt from Section 409A and shall be construed and administered in accordance
with Section 409A. Notwithstanding any other provision of this Agreement,
payments provided under this Agreement may only be made upon an event and in a
manner that complies with Section 409A or an applicable exemption. Any payments
under this Agreement that may be excluded from Section 409A either as separation
pay due to an involuntary separation from service or as a short-term deferral
shall be excluded from Section 409A to the maximum extent possible. For purposes
of Section 409A, each installment payment provided under this Agreement shall be
treated as a separate payment. Any payments to be made under this Agreement upon
a termination of employment shall only be made upon a “separation from service”
under Section 409A. Notwithstanding the foregoing, the Company makes no
representations that the payments and benefits provided under this Agreement
comply with Section 409A and in no event shall the Company be liable for all or
any portion of any taxes, penalties, interest or other expenses that may be
incurred by the Executive on account of non-compliance with Section 409A. In the
event the Company and the Executive determine that this Agreement or payments
under this Agreement fail to comply with Section 409A, the Company and the
Executive shall reasonably cooperate to modify or amend this Agreement to result
in compliance under Section 409A while preserving to the extent practicable the
intended economics of this Agreement.

 

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20.2         Specified Employees. Notwithstanding any other provision of this
Agreement, if any payment or benefit provided to the Executive in connection
with her termination of employment is determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A and the Executive is
determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i),
then such payment or benefit shall not be paid until the first payroll date to
occur following the six-month anniversary of the Termination Date (the
“Specified Employee Payment Date”) or, if earlier, on the Executive’s death. The
aggregate of any payments that would otherwise have been paid before the
Specified Employee Payment Date shall be paid to the Executive in a lump sum on
the Specified Employee Payment Date and thereafter, any remaining payments shall
be paid without delay in accordance with their original schedule.

 

20.3         Reimbursements. To the extent required by Section 409A, each
reimbursement or in-kind benefit provided under this Agreement shall be provided
in accordance with the following:

 

(a)       the amount of expenses eligible for reimbursement, or in-kind benefits
provided, during each calendar year cannot affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(b)       any reimbursement of an eligible expense shall be paid to the
Executive on or before the last day of the calendar year following the calendar
year in which the expense was incurred; and

 

(c)       any right to reimbursements or in-kind benefits under this Agreement
shall not be subject to liquidation or exchange for another benefit.

 

21.         Successors and Assigns; Third-Party Beneficiaries. This Agreement is
personal to the Executive and shall not be assigned by the Executive. The
Company may assign this Agreement to any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company. This Agreement shall
inure to the benefit of the Company and permitted successors and assigns, and
all references herein to the “Company” shall be construed to include any and all
permitted successors and/or assigns thereto. Nothing herein is intended to or
shall be construed to create any third-party beneficiaries other than the
parent, affiliates, and subsidiaries of the Company, all of which are expressly
intended as third-party beneficiaries of this Agreement (including any
amendments or modifications hereafter).

 

22.         Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, or by overnight carrier
to the parties at the addresses set forth below (or such other addresses as
specified by the parties by like notice):

 

If to the Company:

 

CytoSorbents Corporation

7 Deer Park Drive, Suite K

Monmouth Junction, NJ 08852

c/o Chief Executive Officer

 

If to the Executive:

 

 

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23.         Representations of the Executive. The Executive represents and
warrants to the Company that the Executive’s execution of this Agreement and
performance hereunder will not conflict with or result in a violation of, a
breach of, or a default under any contract, agreement or understanding to which
the Executive is a party or is otherwise bound.

 

24.         Withholding. The Company shall have the right to withhold from any
amount payable hereunder any Federal, state and local taxes in order for the
Company to satisfy any withholding tax obligation it may have under any
applicable law or regulation.

 

25.         Survival. Upon the expiration or other termination of this
Agreement, the respective rights and obligations of the parties hereto shall
survive such expiration or other termination to the extent necessary to carry
out the intentions of the parties under this Agreement.

 

26.         Attorneys’ Fees. The Company agrees to reimburse Executive for
reasonable legal fees incurred in negotiating this Agreement in accordance with
the arrangement agreed upon by Executive and the Company’s Board of Directors in
2019.

 

27.         Acknowledgment of Understanding. THE EXECUTIVE ACKNOWLEDGES AND
AGREES THAT THE EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS
INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE EXECUTIVE
HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF THE EXECUTIVE’S CHOICE REGARDING
THIS AGREEMENT, AND THAT THE EXECUTIVE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS
AND CONSULT WITH AN ATTORNEY OF THE EXECUTIVE’S CHOICE BEFORE SIGNING THIS
AGREEMENT.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date written below.

 

  CYTOSORBENTS MEDICAL, INC.       By /s/ Phillip P. Chan       Name: Phillip P.
Chan   Title: CEO   Date: July 30, 2019

 

KATHLEEN P. BLOCH

 

  Signature:   /s/ Kathleen P. Bloch       Date:   July 30, 2019  

 

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