Exhibit 10.3


BioSphere Medical, Inc.


Nonstatutory Stock Option Agreement

Granted Under 2006 Stock Incentive Plan


1.             Grant of Option.


This agreement evidences the grant by BioSphere
Medical, Inc., a Delaware corporation (the “Company”), on           
, 200[ ] (the “Grant Date”) to [                  ],
an [employee], [consultant], [director] of the Company (the “Participant”), of
an option to purchase, in whole or in part, on the terms provided herein and in
the Company’s 2006 Stock Incentive Plan (the “Plan”), a total of [                
 ] shares (the “Shares”) of common stock, $0.01 par
value per share, of the Company (“Common Stock”) at $[          ]
per Share. Unless earlier terminated, this option shall expire at 5:00 p.m.,
Eastern time, on [_______] (the “Final
Exercise Date”).


It is intended that the option evidenced by this
agreement shall not be an incentive stock option as defined in Section 422
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the “Code”). Except as otherwise indicated by the
context, the term “Participant”, as used in this option, shall be deemed to
include any person who acquires the right to exercise this option validly under
its terms.


2.             Vesting Schedule.


This option will become exercisable (“vest”) as to       
% of the original number of Shares on [vesting schedule will generally be
based upon time and/or performance metrics].


The right of exercise shall be cumulative so that to
the extent the option is not exercised in any period to the maximum extent
permissible it shall continue to be exercisable, in whole or in part, with
respect to all Shares for which it is vested until the earlier of the Final
Exercise Date or the termination of this option under Section 3 hereof or
the Plan.


3.             Exercise of Option.


(a)           Form of
Exercise. Each election to exercise this option shall be in writing, signed
by the Participant, and received by the Company at its principal office,
accompanied by this agreement, and payment in full in the manner provided in
the Plan including by delivery of a promissory note of the Participant to the
Company on terms to be determined by the Board. The Participant may purchase
less than the number of shares covered hereby, provided that no partial
exercise of this option may be for any fractional share or for fewer than ten
whole shares.


(b)           Continuous
Relationship with the Company Required. Except as otherwise provided in
this Section 3, this option may not be exercised unless the Participant,
at the time he or she exercises this option, is, and has been at all times
since the Grant Date, an employee, officer or director of, or consultant or
advisor to, the Company or any other entity the employees, 









 



officers, directors, consultants, or advisors of which
are eligible to receive option grants under the Plan (an “Eligible Participant”).


(c)           Termination of
Relationship with the Company. If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate [three] months after such cessation (but
in no event after the Final Exercise Date), provided  that this
option shall be exercisable only to the extent that the Participant was
entitled to exercise this option on the date of such cessation. Notwithstanding
the foregoing, if the Participant, prior to the Final Exercise Date, violates
the non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon [written notice to the Participant from the Company
describing] such violation.


(d)           Exercise Period
Upon Death or Disability. If the Participant dies or becomes disabled
(within the meaning of Section 22(e)(3) of the Code) prior to the
Final Exercise Date while he or she is an Eligible Participant and the Company
has not terminated such relationship for “cause” as specified in paragraph (e) below,
this option shall be exercisable, within the period of [one year] following the
date of death or disability of the Participant, by the Participant (or in the
case of death by an authorized transferee), provided  that this
option shall be exercisable only to the extent that this option was exercisable
by the Participant on the date of his or her death or disability, and further
provided that this option shall not be exercisable after the Final Exercise
Date.


(e)           Termination for
Cause. If, prior to the Final Exercise Date, the Participant’s employment
or other relationship with the Company is terminated by the Company for Cause
(as defined below), the right to exercise this option shall terminate
immediately upon the effective date of such termination of employment or other
relationship. [If, prior to the Final Exercise Date, the Participant is given
notice by the Company of the termination of his or her employment or other
relationship by the Company for Cause, and the effective date of such
employment or other termination is subsequent to the date of the delivery of
such notice, the right to exercise this option shall be suspended from the time
of the delivery of such notice until the earlier of (i) such time as it is
determined or otherwise agreed that the Participant’s employment or  other relationship shall not be terminated
for Cause as provided in such notice or (ii) the effective date of such
termination of employment or other relationship (in which case the right to
exercise this option shall, pursuant to the preceding sentence, terminate
immediately upon the effective date of such termination of employment or other
relationship).]  If the Participant is
party to an employment, consulting or severance agreement with the Company that
contains a definition of “cause” for termination of employment or other
relationship, “Cause” shall have the meaning ascribed to such term in such
agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant
or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be conclusive.
The Participant shall be considered to have been discharged for “Cause” if the
Company determines, within 30 days after the Participant’s resignation, that
discharge for cause was warranted.



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4.             Withholding.


No Shares will be issued pursuant to the exercise of
this option unless and until the Participant pays to the Company, or makes
provision satisfactory to the Company for payment of, any federal, state or
local withholding taxes required by law to be withheld in respect of this
option.


5.             Nontransferability of Option.


This option may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Participant, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the lifetime of the Participant, this option shall be exercisable only
by the Participant.


6.             Provisions of the Plan.


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


IN WITNESS WHEREOF, the
Company has caused this option to be executed under its corporate seal by its
duly authorized officer. This option shall take effect as a sealed instrument.


	
  

  	
   

  	
  BioSphere Medical, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
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PARTICIPANT’S ACCEPTANCE


The undersigned hereby accepts the foregoing option
and agrees to the terms and conditions thereof. The undersigned hereby
acknowledges receipt of a copy of the Company’s 2006 Stock Incentive Plan.


	
  

  	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


	
  

  	
   

  	
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