EMPLOYMENT
AGREEMENT

    


    


    THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this eighth day of
January 2009, by and between MedaSorb Technologies Corporation and its
wholly-owned subsidiary CytoSorbents Inc., (collectively, the “Company”), and
Phillip P. Chan (“Employee”).

    


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

    


    1. Employment and
Term

    


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

    


    1.2 Term. The term of
employment of Employee under this Agreement shall commence January 1, 2009 and
expiring on December 31, 2009 (the “Term”) subject to the provisions for early
termination set forth herein and subject to renewal based on approval by the
Board of Directors.

    


    2. Compensation. In
consideration of the services to be rendered hereunder, the Company
hereby agrees to pay Employee an initial annual base compensation of $216,351
payable in equal semimonthly installments in accordance with the usual practice
of the Company which base compensation shall be subject to semi-annual review
(but his compensation may not be reduced from his then current compensation) by
the Compensation Committee.

    


    As of the
date hereof, the Company agrees to grant Employee a 10-year option grant to
purchase 2,503,858 shares of common stock with an exercise price equal to the
daily volume weighted average closing price of the Common Stock for the five (5)
trading days immediately prior to the date hereof or $0.084 per share. (the
“Options”).  Fifty percent (50%) of the Options shall fully vest upon
the signing of this agreement. The remaining fifty percent (50%) of the Options,
shall vest at the discretion of the compensation committee based on criteria
including (but not limited to) success relative to (i) a timely completion of
the sepsis trial, (ii) raising capital for the company, (iii) partnering and
business development. In no event, however, shall the vesting of all of the
Options occur later than January 1, 2010. The Options shall adjust on the
same basis as all other Unit holders to account for any stock split, stock
dividend, combination or recapitalization.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. Benefits.

    


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

    


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

    


    3.3 Vacation. Employee
shall be entitled to a vacation (without deduction of salary or other
compensation) for the period as is in conformity with the Company’s policy
regarding vacations for management employees (but in no event less than three
weeks per year).

    


    3.4 Bonuses. Employee may
receive such discretionary bonuses as the Board of Directors, in its sole
discretion and from time to time, deem appropriate. Any future option grants
that the Board may award as a bonus will be in addition to the Options granted
in Section 2 above.

    


     Early Termination of
Employment

    


    4.1 Termination for Justifiable
Cause. In addition to termination pursuant to Section 1.2, the Company,
by written notice to Employee authorized by a majority of Directors other than
Employee, may terminate Employee’s employment for “justifiable cause”, which
shall mean any of the following events: (a) adjudication by a court of competent
jurisdiction that Employee has committed an act of fraud or dishonesty resulting
or intended to result, directly or indirectly, in personal enrichment at the
expense of the Company; (b) an indictment of a felony (other than a motor
vehicle related matter) involving moral turpitude; (c) repeated failure or
refusal by Employee to follow written policies and directions reasonably
established by the Board of Directors that go uncorrected for a period of thirty
(30) consecutive days after written notice has been provided to Employee; or (d)
persistent willful failure by Employee to fulfill his duties hereunder that goes
uncorrected for a period of thirty (30) consecutive days after written notice
has been provided Employee. In the event of 4.1 (c) and 4.1 (d), Employee will
be receive 15 calendar days of notice, after which his employment will be
terminated.

     

    
      
         

      

      
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    4.2 In
the event that the Board of Directors reasonably determines that the Employee
has committed a felony (other than a motor vehicle related matter), a material
act of fraud or other willful tort against the Company, it shall have the right
to suspend Employee from his position and duties hereunder without compensation
until such time as either the action is dropped or no longer pursued or a final
adjudication of Employee’s actions is made by a court (whether civil or criminal
as appropriate) of competent jurisdiction. Should said adjudication find
Employee innocent (or not at fault) or the action is dropped or no longer
pursued, the Company shall promptly pay him all unpaid back salary together with
interest on said amount (at the average consumer loan rate published by
Citibank, N.A., during the suspension period) and, if said final adjudication is
rendered or action dropped or no longer pursued within 12 months of Employee’s
suspension, he may, at his option, be reinstated to his position and this
Agreement continued as if never interrupted.

    


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

    


    4.4 Compensation Upon Early
Termination.

    


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

    


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

    


    (c) Upon
a Change of Control or upon Employee’s termination for “Good Reason” as defined
below, Employee shall then be entitled to receive, in lieu of salary and other
benefits under this Agreement, (i) an amount equal to 4 weeks of his
then-current base salary, payable in equal semi-monthly payments in arrears
without interest for a period of 1 month (ii)
continued coverage under all plans or programs of the types listed in Section
3.1 until the sooner of 6 months or one (1) month after Employee becomes
otherwise employed and eligible for other comparable coverage, and (iii) all
other benefits provided to Employee under this Agreement for a period of thirty
(30) days.

    


    
      
         

      

      
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    4.5 In
the event Employee is terminated for any reason other than for “justifiable
cause” as defined in Section 4.1 hereof, death, disability or voluntary
termination (unless the Company and Employee mutually agree to such voluntary
termination), then all unexercised options granted to Employee under the
Company’s option plan (including without limitation the Options granted pursuant
to Section 2(b) hereof) shall be deemed fully vested and exercisable immediately
upon Employee’s termination. The foregoing benefit shall be in addition to, and
not in lieu of, any similar benefit that may be contained in any other agreement
between the Company and Employee.

    


    4.6 (a)
Upon the occurrence of a Change of Control of the Company or Employee terminates
for Good Reason pursuant to Section 4.6(d)(i), all options granted to Employee
under the Company option plan and the Options granted to Employee pursuant to
Section 2(b) hereof shall be automatically fully vested and exercisable
immediately upon a Change of Control.

    


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

    


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

    


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

    


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

    


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

    


    
      
         

      

      
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    (ii) the
date on which a cash tender offer, exchange offer, sale of assets, merger,
consolidation other business combination resulting in the change in the Board of
Directors contemplated by Section 4.5 hereof is consummated.

    


    (d) For
purposes of this Agreement, the term “Good Reason” shall mean the assignment of
an Employee of any duties that are not in the same corporate capacity or area of
operations or are not of the same general nature as Employee’s duties with
Company without the Employee’s written consent.

    


    4.6 In
the event that Employee is terminated prior to the end of this Agreement, and
such early termination is not due to Section 4.1a or 4.1b above, then Employee
shall be entitled to four (4) weeks paid salary and all other compensation due
him during those four (4) weeks following notification of early termination as
severance.

    


    5. Confidentiality and
Non-Competition.

    


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

    


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

    


    
      
         

      

      
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    5.2 Non-Competition. In
the event of a termination of this Agreement for any reason, Employee shall be
prohibited for a period of one (1) year from the effective date of this
separation from engaging in any business in competition with that of the Company
in those states within the United States and those countries outside the United
States in which the Company at the time of Employee’s separation has conducted
business or where Company has written a reasonable plan to conduct business in
the next 12 months or directly or indirectly advising or consulting to or
otherwise performing services for or providing assistance to any person, firm,
corporation, or other entity engaged in such competitive business, provided,
however, nothing herein contained shall be construed as (a) preventing Employee
from investing his personal assets in any businesses which do not compete
directly or indirectly with the Company, provided such investment or investments
do not require any services on his part in the operation of the affairs of the
entity in which such investment is made and in which his participation is solely
that of an investor, (b) preventing Employee from purchasing securities in any
corporation whose securities are regularly traded, if such purchases shall not
result in his owning, at any time, beneficially more than 3% of equity
securities such corporation engaged in a business which is competitive, directly
or indirectly, to that of the Company, (c) preventing Employee from engaging in
any activities, if he receives the prior authorization of the Managers.
Notwithstanding anything herein to the contrary this Section 5.2 shall not be
effective in the event Employee has been discharged for any reason other than
“justifiable cause” or voluntarily leaves the employment of the Company with the
mutual agreement of the Company.

    


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

    


    
      
         

      

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

    


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

    


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

    


    9. Injunction.

    


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

    


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

    


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

    


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

    


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

    


    
      
         

      

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

    


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

    


    


    13. Effective Date. The
effective date of this Agreement shall be January 1, 2009.

    


    


    IN
WITNESS WHEREOF, the parties have executed this Agreement.

    


    


    MedaSorb
Technologies Corporations  EMPLOYEE

    And
Cytosorbents, Inc.

    


    

      
        
          
            
              	
                      By:

                    	 
      	 
      	 
      	 
      
	 
      	
                      Al
      Kraus – Chairman of the Board

                    	 
      	
                      Phillip
      P. Chan

                    	 
      


            

          

        

      

    

     

    
      
         

      

      
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