CTSO CytoSorbents Corporation

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): August 13, 2024

 

CYTOSORBENTS CORPORATION

(Exact name of registrant as specified in its charter) 

 

Delaware		001-36792		98-0373793
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

305 College Road East Princeton, New Jersey	08540
(Address of principal executive offices)	(Zip Code)

 

Registrant’s telephone number, including area code: (732) 329-8885

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	CTSO	The Nasdaq Stock Market LLC (Nasdaq Capital Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

¨

 

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On August 13, 2024, CytoSorbents Corporation (the “Company”) issued a press release announcing the appointment of Peter J. Mariani as the Company’s new Chief Financial Officer, effective as of August 14, 2024 (the “Effective Date”). In connection with such appointment, the Company also announced the retirement of Ms. Kathleen P. Bloch, the Company’s then serving Chief Financial Officer, and her transition into a consulting role with the Company.

 

In connection with his appointment as the Company’s chief financial officer, Mr. Mariani and the Company entered into an employment agreement (the “Employment Agreement”) with an initial term commencing on the Effective Date and ending on December 31, 2025. The Employment Agreement will automatically renew for additional terms of one year unless the Company or Mr. Mariani provide sixty days’ written notice of non-renewal.

 

In accordance with the terms of the Employment Agreement, Mr. Mariani will receive an annual base salary of $425,000 and will be eligible to receive an annual cash bonus equal to up to 45% of Mr. Mariani’s base salary, payable contingent upon the achievement of annual management milestones and upon Mr. Mariani’s general performance. Additionally, beginning in 2025, Mr. Mariani will also be eligible to receive annual equity awards at the discretion of the Board.

 

On the Effective Date the Company issued to Mr. Mariani the following inducement awards pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market Listing Rules, each pursuant to the terms of the Employment Agreement (the “Inducement Awards”):

 

Nonqualified Stock Options (Time- Based Vesting)	Nonqualified Stock Options (Performance- Based Vesting)	Restricted Stock Units	Change in Control Restricted Stock Units	Signing Restricted Stock Units
80,000 (1)	215,000 (2)	65,000 (3)	175,000 (4)	110,000 (5)

 

(1) Vest (i) with respect to 41,000 underlying shares of the Company’s common stock (the “Common Stock”) on the six-month anniversary of the Effective Date, and (ii) with respect to the remaining 39,000 underlying shares of Common Stock, in three equal installments of 13,000 shares each on the one-year, two-year and three-year anniversaries of the Effective Date, subject to Mr. Mariani’s continued service with the Company as of the applicable vesting date.

 

(2) Vest only upon the achievement of certain milestones pursuant to the terms of the Employment Agreement, but only to the extent such milestones are achieved by December 31, 2025 and subject to Mr. Mariani’s continued service with the Company as of the applicable vesting date.

 

(3) Vest in two equal installments on the one-year and two-year anniversaries of the Effective Date, subject to Mr. Mariani’s continued service with the Company as of the applicable vesting date.

 

(4) Vest only upon a Change in Control (as defined in the Employment Agreement), subject to Mr. Mariani’s continued service with the Company as of the applicable vesting date.

 

(5) Vest on the earlier of (i) a Change of Control (as defined in the Employment Agreement), and (ii) the four-year anniversary of the Effective Date, subject to Mr. Mariani’s continued service with the Company as of the applicable vesting date.

 

 

The Employment Agreement also provides for other customary benefits which include participation in employee benefit plans, paid time off and reimbursement of certain business-related expenses, including entertainment and travel expenses. In addition, the Employment Agreement provides for certain termination benefits in the event of termination without “Cause,” voluntary termination of employment for “Good Reason,” or in the event of a “Change of Control” of the Company, each as defined in the Employment Agreement.

 

Mr. Mariani, age 60, brings over 25 years of experience as a valued partner and strategic financial leader across several high growth medical device companies. Prior to joining the Company, Mr. Mariani served as CFO of Axogen, Inc (NASDAQ: AXGN), a medical technology company focused on peripheral nerve repair, from March 2016 to December 2023, most recently as its Executive Vice President & CFO from March 2021 to December 2023. At Axogen, Mr. Mariani was responsible for all finance and accounting functions, investor relations, information technology and security, and Global Quality. Prior to Axogen, Mr. Mariani was the Chief Financial Officer of Lensar, Inc., which at the time was privately-held and a global leader in next generation femtosecond laser technology for refractive cataract surgery. Prior to Lensar, he served as Chief Financial Officer at Hansen Medical, Inc., a publicly traded company that designed and manufactured medical robotics for positioning and control of catheter-based technologies. Accountant. Mr. Mariani earned a Bachelor of Science in accounting from Indiana University

 

There are no family relationships between Mr. Mariani and any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company within the meaning of Item 401(d) of Regulation S-K under the Securities Act (“Regulation S-K”). Since the beginning of the Company’s last fiscal year, the Company has not engaged in any transaction in which Mr. Mariani had a direct or indirect material interest within the meaning of Item 404(a) of Regulation S-K.

 

In connection with Ms. Bloch’s retirement, the Company and Ms. Bloch entered into a Consulting Agreement, dated as of August 13, 2024 (the “Consulting Agreement”), pursuant to which Ms. Bloch will serve as a consultant to the Company.

 

In accordance with the terms of the Consulting Agreement, Ms. Bloch will, among other things, assist in and enable an effective transition in connection with the appointment of Mr. Mariani as the Company’s new Chief Financial Officer. Unless terminated earlier by Ms. Bloch or by the Company upon fourteen days’ notice, the Consulting Agreement will remain in effect until December 31, 2025 and thereafter as mutually agreed between the Company and Ms. Bloch (the “Term”).

 

During the Term, Ms. Bloch will be compensated at an hourly rate of $335 per hour. Restricted stock units awarded to Ms. Bloch prior to the date of the Consulting Agreement will continue to vest as scheduled during the Term and Ms. Bloch will be entitled to customary reimbursement for out-of-pocket expenses incurred in connection with her services under the Consulting Agreement.

 

Additionally, Ms. Bloch is eligible to receive from the Company reimbursement for the monthly cost of continued coverage under the Company’s group health plan pursuant to COBRA during the 12-month period immediately following her retirement date; provided, that Ms. Bloch is eligible and timely elects COBRA continuation coverage.

 

The foregoing summaries of the Employment Agreement and the Consulting Agreement do not purport to be complete and are qualified in their entirety by reference to the copies of the Employment Agreement and the Consulting Agreement filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, respectively, and are incorporated by reference herein.

 

 

Item 9.01

Exhibits

 

(d) Exhibits

 

Exhibit No.	Description
10.1	Employment Agreement, dated August 14, 2024, by and between the Company and Mr. Peter J. Mariani
10.2	Restricted Stock Unit Award Agreement (Inducement Award), dated as of August 14, 2024, by and between the Registrant and Peter Mariani
10.3	Nonstatutory Option Award Agreement (Inducement Award), dated as of August 14, 2024, by and between the Registrant and Peter Mariani
10.4	Nonstatutory Option Award Agreement (Inducement Award), dated as of August 14, 2024, by and between the Registrant and Peter Mariani
10.5	Consulting Agreement, dated August 13, 2024, by and between the Company and Ms. Kathleen P. Bloch.
99.1	Press Release issued on August 13, 2024
104	Cover Page Interactive Data File (embedded with the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: August 16, 2024	CYTOSORBENTS CORPORATION
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer

 

 

 

Exhibit 10.1

 

Executive Employment Agreement

 

This Executive Employment Agreement (the “Employment Agreement” or “Agreement”) is made and entered by and between Peter J. Mariani (the “Executive”), and CytoSorbents Medical, Inc., on behalf of itself, its parent CytoSorbents Corporation, and all other affiliates and subsidiaries thereof (collectively, the “Company”), effective as of August 14, 2024 (the “Effective Date”).

 

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

 

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

 

1.            Term. The term of the Executive’s employment under this Agreement shall be from August 14, 2024 through December 31, 2025, unless terminated earlier pursuant to Section 6 of this Agreement (“Initial Term”). Thereafter, the Executive’s employment hereunder shall automatically renew for additional terms of one-year (each a “Renewal Term” and together, the Initial Term and the Renewal Term, the “Term”), unless either party provides written notice of non-renewal on the other party at least sixty (60) days prior to commencement of a Renewal Term.

 

2.            Position and Duties.

 

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

 

2.2            Duties. During the Term, the Executive shall devote substantially all of his business time and attention to the performance of his duties as Chief Financial Officer and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the Board. Notwithstanding the foregoing, the Executive may serve on one other boards of directors, with the approval of the Board, as long as such services and activities do not create a conflict of interest with the Company or interfere with the Executive’s obligations or performance of Executive’s duties to the Company as provided in this Agreement.

 

 

3.            Place of Performance. The principal place of the Executive’s employment shall be at the Company’s principal office; provided, that the Executive shall have the ability to work a certain number of days from home each month as agreed upon with the CEO, provided it does not interfere with the Executive’s performance or that of the accounting and finance team of the Company, or achievement of finance, accounting and management objectives; provided, further, that the Executive may be required to travel from time to time on Company business. For the period from the date of this Agreement through December 31, 2024, the Executive shall be required to work an average of ten (10) days per month at the Company’s principal office located at 305 College Road East, Princeton, NJ 08540. Notwithstanding the foregoing, the Executive is required to be in-person in the Company’s principal office in Princeton, NJ for all multi-day management meetings, in-office investor, analyst and other otherwise important meetings, and Board meetings, unless previously agreed upon with the CEO.

 

4.            Compensation.

 

4.1            Base Salary. The Company shall pay the Executive a base salary at an annualized rate of $425,000, payable in equal semi-monthly installments in accordance with the Company’s customary payroll practices and pro-rated for the period from the date of this Agreement through December 31, 2024. The Executive’s base salary shall be reviewed annually by the Compensation Committee of the Board. The Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as “Base Salary.”

 

4.2            Bonus. The Executive shall be eligible to receive an annual cash bonus equal to a percentage of up to 45% of the Executive’s Base Salary actually earned for the applicable calendar year (the “Target Bonus”), contingent upon the achievement, as determined by the Board, of annual management milestones and upon general performance as determined by the CEO. In consultation with the Chief Executive Officer and guided by third party compensation analysis, the Board shall notify the Executive of the amount of the Target Bonus together with the performance milestones and objectives necessary for the Executive to achieve the Target Bonus for that calendar year as soon as practicable after such milestones and objectives have been established. Achievement of the Target Bonus, if any, shall be determined by the Board and payable no later than March 15th of the year after the year in which the performance relates so long as Executive is employed by the Company through December 31st of the applicable calendar year to which the bonus is attributable.

 

4.3            Sign-on Equity Awards. In consideration of the Executive’s entering into this Agreement and as an inducement to join the Company, the Executive shall be granted the following equity awards which are intended to be inducement awards under Rule 5635(c)(4) of the Nasdaq Stock Market Listing Rules and will be granted outside of the Amended and Restated CytoSorbents Corporation 2014 Long-Term Incentive Plan (the “LTIP”). Although granted as an inducement award outside of the Plan, the equity awards shall be subject to the terms of the LTIP as if issued thereunder. For the avoidance of doubt, references to the “date hereof” in clauses (b), (c) and (d) of this Section 4.3 shall refer to the date of this Agreement and not the date on which, if ever, such equity awards are granted following satisfaction of the condition described in the prior sentence.

 

(a)       A signing award of 110,000 restricted stock units (“RSUs”) that vest upon the earlier of (i) a Change of Control of the Company (as defined in Section 6.6(b)), provided the Executive remains employed by the Company on such vesting date or (ii) the four (4) years anniversary from the date of grant, provided the Executive remains employed by the Company on such vesting date.

 

 

(b)       An award of 65,000 RSUs that vest in equal installments of 50% each at the one-year and two-year anniversaries of the date hereof, provided the Executive remains employed by the Company on such vesting date.

 

(c)       An award of 175,000 RSUs that vest only upon a Change of Control of the Company, provided the Executive remains employed by the Company on the date such Change of Control is consummated.

 

(d)       A nonqualified stock option to purchase 80,000 shares of the Company’s common stock (the “Option”), with an exercise price per share equal to the fair market value of the Company’s common stock on the Option grant date, and with vesting on the following schedule: (i) 41,000 upon the six-month anniversary of the date hereof; (ii) 13,000 on the one-year anniversary of the date hereof; (iii) 13,000 on the two-year anniversary of the date hereof; and (iv) 13,000 on the three-year anniversary of the date hereof, in each case, subject to the Executive remaining employed by the Company on the applicable vesting date.

 

(e)       A long-term nonqualified stock option to purchase shares of the Company’s common stock, with an exercise price per share equal to the fair market value of the Company’s common stock on the Option grant date, that vests subject to milestone-based vesting conditions if achieved on or prior to December 31, 2025, as further described below, and is subject to the executive officer’s continued service with the Company as of the applicable vesting date.

 

(i)

60,000 options will vest immediately if the Company obtains U.S. Food and Drug Administration approval for its product DrugSorb (“Milestone 1”)

 

(ii)

30,000 options will vest immediately if the Company achieves $80 million or more in annual ex-U.S. sales (“Milestone 2”),

 

(iii)

70,000 options will vest immediately if the Company achieves $20 million or more in annual U.S. sales (“Milestone 3”), and

 

(iv)

55,000 options will vest immediately if the Company achieves U.S. GAAP breakeven (“Milestone 4”).

 

Such awards shall be governed by the LTIP and applicable restricted stock unit and/or stock option award agreements, as applicable, between the Executive and the Company. In the event of any conflict or ambiguity between this Agreement and the LTIP or the applicable award agreement, the LTIP and the award agreement shall govern. The Executive’s Options and RSUs will be adjusted on the same basis as all other shareholders to account for any stock split, stock dividend or recapitalization.

 

4.4            Annual Equity Awards. In addition to the to the equity awards provided in Section 4.3, beginning in 2025, the Executive shall be eligible to participate in any equity incentive plan that the Company may adopt for its management team, on such terms and conditions as determined by the Compensation Committee of the Board.

 

 

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

 

5.1            Paid Time Off. During the Term, the Executive shall be entitled to twenty-seven (27) days of paid time off (PTO) per calendar year (prorated for partial years) in accordance with the Company’s PTO policies, as in effect from time to time for executive employees. Unless otherwise required by applicable law or as may otherwise be provided in applicable Company policy, Executive may carry over up to five (5) days of accrued but unused PTO from one year to the next.

 

5.2            Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Executive in connection with the performance of his duties in accordance with the Company’s expense reimbursement policies and procedures and upon presentation to the Company of reasonable documentation (including receipts) substantiating such expenses, and as approved by the CEO. For the avoidance of doubt, (a) business expenses shall include reasonable monthly individual cell-phone and basic internet charges, and reasonable car rental, airfare (economy or economy plus) and lodging expenses incurred by the Executive while working in-person from the Company’s principal office in Princeton, NJ.

 

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

 

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

 

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

 

(i)

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

 

 

(ii)

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

 

(iii)

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

 

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

 

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

 

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

 

(i)

The Accrued Obligations; and

 

(ii)

Continued payment of Base Salary for nine (9) months, plus an additional three (3) weeks for every full year of service to the Company as its Chief Financial Officer, with such continued payments not to exceed twelve (12) months total.

 

(iii)

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

 

 

(iv)

Notwithstanding the terms of any applicable stock option or equity incentive plan and/or agreement, (x) any and all service-vesting stock options and/or service-vesting restricted stock and/or service-vesting restricted stock units or other service-vesting equity or equity-based awards (with specific exclusion of restricted stock units that vest solely with a Change of Control, or “Change of Control RSUs” or other equity awards that vest based on performance or milestones) granted to the Executive will become fully vested and exercisable (to the extent any such award is exercisable) on the Termination Date and with respect to any stock options, for the ninety (90) day period following the Termination Date (excluding any days within an insider trading blackout period), to exercise any stock options granted to the Executive (but in no event later than the expiration date noted in the applicable stock option agreement unless an extension beyond such expiration date would be permitted under the applicable stock option plan and applicable law and would not result in an “additional tax” as defined in Section 409A(a)(1)(B) of the Internal Revenue Code of 1986, as amended); and

 

(v)

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

 

For the avoidance of doubt, if the Executive’s employment with the Company is terminated within the first sixty (60) days of employment for any reason, with the exception of a Change of Control, then the Executive shall not be entitled to the payments and benefits described in Section 6.2(a) except for the Accrued Obligations and will be eligible to COBRA pursuant to applicable law, and if Executive timely elects COBRA continuation coverage, will receive full payment of the COBRA premiums for the Executive and his spouse, until the earlier of (x) six (6) months following the Termination Date, or (y) until the Executive becomes eligible to participate in another employer’s group health plan.

 

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

 

6.3            Termination for Good Reason. The Executive may terminate his employment hereunder for Good Reason (as defined below), in accordance with Section 6.6(d) herein. If the Executive terminates his employment for Good Reason, then the Executive shall be entitled to the payments and benefits described in Section 6.2(a), subject to the same terms and conditions thereof and as set forth in Section 6.2(b). For the avoidance of doubt, if the Executive’s employment with the Company is terminated within the first sixty (60) days of employment for any reason, with the exception of a Change of Control, then the Executive shall not be entitled to the payments and benefits described in Section 6.2(a) except for the Accrued Obligations.

 

 

6.4            Termination for Death or Disability. The Executive’s employment hereunder shall terminate automatically upon the Executive’s death during the Term, and the Company may terminate the Executive’s employment on account of the Executive’s Disability (as defined below). In the case of a termination for Disability, such termination shall be effective as of the last day of the month in which the Company shall have given notice to the Executive of its intention to terminate the Executive’s employment for Disability. In the event of termination of employment due to death or Disability, the Executive (or the Executive’s estate, as applicable) shall be entitled to the payments and benefits described in Section 6.2(a), subject to the same terms and conditions thereof and as set forth in Section 6.2(b); provided, however, that if Executive’s employment is terminated due to Disability, any payments described in Section 6.2(a) shall be reduced by amounts received by Executive pursuant to any applicable disability benefits plan.

 

6.5            Change of Control.

 

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

 

(i)

The Accrued Obligations; and

 

(ii)

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

 

(iii)

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

 

(iv)

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

 

 

(v)

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

 

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

 

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

 

(d)       A non-renewal of the Initial Term or Renewal Term by the Company at any time following a Change of Control shall entitle the Executive to the payments and benefits set forth in Section 6.2 hereof; provided, however, that in no event shall such a notice operate to provide less than 18 months of continued entitlement to salaried benefits from the date of a Change of Control (e.g., if a Change of Control occurred on December 1, 2024 and Buyer provided Executive with a notice of non-renewal on March 1, 2025 date, then Executive would be entitled to continued salaried benefits through May 30, 2026).

 

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

 

(a)       “Cause” shall mean:

 

(i)

the Executive’s failure to perform the Executive’s duties (other than any such failure resulting from incapacity due to physical or mental illness), provided that failure to achieve any business objective will not itself be a failure by Executive to perform duties, unless such failure was a result of gross negligence or willful misconduct;

 

(ii)

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

 

 

(iii)

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

 

(iv)

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

 

(v)

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

 

(vi)

the Executive’s violation of a material policy of the Company provided to Executive in writing; or

 

(vii)

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

 

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

 

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

 

(i)

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

 

(ii)

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

 

(iii)

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

 

(iv)

the sale of all or substantially all of the Company’s assets.

 

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

 

 

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

 

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

 

(i)

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

 

(ii)

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

 

(iii)

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

 

(iv)

a material, adverse change in the Executive’s title, duties or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law).

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

 

10.           Restrictive Covenants.

 

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

 

10.2          Non-competition. Because of the Company’s legitimate business interest as described herein and the good and valuable consideration offered to the Executive as set forth herein, including without limitation, the compensation and various equity grants, during the Term and for the Restricted Period (as defined below) following the Executive’s termination of employment for any reason, the Executive agrees and covenants not to engage in a Competing Business (as defined below), as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, or any other similar capacity, except on behalf of the Company. The “Restricted Period” means the longer of (i) nine (9) months or (ii) the number of months the Executive is eligible for severance under Section 6.2(a)(ii) (i.e. up to twelve (12) months) or 6.5(a)(ii) (i.e. eighteen (18) months). A “Competing Business” is an entity engaged in the same or similar business as the Company or its parent, and their respective subsidiaries, which is the use of polymeric sorbents to purify blood, blood products, and bodily fluids to prevent or treat inflammation or organ dysfunction. Executive acknowledges and agrees that a Competing Business of the Company also includes any business or activity in which the Company is engaged, in research and development, or is demonstrably planning to conduct, each as of the Termination Date. Nothing herein shall prohibit the Executive from purchasing or owning less than three percent (3%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.

 

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

 

 

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

 

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

 

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

 

 

13.           Proprietary Rights.

 

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

 

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

 

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

 

 

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

 

15.           Entire Agreement. Unless specifically provided herein, this Agreement and the Non-Disclosure Agreement dated June 17, 2024, contain all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

 

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

 

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

 

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

 

 

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

 

20.            Section 409A.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

If to the Company:

 

CytoSorbents Corporation

305 College Road East

Princeton, NJ 08540

c/o Chief Executive Officer

 

If to the Executive:

 

At the Executive’s residence address as maintained by the Company in the regular course of its business for payroll purposes.

 

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

 

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

 

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

 

 

26.           Attorneys’ Fees. The Company agrees to reimburse Executive for reasonable legal fees incurred in negotiating this Agreement not to exceed $2,500.

 

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

 

 

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

 

	CYTOSORBENTS MEDICAL, INC.
	By	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer

 

	PETER J. MARIANI
	Signature:	/s/ Peter J. Mariani

 

 

 

Exhibit 10.2

 

Inducement Grant

 

Restricted Stock Unit Agreement    Grantee: Peter J. Mariani   No. of RSUs: 350,000

 

This Agreement (the “Agreement”), dated as of August 14, 2024 (the “Grant Date”) is delivered by CytoSorbents Corporation, a Delaware corporation (the “Company”) to you, Peter J. Mariani.

 

Pursuant to the terms of the Employment Agreement, dated August 14, 2024 between the Company and you (as it may be amended from time to time, the “Employment Agreement”), you are to be granted restricted stock units on the terms and subject to the conditions set forth herein. The Board of Directors of the Company has decided to make this restricted stock unit grant as a material inducement for you to enter into employment with the Company and to align your interests with those of the Company and its stockholders. The grant of the restricted stock units provided for herein is intended to constitute an “employment inducement grant” as described in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, and is not being granted or made under the CytoSorbents Corporation 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”).

 

1.     Terminology. Unless otherwise provided in this Agreement, capitalized terms used herein are defined in the Glossary at the end of this Agreement or, in the Plan, as applicable.

 

2.     Grant.

 

a.    In accordance with the employment inducement grant exception to the shareholder-approval requirements of the Nasdaq Stock Market set forth in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, the Company hereby grants to you 350,000 restricted stock units (each, an “RSU,” and collectively, the “RSUs”) on the terms and subject to the conditions set forth in this Agreement and, subject to Section 2(c) below, otherwise on terms identical to the terms provided in the Plan. In the event of any conflict between this Agreement and the Plan, this Agreement shall control.

 

b.    You acknowledge that the grant of the RSUs hereunder satisfies in full the Company’s obligation to provide you with a restricted stock unit grant as described in the Employment Agreement. You further acknowledge that the grant of the RSUs hereunder is intended to be in consideration for, in part, the covenants set forth in Section 10 of the Employment Agreement.

 

c.    It is understood that the RSUs are not being granted pursuant to the Plan; provided, however, that this Agreement shall be construed and administered in a manner consistent with the provisions of the Plan as if granted pursuant thereto, the terms of which are incorporated herein by reference (including, without limitation, any interpretations, amendments, rules and regulations promulgated by the Administrator from time to time pursuant to the Plan, which shall be deemed to apply to the RSUs granted hereunder without any further action of the Administrator, unless expressly provided otherwise by the Administrator). The Administrator shall have final authority to interpret and construe the terms of this Agreement and the Plan’s terms as they are incorporated herein by reference and deemed to apply to the RSUs granted hereunder, and to make any and all determinations under them, and its decision shall be binding and conclusive upon you and your beneficiaries in respect of any questions arising under the Plan or this Agreement. You acknowledge that you have received a copy of the Plan and the official prospectus for the Plan. You also acknowledge that you had an opportunity to review the Plan and agree to be bound by all the terms and provisions of the Plan, as incorporated into this Agreement. Paper copies of the Plan and the official Plan prospectus are available, and paper copies of the prospectus for this Agreement will be available, by contacting the Chief Executive Officer of the Company. For the avoidance of doubt, neither the RSUs granted hereunder nor any shares of Common Stock issued upon settlement of the RSUs shall reduce the number of shares of Common Stock available for issuance pursuant to Awards granted under the Plan.

 

 

3.

Vesting.

 

a.    All of the RSUs are nonvested and forfeitable as of the Grant Date. Subject to the terms of this Section 3 and Section 4, the RSUs shall become vested according to the vesting schedules set forth in Appendix A, so long as your Service is continuous from the Grant Date through the applicable date upon which vesting is scheduled to occur.

 

b.    The vesting of the RSUs shall be cumulative, but shall not exceed 100% of the RSUs. If the foregoing schedule would produce fractional shares of Common Stock, the number of shares of Common Stock that vest shall be rounded down to the nearest whole shares of Common Stock.

 

4.     Termination of Employment or Service. Except as otherwise set forth below and subject to the applicable terms of the Employment Agreement that may provide for accelerated vesting of the RSUs under certain circumstances, if your Service with the Company ceases for any reason, all RSUs that are not then vested and nonforfeitable will be forfeited to the Company immediately and automatically upon such cessation without payment of any consideration therefor and you will have no further right, title or interest in or to such RSUs or the underlying shares of Common Stock.

 

5.     Restrictions on Transfer. Neither this Agreement nor any of the RSUs may be assigned, transferred, pledged, hypothecated or disposed of in any way, whether by operation of law or otherwise, and the RSUs shall not be subject to execution, attachment or similar process. All rights with respect to this Agreement and the RSUs shall be exercisable during your lifetime only by you or your guardian or legal representative. Notwithstanding the foregoing, the RSUs may be transferred upon your death by last will and testament or under the laws of descent and distribution.

 

6.

Settlement of RSUs.

 

a.    Manner of Settlement. You are not required to make any monetary payment (other than applicable tax withholding, if required) as a condition to settlement of the RSUs. The Company will issue to you, in settlement of your RSUs and subject to the provisions of Section 7 below, the number of whole shares of Common Stock that equals the number of whole RSUs that become vested, and such vested RSUs will terminate and cease to be outstanding upon such issuance of the shares. Upon issuance of such shares, the Company will determine the form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) and may deliver such shares on your behalf electronically to the Company’s designated stock administrator or such other broker-dealer as the Company may choose at its sole discretion, within reason.

 

b.    Timing of Settlement. Your RSUs will be settled by the Company, in the manner set forth in Section 6(a) above, within thirty days following date that the RSUs become vested and nonforfeitable. However, if a scheduled issuance date falls on a Saturday, Sunday or federal holiday, such issuance date shall instead fall on the next following day that the principal executive offices of the Company are open for business. In all cases, the issuance and delivery of shares under this Agreement is intended to comply with Treasury Regulation 1.409A-1(b)(4) and shall be construed and administered in such a manner.

 

 

7.     Tax Withholding. On or before the time you receive a distribution of the shares subject to your RSUs, or at any time thereafter as requested by the Company, you hereby authorize any required withholding from the Common Stock issuable to you and/or otherwise agree to make adequate provision in cash for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate which arise in connection with your RSUs (the “Withholding Taxes”). Additionally, the Company may, in its sole discretion, satisfy all or any portion of the Withholding Taxes obligation relating to your RSUs by any of the following means or by a combination of such means: (i) withholding from any compensation otherwise payable to you by the Company; (ii) causing you to tender a cash payment; (iii) permitting you to enter into a “same day sale” commitment with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) whereby you irrevocably elect to sell a portion of the shares to be delivered under the Agreement to satisfy the Withholding Taxes and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the Withholding Taxes directly to the Company; or (iv) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to you in connection with the RSUs with a Fair Market Value (measured as of the date shares of Common Stock are issued to you pursuant to Section 6) equal to the amount of such Withholding Taxes; provided, however, that the number of such shares of Common Stock so withheld shall not exceed the amount necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income. Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to you any Common Stock. In the event the Company’s obligation to withhold arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Company’s withholding obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount. Notwithstanding the foregoing, in the event that your RSUs are settled in cash in accordance with Section 6(a) above, such cash payment shall be subject to the Withholding Taxes.

 

8.

Adjustments for Corporate Transactions and Other Events.

 

a.     Stock Dividend, Stock Split and Reverse Stock Split. Upon a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, the number of RSUs and the number of such RSUs that are nonvested and forfeitable shall, without further action of the Administrator, be adjusted to reflect such event. The Administrator shall make adjustments, in its discretion, to address the treatment of fractional shares with respect to the RSUs as a result of the stock dividend, stock split or reverse stock split; provided that such adjustments do not result in the issuance of fractional RSUs. Adjustments under this Section 8 will be made by the Administrator, whose determination regarding such adjustments will be final, binding and conclusive.

 

b.     Binding Nature of Agreement. The terms and conditions of this Agreement shall apply with equal force to any additional and/or substitute securities received by you in exchange for, or by virtue of your ownership of, the RSUs, to the same extent as the RSUs with respect to which such additional and/or substitute securities are distributed, whether as a result of any spin-off, stock split-up, stock dividend, stock distribution, other reclassification of the Common Stock of the Company, or similar event, except as otherwise determined by the Administrator. If the RSUs are converted into or exchanged for, or stockholders of the Company receive by reason of any distribution in total or partial liquidation or pursuant to any merger of the Company or acquisition of its assets, securities of another entity, or other property (including cash), then the rights of the Company under this Agreement shall inure to the benefit of the Company’s successor, and this Agreement shall apply to the securities or other property (including cash) received upon such conversion, exchange or distribution in the same manner and to the same extent as the RSUs.

 

9.     Non-Guarantee of Employment or Service Relationship. Nothing in this Agreement shall alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between the Company and you, or as a contractual right of you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without cause or notice and whether or not such discharge results in the forfeiture of any RSUs or any other adverse effect on your interests under this Agreement.

 

10.   Rights as Stockholder. You shall not have any of the rights of a stockholder with respect to any shares of Common Stock that may be issued in settlement of the RSUs until such shares of Common Stock have been issued to you.

 

 

11.   The Company’s Rights. The existence of the RSUs shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

12.   Notices. All notices and other communications made or given pursuant to this Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by certified mail, addressed to you at the address contained in the records of the Company, or addressed to the Administrator, care of the Company for the attention of its Corporate Secretary at its principal executive office or, if the receiving party consents in advance, transmitted and received via telecopy or via such other electronic transmission mechanism as may be available to the parties.

 

13.   Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the RSUs granted hereunder. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the RSUs granted hereunder shall be void and ineffective for all purposes.

 

14.   Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on your rights with respect to the RSUs as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by each of the parties hereto.

 

15.   Governing Law. The validity, construction and effect of this Agreement, and of any determinations or decisions made by the Administrator relating to this Agreement, and the rights of any and all per-sons having or claiming to have any interest under this Agreement, shall be determined exclusively in accordance with the laws of the State of Delaware, without regard to its provisions concerning the applicability of laws of other jurisdictions. As a condition of this Agreement, you agree that you will not bring any action arising under, as a result of, pursuant to or relating to, this Agreement in any court other than a federal or state court in the districts which include New Jersey, and you hereby agree and submit to the personal jurisdiction of any federal court located in the district which includes New Jersey or any state court in the district which includes New Jersey. You further agree that you will not deny or attempt to defeat such personal jurisdiction or object to venue by motion or other request for leave from any such court.

 

16.   Resolution of Disputes. Any dispute or disagreement which shall arise under, or as a result of, or pursuant to or relating to, this Agreement shall be determined by the Administrator in good faith in its absolute and uncontrolled discretion, and any such determination or any other determination by the Administrator under or pursuant to this Agreement and any interpretation by the Administrator of the terms of this Agreement, will be final, binding and conclusive on all persons affected thereby. You agree that be-fore you may bring any legal action arising under, as a result of, pursuant to or relating to, this Agreement you will first exhaust your administrative remedies before the Administrator. You further agree that in the event that the Administrator does not resolve any dispute or disagreement arising under, as a result of, pursuant to or relating to, this Agreement to your satisfaction, no legal action may be commenced or maintained relating to this Agreement more than twenty-four (24) months after the Administrator’s decision.

 

17.   Headings. The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

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

 

 

19.   Section 409A. This Agreement and the RSUs granted hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code. This Agreement and the RSUs shall be administered, interpreted and construed in a manner consistent with this intent. Nothing in the Plan or this Agreement shall be construed as including any feature for the deferral of compensation other than the deferral of recognition of income until the RSUs settle. Should any provision of the Plan or this Agreement be found not to comply with, or otherwise be exempt from, the provisions of Section 409A of the Code, it may be modified and given effect, in the sole discretion of the Administrator and without requiring your consent, in such manner as the Administrator determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A of the Code. The foregoing, however, shall not be construed as a guarantee or warranty by the Company of any particular tax effect to you.

 

20.   Electronic Delivery of Documents. By your signing this Agreement, you (i) consent to the electronic delivery of this Agreement, all information with respect to the Plan and the RSUs and any reports of the Company provided generally to the Company’s stockholders; (ii) acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost to you by contacting the Company by telephone or in writing; (iii) further acknowledge that you may revoke your consent to the electronic delivery of documents at any time by notifying the Company of such revoked consent by telephone, postal service or electronic mail; and (iv) further acknowledge that you understand that you are not required to consent to electronic delivery of documents.

 

21.   No Future Entitlement. By your signing this Agreement, you acknowledge and agree that: (i) the grant of these RSUs is a one-time benefit which does not create any contractual or other right to receive future grants of stock, or compensation in lieu of stock grants, even if stock grants have been granted repeatedly in the past; (ii) all determinations with respect to any such future grants, including, but not limited to, the times when stock grants shall be granted, the maximum number of shares subject to each stock grant, and the times or conditions under which restrictions on such stock grants shall lapse, will be at the sole discretion of the Administrator; (iii) the value of this stock grant is an extraordinary item of compensation which is outside the scope of your employment contract, if any; (iv) the value of this stock grant is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments or similar payments, or bonuses, long-service awards, pension or retirement benefits; (v) the vesting of these RSUs ceases upon termination of employment with the Company or transfer of employment from the Company, or other cessation of eligibility for any reason, except as may otherwise be explicitly provided in this Agreement; (vi) the Company does not guarantee any future value of these RSUs; and (vii) no claim or entitlement to compensation or damages arises if these RSUs do not increase in value and you irrevocably release the Company from any such claim that does arise.

 

22.   Personal Data. For purposes of the implementation, administration and management of the stock grant or the effectuation of any acquisition, equity or debt financing, joint venture, merger, reorganization, consolidation, recapitalization, business combination, liquidation, dissolution, share exchange, sale of stock, sale of material assets or other similar corporate transaction involving the Company (a “Corporate Transaction”), you consent, by execution of this Agreement, to the collection, receipt, use, retention and transfer, in electronic or other form, of your personal data by and among the Company and its third party vendors or any potential party to a potential Corporate Transaction. You understand that personal data (including but not limited to, name, home address, telephone number, employee number, employment status, social security number, tax identification number, date of birth, nationality, job and payroll location, data for tax withholding purposes and shares awarded, cancelled, vested and unvested) may be transferred to third parties assisting in the implementation, administration and management of the stock grant or the effectuation of a Corporate Transaction and you expressly authorize such transfer as well as the retention, use, and the subsequent transfer of the data by the recipient(s). You understand that these recipients may be located in your country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You understand that data will be held only as long as is necessary to implement, administer and manage the stock grant or effect a Corporate Transaction. You understand that you may, at any time, request a list with the names and addresses of any potential recipients of the personal data, view data, request additional information about the storage and processing of data, require any necessary amendments to data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s Secretary. You understand, however, that refusing or withdrawing your consent may affect your ability to accept a stock grant.

 

 

GLOSSARY

 

a.

“Administrator” means the Board of Directors of CytoSorbents Corporation or such committee or committees appointed by the Board to administer the RSUs under this Agreement.

 

b.

“Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with CytoSorbents Corporation (including but not limited to joint ventures, limited liability companies and partnerships). For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

 

c.

“Cause” has the meaning ascribed to such term in the Employment Agreement.

 

d.

“Change of Control” has the meaning ascribed to such term in the Employment Agreement.

 

e.

“Common Stock” means the common stock, US$0.001 par value per share, of CytoSorbents Corporation.

 

f.

“Company” means CytoSorbents Corporation and its Affiliates, except where the context otherwise requires.

 

g.

“Disability” has the meaning ascribed to such term in the Employment Agreement.

 

h.

“Good Reason” has the meaning ascribed to such term in the Employment Agreement.

 

i.

“Service” means your employment or other service relationship with the Company and its Affiliates. Your Service will be considered to have ceased with the Company and its Affiliates if, immediately after a sale, merger or other corporate transaction, the trade, business or entity with which you are employed or otherwise have a service relationship is not CytoSorbents Corporation or its successor, or an Affiliate of CytoSorbents Corporation or its successor.

 

j.

“Termination Date” has the meaning ascribed to such term in the Employment Agreement.

 

k.

“You”; “Your”. You means the recipient of the RSUs as reflected in the first paragraph of this Agreement. Whenever the word “you” or “your” is used in any provision of this Agreement under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to the estate, personal representative, or beneficiary to whom the RSUs may be transferred by will or by the laws of descent and distribution, the words “you” and “your” shall be deemed to include such person.

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer.

 

	CytoSorbents Corporation
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer
	Date:	August 14, 2024

 

The undersigned hereby acknowledges that he/she has carefully read this Agreement and agrees to be bound by all of the provisions set forth herein. The undersigned also consents to electronic delivery of all notices or other information with respect to the RSUs or the Company.

 

	GRANTEE
	/s/ Peter J. Mariani
	Peter J. Mariani
	Date:	August 14, 2024

 

 

Appendix A

 

Vesting Schedules

 

·

110,000 RSUs shall become vested and nonforfeitable upon the earlier of (i) a Change of Control, or (ii) the fourth (4th) anniversary of the Grant Date; provided, that your Service is continuous from the Grant Date through such applicable vesting date.

 

·

65,000 RSUs shall become vested and nonforfeitable according to the following vesting schedule; provided, that your Service is continuous from the Grant Date through such applicable vesting date: (i) 50% (i.e., 32,500 RSUs) shall vest and become nonforfeitable on the first (1st) anniversary of the Grant Date, and (ii) 50% (i.e., 32,500 RSUs) shall vest and become nonforfeitable on the second (2nd) anniversary of the Grant Date.

 

·

175,000 RSUs shall become vested and nonforfeitable upon a Change of Control; provided, that your Service is continuous from the Grant Date until the date the Change of Control is consummated.*

 

* These RSUs are considered “Change of Control RSUs” as set forth in the Employment Agreement.

 

 

 

Exhibit 10.3

 

Inducement Grant

 

CYTOSORBENTS CORPORATION

Nonstatutory Stock Option Notice

 

Grant No.: _____

 

This Notice evidences the award of nonstatutory stock options (each, an “Option” or collectively, the “Options”) that have been granted to you, Peter J. Mariani, subject to the terms of the attached Nonstatutory Stock Option Agreement (the “Agreement”). The Options entitle you to purchase shares of common stock, par value $0.001 per share (“Common Stock”), of CytoSorbents Corporation, a Delaware corporation (the “Company”). The number of shares you may purchase and the exercise price at which you may purchase them are specified below. This Notice constitutes part of and is subject to the terms and provisions of the Agreement.

 

Grant Date: August 14, 2024

 

Number of Options: 80,000 Options, each permitting the purchase of one Share

 

Exercise Price: $0.90 per share

 

Expiration Date: The Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the 10th anniversary of the Grant Date (the “Expiration Date”), unless fully exercised or terminated earlier.

 

Exercisability Schedule: Subject to the terms and conditions described in the Agreement, the Options become exercisable in accordance with the schedule below:

 

Vesting Schedule: Subject to the terms of the Agreement and to the applicable terms of the Employment Agreement (as defined below), the Options shall become vested and exercisable according to the vesting schedules set forth in Appendix A of the Agreement so long as your Service is continuous from the Grant Date through the applicable date upon which vesting is scheduled to occur, except as otherwise set forth on Appendix A with respect to vesting and exercise acceleration.

 

The extent to which Options become exercisable as of a particular date is rounded down to the nearest whole share. However, exercisability is rounded up to 100% on the first anniversary of the Grant Date.

 

Inducement Grant: The Options being granted to you herein is intended to constitute an “employment inducement grant” as described in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, and is not being granted or made under the CytoSorbents Corporation 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”).

 

	CytoSorbents Corporation
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer
	Date:	August 14, 2024

 

I acknowledge that I have carefully read the attached Agreement and the prospectus for the Plan and agree to be bound by all of the provisions set forth in these documents.

 

Enclosures:	Nonstatutory Stock Option Agreement	OPTIONEE
		/s/ Peter J. Mariani
	Exercise Form	Peter J. Mariani
		Date:	August 14, 2024

 

 

Grant No.: _____

 

Nonstatutory Stock Option Agreement

 

This Agreement, dated as of the Grant Date, is delivered by CytoSorbents Corporation, a Delaware corporation (the “Company”) to you, Peter J. Mariani.

 

Pursuant to the terms of the Employment Agreement, dated August 14, 2024 between the Company and you (as it may be amended from time to time, the “Employment Agreement”), you are to be granted the Options on the terms and subject to the conditions set forth herein. The Board of Directors of the Company has decided to make Options grant as a material inducement for you to enter into employment with the Company and to align your interests with those of the Company and its stockholders. The grant of the Options provided for herein is intended to constitute an “employment inducement grant” as described in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, and is not being granted or made under the Plan.

 

1.     Terminology. Capitalized terms used in this Agreement are defined in the correlating Stock Option Notice and/or the Glossary at the end of the Agreement or, in the Plan, as applicable.

 

2.     Inducement Grant.

 

a.     The Options are being granted to you by the Company in accordance with the employment inducement grant exception to the shareholder-approval requirements of the Nasdaq Stock Market set forth in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules on the terms and subject to the conditions set forth in this Agreement and, subject to Section 2(c) below, otherwise on terms identical to the terms provided in the Plan. In the event of any conflict between this Agreement and the Plan, this Agreement shall control.

 

b.     You acknowledge that the grant of the Options hereunder satisfies in full the Company’s obligation to provide you with nonstatutory stock option grant as described in Section 4.3(d) of the Employment Agreement. You further acknowledge that the grant of the Options hereunder is intended to be in consideration for, in part, the covenants set forth in Section 10 of the Employment Agreement.

 

c.     It is understood that the Options are not being granted pursuant to the Plan; provided, however, that this Agreement shall be construed and administered in a manner consistent with the provisions of the Plan as if granted pursuant thereto, the terms of which are incorporated herein by reference (including, without limitation, any interpretations, amendments, rules and regulations promulgated by the Administrator from time to time pursuant to the Plan, which shall be deemed to apply to the Options granted hereunder without any further action of the Administrator, unless expressly provided otherwise by the Administrator). The Administrator shall have final authority to interpret and construe the terms of this Agreement and the Plan’s terms as they are incorporated herein by reference and deemed to apply to the Options granted hereunder, and to make any and all determinations under them, and its decision shall be binding and conclusive upon you and your beneficiaries in respect of any questions arising under the Plan or this Agreement. You acknowledge that you have received a copy of the Plan and the official prospectus for the Plan. You also acknowledge that you had an opportunity to review the Plan and agree to be bound by the terms and provisions of the Plan, as incorporated into this Agreement. Paper copies of the Plan and the official Plan prospectus are available, and paper copies of the prospectus for this Agreement will be available, by contacting the Chief Legal Officer of the Company. For the avoidance of doubt, neither the Options granted hereunder nor any shares of Common Stock issued upon exercise of the Options shall reduce the number of shares of Common Stock available for issuance pursuant to Awards granted under the Plan.

 

 

3.

Exercise of Options.

 

a.     Exercisability. The Options will become exercisable in accordance with the Exercisability Schedule set forth in the Stock Option Notice, so long as you are in the Service of the Company from the Grant Date through the applicable exercisability dates. None of the Options will become exercisable after your Service with the Company ceases, unless the Stock Option Notice provides otherwise with respect to exercisability that arises as a result of your cessation of Service.

 

b.     Right to Exercise. You may exercise the Options, to the extent exercisable, at any time on or before 5:00 p.m. Eastern Time on the Expiration Date or the earlier termination of the Options, unless otherwise provided under applicable law. Notwithstanding the foregoing, if at any time the Administrator determines that the delivery of the Shares this Agreement is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise the Options or receive Shares pursuant to the Options shall be suspended until the Administrator determines that such delivery is lawful. If at any time the Administrator determines that the delivery of the Shares under this Agreement is or may violate the rules of the national securities exchange on which the shares are then listed for trade, the right to exercise the Options or receive Shares pursuant to the Options shall be suspended until the Administrator determines that such exercise or delivery would not violate such rules. Section 4 below describes certain limitations on exercise of the Options that apply in the event of your death, Disability, or termination of Service. The Options may be exercised only in multiples of whole Shares and may not be exercised at any one time as to fewer than one hundred Shares (or such lesser number of Shares as to which the Options are then exercisable). No fractional Shares will be issued under the Options.

 

c.     Exercise Procedure. In order to exercise the Options, you must provide the following items to the Secretary of the Company or his or her delegate before the expiration or termination of the Options:

 

i.     notice, in such manner and form as the Administrator may require from time to time, specifying the number of Shares to be purchased under the Options;

 

ii.    full payment of the Exercise Price for the Shares or properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section 3(d) of this Agreement; and

 

iii.   full payment of applicable withholding taxes pursuant to Section 8 of this Agreement.

 

An exercise will not be effective until the Secretary of the Company or his or her delegate receives all of the foregoing items, and such exercise otherwise is permitted under and complies with all applicable federal, state and foreign securities laws. Notwithstanding the foregoing, if the Administrator permits payment by means of delivering properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise and such instructions provide for sale of Shares under a limit order rather than at the market, the exercise will not be effective until the earlier of the date the Company receives delivery of cash or cash equivalents in full payment of the Exercise Price or the date the Company receives confirmation from the broker that the sale instruction has been fulfilled, and the exercise will not be effective unless the earlier of such dates occurs on or before termination of the Options.

 

 

d.     Method of Payment. You may pay the Exercise Price by:

 

i.     delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion;

 

ii.    a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System through a brokerage firm designated or approved by the Administrator;

 

iii.   subject to such limits as the Administrator may impose from time to time, tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company which have a Fair Market Value on the date of tender equal to the Exercise Price; or

 

iv.   any other method approved by the Administrator; or

 

v.    any combination of the foregoing.

 

e.     Issuance of Shares upon Exercise. The Company shall issue to you the Shares underlying the Options you exercise as soon as practicable after the exercise date, subject to the Company’s receipt of the aggregate exercise price and the requisite withholding taxes, if any. Upon issuance of such Shares, the Company may deliver, subject to the provisions of Section 8 below, such Shares on your behalf electronically to the Company’s designated stock plan administrator or such other broker-dealer as the Company may choose at its sole discretion, within reason, or may retain such Shares in uncertificated book-entry form. Any share certificates delivered will, unless the Shares are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability of such Shares.

 

4.

Termination of Service.

 

a.     Termination of Unexercisable Options. If your Service with the Company ceases for any reason, the Options that are then unexercisable, after giving effect to any vesting and exercise acceleration provisions set forth on Appendix A, will terminate immediately upon such cessation.

 

b.     Exercise Period Following Termination of Service. If your Service with the Company ceases for any reason other than discharge for Cause, the Options that are then exercisable, after giving effect to any vesting and exercise acceleration provisions set forth on Appendix A, will terminate upon the earliest of:

 

i.     the expiration of 90 days following such cessation, if your Service ceases on account of (1) your termination by the Company other than a discharge for Cause, or (2) your voluntary termination other than for Disability or death;

 

ii.    the expiration of 12 months following such cessation, if your Service ceases on account of your Disability or death;

 

iii.   the expiration of 12 months following your death, if your death occurs during the periods described in clauses (i) or (ii) of this Section 4(b), as applicable; or

 

iv.   the Expiration Date.

 

In the event of your death, the exercisable Options may be exercised by your executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws of descent and distribution.

 

 

c.     Misconduct. The Options will terminate in their entirety, regardless of whether the Options are then exercisable, immediately upon your discharge from Service for Cause, or upon your commission of any of the following acts during the exercise period following your termination of Service: (i) fraud on or misappropriation of any funds or property of the Company, or (ii) your breach of any provision of any employment, non-disclosure, non-competition, non-solicitation, assignment of inventions, or other similar agreement executed by you for the benefit of the Company, as determined by the Administrator, which determination will be conclusive.

 

d.     Change in Status. In the event that your Service is with a business, trade or entity that, after the Grant Date, ceases for any reason to be part or an Affiliate of the Company, your Service will be deemed to have terminated for purposes of this Section 4 upon such cessation if your Service does not continue uninterrupted immediately thereafter with the Company or an Affiliate of the Company.

 

5.     Nontransferability of Options. These Options and, before exercise, the underlying Shares are nontransferable otherwise than by will or the laws of descent and distribution and, during your lifetime, the Options may be exercised only by you or, during the period you are under a legal disability, by your guardian or legal representative. Except as provided above, the Options and, before exercise, the underlying Shares may not be assigned, transferred, pledged, hypothecated, subjected to any “put equivalent position,” “call equivalent position” (as each preceding term is defined by Rule 16(a)-1 under the Securities Exchange Act of 1934), or short position, or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

 

6.     Nonqualified Nature of the Options. The Options are not intended to qualify as incentive stock options within the meaning of Code section 422, and this Agreement shall be so construed. You hereby acknowledge that, upon exercise of the Options, you will recognize compensation income in an amount equal to the excess of the then Fair Market Value of the Shares over the Exercise Price and must comply with the provisions of Section 8 of this Agreement with respect to any tax withholding obligations that arise as a result of such exercise.

 

7.

Withholding of Taxes.

 

a.     At the time the Options are exercised, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll or any other payment of any kind due to you and otherwise agree to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the Options. The Company may require you to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options or issuance of share certificates representing Shares.

 

b.     The Administrator may, in its sole discretion, permit you to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options either by electing to have the Company withhold from the Shares to be issued upon exercise that number of Shares, or by electing to deliver to the Company already-owned shares, in either case having a Fair Market Value not in excess of the amount necessary to satisfy the statutory minimum withholding amount due.

 

8.     Adjustments. The Administrator may make various adjustments to your Options, including adjustments to the number and type of securities subject to the Options and the Exercise Price, in accordance with the terms of the Plan.

 

9.     Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or this Agreement will alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between you and the Company, or as a contractual right for you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without Cause or notice and whether or not such discharge results in the failure of any of the Options to become exercisable or any other adverse effect on your interests as set forth in the Plan.

 

 

10.   No Rights as a Stockholder. You shall not have any of the rights of a stockholder with respect to the Shares until such Shares have been issued to you upon the due exercise of the Options. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to the date such Shares are issued.

 

11.   The Company’s Rights. The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

12.   Entire Agreement. This Agreement, together with the correlating Stock Option Notice, contain the entire agreement between you and the Company with respect to the Options. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options shall be void and ineffective for all purposes.

 

13.   Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Options or Shares as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by you and the Company.

 

14.   Section 409A. This Agreement and the Options granted hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code. This Agreement and the Options shall be administered, interpreted and construed in a manner consistent with this intent. Nothing in the Plan or this Agreement shall be construed as including any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Options. Should any provision of the Plan or this Agreement be found not to comply with, or otherwise be exempt from, the provisions of Section 409A of the Code, it may be modified and given effect, in the sole discretion of the Administrator and without requiring your consent, in such manner as the Administrator determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A of the Code. The foregoing, however, shall not be construed as a guarantee or warranty by the Company of any particular tax effect to you.

 

15.   Electronic Delivery of Documents. By your signing the Notice, you (i) consent to the electronic delivery of this Agreement, all information with respect to the Plan and the Options, and any reports of the Company provided generally to the Company’s stockholders; (ii) acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost to you by contacting the Company by telephone or in writing; (iii) further acknowledge that you may revoke your consent to the electronic delivery of documents at any time by notifying the Company of such revoked consent by telephone, postal service or electronic mail; and (iv) further acknowledge that you understand that you are not required to consent to electronic delivery of documents.

 

 

16.   No Future Entitlement. By execution of the Notice, you acknowledge and agree that: (i) the grant of these Options is a one-time benefit which does not create any contractual or other right to receive future grants of stock options, or compensation in lieu of stock options, even if stock options have been granted repeatedly in the past; (ii) all determinations with respect to any such future grants, including, but not limited to, the times when stock options shall be granted or shall become exercisable, the maximum number of shares subject to each stock option, and the purchase price, will be at the sole discretion of the Administrator; (iii) the value of these Options is an extraordinary item of compensation which is outside the scope of your employment contract, if any; (iv) the value of these Options is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments or similar payments, or bonuses, long-service awards, pension or retirement benefits; (v) the vesting of these Options ceases upon termination of employment with the Company or transfer of employment from the Company, or other cessation of eligibility for any reason, except as may otherwise be explicitly provided in this Agreement; (vi) if the underlying Common Stock does not increase in value, these Options will have no value, nor does the Company guarantee any future value; and (vii) no claim or entitlement to compensation or damages arises if these Options do not increase in value and you irrevocably release the Company from any such claim that does arise.

 

17.   Personal Data. For the purpose of implementing, administering and managing these Options, you, by execution of the Notice, consent to the collection, receipt, use, retention and transfer, in electronic or other form, of your personal data by and among the Company and its third party vendors or any potential party to any Change in Control transaction or capital raising transaction involving the Company. You understand that personal data (including but not limited to, name, home address, telephone number, employee number, employment status, social security number, tax identification number, date of birth, nationality, job and payroll location, data for tax withholding purposes and shares awarded, cancelled, exercised, vested and unvested) may be transferred to third parties assisting in the implementation, administration and management of these Options and you expressly authorize such transfer as well as the retention, use, and the subsequent transfer of the data by the recipient(s). You understand that these recipients may be located in your country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You understand that data will be held only as long as is necessary to implement, administer and manage these Options. You understand that you may, at any time, request a list with the names and addresses of any potential recipients of the personal data, view data, request additional information about the storage and processing of data, require any necessary amendments to data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s Secretary. You understand, however, that refusing or withdrawing your consent may affect your ability to accept a stock option.

 

18.   Governing Law. The validity, construction and effect of this Agreement, and of any determinations or decisions made by the Administrator relating to this Agreement, and the rights of any and all persons having or claiming to have any interest under this Agreement, shall be determined exclusively in accordance with the laws of the State of New Jersey, without regard to its provisions concerning the applicability of laws of other jurisdictions. As a condition of this Agreement, you agree that you will not bring any action arising under, as a result of, pursuant to or relating to, this Agreement in any court other than a federal or state court in the districts which include New Jersey, and you hereby agree and submit to the personal jurisdiction of any federal court located in the district which includes New Jersey or any state court in the district which includes New Jersey. You further agree that you will not deny or attempt to defeat such personal jurisdiction or object to venue by motion or other request for leave from any such court.

 

19.   Resolution of Disputes. Any dispute or disagreement which shall arise under, or as a result of, or pursuant to or relating to, this Agreement shall be determined by the Administrator in good faith in its absolute and uncontrolled discretion, and any such determination or any other determination by the Administrator under or pursuant to this Agreement and any interpretation by the Administrator of the terms of this Agreement, will be final, binding and conclusive on all persons affected thereby. You agree that before you may bring any legal action arising under, as a result of, pursuant to or relating to, this Agreement you will first exhaust your administrative remedies before the Administrator. You further agree that in the event that the Administrator does not resolve any dispute or disagreement arising under, as a result of, pursuant to or relating to, this Agreement to your satisfaction, no legal action may be commenced or maintained relating to this Agreement more than twenty-four (24) months after the Administrator’s decision.

 

 

20.   Headings. The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

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

 

{Glossary begins on next page}

 

 

GLOSSARY

 

(a)           “Administrator” means the Board or the committee(s) or officer(s) appointed by the Board that have authority to administer the Options under this Agreement.

 

(b)           “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, CytoSorbents Corporation. For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

 

(c)           “Cause” has the meaning ascribed to such term in the Employment Agreement.

 

(d)           “Change of Control” has the meaning ascribed to such term in the Employment Agreement.

 

(e)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)            “Company” includes CytoSorbents Corporation and its Affiliates, except where the context otherwise requires.

 

(g)           Disability” has the meaning ascribed to such term in the Employment Agreement.

 

(h)           “Fair Market Value” of a share of Common Stock generally means either the closing price or the average of the high and low sale price per share of Common Stock on the relevant date, as determined in the Administrator’s discretion, as reported by the principal market or exchange upon which the Common Stock is listed or admitted for trade. Refer to the Plan for a detailed definition of Fair Market Value, including how Fair Market Value is determined in the event that no sale of Common Stock is reported on the relevant date.

 

(i)            “Good Reason” has the meaning ascribed to such term in the Employment Agreement.

 

(j)            “Service” means your employment or other service relationship with the Company and its Affiliates. Your Service will be considered to have ceased with the Company and its Affiliates if, immediately after a sale, merger or other corporate transaction, the trade, business or entity with which you are employed or otherwise have a service relationship is not the Company or its successor or an Affiliate of the Company or its successor.

 

(k)           “Shares” mean the shares of Common Stock underlying the Options.

 

(l)            “Stock Option Notice” means the written notice evidencing the award of the Options that correlates with and makes up a part of this Agreement.

 

(m)          “Termination Date” has the meaning ascribed to such term in the Employment Agreement.

 

(n)           “You”; “Your”. “You” or “your” means the recipient of the award of Options as reflected on the Stock Option Notice. Whenever the Agreement refers to “you” under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to your estate, personal representative, or beneficiary to whom the Options may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed to include such person.

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer.

 

	CytoSorbents Corporation
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer
	Date:	August 14, 2024

 

The undersigned hereby acknowledges that he/she has carefully read this Agreement and agrees to be bound by all of the provisions set forth herein. The undersigned also consents to electronic delivery of all notices or other information with respect to the Options or the Company.

 

		GRANTEE
		/s/ Peter J. Mariani
		Peter J. Mariani
		Date:	August 14, 2024

 

 

Appendix A

 

Vesting Schedule

 

Time-Based Option Grant

 

·

80,000 Shares shall become vested and exercisable according to the following vesting schedule; provided, that your Service is continuous from the Grant Date through such applicable vesting date:

 

Number of Shares Subject to Vesting	Vesting Date
41,000	6th month anniversary of the Grant Date
13,000	1st anniversary of the Grant Date
13,000	2nd anniversary of the Grant Date
13,000	3rd anniversary of the Grant Date

 

·

Except as otherwise set forth below and subject to the applicable terms of the Employment Agreement that may provide for accelerated vesting of the Options under certain circumstances, if your Service with the Company ceases for any reason, all Shares that are not then vested and exercisable will be forfeited to the Company immediately and automatically upon such cessation without payment of any consideration therefor and you will have no further right, title or interest in or to such Options or the underlying shares of Common Stock.

 

 

 

Exhibit 10.4

 

Inducement Grant

 

CYTOSORBENTS CORPORATION

Nonstatutory Stock Option Notice

Grant No.: _____

 

This Notice evidences the award of nonstatutory stock options (each, an “Option” or collectively, the “Options”) that have been granted to you, Peter J. Mariani, subject to the terms of the attached Nonstatutory Stock Option Agreement (the “Agreement”). The Options entitle you to purchase shares of common stock, par value $0.001 per share (“Common Stock”), of CytoSorbents Corporation, a Delaware corporation (the “Company”). The number of shares you may purchase and the exercise price at which you may purchase them are specified below. This Notice constitutes part of and is subject to the terms and provisions of the Agreement.

 

Grant Date:

 

Number of Options: 215,000 Options, each permitting the purchase of one Share

 

Exercise Price: $0.90 per share

 

Expiration Date: The Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the 10th anniversary of the Grant Date (the “Expiration Date”), unless fully exercised or terminated earlier.

 

Exercisability Schedule: Subject to the terms and conditions described in the Agreement, the Options become exercisable in accordance with the schedule below:

 

Vesting Schedule: Subject to the terms of the Agreement, the Options shall become vested and exercisable according to the vesting schedules set forth in Appendix A of the Agreement so long as your Service is continuous from the Grant Date through the applicable date upon which vesting is scheduled to occur, except as otherwise set forth on Appendix A with respect to vesting and exercise acceleration.

 

The extent to which Options become exercisable as of a particular date is rounded down to the nearest whole share. However, exercisability is rounded up to 100% on the first anniversary of the Grant Date.

 

Inducement Grant: The Options being granted to you herein is intended to constitute an “employment inducement grant” as described in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, and is not being granted or made under the CytoSorbents Corporation 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”).

 

	CytoSorbents Corporation
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer
	Date:	August 14, 2024

 

I acknowledge that I have carefully read the attached Agreement and the prospectus for the Plan and agree to be bound by all of the provisions set forth in these documents.

 

Enclosures:	Nonstatutory Stock Option Agreement	OPTIONEE
		/s/ Peter J. Mariani
	Exercise Form	Peter J. Mariani
		Date:	August 14, 2024

 

 

Grant No.: _____

 

Nonstatutory Stock Option Agreement

 

This Agreement, dated as of the Grant Date, is delivered by CytoSorbents Corporation, a Delaware corporation (the “Company”) to you, Peter J. Mariani.

 

Pursuant to the terms of the Employment Agreement, dated August 14, 2024 between the Company and you (as it may be amended from time to time, the “Employment Agreement”), you are to be granted the Options on the terms and subject to the conditions set forth herein. The Board of Directors of the Company has decided to make Options grant as a material inducement for you to enter into employment with the Company and to align your interests with those of the Company and its stockholders. The grant of the Options provided for herein is intended to constitute an “employment inducement grant” as described in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules, and is not being granted or made under the Plan.

 

1.    Terminology. Capitalized terms used in this Agreement are defined in the correlating Stock Option Notice and/or the Glossary at the end of the Agreement or, in the Plan, as applicable.

 

2.     Inducement Grant.

 

a.            The Options are being granted to you by the Company in accordance with the employment inducement grant exception to the shareholder-approval requirements of the Nasdaq Stock Market set forth in Rule 5635(c)(4), or any successor provision, of the NASDAQ Listing Rules on the terms and subject to the conditions set forth in this Agreement and, subject to Section 2(c) below, otherwise on terms identical to the terms provided in the Plan. In the event of any conflict between this Agreement and the Plan, this Agreement shall control.

 

b.            You acknowledge that the grant of the Options hereunder satisfies in full the Company’s obligation to provide you with nonstatutory stock option grant as described in Section 4.3(e) of the Employment Agreement. You further acknowledge that the grant of the Options hereunder is intended to be in consideration for, in part, the covenants set forth in Section 10 of the Employment Agreement.

 

c.            It is understood that the Options are not being granted pursuant to the Plan; provided, however, that this Agreement shall be construed and administered in a manner consistent with the provisions of the Plan as if granted pursuant thereto, the terms of which are incorporated herein by reference (including, without limitation, any interpretations, amendments, rules and regulations promulgated by the Administrator from time to time pursuant to the Plan, which shall be deemed to apply to the Options granted hereunder without any further action of the Administrator, unless expressly provided otherwise by the Administrator). The Administrator shall have final authority to interpret and construe the terms of this Agreement and the Plan’s terms as they are incorporated herein by reference and deemed to apply to the Options granted hereunder, and to make any and all determinations under them, and its decision shall be binding and conclusive upon you and your beneficiaries in respect of any questions arising under the Plan or this Agreement. You acknowledge that you have received a copy of the Plan and the official prospectus for the Plan. You also acknowledge that you had an opportunity to review the Plan and agree to be bound by the terms and provisions of the Plan, as incorporated into this Agreement. Paper copies of the Plan and the official Plan prospectus are available, and paper copies of the prospectus for this Agreement will be available, by contacting the Chief Legal Officer of the Company. For the avoidance of doubt, neither the Options granted hereunder nor any shares of Common Stock issued upon exercise of the Options shall reduce the number of shares of Common Stock available for issuance pursuant to Awards granted under the Plan.

 

 

3.

Exercise of Options.

 

a.          Exercisability. The Options will become exercisable in accordance with the Exercisability Schedule set forth in the Stock Option Notice, so long as you are in the Service of the Company from the Grant Date through the applicable exercisability dates. None of the Options will become exercisable after your Service with the Company ceases, unless the Stock Option Notice provides otherwise with respect to exercisability that arises as a result of your cessation of Service.

 

b.          Right to Exercise. You may exercise the Options, to the extent exercisable, at any time on or before 5:00 p.m. Eastern Time on the Expiration Date or the earlier termination of the Options, unless otherwise provided under applicable law. Notwithstanding the foregoing, if at any time the Administrator determines that the delivery of the Shares this Agreement is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise the Options or receive Shares pursuant to the Options shall be suspended until the Administrator determines that such delivery is lawful. If at any time the Administrator determines that the delivery of the Shares under this Agreement is or may violate the rules of the national securities exchange on which the shares are then listed for trade, the right to exercise the Options or receive Shares pursuant to the Options shall be suspended until the Administrator determines that such exercise or delivery would not violate such rules. Section 4 below describes certain limitations on exercise of the Options that apply in the event of your death, Disability, or termination of Service. The Options may be exercised only in multiples of whole Shares and may not be exercised at any one time as to fewer than one hundred Shares (or such lesser number of Shares as to which the Options are then exercisable). No fractional Shares will be issued under the Options.

 

c.          Exercise Procedure. In order to exercise the Options, you must provide the following items to the Secretary of the Company or his or her delegate before the expiration or termination of the Options:

 

i.            notice, in such manner and form as the Administrator may require from time to time, specifying the number of Shares to be purchased under the Options;

 

ii.            full payment of the Exercise Price for the Shares or properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section 3(d) of this Agreement; and

 

iii.            full payment of applicable withholding taxes pursuant to Section 8 of this Agreement.

 

An exercise will not be effective until the Secretary of the Company or his or her delegate receives all of the foregoing items, and such exercise otherwise is permitted under and complies with all applicable federal, state and foreign securities laws. Notwithstanding the foregoing, if the Administrator permits payment by means of delivering properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise and such instructions provide for sale of Shares under a limit order rather than at the market, the exercise will not be effective until the earlier of the date the Company receives delivery of cash or cash equivalents in full payment of the Exercise Price or the date the Company receives confirmation from the broker that the sale instruction has been fulfilled, and the exercise will not be effective unless the earlier of such dates occurs on or before termination of the Options.

 

 

d.          Method of Payment. You may pay the Exercise Price by:

 

i.            delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion;

 

ii.            a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System through a brokerage firm designated or approved by the Administrator;

 

iii.          subject to such limits as the Administrator may impose from time to time, tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company which have a Fair Market Value on the date of tender equal to the Exercise Price; or

 

iv.          any other method approved by the Administrator; or

 

v.           any combination of the foregoing.

 

e.           Issuance of Shares upon Exercise. The Company shall issue to you the Shares underlying the Options you exercise as soon as practicable after the exercise date, subject to the Company’s receipt of the aggregate exercise price and the requisite withholding taxes, if any. Upon issuance of such Shares, the Company may deliver, subject to the provisions of Section 8 below, such Shares on your behalf electronically to the Company’s designated stock plan administrator or such other broker-dealer as the Company may choose at its sole discretion, within reason, or may retain such Shares in uncertificated book-entry form. Any share certificates delivered will, unless the Shares are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability of such Shares.

 

4.

Termination of Service.

 

a.          Termination of Unexercisable Options. If your Service with the Company ceases for any reason, the Options that are then unexercisable, after giving effect to any vesting and exercise acceleration provisions set forth on Appendix A, will terminate immediately upon such cessation.

 

b.          Exercise Period Following Termination of Service. If your Service with the Company ceases for any reason other than discharge for Cause, the Options that are then exercisable, after giving effect to any vesting and exercise acceleration provisions set forth on Appendix A, will terminate upon the earliest of:

 

i.            the expiration of 90 days following such cessation, if your Service ceases on account of (1) your termination by the Company other than a discharge for Cause, or (2) your voluntary termination other than for Disability or death;

 

ii.           the expiration of 12 months following such cessation, if your Service ceases on account of your Disability or death;

 

iii.          the expiration of 12 months following your death, if your death occurs during the periods described in clauses (i) or (ii) of this Section 4(b), as applicable; or

 

iv.          the Expiration Date.

 

In the event of your death, the exercisable Options may be exercised by your executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws of descent and distribution.

 

c.          Misconduct. The Options will terminate in their entirety, regardless of whether the Options are then exercisable, immediately upon your discharge from Service for Cause, or upon your commission of any of the following acts during the exercise period following your termination of Service: (i) fraud on or misappropriation of any funds or property of the Company, or (ii) your breach of any provision of any employment, non-disclosure, non-competition, non-solicitation, assignment of inventions, or other similar agreement executed by you for the benefit of the Company, as determined by the Administrator, which determination will be conclusive.

 

 

d.          Change in Status. In the event that your Service is with a business, trade or entity that, after the Grant Date, ceases for any reason to be part or an Affiliate of the Company, your Service will be deemed to have terminated for purposes of this Section 4 upon such cessation if your Service does not continue uninterrupted immediately thereafter with the Company or an Affiliate of the Company.

 

5.     Nontransferability of Options. These Options and, before exercise, the underlying Shares are nontransferable otherwise than by will or the laws of descent and distribution and, during your lifetime, the Options may be exercised only by you or, during the period you are under a legal disability, by your guardian or legal representative. Except as provided above, the Options and, before exercise, the underlying Shares may not be assigned, transferred, pledged, hypothecated, subjected to any “put equivalent position,” “call equivalent position” (as each preceding term is defined by Rule 16(a)-1 under the Securities Exchange Act of 1934), or short position, or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

 

6.    Nonqualified Nature of the Options. The Options are not intended to qualify as incentive stock options within the meaning of Code section 422, and this Agreement shall be so construed. You hereby acknowledge that, upon exercise of the Options, you will recognize compensation income in an amount equal to the excess of the then Fair Market Value of the Shares over the Exercise Price and must comply with the provisions of Section 8 of this Agreement with respect to any tax withholding obligations that arise as a result of such exercise.

 

7.

Withholding of Taxes.

 

a.          At the time the Options are exercised, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll or any other payment of any kind due to you and otherwise agree to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the Options. The Company may require you to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options or issuance of share certificates representing Shares.

 

b.          The Administrator may, in its sole discretion, permit you to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options either by electing to have the Company withhold from the Shares to be issued upon exercise that number of Shares, or by electing to deliver to the Company already-owned shares, in either case having a Fair Market Value not in excess of the amount necessary to satisfy the statutory minimum withholding amount due.

 

8.     Adjustments. The Administrator may make various adjustments to your Options, including adjustments to the number and type of securities subject to the Options and the Exercise Price, in accordance with the terms of the Plan.

 

9.      Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or this Agreement will alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between you and the Company, or as a contractual right for you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without Cause or notice and whether or not such discharge results in the failure of any of the Options to become exercisable or any other adverse effect on your interests as set forth in the Plan.

 

 

10.   No Rights as a Stockholder. You shall not have any of the rights of a stockholder with respect to the Shares until such Shares have been issued to you upon the due exercise of the Options. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to the date such Shares are issued.

 

11.   The Company’s Rights. The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

12.   Entire Agreement. This Agreement, together with the correlating Stock Option Notice, contain the entire agreement between you and the Company with respect to the Options. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options shall be void and ineffective for all purposes.

 

13.   Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Options or Shares as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by you and the Company.

 

14.   Section 409A. This Agreement and the Options granted hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Code. This Agreement and the Options shall be administered, interpreted and construed in a manner consistent with this intent. Nothing in the Plan or this Agreement shall be construed as including any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Options. Should any provision of the Plan or this Agreement be found not to comply with, or otherwise be exempt from, the provisions of Section 409A of the Code, it may be modified and given effect, in the sole discretion of the Administrator and without requiring your consent, in such manner as the Administrator determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Section 409A of the Code. The foregoing, however, shall not be construed as a guarantee or warranty by the Company of any particular tax effect to you.

 

15.   Electronic Delivery of Documents. By your signing the Notice, you (i) consent to the electronic delivery of this Agreement, all information with respect to the Plan and the Options, and any reports of the Company provided generally to the Company’s stockholders; (ii) acknowledge that you may receive from the Company a paper copy of any documents delivered electronically at no cost to you by contacting the Company by telephone or in writing; (iii) further acknowledge that you may revoke your consent to the electronic delivery of documents at any time by notifying the Company of such revoked consent by telephone, postal service or electronic mail; and (iv) further acknowledge that you understand that you are not required to consent to electronic delivery of documents.

 

16.   No Future Entitlement. By execution of the Notice, you acknowledge and agree that: (i) the grant of these Options is a one-time benefit which does not create any contractual or other right to receive future grants of stock options, or compensation in lieu of stock options, even if stock options have been granted repeatedly in the past; (ii) all determinations with respect to any such future grants, including, but not limited to, the times when stock options shall be granted or shall become exercisable, the maximum number of shares subject to each stock option, and the purchase price, will be at the sole discretion of the Administrator; (iii) the value of these Options is an extraordinary item of compensation which is outside the scope of your employment contract, if any; (iv) the value of these Options is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any termination, severance, resignation, redundancy, end of service payments or similar payments, or bonuses, long-service awards, pension or retirement benefits; (v) the vesting of these Options ceases upon termination of employment with the Company or transfer of employment from the Company, or other cessation of eligibility for any reason, except as may otherwise be explicitly provided in this Agreement; (vi) if the underlying Common Stock does not increase in value, these Options will have no value, nor does the Company guarantee any future value; and (vii) no claim or entitlement to compensation or damages arises if these Options do not increase in value and you irrevocably release the Company from any such claim that does arise.

 

 

17.   Personal Data. For the purpose of implementing, administering and managing these Options, you, by execution of the Notice, consent to the collection, receipt, use, retention and transfer, in electronic or other form, of your personal data by and among the Company and its third party vendors or any potential party to any Change in Control transaction or capital raising transaction involving the Company. You understand that personal data (including but not limited to, name, home address, telephone number, employee number, employment status, social security number, tax identification number, date of birth, nationality, job and payroll location, data for tax withholding purposes and shares awarded, cancelled, exercised, vested and unvested) may be transferred to third parties assisting in the implementation, administration and management of these Options and you expressly authorize such transfer as well as the retention, use, and the subsequent transfer of the data by the recipient(s). You understand that these recipients may be located in your country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You understand that data will be held only as long as is necessary to implement, administer and manage these Options. You understand that you may, at any time, request a list with the names and addresses of any potential recipients of the personal data, view data, request additional information about the storage and processing of data, require any necessary amendments to data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company’s Secretary. You understand, however, that refusing or withdrawing your consent may affect your ability to accept a stock option.

 

18.   Governing Law. The validity, construction and effect of this Agreement, and of any determinations or decisions made by the Administrator relating to this Agreement, and the rights of any and all persons having or claiming to have any interest under this Agreement, shall be determined exclusively in accordance with the laws of the State of New Jersey, without regard to its provisions concerning the applicability of laws of other jurisdictions. As a condition of this Agreement, you agree that you will not bring any action arising under, as a result of, pursuant to or relating to, this Agreement in any court other than a federal or state court in the districts which include New Jersey, and you hereby agree and submit to the personal jurisdiction of any federal court located in the district which includes New Jersey or any state court in the district which includes New Jersey. You further agree that you will not deny or attempt to defeat such personal jurisdiction or object to venue by motion or other request for leave from any such court.

 

19.   Resolution of Disputes. Any dispute or disagreement which shall arise under, or as a result of, or pursuant to or relating to, this Agreement shall be determined by the Administrator in good faith in its absolute and uncontrolled discretion, and any such determination or any other determination by the Administrator under or pursuant to this Agreement and any interpretation by the Administrator of the terms of this Agreement, will be final, binding and conclusive on all persons affected thereby. You agree that before you may bring any legal action arising under, as a result of, pursuant to or relating to, this Agreement you will first exhaust your administrative remedies before the Administrator. You further agree that in the event that the Administrator does not resolve any dispute or disagreement arising under, as a result of, pursuant to or relating to, this Agreement to your satisfaction, no legal action may be commenced or maintained relating to this Agreement more than twenty-four (24) months after the Administrator’s decision.

 

 

20.   Headings. The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

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

 

{Glossary begins on next page}

 

 

GLOSSARY

 

(a)           “Administrator” means the Board or the committee(s) or officer(s) appointed by the Board that have authority to administer the Options under this Agreement.

 

(b)           “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, CytoSorbents Corporation. For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

 

(c)            “Cause” has the meaning ascribed to such term in the Employment Agreement.

 

(d)           “Change of Control” has the meaning ascribed to such term in the Employment Agreement.

 

(e)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)            “Company” includes CytoSorbents Corporation and its Affiliates, except where the context otherwise requires.

 

(g)           Disability” has the meaning ascribed to such term in the Employment Agreement.

 

(h)           “Fair Market Value” of a share of Common Stock generally means either the closing price or the average of the high and low sale price per share of Common Stock on the relevant date, as determined in the Administrator’s discretion, as reported by the principal market or exchange upon which the Common Stock is listed or admitted for trade. Refer to the Plan for a detailed definition of Fair Market Value, including how Fair Market Value is determined in the event that no sale of Common Stock is reported on the relevant date.

 

(i)            “Service” means your employment or other service relationship with the Company and its Affiliates. Your Service will be considered to have ceased with the Company and its Affiliates if, immediately after a sale, merger or other corporate transaction, the trade, business or entity with which you are employed or otherwise have a service relationship is not the Company or its successor or an Affiliate of the Company or its successor.

 

(j)            “Shares” mean the shares of Common Stock underlying the Options.

 

(k)           “Stock Option Notice” means the written notice evidencing the award of the Options that correlates with and makes up a part of this Agreement.

 

(l)            “Termination Date” has the meaning ascribed to such term in the Employment Agreement.

 

(m)          “You”; “Your”. “You” or “your” means the recipient of the award of Options as reflected on the Stock Option Notice. Whenever the Agreement refers to “you” under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to your estate, personal representative, or beneficiary to whom the Options may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed to include such person.

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer.

 

	CytoSorbents Corporation
	By:	/s/ Dr. Phillip P. Chan
	Name:	Dr. Phillip P. Chan
	Title:	Chief Executive Officer
	Date:	August 14, 2024

 

The undersigned hereby acknowledges that he/she has carefully read this Agreement and agrees to be bound by all of the provisions set forth herein. The undersigned also consents to electronic delivery of all notices or other information with respect to the Options or the Company.

 

		GRANTEE
		/s/ Peter J. Mariani
		Peter J. Mariani
		Date:	August 14, 2024

 

 

Appendix A

 

Vesting Schedule

 

Performance-Based Option Grant

 

·

215,000 Shares shall become vested and exercisable according to the following vesting schedule; provided, that the milestone-based vesting conditions set forth below are achieved on or prior to December 31, 2025 and your Service is continuous from the Grant Date through such applicable vesting date:

 

	Number of Shares Subject to Vesting	Performance Vesting Criteria
	60,000	Immediately upon the Company’s obtainment of U.S. Food and Drug Administration approval for its product DrugSorb (“Milestone 1”)
	30,000	Immediately upon the Company’s achievement of $80 million or more in annual ex-U.S. sales (“Milestone 2”)
	70,000	Immediately upon the Company’s achievement of $20 million or more in annual U.S. sales (“Milestone 3”)
	55,000	Immediately upon the Company’s achievement of U.S. GAAP breakeven (“Milestone 4”)

 

·

The Administrator shall have sole and absolute authority to make any determinations necessary with respect to the vesting of the Options. For purposes of clarity, any Shares that do not vest upon the milestones set forth in the table above shall be forfeited.

 

·

If your Service with the Company terminates for any reason prior to a vesting date, any unvested Shares subject to the Option shall be immediately cancelled and forfeited for no consideration.

 

·

Any vested Shares that are unexercised as of the Termination Date shall remain exercisable for the period as provided in Section 4 of the Agreement. The entire Option, including any exercisable and unexercisable portion, expires immediately upon your termination of Service with the Company for Cause.

 

 

 

Exhibit 10.5

 

Kathleen P. Bloch

206 E. Washington Ave.

Wildwood Crest, NJ 08260

732-921-0149

 

Consulting Agreement

 

THIS AGREEMENT (The “Agreement”) entered into as of August 13, 2024 between Kathleen P. Bloch (“Consultant”) and CytoSorbents Corporation and its wholly-owned subsidiary CytoSorbents Medical, Inc., both Delaware corporations, with offices at 305 College Road East, Princeton, NJ 08540 (collectively, the “Company”).

 

Witnesseth

 

WHEREAS, the Consultant possesses capabilities in the areas of Finance and Accounting as the prior Chief Financial Officer of the Company and desires to make available her expertise for the benefits of the Company by providing interim services in such areas of expertise; and

 

WHEREAS, Company desires to engage Consultant during the term of this Agreement;

 

NOW, THEREFORE, in view of the foregoing premises which are hereby incorporated as part of this Agreement, and consideration of the mutual covenants herein contained, the parties hereto agree as follows:

 

1.

The services to be rendered by Consultant (the “Services”) are set forth in Exhibit “B”. Services may be amended by written agreement of Consultant and the Company and in doing, additional Exhibits would be added.

 

2.

Consultant agrees that during the term of this Agreement, Consultant shall perform the Services in a timely fashion to the best of the Consultant’s abilities and in accordance with the Company’s reasonable requests.

 

Consultant agrees to comply with the relevant standard operating procedures of the Company as applicable, while performing Services.

 

3.

It is the express intention of the parties that Consultant be an independent contractor and not an employee, agent, joint venture, or partner of Company. Both parties acknowledge that Consultant is not an employee of Company for state or federal tax purposes. Consultant shall retain right to perform services for others during the term of this agreement.

 

4.

The Agreement may be terminated by Consultant upon fourteen (14) days’ written notice, or by Company upon fourteen (14) days’ notice. Unless sooner terminated by either party, this Agreement shall remain in effect until December 31, 2025, and thereafter as mutually agreed to in writing.

 

 

5.

(a) Consultant recognizes and acknowledges that the data collected, developed, and maintained for Company by Consultant is a valuable property right of the Company and will be kept confidential and secret and therefore agrees to keep all information relating to such data in confidence and trust, and will not use or disclose any such information without the written consent of the Company, except as such use may be necessary in the ordinary course of Consultant’s performance of the Services for the Company.

 

(b) Consultant agrees that all documents and other physical property furnished to Consultant or produced by Consultant in connection with the performance of the Services shall be and remain the sole property of the Company upon request or upon the termination of the Agreement.

 

(c) Consultant agrees to execute the Company’s Non-Disclosure Agreement

 

(d) Consultant agrees any inventions or patents derived from consulting services, if applicable, shall be the property of CytoSorbents Medical, Inc. and assigned to the Company at no further cost.

 

6.

In consideration of the Services rendered hereunder, Company shall compensate Consultant at the rate set forth in Exhibit “A” hereto, together with reimbursement for other out-of-pocket expenses actually incurred on behalf of the Company and approved in advance of the Company. Travel expenses will be submitted within 5 working days of completion of the travel. Company will reimburse the Consultant within 15 days from receipt of the expense report. Consultant shall invoice Company as set forth in Exhibit “A” hereto.

 

7.

Consultant hereby represents that neither the execution of this Agreement, the consulting relationship with the Company nor the performance of the Services will violate any obligations of Consultant to any person, entity, including, without limitation, the obligation to keep confidential proprietary information of such person or entity.

 

8.

Each party shall indemnify the other from and hold it harmless against any loss, liability, damage, action, cause of action, cost or expense (including without limitation attorney’s fees) arising out of (a) any unauthorized act or omission of the indemnitor which may be determined to be binding upon the indemnitee, (b) any material breach of the obligations and undertakings of the indemnitor hereunder, or (c) the negligent, reckless or willful misconduct of the indemnitor.

 

9.

Company agrees to comply with all reasonable requests of Consultant (and provide reasonable access to documents) necessary to the performance of Consultant’s duties under this Agreement.

 

 

10.

Should either party default in the performance of this Agreement or materially breach any of its provisions, the other party may terminate this Agreement by written notification to the other party. For purposes of this section, material breach of this Agreement shall include, but not be limited to, failure to meet the deadlines, destruction of property, dishonesty, theft, or any actions which would tend to disparage the business reputation of either party in the community.

 

11.

This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey.

 

12.

This Agreement cannot be altered or otherwise amended except pursuant to an instrument in writing signed by Consultant and Company.

 

IN WITNESS WHEREOF Company and Consultant have executed this Agreement as of the date first above written.

 

CONSULTANT		CytoSorbents Corporation
		and CytoSorbents Medical, Inc.
/s/ Kathleen P. Bloch		/s/ Dr. Phillip P. Chan
Kathleen P. Bloch		Dr. Phillip Chan
Consultant		CEO, CytoSorbents Corporation

 

 

EXHIBIT “A”

 

CONSULTANT:

 

Kathleen P. Bloch

 

RATE FOR SERVICE FOR:

 

Compensation:

 

·

$335 per hour, as required by the Company

 

·

Reimbursement for other reasonable, documented out-of-pocket expenses actually incurred on behalf of the Company and approved in advance by the Company if in excess of $500 per month

 

·

For clarity, RSUs issued in 2021, 2022, and 2023 will continue to vest as scheduled, provided Kathleen remains a consultant to the Company.

 

Company will make payment to Consultant on a monthly basis following the receipt of an invoice.

 

 

EXHIBIT “B”

 

Consultant: Kathleen P. Bloch

 

Scope of work:

 

You will report directly to Dr. Phillip Chan, CEO, and will work remotely. You may also be given specific assignments by the Chief Financial Officer of CytoSorbents Corporation at his discretion. You are expected to maintain all files on the corporate server in an organized fashion.

 

Duties will include:

 

·

Assist in the orientation and facilitate a smooth transition of the Company’s new Chief Financial Officer, including verbal and written instructions, introductions to contacts, sharing of knowledge of past practices, policies, and agreements.

 

·

Provide consultation with any member of the Management team and/or Finance team to provide historical information or assistance with specific areas with which the Consultant has expert knowledge.

 

·

Specific assignments and/or projects Consultant agrees to undertake at the request of the CEO or the CFO.

 

 

Exhibit 99.1

 

 

 

CytoSorbents Appoints Peter J. Mariani Chief Financial Officer

 

CytoSorbents CFO Kathleen P. Bloch Retires

 

PRINCETON, N.J., August 13, 2024 -- CytoSorbents Corporation (NASDAQ: CTSO), a leader in the treatment of life-threatening conditions in the intensive care unit and cardiac surgery using blood purification via its proprietary polymer adsorption technology, announces the appointment of Peter J. Mariani as Chief Financial Officer (CFO), effective August 14, 2024. Mr. Mariani will report to Dr. Phillip Chan, Chief Executive Officer of CytoSorbents. Concurrently, Kathleen P. Bloch, CytoSorbents’ current CFO, announced her retirement from the Company effective as of the close of business today, and will continue to serve in an advisory role as a consultant to enable an effective transition.

 

Mr. Mariani brings over 25 years of experience as a valued partner and strategic financial leader across several high growth medical device companies. Prior to joining CytoSorbents, Mr. Mariani served as CFO of Axogen, Inc (NASDAQ: AXGN), a medical technology company focused on peripheral nerve repair, from March 2016 to December 2023, most recently as its Executive Vice President & CFO from March 2021 to December 2023. At Axogen, Mr. Mariani was responsible for all finance and accounting functions, investor relations, information technology and security, and Global Quality. During his tenure, Axogen grew annual revenue from $27 million to nearly $160 million, expanded from one to four nerve repair clinical applications, raised approximately $250 million of capital, executed a comprehensive clinical evidence development and publication strategy, and completed a long-term facility build-out.

 

Dr. Chan stated, “Pete is a seasoned and accomplished medical device CFO whose many successes at high growth publicly-traded companies such as Axogen, Hansen Medical, and Guidant Corporation, speak for themselves. He has consistently demonstrated a disciplined and rigorous approach to financial management, operational excellence, and strategic development both domestically and internationally that aligns perfectly with our next phase of expected rapid growth. Importantly, CytoSorbents today shares many similarities to Axogen when Pete joined as CFO in 2016, including with respect to its size, revenue base, U.S. market opportunity, and high margin business model. He has proven his ability to fund, scale, and manage impressive growth. As we pursue U.S. and Canadian marketing approval for DrugSorb-ATR and drive our OUS business with CytoSorb, we believe Pete will be an outstanding fit where his deep global experience and insight is expected to be vital to our success. We are thrilled to have Pete join CytoSorbents and be a key member of the management team.”

 

 

Prior to Axogen, Mr. Mariani was the Chief Financial Officer of Lensar, Inc., (NASDAQ: LNSR) which at the time was privately-held and a global leader in next generation femtosecond laser technology for refractive cataract surgery. Prior to Lensar, he served as Chief Financial Officer at Hansen Medical, Inc., a publicly traded company that designed and manufactured medical robotics for positioning and control of catheter-based technologies.  Mr. Mariani’s career also includes 12 years with Guidant Corporation, a global leader in the development and sale of medical devices for the treatment of cardiovascular disease. During his tenure at Guidant, he held senior financial positions of increasing importance, including Vice President of Finance and Administration, Guidant Japan, and Corporate Vice President, Controller and Chief Accounting Officer. He started his career at Ernst and Young, LLP, where he served a diverse client base as a Certified Public Accountant. Mr. Mariani earned a Bachelor of Science in accounting from Indiana University.

 

“I am excited to join CytoSorbents during this pivotal time in the Company’s history.” stated Mr. Mariani. “The potential future marketing approval of DrugSorb-ATR by the U.S. Food and Drug Administration (FDA) and Health Canada would provide an exciting U.S. and Canadian entry point for the Company’s technology in the large and important cardiac surgery market. The anticipated win-win-win value proposition for patients, surgeons, and hospitals, if approved, appears extremely compelling. Meanwhile the opportunity for CytoSorb® in critical care and cardiac surgery worldwide is massive with the anticipated prospects of stronger and sustained growth ahead. I look forward to partnering with this talented and dedicated team to further develop and execute our long-term growth strategy and bring improved outcomes to as many patients as possible with CytoSorbents’ life-saving blood purification therapies.”

 

Dr. Chan concluded, “As we welcome Pete to CytoSorbents, we remain indebted to Kathy Bloch for her more than 11 years of dedication and leadership at the Company as a trusted colleague and friend, and for all of her contributions that have helped us achieve the success we have today. In particular, after her retirement as our CFO in March 2023, and interim CFO consultancy, Kathy selflessly came back in August 2023 to reprise her role as full-time CFO, and in the intervening 12 months, helped to secure the future of the Company with two key financings and orchestrating our cash conservation strategy. We are glad she will continue as a consultant to help manage a smooth CFO transition. On behalf of the CytoSorbents Board of Directors, its management team, and employees, we wish Kathy an enjoyable, relaxing, and well-deserved retirement.”

 

 

About CytoSorbents Corporation (NASDAQ: CTSO)

 

CytoSorbents Corporation is a leader in the treatment of life-threatening conditions in the intensive care unit and in cardiac surgery through blood purification. Its lead product, CytoSorb^®, is approved in the European Union and distributed in 76 countries worldwide. It is an extracorporeal cytokine adsorber that reduces “cytokine storm” or “cytokine release syndrome” in common critical illnesses that can lead to massive inflammation, organ failure and patient death. In these diseases, the risk of death can be extremely high, and there are few, if any, effective treatments. CytoSorb is also used during and after cardiothoracic surgery to remove antithrombotic drugs and inflammatory mediators that can lead to postoperative complications, including severe bleeding and multiple organ failure. As of June 30, 2024, more than 248,000 CytoSorb devices have been used cumulatively. CytoSorb was originally launched in the European Union under CE mark as the first cytokine adsorber. Additional CE mark extensions were granted for bilirubin and myoglobin removal in clinical conditions such as liver disease and trauma, respectively, and for ticagrelor and rivaroxaban removal in cardiothoracic surgery procedures. CytoSorb has also received FDA Emergency Use Authorization in the United States for use in adult critically ill COVID-19 patients with impending or confirmed respiratory failure. CytoSorb is not yet approved in the United States.

 

The DrugSorb™-ATR antithrombotic removal system, an investigational device based on the same polymer technology as CytoSorb, has received two FDA Breakthrough Device Designations, one for the removal of ticagrelor and another for the removal of the direct oral anticoagulants (DOAC) apixaban and rivaroxaban in a cardiopulmonary bypass circuit during urgent cardiothoracic procedures. The Company has completed the FDA-approved, randomized, controlled STAR-T (Safe and Timely Antithrombotic Removal-Ticagrelor) study of 140 patients at approximately 30 centers in U.S. and Canada to evaluate whether intraoperative use of DrugSorb-ATR can reduce the perioperative risk of bleeding in patients receiving ticagrelor and undergoing cardiothoracic surgery. This pivotal study is intended to support U.S. FDA and Health Canada marketing approval for DrugSorb-ATR in this application.

 

CytoSorbents’ purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Its technologies have received non-dilutive grant, contract, and other funding of approximately $50 million from DARPA, the U.S. Department of Health and Human Services (HHS), the National Institutes of Health (NIH), National Heart, Lung, and Blood Institute (NHLBI), the U.S. Army, the U.S. Air Force, U.S. Special Operations Command (SOCOM), Air Force Material Command (USAF/AFMC), and others. The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued U.S. and international patents and registered trademarks, and multiple patent applications pending, including ECOS-300CY^®, CytoSorb-XL™, HemoDefend-RBC™, HemoDefend-BGA™, VetResQ^®, K⁺ontrol™, DrugSorb™, ContrastSorb, and others. For more information, please visit the Company’s websites at www.cytosorbents.com and www.cytosorb.com or follow us on Facebook and X. 

 

 

Forward-Looking Statements

 

This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, future targets and outlooks for our business, representations and contentions, the timing of our expected regulatory submissions and our expectations with respect to the accretive value that Mr. Mariani will bring to the Company, and are not historical facts and typically are identified by use of terms such as “may,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements in this press release represent management’s current judgment and expectations, but our actual results, events and performance could differ materially from those in the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks discussed in our Annual Report on Form 10-K, filed with the SEC on March 14, 2024, as updated by the risks reported in our Quarterly Reports on Form 10-Q, and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We caution you not to place undue reliance upon any such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required under the Federal securities laws.

 

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U.S. Company Contact:

Dr. Phillip Chan, CEO

305 College Road East

Princeton, NJ 08540

pchan@cytosorbents.com

 

Investor Relations Contact:
Eric Ribner
LifeSci Advisors, LLC
250 W 55^th St, #3401
New York, NY 10019

ir@cytosorbents.com

 

v3.24.2.u1

Cover	Aug. 13, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 13, 2024
Entity File Number	001-36792
Entity Registrant Name	CYTOSORBENTS CORPORATION
Entity Central Index Key	0001175151
Entity Tax Identification Number	98-0373793
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	305 College Road East
Entity Address, City or Town	Princeton
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08540
City Area Code	732
Local Phone Number	329-8885
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	CTSO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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