Exhibit
10.2


SEVERANCE AGREEMENT AND
GENERAL RELEASE


 


November 18, 2004


  (re-sent January 20, 2005)


 


Thomas M. Keenan


15 Ingalls Terrace


Swampscott, MA 01907


 


Dear Tom:


This letter shall constitute written notice, effective
as of the date set forth above, pursuant to Section 4.4 of your March 25, 2004
Employment Agreement (the “Employment Agreement”) of the termination of your
employment with Biosphere Medical, Inc. (the “Company”) on January 17,
2005.  In connection with the termination
of your employment, you are eligible to receive the severance benefits
described in the “Description of Severance Benefits” attached to this letter as
Attachment A if you sign and return this letter agreement to Lisa McGrath on or
after January 17, 2005 but no later than January 24, 2005.  By signing and returning this letter, you
will be entering into a binding agreement with the Company and will be agreeing
to the terms and conditions set forth in the numbered paragraphs below, including
the release of claims set forth in paragraph 3. 
Therefore, you are advised to consult with your attorney before signing
this letter and you have been given in excess of twenty-one (21) days to do
so.  If you sign this letter, you may
change your mind and revoke your agreement during the seven (7) day period
after you have signed it.  If you do not
so revoke, this letter will become a binding agreement between you and the
Company upon the expiration of the seven (7) day revocation period.


If you choose not to sign and return this letter agreement
on or after January 17, 2005 but no later than January 24, 2005, you shall not
receive any severance benefits from the Company.  You will, however, receive payment on your
termination for any unused vacation time accrued through the termination date.  Also, regardless of signing this letter, you
may elect to continue receiving group medical insurance pursuant to the federal
“COBRA” law, 29 U.S.C. § 1161 et  seq.  All premium costs shall be paid by you on a
monthly basis for as long as, and to the extent that, you remain eligible for
COBRA continuation.  You should consult
the COBRA materials to be provided by the Company for details regarding these
benefits.  All other benefits, including
life insurance and long term disability, will cease upon your Termination
Date.  Further, pursuant to the terms of
the stock option grant(s) made to you under the Company’s 1997 Stock Option
Incentive Plan, as amended, you will have up to 90 days after the Termination
Date to exercise any vested stock rights you may have (as provided for by the
plan and the stock option agreement issued to you pursuant to the plan).  Except as provided in Attachment A, all
unvested stock rights will be cancelled on the Termination Date.


If, after reviewing this letter agreement with your
attorney, you find the terms and conditions are satisfactory to you, you should
sign and return this letter to Lisa McGrath on or after January 17, 2005 but no
later than January 24, 2005.





















 


The following numbered paragraphs set forth the terms
and conditions which will apply if you timely sign and return this letter
agreement and do not revoke it within the seven (7) day period:


1.                                       Termination Date — Your effective date of termination
from the Company is January 17, 2005 (the “Termination Date”).


2.                                       Description of Severance
Benefits —
The severance benefits paid to you if you timely sign and return this letter
are described in the “Description of Severance Benefits” attached as Attachment
A (the “severance benefits”).


3.                                       Employee Release — In consideration of the payment of the
severance benefits, which you acknowledge you would not otherwise be entitled
to receive, you hereby fully, forever, irrevocably and unconditionally release,
remise and discharge the Company, its officers, directors, stockholders, corporate
affiliates, subsidiaries, parent companies, agents and employees (each in their
individual and corporate capacities) (hereinafter, the “Released Parties”) from
any and all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages, executions,
obligations, liabilities, and expenses (including attorneys’ fees and costs),
of every kind and nature which you ever had or now have against the Released
Parties arising out of your employment with and/or separation from the Company,
including, but not limited to, all employment discrimination claims under Title
VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et
seq., the Americans With Disabilities Act of 1990, 42 U.S.C., §12101 et
seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et  seq.,
and the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. §
2101 et  seq., all as
amended; all claims arising out of the Fair Credit Reporting Act, 15 U.S.C.
§1681 et  seq.,
the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et  seq.,
the Massachusetts Fair Employment Practices Act., M.G.L. c.151B, §1 et seq., the Massachusetts Civil Rights Act,
M.G.L. c.12 §§11H and 11I, the Massachusetts Equal Rights Act, M.G.L. c.93,
§102 and M.G.L. c.214, §1C, the Massachusetts Labor and Industries Act, M.G.L.
c.149, §1 et  seq.,
the Massachusetts Privacy Act, M.G.L. c. 214, §1B, and the Massachusetts
Maternity Leave Act, M.G.L. c. 149, §105(d), all as amended; all common law
claims including, but not limited to, actions in tort, defamation and breach of
contract (including any and all claims pursuant to the Employment Agreement or
the Executive Retention Agreement between you and the Company dated March 25,
2004); all claims to any non-vested
ownership interest in the Company, contractual or otherwise, including but not
limited to claims to stock or stock options; and any claim or damage
arising out of your employment with or separation from the Company (including a
claim for retaliation) under any common law theory or any federal, state or
local statute or ordinance not expressly referenced above; provided, however,
that nothing in this Agreement prevents you from filing, cooperating with, or
participating in any proceeding before the EEOC or a state Fair Employment
Practices Agency (except that you acknowledge that you may not be able to
recover any monetary benefits in connection with any such claim, charge or
proceeding).  Notwithstanding the above,
this 


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release of claims shall
not apply to (a) any claim you may make for breach of this letter agreement,
(b) any claims you may have under ERISA for previously vested benefits under
any Company benefit plan, (c) any claims
you may have under the Company’s workers compensation insurance policy, or (d)
any rights you may have to indemnification in accordance with the terms of the
Company’s Directors and Officers insurance policy.


4.                                       Company Release — The Company hereby fully, forever,
irrevocably and unconditionally releases, remises and discharges you and your
heirs, assigns, and attorneys from any and all claims, charges, complaints,
suits, demands, actions, causes of action, suits, rights, debts, sums of money,
costs, accounts, reckonings, covenants, contracts, agreements, promises,
doings, omissions, damages, executions, obligations, liabilities, and expenses
(including attorneys’ fees and costs), of every kind and nature which it ever
had or now has against you arising out of your employment with or separation
from the Company.


5.                                       Non-Disclosure and
Non-Competition and Non-Solicitation — You
acknowledge and reaffirm your obligation to keep confidential all non-public
information concerning the Company which you acquired during the course of your
employment with the Company, as stated more fully in Section 7 of the
Employment Agreement, which remains in full force and effect.  You also acknowledge and reaffirm your
obligations with respect to non-competition and non-solicitation as stated more
fully in Section 6 of the Employment Agreement which likewise remain in full force and effect. 
You further agree that the Company’s obligation to provide you with the
severance payments or continuation of benefits described in Attachment A shall
immediately terminate in the event that you violate your obligations under
Section 6 or 7 of the Employment Agreement. 
Such cessation of payments shall in no way limit the Company’s right to
resort to equitable remedies, including but not limited to, specific
performance, as set forth in the Employment Agreement.  Notwithstanding the above, the Company agrees
that you may provide the Company with any necessary or requested information
regarding any endeavor or employment prior to its commencement, and the Company
will, in its sole discretion, provide you with a determination of whether the
Company considers such endeavor or employment to be in violation of the above
obligations.


6.                                       Return of Company Property — You confirm that you have returned to
the Company all keys, files, records (and copies thereof), equipment
(including, but not limited to, computer hardware, software and printers,
wireless handheld devices, cellular phones, pagers, etc.), Company
identification, Company vehicles and any other Company-owned property in your
possession or control and have left intact all electronic Company documents,
including but not limited to those which you developed or help develop during
your employment.  You further confirm
that you have cancelled all accounts for your benefit, if any, in the Company’s
name, including but not limited to, credit cards, telephone charge cards,
cellular phone and/or pager accounts and computer accounts.


7.                                       Business Expenses and
Compensation —
You acknowledge that you have been reimbursed by the Company for all relocation
costs and business expenses incurred in conjunction with the performance of
your employment and that no other reimbursements are owed to you.  You further acknowledge that you have
received payment in full for all


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services rendered in
conjunction with your employment by the Company and that no other compensation
is owed to you.


8.                                       Non-Disparagement — You understand and agree that as a condition for
payment to you of the consideration herein described, you shall not make any
false, disparaging or derogatory statements to any media outlet, industry
group, financial institution or current or former employee, consultant, client,
customer, securities professional, or stockholder of the Company regarding the
Company or any of its directors, officers, employees, agents or representatives
or about the Company’s business affairs and financial condition.  Likewise, the Company agrees to direct those
of its employees with knowledge of this letter agreement not to make any
false, disparaging, derogatory or defamatory statements in public or in private
regarding you or your employment with or separation from the Company.


9.                                       Amendment — This letter agreement shall be binding upon the parties and may not
be modified in any manner, except by an instrument in writing of concurrent or subsequent
date signed by duly authorized representatives of the parties hereto.  This letter agreement is binding upon and
shall inure to the benefit of the parties and their respective agents, assigns,
heirs, executors, successors and administrators.


10.                                 Payment in the Event of
Death — In the event of your death during the Continuation
Period described in Attachment A, any remaining Severance Pay due to you
pursuant to the terms of this letter agreement shall be payable in accordance
with the terms of this letter agreement to your devisee, legatee or other
designee, or if no such designee, to your Estate.


11.                                 Waiver of Rights — No delay or omission by the Company in
exercising any right under this letter agreement shall operate as a waiver of
that or any other right.  A waiver or
consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.


12.                                 Validity
— Should any provision of this letter agreement be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of
the remaining parts, terms or provisions shall not be affected thereby and said
illegal or invalid part, term or provision shall be deemed not to be a part of
this letter agreement.


13.                                 Confidentiality — You understand and agree that as a condition for
payment to you of the severance benefits herein described, the terms and
contents of this letter agreement, and the contents of the negotiations and
discussions resulting in this letter agreement, shall be maintained as
confidential by you and your agents and representatives, including your
immediate family, and shall not be disclosed except to the extent required by
federal or state law or as otherwise agreed to in writing by the Company.


14.                                 Acknowledgments — You acknowledge that you have been given at least
twenty-one (21) days to consider this letter agreement, including Attachment A,
and that the Company advised you to consult with an attorney of your own
choosing prior to signing this letter agreement.  You understand that you may revoke this
letter agreement for a period of


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seven (7) days after you
sign this letter agreement, and the letter agreement shall not be effective or
enforceable until the expiration of this seven (7) day revocation period.  You understand and agree that by entering
into this letter agreement you are waiving any and all rights or claims you
might have under The Age Discrimination in Employment Act, as amended by The
Older Workers Benefit Protection Act, and that you have received consideration
beyond that to which you were previously entitled.


15.                                 Voluntary Assent — You affirm that no other promises or
agreements of any kind have been made to or with you by any person or entity
whatsoever to cause you to sign this letter agreement, and that you fully
understand the meaning and intent of this letter agreement.  You state and represent that you have had an
opportunity to fully discuss and review the terms of this letter agreement with
an attorney.  You further state and
represent that you have carefully read this letter agreement, including
Attachment A, understand the contents herein, freely and voluntarily assent to
all of the terms and conditions hereof, and sign your name of your own free
act.


16.                                 Applicable Law — This letter agreement shall be
interpreted and construed by the laws of the Commonwealth of Massachusetts,
without regard to conflict of laws provisions. 
You hereby irrevocably submit to and acknowledge and recognize the
jurisdiction of the courts of the Commonwealth of Massachusetts, or if
appropriate, a federal court located in Massachusetts (which courts, for
purposes of this letter agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under
or in connection with this letter agreement or the subject matter hereof.


17.                                 Entire Agreement — This letter agreement, including
Attachment A, contains and constitutes the entire understanding and agreement
between the parties hereto with respect to your severance benefits and the
settlement of claims against the Company and cancels all previous oral and
written negotiations, agreements, commitments, writings in connection
therewith.  Nothing in this paragraph, however, shall
modify, cancel or supersede your obligations set forth in paragraph 5 herein.


 


 


If you have any questions about the matters covered in
this letter, please call your Human Resources department.


	
   

  	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin J. Joyce

  	
   

  
	
   

  	
  Name:

  	
  Martin J. Joyce

  	
   

  
	
   

  	
  Title:

  	
  Vice President and
  Chief Financial Officer

  	
   

  



 


 


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I hereby agree to the terms and conditions set forth
above and in the attached Description of Severance Benefits.  I have been given at least twenty-one (21)
days to consider this agreement and I have chosen to execute this on the date
below.  I intend that this letter
agreement become a binding agreement between me and the Company if I do not
revoke my acceptance in seven (7) days.


 


 


	
  /s/ Tomas M.
  Keenan

  	
   

  	
  Date

  	
  1/21/05

  
	
  Employee Name:
  Thomas M. Keenan

  	
   

  



 


 


To be returned Lisa McGrath on or after January 17,
2005 but no later than January 24, 2005.


 


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ATTACHMENT A


DESCRIPTION OF SEVERANCE
BENEFITS


Provided that you timely sign, return, and do not
revoke this letter agreement, the Company will provide you with the following
severance benefits following the Termination Date:


Severance Pay. 
The Company will pay you One Hundred Seventy Five Thousand Eight Hundred
Ninety-Eighty Dollars and Thirty Two Cents ($175,898.32), less all applicable
state and federal taxes, as well as withholdings for your portion of medical
and dental coverage continuation premiums described below (the “Severance
Pay”).  This Severance Pay will be paid
in bi-weekly installments over the twelve (12) months following the Termination
Date (the “Continuation Period”) in accordance with the Company’s normal payroll
procedures, but will no event commence earlier than the eighth (8th)
day after your execution and return of this letter agreement.  The Severance Pay represents payment of
twelve (12) months of your annual salary pursuant to Section 5.1(b) of the Employment
Agreement, and you agree that in exchange for the additional benefits and
consideration provided to you pursuant to this letter agreement to which you
are not otherwise entitled (including, but not limited to, the acceleration of
certain stock options as described below, provision of a mutual release, a
mutual non-disparagement clause, and a positive reference as set forth below),
such pay shall be provided over time instead of on a lump sum basis and shall
be subject to the limitation set forth in Paragraph 5 of the letter
agreement.  Please note that because no
bonus was paid to you for FY 2003, no bonus payment is due pursuant to the
Employment Agreement.


Acceleration of Stock
Option Vesting.  The Company agrees to accelerate the vesting
schedule of the stock option granted to you on June 8, 2004 under the Company’s
1997 Stock Option Incentive Plan, as amended, such that the option to purchase
fifty thousand (50,000) shares of the Company’s common stock shall be fully
vested on the eighth (8th) day after your execution and return of
this letter agreement (the “Vesting Date”). 
You will have up to 90 days after the Vesting Date to exercise such
shares as provided for by the plan and the stock option agreement issued to you
pursuant to the plan.


Benefits Continuation. 
Effective as of the Termination Date, you shall be considered to have
elected to continue receiving group medical and dental insurance pursuant to
the federal “COBRA” law,  29 U.S.C. §
1161 et  seq.  During the Continuation Period, the Company
shall continue to pay the share of the premium for such coverage that is paid
by the Company for active and similarly-situated employees who receive the same
type of coverage.  The remaining balance
of the premium costs during the Benefits Continuation Period shall be deducted
from the Severance Pay, and all premium costs after the Benefits Continuation
Period shall be paid by you on a monthly basis for as long as, and to the
extent that, you remain eligible for COBRA continuation.  You should consult the COBRA materials to be
provided by the Company for details regarding these benefits.


Life Insurance Coverage
Reimbursement.  The Company also will provide you with a lump
sum payment of $900.00 (representing the sum of the Company’s cost of providing
you with group life insurance coverage for twelve (12) months from the
Termination


 


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Date, and in lieu of the
provision of such coverage by the Company). 
This payment will less applicable state and federal taxes, and will be
made in accordance with the Company’s normal payroll procedures, but in no
event earlier than the eighth (8th) day after your execution of this
letter agreement.


401K Payment. 
The Company also will provide you with a lump sum payment of $1,500
(representing the maximum Company 401K match available had you remained an
employee of the Company during the twelve (12) month period following the
Termination Date).  This payment will
less applicable state and federal taxes, and will be made in accordance with
the Company’s normal payroll procedures, but in no event earlier than the
eighth (8th) day after your execution of this letter agreement.


Employment Reference. 
The Company will refer all inquiries regarding your employment with the
Company, to Mr. Faleschini, who shall provide information as to the dates of
your employment with the Company, as well as your duties and position.  Mr. Faleschini shall provide such information
in a positive light, within parameters to be discussed between you and Mr.
Faleschini.


 


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