**Exhibit 10.7**

 

BioSphere Medical, Inc.

 

Form of Restricted Stock Agreement

Granted Under 1997 Stock Incentive Plan

 

AGREEMENTmade this [         ] day of [              ],between BioSphere Medical, Inc., a Delaware corporation (the “Company”), and[insert name of officer] (the “Participant”).

 

Forvaluable consideration, receipt of which is acknowledged, the parties heretoagree as follows:

 

1.                                       Purchaseof Shares.

 

TheCompany shall issue and sell to the Participant, and the Participant shallpurchase from the Company, subject to the terms and conditions set forth inthis Agreement and in the Company’s 1997 Stock Incentive Plan (the “Plan”),[insert number of shares granted] shares (the “Shares”) of common stock, $0.01par value, of the Company (“Common Stock”), at a purchase price of $        per share.  The aggregate purchase pricefor the Shares shall be paid by the Participant by check payable to the orderof the Company or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment forthe Shares, the Company shall issue to the Participant one or more certificatesin the name of the Participant for that number of Shares purchased by theParticipant.  The Participant agrees thatthe Shares shall be subject to the purchase options set forth in Section 2of this Agreement and the restrictions on transfer set forth in Section 5of this Agreement.

 

2.                                       PurchaseOption.

 

(a)                                  Inthe event that the Participant ceases to [be employed by/serve as a directorof] the Company for any reason or no reason, with or without cause, prior to[typically a period of years from grant date], the Company shall have the rightand option (the “Purchase Option”) to purchase from the Participant, for a sumof $            per share (the “Option Price”), some or all of the Unvested Shares (as definedbelow).

 

“UnvestedShares” means the total number of Shares multiplied by the ApplicablePercentage at the time the Purchase Option becomes exercisable by theCompany.  The “Applicable Percentage”shall be [percentage will generally be a fixed amount over a fixed period ofmonths or years].

 

(b)                                 [Inthe event that the Participant’s [employment with/service as a director of] theCompany is terminated by reason of death or disability, the number of the Sharesfor which the Purchase Option becomes exercisable shall be                   percent (         %) of the numberof Unvested Shares for which the Purchase Option would otherwise becomeexercisable.  For this purpose, “disability”shall mean the inability of the Participant, due to a medical reason, to carryout his duties as [an employee/ a director] of the Company for a period of sixconsecutive months.]

 

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[(c)                              Forpurposes of this Agreement, employment with the Company shall includeemployment with a parent or subsidiary of the Company.]

 

3.                                       [AutomaticSale Upon Vesting.

 

[TheAgreement may contain the following provision if the employee or directorelects to establish an automatic trading program under the Agreement.]

 

(a)                                  Uponany vesting of Shares pursuant to Section 2 hereof, the Company shallsell, or arrange for the sale of, such number of the Shares no longer subjectto forfeiture under Section 2 as is sufficient to generate net proceedssufficient to satisfy the Company’s minimum statutory withholding obligationswith respect to the income recognized by the Participant upon the lapse of theforfeiture provisions (based on minimum statutory withholding rates for all taxpurposes, including payroll and social security taxes, that are applicable tosuch income), and the Company shall retain such net proceeds in satisfaction ofsuch tax withholding obligations.

 

(b)                                 TheParticipant hereby appoints [identify attorney in fact] his attorney in fact tosell the Participant’s Shares in accordance with this Section 3.  The Participant agrees to execute and deliversuch documents, instruments and certificates as may reasonably be required inconnection with the sale of the Shares pursuant to this Section 3.

 

(c)                                  TheParticipant represents to the Company that, as of the date hereof, he is notaware of any material nonpublic information about the Company or the CommonStock.  The Participant and the Companyhave structured this Agreement to constitute a “binding contract” relating tothe sale of Common Stock pursuant to this Section 3, consistent with theaffirmative defense to liability under Section 10(b) of the SecuritiesExchange Act of 1934 under Rule 10b5-1(c) promulgated under such Act.]

 

4.                                       Exerciseof Purchase Option and Closing.

 

(a)                                  TheCompany may exercise the Purchase Option by delivering or mailing to theParticipant (or his estate), within 90 days after the termination of theemployment or director service of the Participant with the Company, a writtennotice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased.  If and to the extent the Purchase Option isnot so exercised by the giving of such a notice within such 90-day period, thePurchase Option shall automatically expire and terminate effective upon theexpiration of such 90-day period.

 

(b)                                 Within10 days after delivery to the Participant of the Company’s notice of theexercise of the Purchase Option pursuant to subsection (a) above, theParticipant (or his estate) shall, pursuant to the provisions of the JointEscrow Instructions referred to in Section 6 below, tender to the Companyat its principal offices the certificate or certificates representing theShares which the Company has elected to purchase in accordance with the termsof this Agreement, duly endorsed in blank or with duly endorsed stock powersattached thereto, all in form suitable for the transfer of such Shares to theCompany.  Promptly following its receiptof such certificate or certificates, the Company shall pay to the Participantthe aggregate Option Price for such Shares (provided that any

 

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delay in making suchpayment shall not invalidate the Company’s exercise of the Purchase Option withrespect to such Shares).

 

(c)                                  Afterthe time at which any Shares are required to be delivered to the Company fortransfer to the Company pursuant to subsection (b) above, the Companyshall not pay any dividend to the Participant on account of such Shares orpermit the Participant to exercise any of the privileges or rights of astockholder with respect to such Shares, but shall, in so far as permitted bylaw, treat the Company as the owner of such Shares.

 

(d)                                 TheOption Price may be payable, at the option of the Company, in cancellation ofall or a portion of any outstanding indebtedness of the Participant to theCompany or in cash (by check) or both.

 

(e)                                  TheCompany shall not purchase any fraction of a Share upon exercise of thePurchase Option, and any fraction of a Share resulting from a computation madepursuant to Section 2 of this Agreement shall be rounded to the nearestwhole Share (with any one-half Share being rounded upward).

 

(f)                                    TheCompany may assign its Purchase Option to one or more persons or entities.

 

5.                                       Restrictionson Transfer.

 

(a)                                  TheParticipant shall not sell, assign, transfer, pledge, hypothecate or otherwisedispose of, by operation of law or otherwise (collectively “transfer”) anyShares, or any interest therein, that are subject to the Purchase Option,except that the Participant may transfer such Shares to or for the benefit ofany spouse, children, parents, uncles, aunts, siblings, grandchildren and anyother relatives approved by the Board of Directors (collectively, “ApprovedRelatives”) or to a trust established solely for the benefit of the Participantand/or Approved Relatives, provided that such Shares shall remain subject tothis Agreement (including without limitation the restrictions on transfer setforth in this Section 5 and the Purchase Option) and such permittedtransferee shall, as a condition to such transfer, deliver to the Company awritten instrument confirming that such transferee shall be bound by all of theterms and conditions of this Agreement

 

(b)                                 TheCompany shall not be required (i) to transfer on its books any of the Shareswhich have been transferred in violation of any of the provisions set forth inthis Agreement or (ii) to treat as owner of such Shares or to pay dividends toany transferee to whom such Shares have been transferred in violation of any ofthe provisions of this Agreement.

 

6.                                       Escrow.

 

TheParticipant shall, upon the execution of this Agreement, execute Joint EscrowInstructions in the form attached to this Agreement as Exhibit A.  The Joint Escrow Instructions shall bedelivered to the Secretary of the Company, as escrow agent thereunder.  The Participant shall deliver to such escrowagent a stock assignment duly endorsed in blank, in the form attached to thisAgreement as Exhibit B, and hereby instructs the Company to deliver to suchescrow agent, on

 

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behalf of the Participant,the certificate(s) evidencing the Shares issued hereunder.  Such materials shall be held by such escrowagent pursuant to the terms of such Joint Escrow Instructions.

 

7.                                       RestrictiveLegends.

 

Allcertificates representing Shares shall have affixed thereto a legend insubstantially the following form, in addition to any other legends that may berequired under federal or state securities laws:

 

“Theshares of stock represented by this certificate are subject to restrictions ontransfer and an option to purchase set forth in a certain Restricted StockAgreement between the corporation and the registered owner of these shares (orhis predecessor in interest), and such Agreement is available for inspectionwithout charge at the office of the Secretary of the corporation.”

 

8.                                       Provisionsof the Plan.

 

ThisAgreement is subject to the provisions of the Plan, a copy of which isfurnished to the Participant with this Agreement.

 

9.                                       WithholdingTaxes; Section 83(b) Election.

 

(a)                                  TheParticipant acknowledges and agrees that the Company has the right to deductfrom payments of any kind otherwise due to the Participant any federal, stateor local taxes of any kind required by law to be withheld with respect to thepurchase of the Shares by the Participant or the lapse of the Purchase Option.

 

(b)                                 TheParticipant has reviewed with the Participant’s own tax advisors the federal,state, local and foreign tax consequences of this investment and thetransactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on anystatements or representations of the Company or any of its agents.  The Participant understands that theParticipant (and not the Company) shall be responsible for the Participant’sown tax liability that may arise as a result of this investment or thetransactions contemplated by this Agreement. The Participant understands that it may be beneficial in manycircumstances to elect to be taxed at the time the Shares are purchased ratherthan when and as the Company’s Purchase Option expires by filing an electionunder Section 83(b) of the Code with the I.R.S. within 30 days from thedate of purchase.

 

THEPARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY ANDNOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IFTHE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILINGON THE PARTICIPANT’S BEHALF.

 

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10.                                 Miscellaneous.

 

(a)                                  NoRights to Continued Service.  TheParticipant acknowledges and agrees that the vesting of the Shares pursuant to Section 2hereof is earned only by continuing service to the Company (not through the actof being hired, elected or purchasing shares hereunder).  The Participant further acknowledges andagrees that the transactions contemplated hereunder and the vesting schedule setforth herein do not constitute an express or implied promise of continuedengagement as an employee or director for the vesting period, for any period,or at all.

 

(b)                                 Severability.  The invalidity or unenforceability of anyprovision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement, and each other provision of thisAgreement shall be severable and enforceable to the extent permitted by law.

 

(c)                                  Waiver.  Any provision for the benefit of the Companycontained in this Agreement may be waived, either generally or in anyparticular instance, by the Board of Directors of the Company.

 

(d)                                 BindingEffect.  This Agreement shall bebinding upon and inure to the benefit of the Company and the Participant andtheir respective heirs, executors, administrators, legal representatives,successors and assigns, subject to the restrictions on transfer set forth in Section 5of this Agreement.

 

(e)                                  Notice.   All notices required or permitted hereundershall be in writing and deemed effectively given upon personal delivery or fivedays after deposit in the United States Post Office, by registered or certifiedmail, postage prepaid, addressed to the other party hereto at the address shownbeneath his or its respective signature to this Agreement, or at such otheraddress or addresses as either party shall designate to the other in accordancewith this Section 9(e).

 

(f)                                    Pronouns.  Whenever the context may require, any pronounsused in this Agreement shall include the corresponding masculine, feminine orneuter forms, and the singular form of nouns and pronouns shall include theplural, and vice versa.

 

(g)                                 EntireAgreement.  This Agreement and thePlan constitute the entire agreement between the parties, and supersedes allprior agreements and understandings, relating to the subject matter of thisAgreement.

 

(h)                                 Amendment.  This Agreement may be amended or modifiedonly by a written instrument executed by both the Company and the Participant.

 

(i)                                     GoverningLaw.  This Agreement shall beconstrued, interpreted and enforced in accordance with the internal laws of theState of Delaware without regard to any applicable conflicts of laws.

 

(j)                                     Participant’sAcknowledgments.  The Participantacknowledges that he or she: (i) has read this Agreement; (ii) has beenrepresented in the preparation, negotiation, and execution of this Agreement bylegal counsel of the Participant’s own choice or has voluntarily declined toseek such counsel; (iii) understands the terms and consequences of thisAgreement; (iv) is fully

 

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aware of the legal andbinding effect of this Agreement; and (v) understands that the law firm ofWilmer Cutler Pickering Hale and Dorr LLP, is acting as counsel to the Companyin connection with the transactions contemplated by the Agreement, and is notacting as counsel for the Participant.

 

INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the dayand year first above written.

 
|   | BIOSPHERE  MEDICAL, INC. |
|--------|--------------------------|
|   |                     |
|   | By:                      |   |   |
|   | Title:                   |   |   |
|   | Address:                 | 1050  Hingham Street |   |
|   |                     | Rockland,  MA 02370 |   |
|   |                     |
|   |                     |
|   |                     |   |
|   | [Name  of Participant]   |
|   | Address:                 |   |   |
|   |                     |   |   |
|        |                          |  |  |  |  |  |  |

 

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Exhibit A

 

BIOSPHERE MEDICAL, INC.

 

Joint Escrow Instructions

 

             ,20     

 

                                         

[Secretary]

BioSphere Medical, Inc.

1050Hingham Street

Rockland, MA 02370

 

Dear Sir:

 

AsEscrow Agent for BioSphere Medical, Inc., a Delaware corporation, and itssuccessors in interest under the Restricted Stock Agreement (the “Agreement”)of even date herewith, to which a copy of these Joint Escrow Instructions isattached (the “Company”), and the undersigned person (“Holder”), you are herebyauthorized and directed to hold the documents delivered to you pursuant to theterms of the Agreement in accordance with the following instructions:

 

1.                                       Appointment.  Holder irrevocably authorizes the Company todeposit with you any certificates evidencing Shares (as defined in theAgreement) to be held by you hereunder and any additions and substitutions tosaid Shares.  For purposes of these JointEscrow Instructions, “Shares” shall be deemed to include any additional orsubstitute property.  Holder does herebyirrevocably constitute and appoint you as his attorney-in-fact and agent forthe term of this escrow to execute with respect to such Shares all documentsnecessary or appropriate to make such Shares negotiable and to complete anytransaction herein contemplated.  Subjectto the provisions of this Section 1 and the terms of the Agreement, Holdershall exercise all rights and privileges of a stockholder of the Company whilethe Shares are held by you.

 

2.                                       Closingof Purchase.

 

(a)                                  Uponany purchase by the Company of the Shares pursuant to the Agreement, theCompany shall give to Holder and you a written notice specifying the purchaseprice for the Shares, as determined pursuant to the Agreement, and the time fora closing hereunder (the “Closing”) at the principal office of theCompany.  Holder and the Company herebyirrevocably authorize and direct you to close the transaction contemplated bysuch notice in accordance with the terms of said notice.

 

(b)                                 Atthe Closing, you are directed (i) to date the stock assignment form or formsnecessary for the transfer of the Shares, (ii) to fill in on such form or formsthe number of Shares being transferred, and (iii) to deliver same, togetherwith the certificate or certificates evidencing the Shares to be transferred,to the Company against the simultaneous delivery to you of the purchase pricefor the Shares being purchased pursuant to the Agreement.

 

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3.                                       Withdrawal.  The Holder shall have the right to withdrawfrom this escrow any Shares as to which the Purchase Option (as defined in theAgreement) has terminated or expired.

 

4.                                       Dutiesof Escrow Agent.

 

(a)                                  Yourduties hereunder may be altered, amended, modified or revoked only by a writingsigned by all of the parties hereto.

 

(b)                                 Youshall be obligated only for the performance of such duties as are specificallyset forth herein and may rely and shall be protected in relying or refrainingfrom acting on any instrument reasonably believed by you to be genuine and tohave been signed or presented by the proper party or parties.  You shall not be personally liable for anyact you may do or omit to do hereunder as Escrow Agent or as attorney-in-factof Holder while acting in good faith and in the exercise of your own goodjudgment, and any act done or omitted by you pursuant to the advice of your ownattorneys shall be conclusive evidence of such good faith.

 

(c)                                  Youare hereby expressly authorized to disregard any and all warnings given by anyof the parties hereto or by any other person or entity, excepting only ordersor process of courts of law, and are hereby expressly authorized to comply withand obey orders, judgments or decrees of any court.  If you are uncertain of any actions to betaken or instructions to be followed, you may refuse to act in the absence ofan order, judgment or decrees of a court. In case you obey or comply with any such order, judgment or decree ofany court, you shall not be liable to any of the parties hereto or to any otherperson or entity, by reason of such compliance, notwithstanding any such order,judgment or decree being subsequently reversed, modified, annulled, set aside,vacated or found to have been entered without jurisdiction.

 

(d)                                 Youshall not be liable in any respect on account of the identity, authority orrights of the parties executing or delivering or purporting to execute ordeliver the Agreement or any documents or papers deposited or called forhereunder.

 

(e)                                  Youshall be entitled to employ such legal counsel and other experts as you maydeem necessary properly to advise you in connection with your obligationshereunder and may rely upon the advice of such counsel.

 

(f)                                    Yourrights and responsibilities as Escrow Agent hereunder shall terminate if (i)you cease to be [Secretary] of the Company or (ii) you resign by written noticeto each party.  In the event of atermination under clause (i), your successor as [Secretary] shall become EscrowAgent hereunder; in the event of a termination under clause (ii), the Companyshall appoint a successor Escrow Agent hereunder.

 

(g)                                 Ifyou reasonably require other or further instruments in connection with theseJoint Escrow Instructions or obligations in respect hereto, the necessaryparties hereto shall join in furnishing such instruments.

 

(h)                                 Itis understood and agreed that if you believe a dispute has arisen with respectto the delivery and/or ownership or right of possession of the securities heldby you hereunder, you

 

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are authorized anddirected to retain in your possession without liability to anyone all or anypart of said securities until such dispute shall have been settled either bymutual written agreement of the parties concerned or by a final order, decreeor judgment of a court of competent jurisdiction after the time for appeal hasexpired and no appeal has been perfected, but you shall be under no dutywhatsoever to institute or defend any such proceedings.

 

(i)                                     TheseJoint Escrow Instructions set forth your sole duties with respect to any andall matters pertinent hereto and no implied duties or obligations shall be readinto these Joint Escrow Instructions against you.

 

(j)                                     TheCompany shall indemnify you and hold you harmless against any and all damages,losses, liabilities, costs, and expenses, including attorneys’ fees anddisbursements, (including without limitation the fees of counsel retainedpursuant to Section 4(e) above, for anything done or omitted to be done byyou as Escrow Agent in connection with this Agreement or the performance ofyour duties hereunder, except such as shall result from your gross negligenceor willful misconduct.

 

5.                                       Notice.  Any notice required or permitted hereundershall be given in writing and shall be deemed effectively given upon personaldelivery or upon deposit in the United States Post Office, by registered orcertified mail with postage and fees prepaid, addressed to each of the otherparties thereunto entitled at the following addresses, or at such otheraddresses as a party may designate by ten days’ advance written notice to eachof the other parties hereto.

 

| COMPANY:      |   | Notices to the  Company shall be sent to the address set forth in the salutation hereto,  Attn: President |
|---------------|--------|-----------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                      |
| HOLDER:       |   | Notices to  Holder shall be sent to the address set forth below Holder’s signature below.            |
|          |   |                                                                                                      |
| ESCROW AGENT: |   | Notices to the  Escrow Agent shall be sent to the address set forth in the salutation hereto.             |

 

6.                                       Miscellaneous.

 

(a)                                  Bysigning these Joint Escrow Instructions, you become a party hereto only for thepurpose of said Joint Escrow Instructions, and you do not become a party to theAgreement.

 

(b)                                 Thisinstrument shall be binding upon and inure to the benefit of the parties heretoand their respective successors and permitted assigns.

 

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|          | Very  truly yours,       |
|---------------|--------------------------|
|          |                     |
|          | BIOSPHERE  MEDICAL, INC. |
|          |                     |
|          | By:                      |   |   |
|          | Title:                   |   |   |
|          |                     |
|          | HOLDER:                  |
|          |                     |
|          |                     |   |
|          | (Signature)              |
|          |                     |
|          |                     |   |
|          | Print  Name              |
|          |                     |
|          | Address:                 |   |   |
|          |                     |   |   |
|          |                     |
|          | Date  Signed:            |   |   |
|          |                     |
| ESCROW AGENT: |                     |
|          |                     |
|          |                     |   |
|               |                          |  |  |  |  |  |  |  |  |

 

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Exhibit B

 

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

 

 

FOR VALUE RECEIVED, Ihereby sell, assign and transfer unto                               (                  )shares of Common Stock, $0.01 par value per share, of BioSphere Medical, Inc.(the “Corporation”) standing in my name on the books of the Corporationrepresented by Certificate(s) Number                      herewith,and do hereby irrevocably constitute and appoint                                     attorneyto transfer the said stock on the books of the Corporation with full power ofsubstitution in the premises.

 
|           | Dated: |
|----------------|--------|
|           |   |
| IN PRESENCE OF |   |   |
|           |   |
|           |   |   |

 

NOTICE:The signature(s) to this assignment must correspond with the name as writtenupon the face of the certificate, in every particular, without alteration,enlargement, or any change whatever and must be guaranteed by a commercialbank, trust company or member firm of the Boston, New York or Midwest StockExchange.

 

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