EMPLOYMENT AGREEMENT


 


 


THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is entered into on May 7, 2013, by and between CytoSorbents Corporation and its wholly-owned subsidiary
CytoSorbents, Inc. (collectively the “Company”), and Kathleen P. Bloch (“Employee”).


 


The Company wishes
to employ Employee as Chief Financial Officer upon the terms and conditions set forth in this Agreement and Employee is willing
to accept employment subject to the terms and conditions set forth below. Accordingly, the parties, intending to be legally bound,
agree as follows:


 


1.Employment and Term


 


1.1             
Employment. Subject to the terms and conditions hereof, the Company hereby employs Employee during the term of employment
set forth in Section 1.2 to serve as Chief Financial Officer of the Company and perform such services and duties as are normally
and customarily associated with such position as well as such other associated duties as the Board of Directors (“BOD”)
or the Chief Executive Officer (“CEO”) shall determine. Employee hereby accepts such employment and agrees to devote
sufficient time, attention and energies during regular business hours to effectively perform her duties and obligations hereunder.


 


1.2             
Term.The term of employment of Employee under this Agreement shall commence May 29, 2013 and expire on May 31,
2014 (the “Term”) subject to the provisions for early termination set forth herein and subject to automatic renewal
for an additional one year term unless a party gives notice of nonrenewal. If the Company does not wish to renew this agreement,
it will provide the Employee with 90 days advance written notice of such.


 


2.Compensation


 


2.1Base Compensation.
In consideration of the services to be rendered hereunder, the Company hereby agrees to pay Employee an initial annual base compensation
of $200,000 payable in equal semimonthly installments in accordance with the usual practice of the Company which base compensation
shall be subject to annual review by the Compensation Committee. Employee stock options will be adjusted on the same basis as all
other shareholders to account for any stock split, stock dividend, combination or recapitalization


 


2.2 Signing
Bonus. In addition to the above, as a one-time signing bonus, the Employee will receive a 10-year option grant to purchase
one million (1,000,000) shares of common stock with an exercise price equal to the daily volume weighted average closing price
of the Common Stock for the five (5) trading days immediately prior to the date hereof or $0.116 per share. These options will
vest in two equal installments (500,000 shares each) at the 12 month and 24 month anniversary of the signing of this Agreement,
provided the Employee is still a full-time employee of the Company at that time.


 






    	 



    	 



    




 


 


2.3 Company 2013 Performance-based
Stock Option Grant. In addition to the above, the Employee will be entitled to an option grant to purchase 500,000 shares of the
Company’s common stock, that vests piecemeal with the achievement of pre-determined milestones approved by the BOD priced
at the 5-day VWAP at the time of BOD approval of the Company’s ISO plans, or $0.115 per share.


 


2.4Restricted Stock:
In the event of an acquisition by another company, Employee would be eligible for an award of restricted shares of the Company,
as detailed in the 2013 Stock Option Grant, depending on the acquisition price.


 


2.5Adjustment for
dilution. All the above options and/or restricted stock plus any other stock options or restricted awards will be subject to standard
adjustments for stock splits and stock dividends.


 


3.Benefits.


 


3.1             
Participation in Plans. During the term hereof, Employee shall be entitled to participate on the same terms as afforded
other executive officers in any group insurance, hospitalization, medical, dental, health and accident, disability or similar plan
or program of the Company now existing or established hereafter to the extent that she is eligible under the general provisions
thereof; provided that in no case shall the benefits be reduced or less than that granted, awarded or provided to Employee on the
date hereof.


 


3.2             
Reasonable Business Expenses. Employee shall be allowed reimbursement for reasonable business expenses in connection
with the performance of her duties hereunder upon presentation by Employee of the details of, vouchers for, such expenses, including
tourist class commercial air travel, and Employee shall be furnished reasonable office space, assistance and facilities.


 


3.3             
Vacation. Employee shall be entitled to four (4) weeks of vacation (without deduction of salary or other compensation)
for the period as is in conformity with the Company’s policy regarding vacations for management employees.


 


3.4             
Bonuses. Employee shall be eligible for participation in any incentive stock option plan approved by the BOD, and
may receive such discretionary bonuses as the BOD, in its sole discretion and from time to time, deems appropriate.


 






 



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4.Early Termination of Employment.


 


4.1Termination for Justifiable
Cause. In addition to termination pursuant to Section 1.2, the Company, by written notice to Employee authorized by the BOD
may terminate Employee’s employment for “justifiable cause”, which shall mean any of the following events: (a)
Commission by the Employee of an act of fraud or dishonesty resulting or intended to result, directly or indirectly, in personal
enrichment at the expense of the Company or a willful act causing material damage to the Company and/or its reputation; (b) a conviction
of a felony involving moral turpitude; (c) repeated failure or refusal by Employee to follow - written policies and directions
reasonably established by the BOD or CEO that go uncorrected for a period of thirty (30) consecutive days after written notice
has been provided to Employee; or (d) persistent willful failure by Employee to fulfill her duties hereunder that goes uncorrected
for a period of thirty (30) consecutive days after written notice has been provided Employee.


 


4.2In the event that the BOD reasonably
determines that the Employee has committed a felony), a material act of fraud or other willful tort against the Company, it shall
have the right to suspend Employee from her position and duties hereunder without compensation until such time as either the action
is dropped or no longer pursued or a final adjudication of Employee’s actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication find Employee innocent (or not at fault) or the action is dropped
or no longer pursued, the Company shall promptly pay her all unpaid back salary together with interest on said amount (at the average
consumer loan rate published by Citibank, N.A., during the suspension period) and, if said final adjudication is rendered or action
dropped or no longer pursued within three (3) months of Employee’s suspension, she may, at her option, be reinstated to her
position and this Agreement continued as if never interrupted.


 


4.3 Permanent Disability
of Employee. The Company shall have the right to terminate Employee’s employment hereunder if the BOD shall in good faith
and on the basis of reasonable medical evidence determine that Employee, by reason of physical or mental disability, has been unable
to perform the services required of him hereunder for more than 120 consecutive days or an aggregate of 180 calendar days, during
any 12-month period. Such termination shall be effective as of the last day of the month following the month in which the Company
shall have given notice to Employee of its intention to terminate pursuant to this paragraph. Company paid Disability Benefits
will be activated 90 days after termination.


 


4.4Compensation Upon Early Termination.


 



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(a)              
In the event of termination of this Agreement for “justifiable cause” as described in Section 4.1, or pursuant
to Section 1.2 hereof, Employee shall be entitled solely to the compensation and benefits earned by her before the effective date
of termination, as provided for in this Agreement, computed pro rata up to and including that date, in lieu of salary and other
benefits under this Agreement.


 


(b)              
If prior to the expiration of the term of this Agreement Employee dies, the Company shall continue Employee’s compensation
and coverage of Employee’s direct dependents (if any and if they are eligible) under all plans or programs of the types listed
in Section 3.1 for a period of 120 days, provided that no benefits will continue past the end of the term of this Agreement.


 


(c)               
Upon Employee’s termination for “Good Reason” as defined below, Employee shall then be entitled to receive,
in lieu of salary and other benefits under this Agreement, (i) an amount equal to four (4) months of her then-current base salary
payable in equal semi-monthly payments in arrears without interest for a period of four (4) months, (ii) continued coverage under
all plans or programs of the types listed in Section 3.1 until the sooner of 1 year or one (1) month after Employee becomes otherwise
employed and eligible for other coverage, and (iii) all other benefits provided to Employee under this Agreement for a period of
thirty (30) days.


 


(d)              
Upon a Change of Control as defined below, and Employee is involuntarily terminated or voluntarily terminates her employment
with the Company she will receive, in lieu of salary and other benefits under this Agreement, (i) an amount equal to six (6) months
of her then-current base salary payable within one (1) month of the Change of Control (ii) continued coverage under all plans or
programs of the types listed in Section 3.1 until the sooner of 1 year or one (1) month after Employee becomes otherwise employed
and eligible for other coverage, and (iii) all other benefits provided to Employee under this Agreement for a period of thirty
(30) days.


 


4.5In
the event Employee is terminated for any reason other than for “justifiable cause” as defined in Section 4.1 hereof,
or death, disability or her voluntary termination, then all unexercised options granted to Employee under the Company’s option
plan shall be deemed fully vested and exercisable immediately upon Employee’s termination. The foregoing benefit shall be
in addition to, and not in lieu of, any similar benefit that may be contained in any other agreement between the Company and Employee.


 



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4.6If Employee terminates
her employment upon the occurrence of a Change of Control of the Company or for Good Reason pursuant to Section 4.6(d), all options
granted to Employee under the Company option plan and the Options granted to Employee under the Company option plan shall be automatically
fully vested and exercisable immediately.


 


(a) For purposes
of this Agreement, “Change of Control” shall be deemed to have occurred if, during the term of this Agreement:


 


(i)the
beneficial ownership of at least 50% of the Company’s voting securities or all or substantially all of the assets of the
Company shall have been acquired, directly or indirectly by a single person or a group of affiliated persons, other than the Employee
or a group in which the Employee is a member, in any transaction or series of transactions or





(ii)as
the result of or in connection with any cash tender offer, exchange offer, sale of assets, merger, consolidation or other business
combination of the Company with another corporation or entity the new Board of Directors is comprised of a majority of Directors
chosen or elected by the shareholders of the new/combined entity who were not shareholders of the Company before such cash tender
offer, exchange offer, sale of assets, merger, consolidation or other business combination of the Company with another corporation
or entity


 


(c)For purposes of this
Agreement, the date of Change of Control shall mean the earlier to occur of:


 


(i)          
the first date on which a single person or group of affiliated persons acquires the beneficial ownership of 50% or more
of the Company’s voting securities or all or substantially all of the Company’s assets in any transaction or series
of transactions; or


 


(ii)        
the date on which a cash tender offer, exchange offer, sale of assets, merger, consolidation other business combination
resulting in the change in the Board of Directors contemplated by Section 4.6 hereof is consummated.


 


(d)For purposes of this
Agreement, the term “Good Reason” shall mean the 1) assignment of an Employee of any duties that are not in the same
corporate capacity or area of operations or are not of the same general nature as Employee’s duties with Company without
the Employee’s written consent 2) a material diminishment of duties, 3) Company’s breach of the employment agreement,
or 4) a forced relocation outside of a thirty (30) mile radius of Company’s current address.


 



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5.Confidentiality and Non-Competition.


 


5.1Confidentiality. During
the term of employment under this Agreement, Employee will have access to and become acquainted with various confidential information
including without limitation, trade secrets, customer relationships, formulas, devices, inventions, processes, know-how, financial
information and other compilations of information, records, and specifications, which are owned by the Company. Employee shall
not disclose any of the Company’s confidential information, directly or indirectly, or use them in any way, either during
the term of this Agreement or at any time thereafter, except as required in the course of her employment for the Company. All files,
records, documents, drawings, specifications, equipment and similar items relating to the business of the Company, whether prepared
by Employee or otherwise coming into her possession, shall remain the exclusive property of the Company and shall not be removed
from the premises of the Company under any circumstances whatsoever without the prior written consent of the Company, and if removed
shall be immediately returned to the Company upon any termination of her employment and no copies thereof shall be kept by Employee,
provided, however, that Employee shall be entitled to retain documents reasonably related to her interest as a shareholder.


 


(ii) Inventions
and Shop Right. Every invention, discovery or improvement made or conceived by Employee related to the business of the Company
during her employment by the Company whenever and wherever made or conceived, and whether or not during business hours, of any
product, article, appliance, tool, device, formula, process, machinery or pattern similar to, or which constitutes an improvement,
on those heretofore, now or at any time during ther employment, manufactured or used by the Company in connection with the manufacture
or process of any product heretofore or now or hereafter manufactured by the Company, or of any product which shall or could reasonably
be manufactured in the reasonable expansion of the Company’s business, shall be and continue remain the Company’s exclusive
property, without any added compensation or any reimbursement for expenses to Employee, and upon the conception of any and every
such invention, discovery or improvement and without waiting to perfect or complete it, Employee promises and agrees that he will
immediately disclose it to the Company and to no one else and thenceforth will treat it as the property and secret of the Company.
Employee will also execute any instruments requested from time to time by the Company to vest in it complete title and ownership
to such invention, discovery or improvement and will, at the request of the Company, do such acts and execute such instruments
as the Company may require but at the Company’s expense to obtain Letters Patent in the United States and foreign countries,
for such invention, discovery or improvement and for the purpose of vesting title thereto in the Company, all without any reimbursement
for expenses or otherwise and without any additional compensation of any kind to Employee.


 



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5.2Non-Competition.
In the event of a termination of this Agreement for any reason including expiration of the term thereof , Employee shall be prohibited
for a period of one (1) year from the effective date of her separation from engaging in any business in direct competition with
that of the Company in those states within the United States and those countries outside the United States in which the Company
at the time of Employee’s separation has conducted business or where Company has written a reasonable plan to conduct business
in the next 12 months or directly or indirectly advising or consulting to or otherwise performing services for or providing assistance
to any person, firm, corporation, or other entity engaged in such competitive business, provided, however, nothing herein contained
shall be construed as (a) preventing Employee from investing her personal assets in any businesses which do not compete directly
or indirectly with the Company, provided such investment or investments do not require any services on her part in the operation
of the affairs of the entity in which such investment is made and in which her participation is solely that of an investor, (b)
preventing Employee from purchasing securities in any corporation whose securities in any corporation whose securities are regularly
traded, if such purchases shall not result in her owning beneficially at any time 3% or more of equity securities of any corporation
engaged in a business which is competitive, directly or indirectly, to that of the Company, (c) preventing Employee from engaging
in any activities, if she receives the prior authorization of the BOD. Notwithstanding anything herein to the contrary, this Section
5.2 shall not be effective in the event the Employee is discharged for Good Reason or Company’s material breach of this Agreement.
This paragraph will be null and void if the Employee is terminated without cause during the term of this Agreement.


 


5.3Subsequent to the termination
of this Agreement, Employee will not for a period of one (1) year materially interfere with or disrupt the Company’s business
relationship with its customers or suppliers or employ any person who was employed with the Company at any time during the 6 months
prior to Employee’s termination, or for a period of three (3) years, directly or indirectly solicit any of the employees
to leave the employ of the Company. 


 


6.Notices.
All notices under this Agreement shall be in writing and shall be deemed effective when delivered in person (in the Company’s
case, to its CEO or Secretary) or forty eight (48) hours after deposit thereof in the U.S. mail, postage prepaid, addressed to
Employee, at last known address as carried in the records of the Company, or to the Company, at the corporate headquarters, to
the attention of the Secretary, or to such other address as the party to be notified may specify by notice to the other party.


 


 



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7.Assigns and Successors. The
rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company and the rights and obligations of Employee shall move to the benefit of and shall be binding on Employee
and her legal representatives or heirs. This agreement constitutes a personal service agreement and Employee’s obligations
hereunder may not be transferred or assigned by Employee.


 


8.Amendment Waiver. This Agreement
may be amended, and any right or claim hereunder waived, only by a written instrument signed by both Employee and the Company,
following authorization by the BOD. Nothing in this Agreement, express or implied, is intended to confer upon any third person
any rights or remedies under or by reason of this Agreement. No amendment or waiver of this Agreement requires the consent of any
individual, partnership, corporation or other entity not a party of this Agreement.


 


9.Injunction.


 


(a) Should Employee
at any time violate or threaten to violate any of the provisions of this Agreement, the Company shall be entitled to an injunction
restraining Employee from doing or continuing to do or performing any such acts and Employee hereby consents to the issuance of
such an injunction.


 


(b) In the event that
a proceeding is bought in equity to enforce the provisions of this paragraph, Employee shall not urge as a defense that there is
an adequate remedy at law, nor shall the Company be prevented from seeking any other remedies which may be available.


 


(c) The existence of
a claim or cause of action by the Company against Employee, or by Employee against the Company, whether predicated upon this Agreement
or otherwise, shall not constitute a defense to the endorsement by the Company of the foregoing restrictive covenants but shall
be litigated separately.


 


(d) The provisions
of this Section 9 shall survive termination of this Agreement.


 


10.Governing Law and Jurisdiction.
This Agreement in its interpretation and application and enforcement shall be governed by the law of the State of New Jersey without
application of its conflict of laws provisions, and any legal action commenced by either party seeking interpretation, application
and/or enforcement of this Agreement shall be brought only in the State of New Jersey of federal court sitting in Princeton, NJ.





 





11.Prior Agreements. This Agreement
supersedes and replaces any and all prior agreements between the parties as to its subject matter.


 


12.Construction. Paragraph headings
are for convenience only and shall not be considered a part of the terms and provisions of this Agreement.


 







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IN WITNESS WHEREOF, the parties have executed
this Agreement.


 





	CytoSorbents Corporation	 	EMPLOYEE
	 	 	 	 
	 	 	 	 
	By: 	/s/ Phillip P. Chan	 	/s/ Kathleen P. Bloch
	 	Phillip P. Chan, CEO	 	Kathleen P. Bloch
	 	CytoSorbents Corporation 	 	 




 


 






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