EXHIBIT 10.1

 

RESTRICTIVE COVENANTS AGREEMENT

 

This RESTRICTIVE COVENANTS AGREEMENT (the “Agreement”) is made and entered into
as of this 23rd day of December, 2004 (the “Effective Date”), by and among
BioSphere Medical, Inc., a Delaware corporation (the “Biosphere”), Cerberus
Partners, L.P. (“Cerberus”) and Sepracor Inc. (“Sepracor” and, together with
Cerberus, the “Investors”).

 

RECITALS:

 

WHEREAS, on November 10, 2004, BioSphere and the Investors entered into a
Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to
which BioSphere sold to the Investors (i) an aggregate of 8,000 shares (the
“Preferred Shares”) of its Series A Preferred Stock, $0.01 par value per share
(the “Series A Preferred Stock”), and (ii) warrants (the “Warrants” and together
with the Preferred Shares, the “Securities”) to purchase an aggregate of up to
400,000 shares of BioSphere’s common stock, $0.01 par value per share (the
“Common Stock”), for aggregate gross proceeds of $8,000,000;

 

WHEREAS, BioSphere and the Investors have agreed to amend certain terms of the
Securities in accordance with the terms and conditions set forth in this
Agreement;

 

WHEREAS, BioSphere and the Investors have further agreed that (i) BioSphere will
submit to BioSphere’s stockholders for approval certain amendments to the
Certificate of Designations, Preferences and Rights of Series A Preferred Stock
of BioSphere filed with the Secretary of State of the State of Delaware on
November 9, 2004 (the “Certificate of Designations”), as more specifically
described in this Agreement, and (ii) that this Agreement shall remain in full
force and effect until the earlier of (x) the time that such amendments to the
Certificate of Designations are approved by BioSphere’s stockholders or (y)
termination of this Agreement pursuant to Article IV; and

 

WHEREAS, the parties intend that this Agreement be binding on all transferees of
the Securities.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

ARTICLE I

 

RESTRICTIONS ON
CONVERSION OF SERIES A PREFERRED STOCK
AND EXERCISE OF WARRANTS

 

SECTION 1.01.  Restrictions on Conversion of Series A Preferred Stock and
Exercise of Warrants.  Notwithstanding anything to the contrary contained in the
Certificate of Designations or the Warrants, the parties hereto agree that, from
and after the Effective Date and until the termination of this Agreement in
accordance with the terms hereof:

 

(a)                                  BioSphere shall not issue any shares of
Common Stock upon conversion of the Series A Preferred Stock and/or exercise of
the Warrants (i) to the extent that such conversion and/or exercise would result
in a change of control (within the meaning of Nasdaq Marketplace Rule
4350(i)(1)(B)) (“Change of Control”), or (ii) to the extent that such conversion
and/or exercise would result in the aggregate issuance of more than 19.9% of
Common Stock outstanding as of the Initial

 

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Issuance Date (as such term is defined in the Certificate of Designations), for
purposes of Nasdaq Marketplace Rule 4350(i)(1)(D) (“19.9% Threshold”).

 

(b)                                 No holder of Series A Preferred Stock shall
convert its Series A Preferred Stock and/or exercise its Warrants (i) to the
extent that such conversion and/or exercise would result in a Change of Control
or (ii) to the extent that such conversion and/or exercise would result in the
aggregate issuance in excess of the 19.9% Threshold.

 

ARTICLE II

 

VOTING OF PREFERRED SHARES

 

SECTION 2.01.  Voting of Preferred Shares.  Notwithstanding anything to the
contrary contained in the Certificate of Designations, each holder of Series A
Preferred Stock agrees that, from and after the Effective Date and until the
termination of this Agreement in accordance with the terms hereof, at any
meeting of stockholders of BioSphere, however called, and in any action by
written consent of stockholders of BioSphere, such Investor will not vote, or
cause to be voted (by means of proxy, voting trust, voting agreement or
otherwise), on any matter on which the holders of Series A Preferred Stock vote
together with the holders of the Common Stock (and any other class or series of
capital stock of BioSphere) as a single class, more than the number of shares of
Common Stock in respect of its Preferred Shares that exceeds the quotient of (x)
the aggregate purchase price paid by such Investor for its Preferred Shares
divided by (y) the closing bid price of the Common Stock on the Initial Issuance
Date (the “Voting Shares”).  Notwithstanding the foregoing, nothing in this
Agreement shall restrict any holder of Series A Preferred Stock from voting or
causing to be voted at any meeting of stockholders of BioSphere or in any action
by written consent of stockholders of BioSphere any Preferred Shares on any
matter upon which the holders of Preferred Shares are voting as a separate
class, solely to the extent such holders of Preferred Shares are voting as a
separate class.  Notwithstanding the foregoing, nothing in this Article II shall
restrict or otherwise effect the right of any holder of Series A Preferred Stock
to vote (or give its consent in respect of) any outstanding shares of Common
Stock, whether acquired upon conversion of the Preferred Shares or otherwise.

 

ARTICLE III

 

AMENDMENTS TO CERTIFICATE OF DESIGNATIONS AND WARRANTS

 

SECTION 3.01.  Certificate of Designations.

 

(a)                                  Amendments to Certificate of Designations.

 

(1)                                  BioSphere hereby agrees to seek the consent
of its stockholders to a Certificate of Amendment of the Certificate of
Designations, in a form reasonably satisfactory the Investors (the “Certificate
of Amendment”) to effect the following amendments (collectively, “Amendments”):

 

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(A)  to provide that a holder of Series A Preferred Stock and/or Warrants shall
not be entitled to convert its shares of Series A Preferred Stock and/or
exercise its Warrants (i) to the extent that such conversion and/or exercise
would result in a Change of Control, or (ii) to the extent that such conversion
and/or exercise would result in the aggregate issuance of more than the 19.9%
Threshold; and

 

(B)  to provide that the holders of Series A Preferred Stock shall not have the
right to vote with the Common Stock to the extent the number of votes cast would
exceed the number of Voting Shares.

 

(2)                                  BioSphere hereby agrees to seek the consent
of its stockholders to the Certificate of Amendment and the Amendments at its
next annual meeting of stockholders (the “Annual Meeting”).  BioSphere shall
prepare and file with the Securities and Exchange Commission a proxy statement
meeting the requirements of Section 14 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder (the “Proxy
Statement”) to solicit stockholder approval of the Certificate of Amendment and
the Amendments at the Annual Meeting.  At least five business days before filing
such Proxy Statement or any amendments or supplements thereto, BioSphere shall
furnish to each Investor copies of all such documents proposed to be filed,
including documents incorporated by reference in the Proxy Statement, and, if
requested by either Investor, the exhibits incorporated by reference, and each
Investor shall have the reasonable opportunity to review and comment on such
documents, and BioSphere will incorporate into such documents the comments
reasonably requested by each Investor.  BioSphere shall use its commercially
reasonable efforts to cause the Proxy Statement to be cleared by the Securities
and Exchange Commission as promptly as reasonably practicable after such filing,
and shall thereafter promptly mail the Proxy Statement to the stockholders of
BioSphere.  BioSphere shall keep the Investors apprised of the status of
material matters relating to the Proxy Statement and the Annual Meeting. 
BioSphere shall notify the Investors promptly upon the receipt of any notices,
comments or other communications from the Securities and Exchange Commission or
its staff, in connection with the filing of, or amendments or supplements to,
the Proxy Statement, or upon the receipt of any communications with respect to
the Proxy Statement, the Annual Meeting or the transactions contemplated hereby
from the Securities and Exchange Commission or The Nasdaq National Market
(“Nasdaq”) or their respective staffs.  BioSphere shall provide each Investor
(and its counsel) with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement at least five business days
before filing such amendment or supplement with the Securities and Exchange
Commission, and will provide the Investor with a copy of all such filings made
with the Securities and Exchange Commission.  If the BioSphere stockholders fail
to approve the Certificate of Amendment and the Amendments at the Annual Meeting
, then, so long as this Agreement remains in effect, BioSphere shall seek such
approval at each and every annual meeting (and special meeting)  of its
stockholders that takes place until the Certificate of Amendment and the
Amendments have been duly approved by the BioSphere stockholders, and BioSphere
shall comply with this Section 3.01(a)(2) regarding the Proxy Statement (and all
amendments and supplements thereto) with respect to each such annual meeting
(and special meeting).

 

(b)                                 Voting in favor of Amendments.  Each
Investor hereby agrees to vote all shares of Common Stock acquired by the
Investor prior to or after (other than shares of Common Stock issued upon
conversion or exercise, as the case may be, of the Securities) the consummation
of the transactions contemplated by the Securities Purchase Agreement that the
Investor is entitled to vote at the time of any meeting or meetings of the
stockholders of BioSphere in favor of the Certificate of Amendment and the
Amendments.  In furtherance of, but without limiting, the foregoing, Investors
shall not be entitled to vote at any such meeting or meetings any shares of
Common Stock underlying the Series A Preferred Stock or the Warrants.  Each
Investor hereby agrees that it will not vote any shares of Common Stock in favor
of

 

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the approval of any action the consummation of which would frustrate the
purposes, or prevent or delay the effectiveness of, the Certificate of Amendment
or the Amendments.

 

(c)                                  Irrevocable Proxy.  By entering into this
Agreement, each Investor hereby grants a proxy appointing the President and
Chief Executive Officer and the Vice President, Finance of BioSphere, and each
of them separately, as its attorney-in-fact and proxy, with full power of
substitution, for and in its name, to vote, express, consent or dissent, or
otherwise to utilize such voting power solely in the manner provided by
Section 3.01(b) above (i.e,. only with respect to the Certificate Amendment and
the Amendments) with respect to all of its shares of Common Stock (excluding
shares of Common Stock underlying the Preferred Shares and the Warrants).  The
proxy granted by each Investor pursuant to this Article III is irrevocable;
provided, however, that such proxy shall, automatically and without further
action or deed, be revoked upon termination of this Agreement in accordance with
its terms.

 

SECTION 3.02.  Warrants.  Simultaneously with the execution and delivery of this
Agreement, BioSphere and each Investor shall enter into an amendment to such
Investor’s Warrant, in the form attached hereto as Exhibit A (each, a “Warrant
Amendment”).

 

SECTION 3.03.  Legends.  Each certificate representing the Securities held by an
Investor shall bear a legend substantially in the following form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE LAWS OF ANY STATE OF THE UNITED STATES OR IN ANY
OTHER JURISDICTION.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

 

THE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN
RESTRICTED COVENANTS AGREEMENT (THE “AGREEMENT”) DATED DECEMBER 23, 2004 BY AND
AMONG BIOSPHERE MEDICAL, INC. (THE “COMPANY”) AND EACH OF THE OTHER PARTIES
THERETO.  COPIES OF THE AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.”

 

Following the execution of this Agreement, each Investor will return to
BioSphere any and all certificates representing the Securities held by such
Investor so that BioSphere may place thereon the legend required by this
Section 3.03, and immediately upon receipt thereof, BioSphere shall deliver to
each such Investor replacement certificates containing such legend.  The legend
required by this Section 3.03 shall be removed from certificates representing
the Securities held by an Investor at the request of such Investor, upon the
termination of this Agreement and the delivery to BioSphere of such
certificates.

 

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ARTICLE IV

 

TERM

 

SECTION 4.01.  Term.  This Agreement shall become effective on the Effective
Date, and shall continue in effect until terminated in accordance with this
Section 4.01.  This Agreement shall terminate as to any Investor on the soonest
of: (i) upon receipt by BioSphere of written notification from Nasdaq that the
ownership and voting of the Preferred Shares by the Investors does not conflict
with Nasdaq Marketplace Rules 4350 and 4351 or any successor(s) thereto; (ii)
upon receipt by BioSphere of stockholder approval of the Certificate of
Amendment and the Amendments; (iii) upon the conversion of all Preferred Shares
owned by such Investor into Common Stock pursuant to the terms of the Preferred
Shares; (iv) upon such Investor no longer owning any Preferred Shares; or (v) at
such time as no shares of Series A Preferred Stock are issued and outstanding.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF BIOSPHERE

 

SECTION 5.01.  Representations and Warranties of BioSphere.  BioSphere hereby
represents and warrants to the Investors on and as of the date hereof, knowing
and intending their reliance hereon, that:

 

(a)                                  BioSphere has all corporate right, power
and authority to enter into this Agreement and each Warrant Amendment and to
consummate the transactions contemplated hereby and thereby.  In furtherance of,
but without limiting, the foregoing, the Independent Committee of Directors of
the Board of Directors of BioSphere has approved this Agreement, each Warrant
Amendment and the preparation and filing with the secretary of State of the
State of Delaware of the Certificate of Amendment (collectively, the
“Transaction Documents”), the execution and delivery of this Agreement and each
Warrant Amendment and the performance of the transactions contemplated hereby
and thereby.

 

(b)                                 This Agreement and each Warrant Amendment
has been duly executed and delivered by BioSphere and, assuming the
authorization, execution and delivery of this Agreement and each Warrant
Amendment by the other parties hereto, constitutes the legal, valid and binding
obligation of BioSphere, enforceable against BioSphere in accordance with its
terms, subject to the effects of any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or general laws of
applicability affecting creditors’ rights generally and to general equitable
principles.

 

(c)                                  The execution, delivery and performance by
BioSphere of any of the Transaction Documents (i) will not result in the
violation by BioSphere of any provision of the certificate of incorporation or
by-laws of BioSphere, or any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which BioSphere is bound, (ii) will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute (with due notice
or lapse of time or both) a default under, any lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
BioSphere is a party or by which it is bound or to which any of its properties
or assets is subject, except for any conflict, breach, violation, default which
would not, either individually or in the aggregate, be reasonable determined to
have a material adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of BioSphere (a “Material Adverse
Effect”)_ nor (iii) result in the creation or imposition of any lien upon any of
the properties or assets of BioSphere, except for any lien which would not,
either individually or in the aggregate be reasonable determined to have a
Material Adverse Effect.

 

(d)                                 No consent, approval, authorization or other
order of any governmental authority or other third party is required to be
obtained by BioSphere in connection with the authorization,

 

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execution and delivery of any Transaction Document, except, with respect to the
filing of the Certificate of Amendment, the approval of BioSphere’s stockholders
and except for any consent, approval, authorization or order, the absence of
which would not, either individually or in the aggregate be reasonable
determined to have a Material Adverse Effect.

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF INVESTORS

 

SECTION 6.01.  Representations and Warranties of Investors.  Each Investor,
severally and not jointly, represents and warrants to BioSphere that:

 

(a)                                  The execution, delivery and performance by
the Investor of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) violate any applicable law, rule,
regulation, judgment, injunction, order or decree, (ii) require any consent or
other action by any Person under, constitute a default under, or give rise to
any right of termination, cancellation or acceleration or to a loss of any
benefit to which Investor is entitled under any provision of any agreement or
other instrument binding on Investor, or (iii) result in the imposition of any
lien on any assets of Investor.

 

(b)                                 With respect to the Securities set forth on
Schedule I hereto, Investor (x) is the record or beneficial owner of such
Securities free and clear of any lien and any other limitation or restriction
(including any restriction on the right to vote or otherwise dispose of the
Securities, except as contemplated herein and in the Transaction Documents) or
(y) has and will have the full power and authority to vote, express consent or
dissent, or otherwise utilize the voting power of such Securities.

 

ARTICLE VII

 

TRANSFER RESTRICTIONS

 

SECTION 7.01.  Transfer Restrictions.  So long as this Agreement remains in
effect as to an Investor, in addition to any requirements of law, no transfer,
sale, assignment, exchange, mortgage, pledge, hypothecation or other disposition
(a “Transfer”) of any of the Securities by such Investor shall be made except to
a transferee who shall agree in writing to be bound by each and every obligation
of such Investor pursuant to this Agreement, which writing shall also contain
notice to BioSphere of such transfer and of the notice information for such
transferee.  Any Transfer of Securities in violation of this Article VII shall
be void and of no effect and shall not be recognized by BioSphere for any
purpose.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.  Successors and Assigns.  This Agreement shall inure to the
benefit of the successors and assigns of BioSphere and be binding upon the
Investors and each of their respective heirs, executors, administrators,
successors and assigns.

 

SECTION 8.02.  Counterparts; Faxes.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may also
be executed via facsimile, which shall be deemed an original.

 

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SECTION 8.03.  Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

 

SECTION 8.04.  Notices.  Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described: (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery; (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal; (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three (3) days after such notice is deposited in first class
mail, postage prepaid; and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one (1) day after
delivery to such carrier.  All notices shall be addressed to the party to be
notified at the address as follows, or at such other address as such party may
designate by ten (10) days’ advance written notice to the other party:

 

If to BioSphere:

 

BioSphere Medical, Inc.

1050 Hingham Street

Rockland, Massachusetts 02370

Attn:  President

Fax:  (781) 681-5093

 

With a copy to:

 

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Attn:  Susan W. Murley, Esq.

Fax:  (617) 526-5000

 

To the holders of Series A Preferred Stock:

 

Cerberus Partners, L.P.

299 Park Avenue, 22nd Floor

New York, New York 10171

Attn:  Mr. Seth P. Plattus

Fax:  (212) 891-1541

 

Cerberus Partners, L.P.

299 Park Avenue, 22nd Floor

New York, New York 10171

Attn:  Mr. Daniel Frank

Fax:  (212) 284-7818

 

Sepracor Inc.

84 Waterford Drive

Marlborough, MA 01752

Attn:  President

Fax:  508-357-7495

 

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With copies to:

 

Lowenstein Sandler PC

65 Livingston Avenue

Roseland, NJ 07068-1791

Attn:  Robert G. Minion, Esq.

Fax:  (973) 597-2400

 

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Attn:  Susan W. Murley, Esq.

Fax:  617-526-5000

 

SECTION 8.05.  Expenses.  BioSphere shall pay the reasonable fees and expenses
of Cerberus’ counsel in connection with the transactions contemplated by this
Agreement (the “Cerberus Counsel Fees”), which Cerberus Counsel Fees shall
include, without limitation, the fees and expenses associated with the
negotiation, preparation and execution and delivery of this Agreement and any
and all documents relating thereto.  The Cerberus Counsel Fees shall be paid to
Cerberus’ counsel on the Effective Date by the wire transfer from BioSphere to
Cerberus’ counsel.  Except as set forth above, BioSphere and the Investors shall
each bear their own expenses in connection with the negotiation, preparation,
execution and delivery of this Agreement.  In the event that legal proceedings
are commenced by any party to this Agreement against another party to this
Agreement in connection with this Agreement, the party or parties which do not
prevail in such proceedings shall severally, but not jointly, pay their pro rata
share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs
and expenses incurred by the prevailing party in such proceedings.

 

SECTION 8.06.  Amendments and Waivers.  This Agreement shall not be amended and
the observance of any term of this Agreement shall not be waived (either
generally or in a particular instance and either retroactively or prospectively)
without (x)  the prior written consent of BioSphere and the Investors, and (y)
advance written notice to Nasdaq; provided, however, that any provision hereof
which impairs the rights or increases the obligations of a specific Investor
disproportionately to other Investors shall not be amended or waived without the
prior written consent of BioSphere and that particular Investor.  Any amendment
or waiver effected in accordance with this Section 8.06 shall be binding upon
each holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such Securities, and BioSphere.

 

SECTION 8.07.  Severability.  Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.  To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.

 

SECTION 8.08.  Entire Agreement.  This Agreement, including the Schedules and
Exhibits hereto, and the other Transaction Documents, constitute the entire
agreement among the parties hereof

 

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with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.  Prior drafts or versions of
this Agreement shall not be used to interpret this Agreement.

 

SECTION 8.09.  Conflicts.  If there is any conflict between the terms of this
Agreement and any or all of the Transaction Documents, the terms of this
Agreement shall control.

 

SECTION 8.10.  Further Assurances.  The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

SECTION 8.11.  Governing Law; Consent to Jurisdiction.  This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof.  Each of the
parties hereto irrevocably submits to the jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby.  Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement.  Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court.  Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum. 
BIOSPHERE AND EACH OF THE INVESTORS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first above written.

 

 

BIOSPHERE MEDICAL, INC.

 

 

 

 

 

By:

/s/ Martin J. Joyce

 

 

 Martin Joyce
 Vice President and Chief Financial
 Officer

 

 

 

 

 

CERBERUS PARTNER, L.P.

 

 

 

By:

Cerberus Associates, LLC,
its General Partner

 

 

 

 

 

By:

/s/ Seth Plattus

 

 

 Seth Plattus
 Managing Director

 

 

 

 

 

SEPRACOR, INC.

 

 

 

 

 

By:

/s/ Timothy J. Barberich

 

 

 Timothy J. Barberich
 Chairman of the Board and Chief
 Executive Officer

 

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Schedule I

 

Name and Address of Investor

 

Number of Shares of
Preferred Stock

 

Number of
Warrants

 

Cerberus Partners, L.P.

 

4,000

 

200,000

 

Sepracor Inc.

 

4,000

 

200,000

 

Total

 

8,000

 

400,000

 

 

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Exhibit A

 

AMENDMENT NO. 1 TO
WARRANT NO. 2004-    TO PURCHASE
200,000 SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE

 

This Amendment No. 1, dated December   , 2004 amends that certain Warrant No.
2004-    dated November 10, 2004 to purchase 200,000 shares of Common Stock, par
value $0.01 per share, of BioSphere Medical, Inc., registered in the name of
                                   (the “Warrant”).  Terms that are capitalized
herein but not defined shall have the meanings ascribed to them in the Warrant.

 

For good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and acting in accordance with Section 9 of the Warrant, the
undersigned Company and Holder hereby agree as follows:

 

1.                                       The Warrant is hereby amended such that
a new legend is hereby added to the cover page thereof which reads as follows:

 

“THIS WARRANT IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN RESTRICTED
COVENANTS AGREEMENT (THE “AGREEMENT”) DATED DECEMBER   , 2004 BY AND BETWEEN
BIOSPHERE MEDICAL, INC. (THE “COMPANY”) AND EACH OF THE OTHER PARTIES THERETO. 
COPIES OF THE AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY.”

 

2.                                       A new Section 1(d) is hereby added to
the Warrant which reads as follows:

 

“(d)  Limitation on Exercise.  Notwithstanding anything in this Warrant to the
contrary, including without limitation any provisions of this Section 1, a
Holder shall not be entitled to exercise this Warrant (i) to the extent that
such exercise, when aggregated with any shares of Common Stock theretofore and
simultaneously therewith issued to the Holder upon conversion by the Holder of
shares of the Company’s Series A Preferred Stock, $.01 par value,  would result
in a change of control (within the meaning of Nasdaq Marketplace Rule
4350(i)(1)(B)), or (ii) to the extent that such exercise, when aggregated with
any shares of Common Stock theretofore or simultaneously therewith issued to the
Holder upon conversion of shares of the Company’s Series A Preferred Stock, $.01
par value,  would result in the issuance of more than 19.9% of the Company’s
Common Stock outstanding as

 

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of November 10, 2004, for purposes of Nasdaq Marketplace Rule 4350(i)(1)(D).”

 

3.                                       The first sentence of Section 16 of the
Warrant is hereby deleted in its entirety and a new first sentence of Section 16
is hereby added in lieu thereof which reads as follows:

 

“Section 16.  Assignment.  Subject to the terms hereof and compliance with
applicable federal and state securities laws, this Warrant may be transferred by
the Holder with respect to any or all of the Warrant Shares then purchasable
hereunder; provided however, that notwithstanding anything herein to the
contrary, so long as that certain Restricted Covenants Agreement dated
December   , 2004 by and between the Company and the other parties thereto (the
“Agreement”) remains in effect, this Warrant may be transferred by the Holder
only if the designated transferee agrees in writing, as a condition to such
transfer, to be bound by all of the terms and conditions of such Agreement.”

 

4.                                       Except as expressly set forth herein,
the Warrant and all of the terms and conditions set forth therein shall remain
in full force and effect and such Warrant is hereby ratified and confirmed.

 

 

BIOSPHERE MEDICAL, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

Agreed and acknowledged as
of the date set forth above

 

 

 

 

 

 

Name of Holder

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

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