Exhibit 10.6

 

FOURTH ACKNOWLEDGEMENT AND AMENDMENT AGREEMENT

 

This Fourth Acknowledgement and Amendment Agreement (the “Acknowledgement”) is
dated December 23, 2008, and is entered into by and between Richard J.
Faleschini (the “Employee”), and BioSphere Medical, Inc., a Delaware corporation
(the “Company”).

 

WHEREAS, the Employee and the Company have entered into (i) a certain Employment
Agreement dated November 2, 2004, as amended by an Acknowledgement and Amendment
Agreement dated March 16, 2007, a Second Acknowledgement and Amendment Agreement
dated April 5, 2007, and a Third Acknowledgement and Amendment Agreement dated
October 10, 2007, regarding the Employee’s employment with the Company (the
“Employment Agreement”) and (ii) a certain Executive Retention Agreement made
effective as of November 2, 2004 (the “Retention Agreement”);

 

WHEREAS, the parties desire to modify the provisions of the Employment Agreement
and the Retention Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the undersigned hereby agree as follows:

 

1.                                       THE EMPLOYMENT AGREEMENT IS HEREBY
AMENDED AS FOLLOWS:

 

(A)                                  SECTION 4.3 IS DELETED IN ITS ENTIRETY AND
A NEW SECTION 4.3 IS INSERTED IN LIEU THEREOF WHICH READS AS FOLLOWS:

 

“4.3.  At the election of the Employee for Good Reason (as defined below),
immediately upon written notice by the Employee to the Company, which notice
shall identify the Good Reason upon which the termination is based.  For the
purpose of this Section 4.3, “Good Reason” for termination shall mean (i) a
material adverse change in Employee’s authority, duties or compensation without
the prior consent of the Employee, or (ii) the commission by the Company of a
material breach of this Agreement.  Notwithstanding the occurrence of any such
event or circumstance, such occurrence shall not be deemed to constitute Good
Reason unless (x) the Employee gives the Company the notice of termination no
more than 90 days after the initial existence of such event or circumstance,
(y) such event or circumstance has not been fully corrected and the Employee has
not been reasonably compensated for any losses or damages resulting therefrom
within 30 days of the Company’s receipt of such notice and (z) the Employee’s
termination of employment occurs within 2 years following the Company’s receipt
of such notice.

 

(B)                                 SECTION 5.1(B) IS DELETED IN ITS ENTIRETY
AND A NEW SECTION 5.1(B) IS INSERTED IN LIEU THEREOF WHICH READS AS FOLLOWS:

 

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“(b)                           In the event the Employee’s employment is
terminated pursuant to Section 4.1 because the Company has elected not to renew
the Agreement, or is terminated by the Employee pursuant to Section 4.3 or by
the Company pursuant to Section 4.5, the Company shall continue to pay to the
Employee his salary as in effect on the date of termination and the amount of
the annual bonus paid to him for the fiscal year immediately preceding the date
of termination (payable in annualized monthly installments) and continue to
provide to the Employee the other benefits owed to him under Section 3.2 (to the
extent such benefits can be provided to non-employees, or to the extent such
benefits cannot be provided to non-employees, then the cash equivalent thereof)
for a period of 12 months, provided, however, that the Company’s obligation to
make the aforesaid payments or provide the aforesaid benefits shall immediately
terminate in the event that the Employee violates the provisions of Section 6.1
or Section 7 during such 12 month period.  Notwithstanding the foregoing, to the
extent such payments are reimbursement to the Employee of medical expenses
incurred by the Employee as described in Reg. § 1.409A-1(b)(9)(v)(B),
reimbursements may not be made beyond the period of time during which the
Employee would be entitled (or would, but for such arrangement, be entitled) to
COBRA continuation coverage under a group health plan of the Company.  The
payment to the Employee of the amounts payable under this
Section 5.1(b) (i) shall be contingent upon the execution and non-revocation by
the Employee of a release in a form reasonably acceptable to the Company within
30 days of the date of termination and (ii) shall constitute the sole remedy of
the Employee in the event of a termination of the Employee’s employment in the
circumstances set forth in this Section 5.1(b).  The payments and benefits shall
commence 60 days following the date of termination, provided that the release
has been properly executed and not revoked as of such date, or, if the release
has been executed and any applicable revocation period has expired prior to the
60th day following the date of termination, then the payments and benefits may
commence prior to the 60th day but no sooner than the 30th day following the
date of termination.  Notwithstanding the foregoing, if the 60th day following
the date of termination occurs in the calendar year following the termination,
then the payments shall commence no earlier than January 1 of such subsequent
calendar year.

 

Payments to the Employee under this Section 5.1(b) shall be bifurcated into two
portions, consisting of a portion that does not constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and a portion that does constitute
nonqualified deferred compensation.  Payments hereunder shall first be made from
the portion that does not consist of nonqualified deferred compensation until it
is exhausted and then shall be made from the portion that does constitute
nonqualified deferred compensation.  Notwithstanding the foregoing, because the
Employee is a “specified employee” as defined in Section 409A(a)(3)(B)(i) of the
Code, the commencement of the delivery of any such payments that constitute
nonqualified deferred compensation will be delayed to the date that is 6 months
and one day after the Employee’s termination of employment (the “Earliest
Payment Date”) unless payable upon the Employee’s death.  Any payments that are
delayed pursuant to the preceding sentence shall be paid on the Earliest Payment
Date.  The determination of whether, and the extent to which, any of the
payments to be made to the Employee hereunder are nonqualified deferred
compensation shall be made after the application of all applicable exclusions
under Treasury Reg. § 1.409A-1(b)(9). 

 

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Any payments that are intended to qualify for the exclusion for separation pay
due to involuntary separation from service set forth in Reg. §
1.409A-1(b)(9)(iii) must be paid no later than the last day of the second
taxable year of the Employee following the taxable year of the Employee in which
the Employee’s termination of employment occurs.”

 

(C)                                  SECTION 9.10 IS HEREBY DELETED IN ITS
ENTIRETY AND REPLACED WITH THE FOLLOWING NEW SECTION 9.10:

 

“9.10                     Section 409A.  Notwithstanding anything else to the
contrary in this agreement, to the extent that any of the payments that may be
made hereunder constitute “nonqualified deferred compensation”, within the
meaning of Section 409A and the Employee is a “specified employee” upon his
separation (as defined under Section 409A), the timing of any such payment
following the separation date shall be modified if, absent such modification,
such payment would otherwise be subject to penalty under Section 409A.  In any
event, the Company makes no representation or warranty and shall have no
liability to the Employee or to any other person if any provisions of this
agreement are determined to constitute “nonqualified deferred compensation”
subject to Section 409A but do not satisfy the requirements of that section.

 

It is intended that each installment of the severance payments and benefits
provided hereunder shall be treated as a separate “payment” for purposes of
Section 409A.  Neither the Company nor the Employee shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.”

 

2.                                       THE RETENTION AGREEMENT IS HEREBY
AMENDED AS FOLLOWS:

 

(A)                                  SECTION 7.10 IS HEREBY DELETED IN ITS
ENTIRETY AND REPLACED WITH THE FOLLOWING NEW SECTION 7.10:

 

“7.10                     Section 409A.  Notwithstanding anything else to the
contrary in this agreement, to the extent that any of the payments that may be
made hereunder constitute “nonqualified deferred compensation”, within the
meaning of Section 409A and the Executive is a “specified employee” upon his
separation (as defined under Section 409A), the timing of any such payment
following the separation date shall be modified if, absent such modification,
such payment would otherwise be subject to penalty under Section 409A.  In any
event, the Company makes no representation or warranty and shall have no
liability to the Executive or to any other person if any provisions of this
agreement are determined to constitute “nonqualified deferred compensation”
subject to Section 409A but do not satisfy the requirements of that section.

 

It is intended that each installment of the severance payments and benefits
provided hereunder shall be treated as a separate “payment” for purposes of
Section 409A.  Neither the Company nor the Employee shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.”

 

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3.                                       THE PARTIES ACKNOWLEDGE AND AGREE THAT
ALL OTHER PROVISIONS OF THE EMPLOYMENT AGREEMENT AND RETENTION AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT.

 

4.                                       THIS ACKNOWLEDGEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW.

 

5.                                       THIS ACKNOWLEDGEMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS, AND EACH SUCH COUNTERPART SHALL BE DEEMED TO BE AN
ORIGINAL INSTRUMENT, BUT ALL SUCH COUNTERPARTS TOGETHER SHALL CONSTITUTE BUT ONE
AGREEMENT.

 

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Fourth Acknowledgement and
Amendment Agreement as of the date first above written.

 

 

BIOSPHERE MEDICAL, INC.

 

 

 

 

 

By:

/s/ Martin J. Joyce

 

Title:

Martin J. Joyce

 

 

Chief Financial Officer

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

/s/ Richard J. Faleschini

 

Name:

Richard J. Faleschini

 

Title:

President and Chief Executive Officer

 

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