Exhibit 10.1


 


CytoSorbents
Corporation, A DELAWARE CORPORATION


CytoSorbEnts
Medical, Inc., a delaware corporation


 


WESTERN ALLIANCE
BANK, an arizona corporation




LOAN AND SECURITY AGREEMENT


 




     


     


    

 


This Loan
And Security Agreement (as the same may from time to time be amended, modified, supplemented or restated, this “Agreement”)
is entered into as of June 30, 2016, by and between Western Alliance Bank, an
Arizona corporation (“Bank”), and CytoSorbents
Corporation, a Delaware corporation and CytoSorbents Medical,
Inc., a Delaware corporation (individually and collectively, jointly
and severally “Borrower”).


 


Recitals


 


Borrower wishes to obtain
credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which
Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.


 


Agreement


 


The parties agree as follows:


 


1.          Definitions
and Construction.


 


1.1           Definitions.
As used in this Agreement, the following terms shall have the following definitions:


 


“Accounts”
means all presently existing and hereafter arising accounts, contract rights, payment intangibles, and all other forms of obligations
owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other
technology) or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties,
and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating
to any of the foregoing.


 


“Affiliate”
means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls
or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors,
and partners.


 


“Amortization Date”
means (i) August 1, 2017, if the Term B Loans are not made hereunder, and (ii) February 1, 2018, if Term B Loans are made hereunder.


 


“Anti-Terrorism Laws”
are any laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the
USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.


 


“Bank Expenses”
means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s
reasonable attorneys’ fees and expenses incurred in amending, enforcing or defending the Loan Documents (including fees and
expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.


 


“Blocked Person”
means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224,
(b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (c) a Person with which Bank is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated
national” or “blocked person” on the most current list published by OFAC or other similar list.


 




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“Borrower’s
Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or
liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment,
containing such information.


 


“Business Day”
means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required
to close.


 


“Change in Control”
means a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of either
Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group”
to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.


 


“Closing Date”
means the date of this Agreement.


 


“Code” means
the California Uniform Commercial Code.


 


“Collateral”
means the property described on Exhibit A attached hereto.


 


“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account, or any other bank account maintained by Borrower or any Subsidiary
at any time.


 


“Commodity Account”
is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.


 


“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another; (ii) any obligations with respect to undrawn
letters of credit, corporate credit cards, or merchant services issued or provided for the account of that Person; and (iii) all
obligations arising under any agreement or arrangement designed to protect such Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements
for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by Bank in good
faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee
or other support arrangement.


 


“Copyrights”
means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship
and derivative work thereof.


 


“Credit Extension”
means any Term Loan or any other extension of credit by Bank for the benefit of Borrower hereunder.


 


“Daily Balance”
means the amount of the Obligations outstanding under the Loan Documents owed at the end of a given day.


 


“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.


 


“Designated Deposit
Account” means Borrower’s primary depository or operating account with Bank.


 




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“Effective Interest
Rate” means, with respect to the Term Loan, the per annum rate of interest (based on a year of three hundred sixty (360)
days) equal to the sum of (a) Index Rate on the last Business Day of the month that immediately precedes the month in which the
interest will accrue, plus (b) Seven and Seventy-Five Hundredths percent (7.75%). Notwithstanding the foregoing, the Effective
Interest Rate for the Term A Loan for the period from its Disbursement Date through and including June 30, 2016 shall be Eight
and One Thousand Nine Hundred Ninety Three Ten Thousandths percent (8.1993%).


 


“Equipment”
means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.


 


“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.


 


“Event of Default”
has the meaning assigned in Article 8.


 


“Final Payment”
means a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due
on the earliest to occur of (a) the Maturity Date, or (b) the acceleration of any Term Loan, or (c) the prepayment of a Term Loan
pursuant to Section 2.2(c) or (d), equal to the original principal amount of such Term Loan multiplied by the Final Payment Percentage,
payable to Bank.


 


“Final Payment Percentage”
means two and one-half percent (2.50%).


 


“Foreign Subsidiary”
means a Subsidiary that is not an entity organized under the laws of the United States or any territory thereof.


 


“Funding Date”
means any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day.


 


“GAAP” means
generally accepted accounting principles in the United States as in effect from time to time.


 


“German Sub”
means CytoSorbents Europe GmbH, a wholly and directly owned subsidiary of Borrower that is organized under the laws of Germany.


 


“Guillermina Vega
Montiel Agreement” means that certain letter agreement, by and among CytoSorbents Corporation (as successor in interest to
RenalTech International, LLC) and Guillermina Vega Montiel, dated August 11, 2003, a copy of which has been provided to Bank prior
to the Closing Date (and without any amendments thereto).


 


“Indebtedness”
means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations.


 


“Index Rate”
means the thirty (30) day U.S. DOLLAR LIBOR rate reported in The Wall Street Journal.


 


“Insolvency Proceeding”
means any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.


 


“Intellectual Property”
means all of Borrower’s right, title, and interest in and to the following: Copyrights, Trademarks and Patents; all trade
secrets, all design rights, claims for damages by way of past, present and future infringement of any of the rights included above,
all licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from
such use to the extent permitted by such license or rights; all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents; and all proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity
or warranty payable in respect of any of the foregoing.


 




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“Inventory”
means all inventory in which Borrower has or acquires any interest, including work in process and finished products intended for
sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned
by or in the custody or possession, actual or constructive, of Borrower, including such inventory as is temporarily out of its
custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower’s
Books relating to any of the foregoing.


 


“Investment”
means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance
or capital contribution to any Person.


 


“IRC” means
the Internal Revenue Code of 1986, as amended, and the regulations thereunder.


 


“Lien” means
any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.


 


“Loan Documents”
means, collectively, this Agreement, any note or notes (including the Secured Promissory Notes) executed by Borrower, the Success
Fee Letter, the Post Closing Letter, any pledge agreement regarding Shares of the German Sub and any other agreement entered into
in connection with this Agreement, all as amended, restated, supplemented or otherwise modified from time to time.


 


“Material Adverse
Effect” means a material adverse effect on (i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations
under the Loan Documents or (iii) the value or priority of Bank’s security interests in the Collateral, but subject to Permitted
Liens.


 


“Maturity Date”
means July 1, 2020.


 


“Negotiable Collateral”
means all letters of credit of which Borrower is a beneficiary, notes, drafts, instruments, securities, documents of title, and
chattel paper, and Borrower’s Books relating to any of the foregoing.


 


“Obligations”
means all debt, principal, interest, the Prepayment Fee, the Final Payment, Bank Expenses and other amounts owed to Bank by Borrower
pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability
or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise.


 


“OFAC” means
the U.S. Department of Treasury Office of Foreign Assets Control.


 


“OFAC Lists”
means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order
No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant
to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.


 


“Patents” means
all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.


 


“Payment Date”
means the first (1st) calendar day of each calendar month.


 


“Perfection Certificate”
has the meaning assigned in Section 3.1.


 


“Periodic Payments”
means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant
to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.


 




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“Permitted Indebtedness”
means:


 


(a)          Indebtedness
of Borrower in favor of Bank arising under this Agreement or any other Loan Document;


 


(b)          Indebtedness
existing on the Closing Date and disclosed in the Perfection Certificate on the Closing Date;


 


(c)          Indebtedness
secured by a Lien described in clause (c) of the defined term “Permitted Liens”, provided (i) such Indebtedness
does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness and (ii) such
Indebtedness does not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate at any given time;


 


(d)          Subordinated
Debt;


 


(e)          Unsecured
Indebtedness to trade creditors incurred in the ordinary course of business;


 


(f)          Contingent
Obligations (in the aggregate outstanding amount of up to Two Hundred Fifty Thousand Dollars ($250,000) at any given time) arising
in the ordinary course of business or consisting of guarantees of any items of Permitted Indebtedness;


 


(g)          Indebtedness
(in the aggregate outstanding amount of up to One Hundred Thousand Dollars ($100,000) at any given time) incurred as a result of
endorsing negotiable instruments received in the ordinary course of business;


 


(h)          Indebtedness
(in the aggregate outstanding amount of up to Three Hundred Thousand Dollars ($300,000) at any given time) incurred to finance
insurance premiums in the ordinary course of business;


 


(i)          Indebtedness
constituting financing by the landlord or its Affiliates of leasehold improvements related to the Plant Expansion and not exceeding
Five Hundred Thousand Dollars ($500,000) in the aggregate at any given time; and


 


(j)          extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (i) above, provided
that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower
or its Subsidiary, as the case may be.


 


“Permitted Investment”
means:


 


(a)          Investments
existing on the Closing Date disclosed in the Perfection Certificate;


 


(b)          (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing
within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the
date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation
or Moody’s Investors Service, (iii) certificates of deposit maturing no more than one (1) year from the date of investment
therein issued by Bank and (iv) Bank’s money market accounts;


 


(c)          Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of Borrower;


 


(d)          Investments
consisting of deposit accounts in which Bank has a perfected security interest;


 




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(e)          Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries
pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors; not to exceed in the aggregate
for (i) and (ii), Two Hundred Fifty Thousand Dollars ($250,000) in any fiscal year;


 


(f)          (i)
Net Investments (i.e. Investments net of any payments received by Borrower from the German Sub after the making of such
Investments) by Borrower in the German Sub not to exceed Seven Hundred Thousand Dollars ($700,000) in the aggregate at any given
time in any fiscal year and (ii) Net Investments (i.e. Investments net of any payments received by German Sub from the Swiss Sub
after the making of such Investments) by German Sub in the Swiss Sub not to exceed Two Hundred Thousand Dollars ($200,000)
in the aggregate at any given time in any fiscal year;


 


(g)          Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;


 


(h)          Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (h) shall not apply to Investments of Borrower in any Subsidiary;
and


 


(i)          non-cash
Investments in joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive
licensing of technology, the development of technology or the providing of technical support.


 


“Permitted Liens”
means the following:


 


(a)          Any
Liens existing on the Closing Date and disclosed in the Perfection Certificate on the Closing Date or arising under this Agreement
or the other Loan Documents;


 


(b)          Liens
for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank’s security interests;


 


(c)          Liens
(i) upon or in any equipment which was not financed by Bank acquired or held by Borrower or any of its Subsidiaries to secure
the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment
or (ii) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment;


 


(d)          Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business
so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Fifty Thousand Dollars
($50,000.00), and which are not delinquent or remain payable without penalty or which are being contested in good faith and by
appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;


 


(e)          Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);


 


(f)          leases
or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal
property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not prohibit
granting Bank a security interest therein;


 




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(g)          Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 or
8.7;


 


(h)          Liens
in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at
such institutions, provided that Borrower is permitted under the terms of this Agreement to maintain such accounts and Bank has
a perfected security interest in the amounts held in such deposit and/or securities accounts;


 


(i)          Liens
in favor of the landlord or its Affiliates to secure the Permitted Indebtedness described in clause (i) of the definition of “Permitted
Indebtedness”; provided, however, such Liens are restricted to the leasehold improvements related to the Plant Expansion
that are financed by such Permitted Indebtedness; and


 


(j)          Liens
incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (i) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; and


 


(k)          easements,
rights of way, restrictions, minor defects or irregularities in title and other similar Liens affecting real property not interfering
in any material respect with the conduct of Borrower’s business in its ordinary course.


 


“Person” means
any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.


 


“Post Closing Letter”
is that certain Post Closing Letter dated as of the Closing Date by and between the Bank and Borrower.


 


“Prepayment Fee”
means, with respect to any Term Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary prepayment,
acceleration or otherwise, an additional fee payable to Bank in amount equal to:


 


(i)          for
a prepayment made on or after the Funding Date of such Term Loan through and including the first anniversary of the Funding Date
of such Term Loan, two percent (2.0%) of the principal amount of such Term Loan prepaid;


 


(ii)         for
a prepayment made after the date which is after the first anniversary of the Funding Date of such Term Loan through and including
the second anniversary of the Funding Date of such Term Loan, one and one-half percent (1.5%) of the principal amount of the Term
Loan prepaid; and


 


(iii)        for
a prepayment made after the second anniversary of the Funding Date of such Term Loan, one percent (1.0%) of the principal amount
of the Term Loan prepaid, provided that no Prepayment Fee shall be due for any payment made at the Maturity Date.


 


“Plant Expansion”
means the new plant expansion contemplated by Borrower during 2017 and 2018.


 


“Purolite”
means collectively, Brotech Corporation and its affiliate, Purolite International, Inc.


 


“Purolite Settlement
Agreement” means that certain Settlement Agreement, by and among Purolite and Borrower, dated October 2006, in the form provided
to the Bank prior to the Closing Date and without any amendments thereto unless such amendments have been approved by Bank in writing
in advance.


 


“Responsible Officer”
means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Controller of Borrower.


 




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“Revenue Event”
means the achievement by Borrower, for its fiscal year 2016, of consolidated annual revenues (strictly from the sale of its products
and not related to grant funding activities) of at least Four Million Eight Hundred Seventy-Five Thousand Dollars ($4,875,000),
reasonably determined by the Bank based upon written evidence reasonably satisfactory to the Bank.


 


“Required Reserves
Test” means that on the date of its determination, Borrower shall have sufficient cash reserves (including the proceeds of
the Term B Loans) to meet all of its projected expenses in accordance with its then applicable annual operating budget and financial
projections delivered and accepted by Bank in accordance with Section 6.3 hereof (including, but not limited to, interest expenses
and any applicable principal repayment expenses) for the then immediately following 12 month period, as reasonably determined by
the Bank based on evidence reasonably acceptable to the Bank.


 


“Schedule”
means the schedule of exceptions attached hereto and approved by Bank, if any.


 


“Second Draw Period”
means the period commencing on the of the date of the occurrence of Revenue Event and ending on the earlier of (i) June 30,
2017 and (ii) the occurrence of an Event of Default; provided, however, that the Second Draw Period shall not commence if
on the date of the occurrence of the Revenue Event an Event of Default has occurred and is continuing; provided further that no
Term B Loans shall be made during the Second Draw Period unless on the Funding Date of the Term B Loans, the Required Reserves
Test is met and on or before the Funding Date of the Term B Loans (but no earlier than ten (10) days prior to the Funding Date),
the Seventy Five Percent Test is met.


 


“Secured Promissory
Note” has the meaning assigned in Section 2.7.


 


“Secured Promissory
Note Record” means a record maintained by the Bank with respect to the outstanding Obligations under the Loan Documents owed
by Borrower to the Bank and credits made thereto.


 


“Securities Account”
is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.


 


“Seventy Five Percent
Test” means that on the date of its determination, Borrower shall have achieved consolidated trailing six month revenue (for
the six full calendar months completed immediately preceding the date of determination and strictly from the sale of its products
and not related to grant funding activities) equal to at least seventy-five percent (75%) of the projected revenue for such period
in accordance with the then applicable financial projections delivered by Borrower and accepted by Bank in accordance with Section
6.3 hereof, as reasonably determined by the Bank based on evidence reasonably acceptable to the Bank.


 


“Shares” means
one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or held of record
by Borrower or Borrower’s Subsidiary, in any Subsidiary; provided that, in the event Borrower, demonstrates to the Bank’s
reasonable satisfaction, that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary which is a Foreign
Subsidiary, creates a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code, “Shares”
shall mean sixty-five percent (65%) of the issued and outstanding capital stock, membership units or other securities owned or
held of record by Borrower or its Subsidiary in such Foreign Subsidiary. For the purposes of clarification, “Shares”
with respect to the German Subsidiary means sixty-five percent (65%) of the issued and outstanding capital stock, membership units
or other securities owned or held of record by Borrower of the German Sub.


 


“Subordinated Debt”
means any debt incurred by Borrower that is subordinated to the debt owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank).


 


“Subsidiary”
means any corporation, company or partnership in which (i) any general partnership interest or (ii) more than 50% of
the stock or other units of ownership which by the terms thereof has the ordinary voting power to elect the Board of Directors,
managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly
or through an Affiliate.


 




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“Success Fee Letter”
means that certain success fee letter agreement, by and between the Bank and Borrower, dated as of the date hereof.


 


“Swiss Sub”
means CytoSorbents Switzerland GmbH, a wholly and directly owned subsidiary of the German Sub that is organized under the laws
of Switzerland.


 


“Term Loan”
has the meaning assigned in Section 2.2(a)(ii) hereof.


 


“Term A Loan”
has the meaning assigned in Section 2.2(a)(i) hereof.


 


“Term B Loan”
has the meaning assigned in Section 2.2(a)(ii) hereof.


 


“Trademarks”
means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.


 


1.2           Accounting
Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the terms “financial statements” shall include
the notes and schedules thereto. Without limiting the foregoing, if leases are to be reclassified and accounted for on a basis
inconsistent with that reflected in the financial statements of Borrower for the fiscal year ended December 31, 2015 due to a change
in GAAP that becomes effective after the Closing Date then, for the purposes of this Agreement, any Indebtedness of Borrower resulting
strictly due to such reclassification of such leases (and for no other reason) shall be deemed to be Permitted Indebtedness hereunder.


 


2.          Loan
and Terms Of Payment.


 


2.1           Credit
Extensions.


 


Borrower promises to pay
to the order of Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions
made by Bank to Borrower hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit Extensions at
rates in accordance with the terms hereof.


 


2.2           Term
Loan.


 


(a)          Availability.


 


(i)          Subject
to the terms and conditions of this Agreement, on the Closing Date, Bank shall make a term loan to Borrower in the amount of Five
Million Five Dollars ($5,000,000) (the “Term A Loan”). After repayment, the Term A Loan may not be re-borrowed.


 


(ii)         Subject
to the terms and conditions of this Agreement, during the Second Draw Period, Bank shall make a term loan to Borrower in the amount
of Five Million Dollars ($5,000,000) (the “Term B Loans”, and together with the Term A Loan, the “Term Loans”
and each individually, a “Term Loan”). After repayment, the Term B Loan may not be re-borrowed.


 


(b)          Repayment.
Borrower shall make monthly payments of interest only commencing on the first (1st) Payment Date following the Funding Date of
each Term Loan, and continuing on the Payment Date of each successive month thereafter through and including the Payment Date immediately
preceding the Amortization Date of such Term Loan. Borrower agrees to pay, on the Funding Date of each Term Loan, any initial partial
monthly interest payment otherwise due for the period between the Funding Date of such Term Loan and the first Payment Date thereof.
Commencing on the Amortization Date for the Term Loans, and continuing on the Payment Date of each month thereafter, Borrower shall
make equal monthly payments of principal, together with applicable interest, in arrears, as calculated by Bank (which calculations
shall be deemed correct absent manifest error) based upon: (1) the amount of the Term Loans, (2) the Effective Interest Rate, as
determined in Section 2.3(a), and (3) a repayment schedule equal to (A) thirty-six (36) months, if the Term B Loans are not drawn,
and (B) thirty (30) months, if the Term B Loans are drawn. All unpaid principal and accrued and unpaid interest is due and payable
in full on the Maturity Date with respect to the Term Loans. For the avoidance of doubt, if Borrower pays the Term Loan in full
on the Maturity Date in accordance with this Agreement, no prepayment fee will apply. The Term Loans may only be prepaid in accordance
with Sections 2.2(c) and 2.2(d).


 




    	 	9	 



     


    

 


(c)          Mandatory
Prepayments. If the Term Loans are accelerated following the occurrence of an Event of Default, Borrower shall immediately
pay to Bank, an amount equal to the sum of: (i) all outstanding principal of the Term Loans plus accrued and unpaid interest
thereon through the prepayment date, (ii) the Final Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations
that are due and payable, including Bank’s Expenses and interest at the Default Rate with respect to any past due amounts.
Notwithstanding (but without duplication with) the foregoing, on the Maturity Date, if the Final Payment has not previously been
paid in full in connection with the prepayment of the Term Loans in full, Borrower shall pay Bank the Final Payment in respect
of the Term Loan(s).


 


(d)          Permitted
Prepayment of Term Loans. Borrower shall have the option to prepay, all but not less than all, of Term A Loan and/or Term B
Loan advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay
such Term Loan at least ten (10) days prior to such prepayment, and (ii) pays to the Bank on the date of such prepayment an
amount equal to the sum of (A) all outstanding principal of such Term Loan being prepaid plus accrued and unpaid interest
thereon through the prepayment date, (B) the Final Payment, (C) the Prepayment Fee, plus (D) all other Obligations that are due
and payable, including Bank Expenses and interest at the Default Rate with respect to any past due amounts.


 


2.3          Interest
Rate, Payments, and Calculations.


 


(a)          Interest
Rate. Except as set forth in Section 2.3(b) below, the Term Loan shall bear interest, on the outstanding Daily Balance thereof,
at a floating per annum rate equal to the Effective Interest Rate.


 


(b)          Late
Fee; Default Rate. If any payment is not made within ten (10) days after the date such payment is due, Borrower shall pay Bank
a late fee equal to the lesser of (i) five percent (5%) of the amount of such unpaid amount or (ii) the maximum amount
permitted to be charged under applicable law, not in any case to be less than Twenty-Five Dollars ($25.00). All Obligations shall
bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5) percentage
points above the interest rate applicable immediately prior to the occurrence of the Event of Default.


 


(c)          Payments.
Interest hereunder shall be due and payable on the first calendar day of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts (including
but not limited to the Designated Deposit Account), in which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest
shall thereafter accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings,
duties, impositions or other charges, to the end that Bank will receive the entire amount of any Obligations payable hereunder,
regardless of source of payment.


 


(d)          Computation.
In the event the Index Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased
or decreased, as set forth in the definition of “Effective Interest Rate.” All interest chargeable under the Loan Documents
shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed.


 




    	 	10	 



     


    

 


2.4          Crediting
Payments. Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the occurrence of an Event of Default, unless such Event
of Default is either waived by the Bank in its sole discretion or cured to the Bank’s satisfaction and Bank upon such Event
of Default having been cured decides in its sole discretion not to further exercises its remedies hereunder in connection therewith,
the receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied to conditionally
reduce Obligations, but shall not be considered a payment on account unless such payment is of immediately available federal funds
or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the
contrary contained herein, any wire transfer or payment received by Bank after 1:00 p.m. Pacific time shall be deemed to have been
received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the
Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall
instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the
period of such extension.


 


2.5          Fees.
Borrower shall pay to Bank the following:


 


(a)          Diligence
Deposit. The Bank acknowledges prior receipt of diligence deposit from Borrower in the amount of Twenty-Five Thousand Dollars
($25,000) on or about May 27, 2016 and agrees that such deposit will be applied in the following order: towards payment of the
Bank Expenses payable on the Closing Date in accordance with Section 2.5(f) and, to the extent that any diligence deposit is remaining
thereafter, towards payment of the closing fee in accordance with Section 2.5(b).


 


(b)          Closing
Fee. A fully earned and non-refundable closing fee equal to Fifty Thousand Dollars ($50,000) shall be due and payable on the
Closing Date;


 


(c)          Final
Payment. The Final Payment, when due hereunder;


 


(d)          Prepayment
Fee. The Prepayment Fee, when due hereunder;


 


(e)          Success
Fee. The Success Fee (as defined in the Success Fee Letter), when due thereunder; and


 


(f)          Bank
Expenses. On the Closing Date, all Bank Expenses incurred through such date and, after the Closing Date, all Bank Expenses
as and when they are incurred by Bank.


 


2.6         Term.
This Agreement shall become effective on the date hereof and, subject to Section 13.7, shall continue in full force and effect
for so long as any Obligations under the Loan Documents (other than inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit
Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.
Notwithstanding termination, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations under the
Loan Documents (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination
of this Agreement) are outstanding. Furthermore, termination hereof shall not in any way affect the respective rights and obligations
of Borrower and Bank under the Success Fee Letter.


 


2.7         Secured
Promissory Notes. The Term Loans shall be evidenced by a Secured Promissory Note or Notes in the form attached as Exhibit D
hereto (each a “Secured Promissory Note”), and shall be repayable as set forth in this Agreement. Borrower irrevocably
authorizes the Bank to make or cause to be made, on or about the Funding Date of any Term Loan or at the time of receipt of any
payment of principal on such Secured Promissory Note, an appropriate notation on such Secured Promissory Note Record reflecting
the making of such Term Loan or (as the case may be) the receipt of such payment. The outstanding amount of each Term Loan set
forth on such Secured Promissory Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to
the Bank, but the failure to record, or any error in so recording, any such amount on such Secured Promissory Note Record shall
not limit or otherwise affect the obligations of Borrower under any Secured Promissory Note or any other Loan Document to make
payments of principal of or interest on any Secured Promissory Note when due. Upon receipt of an affidavit of an officer of the
Bank as to the loss, theft, destruction, or mutilation of any of its Secured Promissory Note, Borrower shall issue, in lieu
thereof, a replacement Secured Promissory Note in the same principal amount thereof and of like tenor.


 




    	 	11	 



     


    

 


3.          Conditions
of Loans.


 


3.1           Conditions
Precedent to Initial Credit Extension. The obligation of Bank to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance reasonably satisfactory to Bank, the following:


 


(a)          this
Agreement;


 


(b)          a
certificate of the Secretary of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this
Agreement;


 


(c)          UCC
National Form Financing Statement;


 


(d)          a
duly executed Success Fee Letter;


 


(e)          duly
executed original Secured Promissory Notes in favor of the Bank;


 


(f)           agreement
to provide insurance;


 


(g)          payment
of the fees and Bank Expenses then due specified in Section 2.5 hereof;


 


(h)          current
financial statements of Borrower;


 


(i)           [reserved];


 


(j)           completed
perfection certificate of Borrower (the “Perfection Certificate”);


 


(k)         a
landlord’s consent for each of Borrower’s leased locations;


 


(l)          a
bailee waiver for each location where Borrower maintains Collateral having a book value in excess of Two Hundred Fifty Thousand
Dollars ($250,000);


 


(m)        a
Disbursement Letter in the form of Exhibit B-1 attached hereto;


 


(n)          a
Loan Payment/Advance Request Form in the form of Exhibit B-2 attached hereto;


 


(o)          the
certificate(s) for the Shares of CytoSorbents Medical, Inc., together with Assignment(s) Separate from certificate(s), duly executed
in blank;


 


(p)          a
pledge agreement and other related documents regarding the pledge to the Bank of a perfected security interest in the Shares of
the German Sub; and


 


(q)          such
other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.


 


3.2         Conditions
Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension,
is further subject to the representations and warranties contained in Section 5 shall be true and correct in all material
respects on and as of the effective date of each Credit Extension as though made at and as of each such date (except for representations
and warranties that relate to a specific date, which shall be true and correct in all material respects as of such date), and no
Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension. The making
of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as
to the accuracy of the facts referred to in this Section 3.2. Furthermore, the making of each Credit Extension shall be subject
to the (i) delivery by Borrower to the Bank, to the extent not delivered at the Closing, of duly executed original Secured Promissory
Notes, in number, form and content acceptable to the Bank, with respect to such Credit Extension made by the Bank after the Closing
Date and (ii) in the event of Credit Extension of Term B Loans, the Required Reserves Test must be met on the Funding Date of the
Term B Loans and the Seventy Five Percent Test must be met on or before the Funding Date of the Term B Loans but no earlier than
ten (10) days prior to the Funding Date of the Term B Loans.


 




    	 	12	 



     


    

 


3.3           Procedures
for Borrowing. Whenever Borrower desires a Term Loan, Borrower will notify Bank no later than 3:00 p.m. Pacific time,
three (3) Business Days prior to the date the Term Loan is to be made. Each such notification shall be made (i) by telephone or
in-person followed by written confirmation from Borrower within twenty four (24) hours, (ii) by electronic mail or facsimile
transmission, or (iii) by delivering to Bank a Loan Payment/Advance Request Form in substantially the form of Exhibit B-2
hereto. Bank shall be entitled to rely on any notice given by a person who Bank reasonably believes to be a Responsible Officer
or a designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss suffered by Bank as a result
of such reliance. Bank will credit the amount of Term Loan made under this Section 3.3 to Borrower’s deposit account.


 


4.          Creation
of Security Interest.


 


4.1           Grant
of Security Interest. Borrower grants and pledges to Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance
by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Perfection Certificate, such
security interest constitutes a valid, first priority security interest in the presently existing Collateral, other than Permitted
Liens, and will constitute a valid, first priority security interest in Collateral, other than Permitted Liens, acquired after
the date hereof.


 


4.2           Delivery
of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank, at the request of Bank,
all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form satisfactory
to Bank, to perfect and continue the perfection of Bank’s security interests in the Collateral and in order to fully consummate
all of the transactions contemplated under the Loan Documents. Borrower from time to time may deposit with Bank specific time deposit
accounts to secure specific Obligations. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts
thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the
Obligations are outstanding.


 


4.3           Right
to Inspect. Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred
and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, and appraise the Collateral
in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.


 


4.4           Pledge
of Collateral. Borrower hereby pledges, assigns and grants to the Bank a security interest in all the Shares, together with
all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for
securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for
the performance of the Obligations. On the Closing Date, or, to the extent not certificated as of the Closing Date, within fifteen
(15) days of the certification of any Shares, the certificate or certificates for the Shares will be delivered to the Bank, accompanied
by an instrument of assignment duly executed in blank by Borrower. To the extent required by the terms and conditions governing
the Shares, Borrower shall cause the books of each entity whose Shares are part of the Collateral and any transfer agent to reflect
the pledge of the Shares. Upon the occurrence and during the continuance of an Event of Default hereunder and continuing only until
all of the Obligations outstanding under the Loan Documents have been fully repaid, the Bank may effect the transfer of any securities
included in the Collateral (including but not limited to the Shares) into the name of the Bank and cause new (as applicable) certificates
representing such securities to be issued in the name of Bank or its transferee. Borrower will execute and deliver such documents,
and take or cause to be taken such actions, as the Bank may reasonably request to perfect or continue the perfection of the Bank’s
security interest in the Shares. Unless an Event of Default shall have occurred and be continuing, Borrower shall be entitled to
exercise any voting rights with respect to the Shares and to give consents, waivers and ratifications in respect thereof, provided
that no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the
terms of this Agreement or which would constitute or create any violation of any of such terms. All such rights to vote and give
consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default.


 




    	 	13	 



     


    

 


5.          Representations
and Warranties.


 


Borrower represents and
warrants as follows:


 


5.1           Due
Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of its jurisdiction
of incorporation and qualified and licensed to do business in any state in which the conduct of its business or its ownership of
property requires that it be so qualified.


 


5.2           Due
Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers,
have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s
Articles of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement to which Borrower
is a party or by which Borrower is bound. Borrower is not in default under any material agreement to which it is a party or by
which it is bound.


 


5.3           No
Prior Encumbrances. Borrower has good and marketable title to its material property, free and clear of Liens, except for Permitted
Liens.


 


5.4           Merchantable
Inventory. All Inventory is in all material respects of good and marketable quality, free from all material defects, except
for Inventory for which adequate reserves have been made.


 


5.5           Intellectual
Property. Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted by Borrower to
its customers in the ordinary course of business. Except for the Purolite Settlement Agreement, each of the Patents is valid and
enforceable, and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim
has been made that any part of the material Intellectual Property violates the rights of any third party. Except as set forth in
the Perfection Certificate, Borrower is not a party to, or bound by, any agreement that restricts the grant by Borrower of a security
interest in Borrower’s rights under such agreement.


 


5.6           Name;
Location of Chief Executive Office. Except as disclosed in the Perfection Certificate or as disclosed by Borrower under Section
7.2, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive
office of Borrower is located at the address indicated in Section 10 hereof or such other address as provided by Borrower
under Section 7.2. All Borrower’s Inventory and Equipment is located only at the location set forth in Section 10 hereof
or such other address as provided by Borrower under Section 7.2.


 


5.7           Litigation.
Except as set forth in the Perfection Certificate, there are no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could reasonably be expected to have a Material Adverse
Effect.


 


5.8           No
Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower
and any Subsidiary that Bank has received from Borrower fairly present in all material respects Borrower’s financial condition
as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There
has not been a material adverse change in the consolidated or the consolidating financial condition of Borrower since the date
of the most recent of such financial statements submitted to Bank.


 


5.9           Solvency,
Payment of Debts. Borrower is solvent and able to pay its debts (including trade debts) as they mature.


 




    	 	14	 



     


    

 


5.10         Regulatory
Compliance. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA, and no event has occurred resulting from Borrower’s failure to comply with ERISA that could reasonably
be expected to result in Borrower’s incurring any material liability. Borrower is not an “investment company”
or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of
1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not violated
any statutes, laws, ordinances or rules applicable to it, violation of which could reasonably be expected to have a Material Adverse
Effect.


 


None of Borrower, any of
its Subsidiaries, or any of Borrower’s or its Subsidiaries’ Affiliates or any of their respective agents acting or
benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism
Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding
or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrower,
any of its Subsidiaries, or to the knowledge of Borrower and any of their Affiliates or agents, acting or benefiting in any capacity
in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving
any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages
in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar
executive order or other Anti-Terrorism Law.


 


5.11         Environmental
Condition. Except as disclosed in the Perfection Certificate, none of Borrower’s or any Subsidiary’s properties
or assets have ever been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance
other than in accordance with applicable law; to the best of Borrower’s knowledge, none of Borrower’s properties or
assets have ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste
or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien arising
under any environmental protection statute has attached to any revenues or to any real or personal property owned by Borrower or
any Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal, state or other governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment.


 


5.12         Taxes.
Borrower and each Subsidiary have filed or caused to be filed all material tax returns required to be filed, and have paid, or
have made adequate provision for the payment of, all taxes reflected therein, except to the extent such taxes are being contested
in accordance with the following sentence (for the purposes hereof, any and all taxes in the aggregate amount of One Hundred Thousand
Dollars ($100,000) or more shall be deemed to be material, individually and collectively). Borrower and each of its Subsidiaries,
may defer payment of any contested taxes, provided that Borrower or such Subsidiary, (a) in good faith contests its obligation
to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (b) notifies Bank in writing
of the commencement of, and any material development in, the proceedings, and (c) posts bonds or takes any other steps required
to prevent the applicable ggovernmental aauthority levying such contested taxes from obtaining a Lien upon any of the Collateral
that is other than a Permitted Lien.


 


5.13         Subsidiaries.
Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments
and the Shares of its Subsidiaries identified on the Perfection Certificate on the Closing Date.


 


5.14         Government
Consents. Borrower and each Subsidiary have obtained all material consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s
business as currently conducted.


 




    	 	15	 



     


    

 


5.15         Accounts.
Other than as set forth on the Perfection Certificate, none of Borrower’s nor any Subsidiary’s Collateral Accounts
(other than the German Sub’s and Swiss Sub’s Collateral Accounts maintained outside the United States and otherwise
disclosed to Borrower) is maintained or invested with a Person other than Bank.


 


5.16         Use
of Proceeds. Borrower shall use the proceeds of the Term Loan solely as working capital and to fund its general business requirements
in accordance with the provisions of this Agreement, and not for personal, family, household or agricultural purposes.


 


5.17         Full
Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished
to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements
contained in such certificates or statements not misleading in light of the circumstances under which they were made, it being
recognized by Bank that the projections and forecasts have been provided by Borrower in good faith and based upon reasonable assumptions
and are not to be viewed as representations, warranties, statements or facts, and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or forecasted results; provided, however, nothing herein
is meant to affect, nor shall it affect, any of Borrower’s obligations and covenants hereunder, including without limitation
the financial covenant set forth in Section 6.13, or any other provisions of this Agreement that may be contingent upon the achievement
of certain financial results by Borrower.


 


5.18         Shares.
Borrower has full power and authority to create a first lien on the Shares and no disability or contractual obligation exists that
would prohibit Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s knowledge, there are no subscriptions,
warrants, rights of first refusal or other restrictions on transfer relative to, or options exercisable with respect to the Shares.
The Shares have been and will be duly authorized and validly issued, and are fully paid and non-assessable. To Borrower’s
knowledge, the Shares are not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding,
and Borrower knows of no reasonable grounds for the institution of any such proceedings.


 


6.          Affirmative
Covenants.


 


Borrower shall do all of
the following:


 


6.1           Good
Standing. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in which it is required under applicable law, in each case where
the loss of which could reasonably be expected to have a Material Adverse Effect. Borrower shall maintain, and shall cause each
of its Subsidiaries to maintain, in force all licenses, approvals and agreements, in each case where the loss of which could reasonably
be expected to have a Material Adverse Effect.


 


6.2           Government
Compliance. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes,
laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected
to have a Material Adverse Effect.


 


6.3           Financial
Statements, Reports, Certificates. Borrower shall deliver the following to Bank: (a) as soon as available, but in any
event within thirty (30) days after the end of each calendar month, a company prepared consolidated balance sheet, income statement
and, for each calendar month that is the last month of a fiscal quarter, cash flow statement, covering Borrower’s consolidated
operations during such period (except that the cash flow statement shall cover the entire applicable fiscal quarter), prepared
in accordance with GAAP, consistently applied, in a form acceptable to Bank and certified by a Responsible Officer; (b) as
soon as available, but in any event within ninety (90) days after the end of Borrower’s fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an unqualified opinion on
such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (c) copies of all statements,
reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt
and, if applicable, within five (5) days of such filings, all reports on Forms 10-K and 10-Q filed with the Securities and
Exchange Commission; (d) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened in writing
against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary
of One Hundred Thousand Dollars ($100,000) or more; (e) as soon as available, but in any event no later than the earlier to
occur of thirty (30) days following the beginning of each fiscal year or the date of approval by Borrower’s board of directors,
an annual operating budget and financial projections (including income statements, balance sheets and cash flow statements) for
such fiscal year, presented in a quarterly format (provided, however, the projected revenues must be set forth for each month of
such fiscal year), approved by Borrower’s board of directors, and in form and substance reasonably acceptable to Bank; and
(f) such budgets, sales projections, operating plans or other financial information as Bank may reasonably request from time
to time.


 




    	 	16	 



     


    

 


Borrower shall deliver
to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit C hereto.


 


Bank shall have a right
from time to time hereafter to audit Borrower’s Accounts and appraise Collateral at Borrower’s expense, provided that
such audits will be conducted no more often than every six (6) months unless an Event of Default has occurred and is continuing.


 


6.4           Inventory;
Returns. Borrower shall keep all Inventory in good and marketable condition, free from all material defects, except for Inventory
for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be
on the same basis and in accordance with the usual customary practices of Borrower, as they exist at the time of the execution
and delivery of this Agreement. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims,
where the return, recovery, dispute or claim involves more than Two Hundred Fifty Thousand Dollars ($250,000).


 


6.5           Taxes.
Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of all material federal, state,
and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate
certificates attesting to the payment or deposit thereof; and Borrower will make, and will cause each Subsidiary to make, timely
payment or deposit of all material tax payments and withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request,
furnish Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits; provided
that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower.


 


6.6         Insurance.


 


(a)          Borrower,
at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards
and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations
where Borrower’s business is conducted on the date hereof. Borrower shall also maintain insurance relating to Borrower’s
business, ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower’s.


 


(b)          All
such policies of insurance shall be in such form, with such companies, and in such amounts as are reasonably satisfactory to Bank.
All such policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank,
showing Bank as an additional loss payee thereof, and all liability insurance policies shall show the Bank as an additional insured
and all such insurance policies shall specify that the insurer must give at least twenty (20) days’ notice to Bank before
canceling its policy for any reason. Upon Bank’s request, Borrower shall deliver to Bank certified copies of such policies
of insurance and evidence of the payments of all premiums therefor. All proceeds payable under any such policy shall, at the option
of Bank, be payable to Bank to be applied on account of the Obligations to amounts due; provided that, notwithstanding the foregoing,
so long as no Event of Default has occurred and is continuing, Borrower shall be permitted to reinvest up to $500,000 of such proceeds
in any fiscal year into its business within 180 days of receipt thereof.


 




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6.7          Accounts.
Borrower shall (i) maintain and shall cause each of its Subsidiaries to maintain its primary depository, operating, and investment
accounts with Bank (including, without limitation, all depository, operating, and investment accounts maintained in the United
States) and (ii) endeavor to utilize and shall cause each of its Subsidiaries to endeavor to utilize Bank’s International
Banking Division for any international banking services required by Borrower, including, but not limited to, foreign currency wires,
hedges and swaps. Notwithstanding the foregoing, Borrower may continue to maintain its account (i) with Chase Bank in an amount
not to exceed Fifty Thousand Dollars ($50,000) at any time and (ii) with Merrill Lynch (as set forth on the Perfection Certificate
on the date hereof) in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) at any time until Borrower’s
certificate of deposit associated with such account matures on August 10, 2016; provided, however, promptly after such certificate
of deposit with Merrill Lynch matures, Borrower must provide evidence of closure of such Merrill Lynch account to Bank, which evidence
must be reasonably acceptable to the Bank and transfer all funds therein to an account maintained with Bank. Notwithstanding anything
herein to the contrary (including any provisions of Section 7.7), for so long as the Collateral Accounts maintained with Chase
Bank and Merrill Lynch (each as described in this Section 6.7) are maintained in accordance with the provision of this Section
6.7, no control agreements shall be required by the Bank with respect thereto.


 


6.8          Intellectual
Property Rights. Borrower and each of its Subsidiaries shall: (a) use commercially reasonable efforts to protect, defend
and maintain the validity and enforceability of its Intellectual Property that is material to Borrower’s business; (b) promptly
advise Bank in writing of infringement by a third party of its Intellectual Property; (c) on a quarterly basis, advise Bank of
any material changes to the composition of Intellectual Property; and (d) not allow any Intellectual Property material to
Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s prior written consent.


 


6.9          Landlord
Waivers; Bailee Waivers. In the event that Borrower or any of its Subsidiaries, after the Closing Date, intends to add any
new offices or business locations, including warehouses, or otherwise store any portion of the Collateral with, or deliver any
portion of the Collateral to, a bailee, in each case pursuant to Section 7.2, then Borrower or such Subsidiary will first
notify Bank and, in the event that the Collateral at any new location is valued in excess of Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate or includes any of the books and records of Borrower or any of its Subsidiaries, Borrower shall obtain
from such bailee or landlord, as applicable, a bailee waiver or landlord waiver, as applicable, in form and substance reasonably
satisfactory to Bank within thirty (30) days from the addition of any new offices or business locations, or any such storage with
or delivery to any such bailee, as the case may be; provided, however, no waiver shall be required with respect to a new office,
business location or bailee of a Foreign Subsidiary that is neither a party hereto nor a guarantor of the Obligations.


 


6.10        Creation/Acquisition
of Subsidiaries. In the event Borrower, or any of its Subsidiaries creates or acquires any Subsidiary, Borrower shall provide
prior written notice to Bank of the creation or acquisition of such new Subsidiary and take all such action as may be reasonably
required by Bank to cause each such Subsidiary to become a co-Borrower hereunder or to guarantee the Obligations of Borrower under
the Loan Documents and, in each case, grant a continuing pledge and security interest in and to the assets of such Subsidiary (as
described on Exhibit A hereto); and Borrower (or its Subsidiary, as applicable) shall grant and pledge to Bank a perfected
security interest in the all of the Shares of each newly created Subsidiary; provided, however, no Foreign Subsidiary will be required
to become a co-Borrower hereunder or to guarantee the Obligations of Borrower under the Loan Documents to the extent Borrower demonstrates
to the Bank’s reasonable satisfaction that such action creates a present and existing adverse tax consequence to Borrower
under the U.S. Internal Revenue Code. For the purposes of clarification, the German Sub will not be required become a co-Borrower
hereunder or to guarantee the Obligations of Borrower under the Loan Documents.


 


6.11        Litigation
Cooperation. Commencing on the Closing Date and continuing through the termination of this Agreement, make available to Bank,
without expense to Bank, Borrower and each of Borrower’s officers, employees and agents and Borrower’s Books, to the
extent that Bank may reasonably deem them necessary to prosecute or defend any third-party suit or proceeding instituted by or
against Bank with respect to any Collateral or relating to Borrower.


 




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6.12        Further
Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further
action as may reasonably be requested by Bank to effect the purposes of this Agreement.


 


6.13        Financial
Covenant. 


 


(a)          Following
the funding of the Term B Loans hereunder, the Borrower must satisfy the Seventy Five Percent Test each month, as determined by
the Bank on the date of the receipt of the monthly financial statements by the Bank in accordance with Section 6.3 hereof.


 


(b)          If,
after the Funding Date of the Term B Loans, the aggregate cash reserves of Borrower (held in accounts maintained with the Bank
or in such accounts as are subject to one or more account control agreements with the Bank in form and substance satisfactory to
Bank) for any given month, as determined by the Bank based on evidence reasonably acceptable to the Bank, exceed One Hundred Twenty
Five percent (125%) of the then outstanding aggregate outstanding principal amount of the Term Loans, Borrower shall not be required
to comply with the provisions of Section 6.13(a) for such month.


 


7.          Negative
Covenants.


 


Borrower will not do any
of the following:


 


7.1          Dispositions.
Convey, sell, lease, transfer or otherwise dispose of (collectively, a “Transfer”), or permit any of its Subsidiaries
to Transfer, all or any part of its business or property, other than: (i) Transfers of Inventory in the ordinary course of
business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (iii) intercompany Transfers between or among Borrower and co-Borrower or guarantor
of Obligations, in each case located in, formed or incorporated under the laws of, and primarily conducting its business in the
United States; (iv) Transfers of worn-out or obsolete Equipment and (v) making of royalty payments in accordance with the
terms of the Purolite Settlement Agreement and the Guillermina Vega Montiel Agreement.


 


7.2          Change
in Business; Change in Control or Executive Office. Engage in any business, or permit any of its Subsidiaries to engage in
any business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto); or cease to conduct business in the manner conducted by Borrower as of the Closing Date; or suffer or
permit a Change in Control; or without thirty (30) days prior written notification to Bank, relocate its chief executive office
or state of incorporation or change its legal name; or without Bank’s prior written consent, change the date on which its
fiscal year ends. Furthermore, Borrower shall not, without at least thirty (30) days’ prior written notice to Bank add any
new offices or business locations, including warehouses (unless such new offices or business locations contain less than Two Hundred
Fifty Thousand Dollars ($250,000) in assets or property of Borrower or any of its Subsidiaries).


 


7.3          Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property
of another Person.


 


7.4          Indebtedness.
Create, incur, assume or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness.


 


7.5          Encumbrances.
Create, incur, assume or suffer to exist any Lien with respect to any of its property (including without limitation, its Intellectual
Property) or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries
to do so, in each case, except for Permitted Liens, or agree with any Person other than Bank not to grant a security interest in,
or otherwise encumber, any of its property (including without limitation, its Intellectual Property), or permit any Subsidiary
to do so.


 




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7.6           Distributions.
Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital
stock, or permit any of its Subsidiaries to do so, except that Borrower may repurchase the stock of former employees pursuant to
stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase.


 


7.7           Investments.
Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments; or, maintain any Collateral Accounts with a Person other than Bank or permit any of its Subsidiaries
to do so (other than the Collateral Accounts maintained by the German Sub and the Swiss Sub outside the United States and otherwise
disclosed to the Bank) unless such Person has entered into an account control agreement with Bank in form and substance satisfactory
to Bank; or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from
paying dividends or otherwise distributing property to Borrower.


 


7.8           Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for (i) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, (ii) Permitted
Investments and Permitted Indebtedness to be made in or to Affiliates and (iii) sales of inventory from Borrower to German Sub
pursuant to standard transfer pricing arrangements and in the ordinary course of business.


 


7.9           Subordinated
Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except
in compliance with the terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated
Debt without Bank’s prior written consent.


 


7.10         Inventory
and Equipment. Store any Inventory or Equipment having a book value in excess of Two Hundred Fifty Thousand Dollars ($250,000)
with a bailee, warehouseman, or other third party unless the third party has been notified of Bank’s security interest and
Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank’s
benefit or (b) is in pledge possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Store
or maintain any Equipment or Inventory at a location other than the location set forth in Section 10 of this Agreement or as disclosed
under Section 7.2 hereof; provided, however, Borrower must at all times be in compliance with Section 6.9 hereof.


 


7.11         Compliance.
Become an “investment company” or be controlled by an “investment company,” within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending
credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to
occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation, which violation could reasonably
be expected to have a Material Adverse Effect, or permit any of its Subsidiaries to do any of the foregoing.


 


7.12         Compliance
with Anti-Terrorism Laws. Bank hereby notifies Borrower and each of its Subsidiaries that pursuant to the requirements of Anti-Terrorism
Laws, and Bank’s policies and practices, Bank is required to obtain, verify and record certain information and documentation
that identifies Borrower and each of its Subsidiaries and their principals, which information includes the name and address of
Borrower and each of its Subsidiaries and their principals and such other information that will allow Bank to identify such party
in accordance with Anti-Terrorism Laws. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries
permit any Affiliate to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists. Borrower and each of its Subsidiaries shall immediately notify Bank if Borrower or such Subsidiary
has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or (a) is convicted on,
(b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving
money laundering or predicate crimes to money laundering. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower
or any of its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct any business or engage in any transaction
or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods
or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to,
any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism
Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding,
or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.


 




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7.13        Cash
and Cash Equivalent Assets of German Sub and Swiss Sub. 


 


(a)          The
total cash and cash equivalent assets of the German Sub may not exceed Five Hundred Thousand Dollars ($500,000) at any given time
and any cash and cash equivalent assets in excess of such amount must be caused to be distributed to the Borrower.


 


(b)          The
total assets of the Swiss Sub may not exceed Two Hundred Thousand Dollars ($200,000) in value at any given time and any assets
in excess of such amount must be caused to be distributed to the German Sub within 90 days, where such assets shall be subject
to the provisions of Section 7.13(a).


 


8.          Events
of Default.


 


Any one or more of the
following events shall constitute an “Event of Default” by Borrower under this Agreement:


 


8.1           Payment
Default. If Borrower fails to pay, when due, any of the Obligations.


 


8.2           Covenant
Default.


 


(a)          If
Borrower fails to perform any obligation under Sections 6.3 (Financial Statements, Reports, Certificates), 6.5 (Taxes),
6.6 (Insurance), 6.7 (Accounts), 6.10 (Creation/Acquisition of Subsidiaries), 6.11 (Litigation Cooperation)
or 6.13 (Financial Covenant), or violates any of the covenants contained in Article 7 of this Agreement; or


 


(b)          If
Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under
such other term, provision, condition or covenant that can be cured, has failed to cure such default within fifteen (15) days after
Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot
by its nature be cured within the fifteen (15) day period or cannot after diligent attempts by Borrower be cured within such fifteen
(15) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable
period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.


 


8.3           Material
Adverse Effect. If there occurs a Material Adverse Effect or there occurs any circumstance or circumstances that could reasonably
be expected to have a Material Adverse Effect.


 


8.4           Attachment.
If any portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within fifteen (15) days, or if Borrower is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment
or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy,
or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within
fifteen (15) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default
where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that
no Credit Extensions will be required to be made during such cure period).


 




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8.5           Insolvency.
If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within thirty (30) days (provided that no Credit Extensions will be made prior
to the dismissal of such Insolvency Proceeding).


 


8.6           Other
Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party or by which it
is bound resulting in a right by a third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness
in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or which could reasonably be expected to have a Material
Adverse Effect.


 


8.7           Judgments.
If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty
Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of fifteen
(15) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment).


 


8.8           Misrepresentations.
If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter
into this Agreement or any other Loan Document.


 


8.9           Subordinated
Debt. A default or breach occurs under any agreement between Borrower or any of its Subsidiaries and any creditor of Borrower
or any of its Subsidiaries that signed a subordination, intercreditor, or other similar agreement with Bank, or any creditor that
has signed such an agreement with Bank breaches any terms of such agreement.


 


8.10         Governmental
Approvals. Any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any governmental authority shall have been revoked,
rescinded, suspended, modified in an adverse manner, or not renewed in the ordinary course for a full term and such revocation,
rescission, suspension, modification or non-renewal has resulted in or could reasonably be expected to result in a Material Adverse
Effect.


 


9.          Bank’s
Rights and Remedies.


 


9.1           Rights
and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice
of its election and without demand (except as required by law), do any one or more of the following, all of which are authorized
by Borrower:


 


(a)          Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately
due and payable without any action by Bank);


 


(b)          Cease
advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;


 


(c)          Settle
or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;


 


(d)          Make
such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower
agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower
authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears
to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any
of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;


 




    	 	22	 



     


    

 


(e)          Set
off and apply to the Obligations when due (after taking into account the occurrence of such Event of Default) any and all (i) balances
and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of Borrower
held by Bank;


 


(f)          Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein)
the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to
use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1,
Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;


 


(g)          Dispose
of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including
Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate;


 


(h)          Bank
may credit bid and purchase at any public sale; and


 


(i)          Any
deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.


 


9.2           Power
of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a)
send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign
Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments
of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust
all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g)
to file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the
Collateral. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations outstanding under the Loan Documents have been fully
repaid and performed and Bank’s obligation to provide Credit Extensions hereunder is terminated.


 


9.3           Accounts
Collection. At any time after the occurrence of an Event of Default unless cured to the satisfaction of (or waived by) Bank,
Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such
Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee,
and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements
for deposit.


 


9.4           Bank
Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make
payment of the same or any part thereof; (b) set up such reserves under a loan facility in Section 2.1 as Bank deems necessary
to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed
in Section 6.6 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so
paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute
an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.


 




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9.5           Bank’s
Liability for Collateral. So long as Bank complies with reasonable banking practices, Bank shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising
in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of loss, damage or destruction of the Collateral
shall be borne by Borrower.


 


9.6           Remedies
Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise
by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part
shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by
Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific
instance and for the specific purpose for which it was given.


 


9.7           Demand;
Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments,
chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable.


 


10.         Notices.


 


All notices, consents,
requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing
and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid;
(b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed
to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change
its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with
the terms of this Section 10.


 


	If to Borrower:	CYTOSORBENTS CORPORATION
	 	7 Deer Park Drive
	 	Suite K
	 	Monmouth Junction, NJ  94010
	 	Attn: Kathleen P. Bloch, Chief Financial Officer
	 	FAX:  (732) 329-8650
	 	EMAIL:  kbloch@cytosorbents.com
	 	 
	If to Bank:	Bridge Bank, a division of Western Alliance Bank
	 	12220 El Camino Real, Suite 100
	 	San Diego, CA 92130
	 	Attn:  Bill Wickline
	 	EMAIL:  bill.wickline@bridgebank.com


 


The parties hereto may
change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.


 


11.         CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.


 


This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts
of law. Each of Borrower and Bank hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County
of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES
THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS
THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.


 




    	 	24	 



     


    

 


12.         JUDICIAL
REFERENCE PROVISION.


 


12.1         In
the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to proceed under this Judicial Reference
Provision.


 


12.2         With
the exception of the items specified in Section 12.3, below, any controversy, dispute or claim (each, a “Claim”)
between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned
parties (collectively in this Section, the “Loan Documents”), will be resolved by a reference proceeding
in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”),
or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the
Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding
will be in the state or federal court in the county or district where the real property involved in the action, if any, is located
or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).


 


12.3         The
matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real
or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver
and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession,
temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise
or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction
any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the
right of any party to a reference pursuant to this reference provision as provided herein.


 


12.4         The
referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within
ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the
Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte
or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted. Pursuant to CCP
§ 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his
or her representative).


 


12.5         The
parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested,
subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting
conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact
within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20)
days after the matter has been submitted for decision.


 


12.6         The
referee will have power to expand or limit the amount and duration of discovery. The referee may set or extend discovery deadlines
or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise
ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions
may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15)
days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee
whose decision shall be final and binding.


 




    	 	25	 



     


    

 


12.7         Except
as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course
of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without
a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee,
and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to
arrange for and pay the court reporter. Subject to the referee’s power to award costs to the prevailing party, the parties
will equally share the cost of the referee and the court reporter at trial.


 


12.8         The
referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California.
The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding.
The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties
and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment
or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims
of the parties that are the subject of the reference. Pursuant to CCP § 644, such decision shall be entered by the Court as
a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding
and conclusive. The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order
entered by the referee. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.


 


12.9         If
the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute
between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to discovery set forth above shall apply to
any such arbitration proceeding.


 


12.10         THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED
BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN
CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS.


 


13.         General
Provisions.


 


13.1         Successors
and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s
prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without
the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest
in, Bank’s obligations, rights and benefits hereunder; provided, however, so long as no Event of Default has occurred and
is continuing, Bank may not transfer its obligations, rights or benefits hereunder (other than in connection with (x) assignments
by Bank due to a forced divestiture at the request of any regulatory agency; or (y) upon the occurrence of a default, event of
default or similar occurrence with respect to a Bank’s own financing or securitization transactions), without Borrower’s
consent, to any Person which is an Affiliate or Subsidiary of Borrower, a direct competitor of Borrower or a vulture hedge fund,
each as determined by the Bank in its reasonable discretion.


 


13.2         Indemnification.
Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this
Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way
arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise
(including without limitation reasonable attorneys’ fees and expenses), except for losses caused by Bank’s gross negligence
or willful misconduct.


 




    	 	26	 



     


    

 


13.3         Time
of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.


 


13.4         Severability
of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.


 


13.5         Amendments
in Writing, Integration. Neither this Agreement nor the Loan Documents can be amended or terminated orally. All prior agreements,
understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of
this Agreement and the Loan Documents, if any, are merged into this Agreement and the Loan Documents.


 


13.6         Counterparts.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one
and the same Agreement.


 


13.7         Survival.
All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations
under the Loan Documents remain outstanding or Bank has any obligation to make Credit Extensions to Borrower. The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 13.2
shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank
have run. Furthermore, as set forth above, termination hereof shall not in any way affect the respective rights and obligations
of Borrower and Bank under the Success Fee Letter.


 


13.8         Confidentiality.
In handling any confidential information Bank and all employees and agents of Bank, including but not limited to accountants, shall
exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure
of such information may be made (i) to the subsidiaries or affiliates of Bank in connection with their present or prospective
business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Loans, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection
with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement
of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public
domain or in the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank through no fault of Bank; or (b) is disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.


 


13.9         Patriot
Act Notice.  Bank notifies Borrower that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56
(signed into law on October 26, 2001) (the “ Patriot Act “), it is required to obtain, verify and record information
that identifies Borrower, which information includes names and addresses and other information that will allow Bank to identify
the Borrower in accordance with the Patriot Act.


 


13.10         Short
Selling Transactions. Until the later of (i) repayment of all Term Loans hereunder by Borrower and (ii) termination of the
Success Fee Letter, the Bank shall not itself engage in, or direct any third party to engage in on the Bank’s behalf, any
transaction whereby the Bank may benefit from a decline in the Borrower’s stock price.


 




    	 	27	 



     


    

 


13.11         Borrower
Liability. Either Borrower may, acting singly, request Credit Extensions hereunder. Each Borrower hereby appoints the other
as agent for the other for all purposes hereunder, including with respect to requesting Credit Extensions hereunder. Each Borrower
hereunder shall be jointly and severally obligated to repay all Credit Extensions made hereunder, regardless of which Borrower
actually receives said Credit Extension, as if each Borrower hereunder directly received all Credit Extensions. Each Borrower waives
(a) any suretyship defenses available to it under the Code or any other applicable law, including, without limitation, the
benefit of California Civil Code Section 2815 permitting revocation as to future transactions and the benefit of California
Civil Code Sections 1432, 2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850, and 2899 and 3433, and (b) any right to require
Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue
any other remedy. Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including
the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability. Notwithstanding any
other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law
or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily
liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement
or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result
of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise. Any agreement providing
for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void. If any payment
is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Bank and such payment
shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.


 


14.         NOTICE
OF FINAL AGREEMENT.


 


BY SIGNING
THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES,
(B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.


 


[Balance of Page Intentionally
Left Blank]


 




    	 	28	 



     


    

 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first above written.


 


	 	CytoSorbents Corporation, a Delaware corporation
	 	 
	 	By:	/s/ Dr. Phillip P. Chan
	 	 
	 	Title: President and Chief Executive Officer
	 	 
	 	CytoSorbents Medical, Inc., a Delaware corporation
	 	 
	 	By:	/s/ Dr. Phillip P. Chan
	 	 
	 	Title: President and Chief Executive Officer
	 	 
	 	Western Alliance Bank, an Arizona corporation
	 	 
	 	By:	/s/ Lindsay Schwallie
	 	 
	 	Title: Vice President of Portfolio Management


 





Signature Page to Loan and Security Agreement




 




     


     


    

 


EXHIBIT A


 


	DEBTOR:	CYTOSORBENTS CORPORATION, a Delaware corporation
	 	 
	 	CYTOSORBENTS MEDICAL, INC., a Delaware corporation
	 	 
	SECURED PARTY:	WESTERN ALLIANCE BANK, an Arizona corporation


 


COLLATERAL DESCRIPTION
ATTACHMENT

TO LOAN AND SECURITY AGREEMENT


 


All personal property of
Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created
or acquired, and wherever located, including, but not limited to:


 


(a)         all accounts (including
health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including payment
intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods
held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property
(including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records
with respect to any of the foregoing, and the computers and equipment containing said books and records;


 


(b)         any and all cash
proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California
Uniform Commercial Code, as amended or supplemented from time to time.


 


Notwithstanding the foregoing,
the Collateral does not include (i) any Intellectual Property; provided, however, the Collateral shall include all Accounts and
all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest
in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds
of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual
Property to the extent necessary to permit perfection of Bank’s security interest in such Accounts and such other property
of Borrower that are proceeds of the Intellectual Property; and (ii) more than 65% of the total combined voting power of all classes
of stock entitled to vote the shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Borrower demonstrates
to Bank’s reasonable satisfaction that a pledge of more than sixty five percent (65%) of the Shares of such Subsidiary creates
a present and existing adverse tax consequence to Borrower under the U.S. Internal Revenue Code; and (iii) any license or contract,
in each case if the granting of a Lien in such license or contract is prohibited by or would constitute a default under the agreement
governing such license or contract (but (A) only to the extent such prohibition is enforceable under applicable law and (B) other
than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-408 or 9-409 (or any other Section)
of Division 9 of the Code); provided that upon the termination, lapsing or expiration of any such prohibition, such license or
contract, as applicable, shall automatically be subject to the security interest granted in favor of Bank hereunder and become
part of the “Collateral.”


 


Pursuant to the terms of
a certain negative pledge arrangement with the Bank, Borrower has agreed not to encumber any of its Intellectual Property.


 




     


     


    

 


Exhibit B-1


 


DISBURSEMENT
LETTER



June __, 2016


 


The undersigned, being
the duly elected and acting                              
of CYTOSORBENTS CORPORATION, a Delaware corporation as a Borrower (as defined in the Loan Agreement), on behalf of itself
and all Borrowers, does hereby certify to WESTERN ALLIANCE BANK, an Arizona corporation (“Bank”), in
connection with that certain Loan and Security Agreement dated as of June __, 2016, by and among Borrower and Bank (the “Loan
Agreement”; with other capitalized terms used herein having the meanings ascribed thereto in the Loan Agreement) that:


 


1.         The
representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true
and correct in all material respects as of the date hereof.


 


2.         No
event or condition has occurred that would constitute an Event of Default under the Loan Agreement or any other Loan Document.


 


3.         Borrower
is in compliance with the covenants and requirements contained in Sections 5, 6 and 7 of the Loan Agreement.


 


4.         All
conditions referred to in Section 3 of the Loan Agreement to the making of the Loan to be made on or about the date hereof
have been satisfied or waived by Bank.


 


5.         No
Material Adverse Effect has occurred.


 


6.         The
undersigned is a Responsible Officer.


 


[Balance of Page
Intentionally Left Blank]


 




     


     


    

 


7.          The
proceeds of the Term Loan shall be disbursed as follows:


 


	Disbursement from Bank:	 	 	 	 
	Loan Amount	 	$	5,000,000.00	 
	Plus:	 	 	 	 
	--Deposit Received	 	$	25,000.00	 
	 	 	 	 	 
	Less:	 	 	 	 
	--Loan Fee	 	$	([_______]	)
	--Interim Interest	 	$	(_________	)
	--Bank’s Legal Fees	 	$	(_________	)*
	 	 	 	 	 
	TOTAL TERM LOAN NET PROCEEDS	 	$ 	_______________ 	 



 


8.          The
aggregate net proceeds of the Term Loans shall be transferred to the Designated Deposit Account as follows:


 


	Account Name:	CYTOSORBENTS CORPORATION.
	 	 
	Bank Name:	[                            ]
	 	 
	Bank Address:	[                            

                              ]
	 	 
	Account Number:	                                                                          
	 	 
	ABA Number:	[                            ]


  


[Balance
of Page Intentionally Left Blank]


 


* Legal fees and costs are
through the Closing Date. Post-closing legal fees and costs, payable after the Closing Date, to be invoiced and paid post-closing.


 




     


     


    

 


Dated as of the date first
set forth above.


 


	BORROWER:	 	 
	 	 	 
	CYTOSORBENTS CORPORATION,	 	 
	a Delaware corporation	 	 
	 	 	 
	By	 	 	 
	Name:	 	 	 
	Title:	 	 	 
	 	 	 
	CYTOSORBENTS MEDICAL, INC., a Delaware corporation	 	 
	 	 	 
	By:	 	 	 
	 	 	 	 
	Title:	 	 	 
	 	 	 
	BANK:	 	 
	 	 	 
	WESTERN ALLIANCE BANK,	 	 
	an Arizona corporation	 	 
	 	 	 
	By	 	 	 
	Name:	 	 	 
	Title:	 	 	 


 


[Signature Page to Disbursement Letter]


 




     


     


    

 


EXHIBIT B-2


 


Loan Payment/Advance
Request Form


 


To be submitted no later than 3:00 PM to be
considered for same day processing)


 


	To:	Western Alliance Bank, an Arizona corporation


 


	Fax:	[(408) 282-1681]


 


	Date:	 


 


	From:	 


Borrower's Name


 


	 	 


Authorized Signature


 


	 	 


Authorized Signer's Name (please print)


 


	 	 


Phone Number


 


	To Account #	 


 


Borrower hereby requests funding in the amount
of $ _______ in accordance with the Term Loan as defined in the Loan and Security Agreement dated _______________, 2016.


 


Borrower hereby authorizes the Bank to rely
on facsimile stamp signatures and treat them as authorized by Borrower for the purpose of requesting the above advance.


 


All representations and warranties of Borrower
stated in the Loan and Security Agreement are true, correct and complete in all material respects as of the date of this request;
provided that those representations and warranties expressly referring to another date shall be true, correct and complete
in all material respects as of such date.


 


Capitalized terms used herein
and not otherwise defined have the meanings set forth in the Loan and Security Agreement.


 




     


     


    

 


Exhibit C






Compliance Certificate


 


	TO:	WESTERN ALLIANCE BANK, an Arizona corporation
	 	 
	FROM:	______________________________________


 


The undersigned authorized
officer of CYTOSORBENTS CORPORATION hereby certifies, on behalf of itself and CYTOSORBENTS MEDICAL INC., that in accordance with
the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
is in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and correct in all material respects as of the date
hereof (except for representations and warranties that relate to a specific date, which shall be true and correct in all material
respects as of such date). Attached herewith are the required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied
from one period to the next except as explained in an accompanying letter or footnotes.


 


Please indicate compliance status by circling
Yes/No under “Complies” column.


 


	Reporting Covenant	 	Required	 	Complies
	 	 	 	 	 	 	 
	Annual financial statements (CPA Audited)	 	FYE within 90 days	 	Yes	 	No
	 	 	 	 	 	 	 
	Monthly financial statements and Compliance Certificate	 	Prior to each Credit Extension, and monthly within 30 days	 	Yes	 	No
	 	 	 	 	 	 	 
	10K and 10Q	 	Within 5 days of filing	 	Yes	 	No
	 	 	 	 	 	 	 
	Annual operating budget, sales projections and operating plans approved by board of directors	 	Annually no later than 30 days prior to the beginning of each fiscal year	 	Yes	 	No
	 	 	 	 	 	 	 
	Intellectual Property Report	 	Quarterly no later than 30 days after the end of each fiscal quarter	 	Yes	 	No
	 	 	 	 	 	 	 
	Deposit balances with Bank	 	$ ___________________	 	 	 	 
	Deposit balance outside Bank	 	$ ___________________	 	 	 	 


 


	Comments Regarding Exceptions: See Attached.		BANK USE ONLY
	 		 
	 		Received by:	 
	Sincerely,	 	 	AUTHORIZED SIGNER


 


	 		Date:	 
	 		 	 
	 		Verified:	 
	SIGNATURE	 	 	AUTHORIZED SIGNER





	 	 	Date:	 


TITLE


	 	 	Compliance Status	Yes	No
	 	 	 
	DATE	 	 


 




     


     


    

 


EXHIBIT D


 


SECURED PROMISSORY NOTE

(Term [A][B] Loan)


 


	$[_____]	Dated:  [_____]


 


FOR VALUE RECEIVED, the undersigned, CYTOSORBENTS
CORPORATION, a Delaware corporation with offices located at 7 Deer Park Drive, Suite K, Monmouth Junction, NJ 08852 and CYTOSORBENTS
MEDICAL, INC., a Delaware corporation with offices located at 7 Deer Park Drive, Suite K, Monmouth Junction, NJ 08852 (individually
and collectively, jointly and severally “Borrower”) HEREBY PROMISES TO PAY to the order of WESTERN ALLIANCE
BANK (“Bank”) the principal amount of FIVE MILLION DOLLARS ($5,000,000.00) or such lesser amount as shall equal
the outstanding principal balance of the Term [A][B] Loan made to Borrower by the Bank, plus interest on the aggregate unpaid
principal amount of such Term Loan, at the rates and in accordance with the terms of the Loan and Security Agreement dated
June [_], 2016 by and between Borrower and the Bank (as amended, restated, supplemented or otherwise modified from time to time,
the “Loan Agreement”). If not sooner paid, the entire principal amount and all accrued and unpaid interest hereunder
shall be due and payable on the Maturity Date as set forth in the Loan Agreement. Any capitalized term not otherwise defined herein
shall have the meaning attributed to such term in the Loan Agreement.


 


Principal, interest and
all other amounts due with respect to the Term [A][B] Loan, are payable in lawful money of the United States of America to the
Bank as set forth in the Loan Agreement and this Secured Promissory Note (this “Note”). The principal amount
of this Note and the interest rate applicable thereto, and all payments made with respect thereto, shall be recorded by the Bank
and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note.


 


The Loan Agreement, among
other things, (a) provides for the making of a secured Term [A][B] Loan by the Bank to Borrower, and (b) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated events.


 


This Note may not be prepaid
except as set forth in Section 2.2 (c) and Section 2.2(d) of the Loan Agreement.


 


This Note and the obligation
of Borrower to repay the unpaid principal amount of the Term [A][B] Loan, interest on the Term [A][B] Loan and all other amounts
due to the Bank under the Loan Agreement is secured under the Loan Agreement.


 


Presentment for payment,
demand, notice of protest and all other demands and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.


 


Borrower shall pay all
reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred by the Bank in
the enforcement or attempt to enforce any of Borrower’s obligations hereunder not performed when due.


 


This Note shall be governed
by, and construed and interpreted in accordance with, the internal laws of the State of California.


 


The ownership of an interest
in this Note shall be registered on a record of ownership maintained by the Bank or its agent. Notwithstanding anything else in
this Note to the contrary, the right to the principal of, and stated interest on, this Note may be transferred only if the transfer
is registered on such record of ownership and the transferee is identified as the owner of an interest in the obligation. Borrower
shall be entitled to treat the registered holder of this Note (as recorded on such record of ownership) as the owner in fact thereof
for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Note on the part of any
other person or entity.


 


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Blank]


 




     


     


    

 


IN WITNESS WHEREOF, Borrower has caused this
Note to be duly executed by one of its officers thereunto duly authorized on the date hereof.


 


	 	 	BORROWER:
	 	 	 
	 	 	CYTOSORBENTS CORPORATION
	 	 	 
	 	 	By	 
	 	 	Name:	 
	 	 	Title:	 


  


	 	 	BORROWER:
	 	 	 
	 	 	CYTOSORBENTS MEDICAL, INC.
	 	 	 
	 	 	By	 
	 	 	Name:	 
	 	 	Title:	 


 


Term [A][B] Loan Note


 




     


     


    

 


LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL


 


	
         

        Date
	 	
        Principal

        Amount
	 	Interest Rate	 	
        Scheduled

        Payment Amount
	 	Notation By