**Exhibit 10.4**

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**BioSphere Medical Inc.**

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NON-STATUTORY STOCK OPTION AGREEMENT

 

# 1.             Grantof Option.  BioSphere Medical Inc., aDelaware corporation (the “Company”), hereby grants to the person (the “Optionee”)listed on the above Grant Summary, an option, pursuant to the Company’s 1994Stock Option Plan (the “Plan”), to purchase up to the number of shares ofcommon stock, $0.01 par value per share (the “Common Stock”), of the Companyset forth on the Grant Summary as Total Shares at a price per share set forth onthe Grant Summary as the Option Price. The shares of Common Stock subject to this option are purchasable as setforth in and subject to the terms and conditions of this option and the Plan.  Except where the context otherwise requires,the term “Company” shall include the parent and all present and futuresubsidiaries of the Company as defined in Sections 424(e) and 424(f) of theInternal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).

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# 2.             Non-StatutoryStock Option.  This option is notintended to qualify as an incentive stock option within the meaning of Section422 of the Code.

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# 3.             Exerciseof Option and Provisions for Termination.

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## (a)           Vesting Schedule.  Except as otherwise provided in thisAgreement, this option may be exercised prior to the tenth anniversary of theGrant Date set forth on the Grant Summary (hereinafter the “Expiration Date”)to purchase, from and after each date set forth under the column entitled “FullVest Date” on the attached Grant Summary Table, the number of shares of CommonStock set forth opposite such date.  Theright off exercise shall be cumulative so that if any installment is notexercised to the maximum extent permissible on the applicable Full Vest Dateduring any exercise period, it shall be exercisable, in whole or in part, withrespect to all shares not so purchased at any time prior to the Expiration Dateor the earlier termination of this option. This option may not be exercised at any time on or after the ExpirationDate, except as otherwise provided in Section 3(e) below.

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## (b)           Exercise Procedure.  Subject to the conditions set forth in thisAgreement, this option shall be exercised by the Optionee’s delivery of writtennotice of exercise to the Treasurer of the Company, specifying the number ofshares to be purchased and the purchase price to be paid therefor andaccompanied by payment in full in accordance with Section 4.  Such exercise shall be effective upon receiptby the Treasurer of the Company of such written notice together with therequired payment.  The Optionee maypurchase less than the number of shares covered hereby, provided that nopartial exercise of this option may be for any fractional share or for fewerthan ten whole shares.

 

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## (c)           Continuous Relationship with the CompanyRequired.  Except as otherwiseprovided in this Section 3, this option may not be exercised unless theOptionee, at the time he or she exercises this option, is, and has been at alltimes since the Grant Date of this option, an employee, officer or director of,or consultant or advisor to, the Company (an “Eligible Optionee”).  For purposes of this Agreement, employmentwith the Company shall not include employment with Sepracor Inc.

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## (d)           Termination of Relationship withthe Company.  If the Optionee ceasesto be an Eligible Optionee for any reason, then, except as provided inparagraphs (e) and (f) below, the right to exercise this option shall terminatethree months after such cessation (but in no event after the Expiration Date), providedthat this option shall be exercisable only to the extent that the Optionee wasentitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if theOptionee, prior to the Expiration Date, materially violates the non-competitionor confidentiality provisions of any employment contract, confidentiality andnondisclosure agreement or other agreement between the Optionee and theCompany, the right to exercise this option shall terminate immediately uponwritten notice to the Optionee from the Company describing such violation.

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## (e)           Exercise Period Upon Death orDisability.  If the Optionee dies orbecomes disabled (within the meaning of Section 22(e)(3) of the Code) prior tothe Expiration Date while he or she is an Eligible Optionee, or if the Optioneedies within three months after the Optionee ceases to be an Eligible Optionee(other than as the result of a termination of such relationship by the Companyfor “cause” as specified in paragraph (f) below), this option shall beexercisable, within the period of one year following the date of death ordisability of the Optionee (whether or not such exercise occurs before theExpiration Date), by the Optionee or by the person to whom this option istransferred by will or the laws of descent and distribution, providedthat this option shall be exercisable only to the extent that this option wasexercisable by the Optionee on the date of his or her death or disability.  Except as otherwise indicated by the context,the term “Optionee”, as used in this option, shall be deemed to include theestate of the Optionee or any person who acquires the right to exercise thisoption by bequest or inheritance or otherwise by reason of the death of theOptionee.

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## (f)            Discharge for Cause.  If the Optionee, prior to the ExpirationDate, is discharged by the Company for “cause” (as defined below), the right toexercise this option shall terminate immediately upon such cessation ofemployment.  “Cause” shall mean willfulmisconduct by the Optionee or willful failure to perform his or herresponsibilities in the best interests of the Company (including, withoutlimitation, breach by the Optionee of any provision of any employment,consulting, advisory, nondisclosure, non-competition or other similar agreementbetween the Optionee and the Company), as determined by the Company, whichdetermination shall be conclusive.  TheOptionee shall be considered to have been discharged “for cause” if the Companydetermines, within 30 days after the Optionee’s resignation, that discharge forcause was warranted.

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# 4.             Paymentof Purchase Price.

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## (a)           Method of Payment.  Payment of the purchase price for sharespurchased upon exercise of this option shall be made (i) by delivery to theCompany of cash or a check to

 

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## the order of the Company in an amount equal to the purchase price ofsuch shares, (ii) subject to the consent of the Company, by delivery to theCompany of shares of Common Stock of the Company then owned by the Optioneehaving a fair market value equal in amount to the purchase price of suchshares, (iii) by any other means which the Board of Directors determines areconsistent with the purpose of the Plan and with applicable laws andregulations (including, without limitation, the provisions of Rule 16b-3 underthe Securities Exchange Act of 1934 and Regulation T promulgated by the FederalReserve Board), or (iv) by any combination of such methods of payment.

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## (b)           Valuation of Shares or OtherNon-Cash Consideration Tendered in Payment of Purchase Price.  For the purposes hereof, the fair marketvalue of any share of the Company’s Common Stock or other non-cashconsideration which may be delivered to the Company in exercise of this optionshall be determined in good faith by the Board of Directors of the Company.

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## (c)           Delivery of Shares Tendered inPayment of Purchase Price.  If theOptionee exercises this option by delivery of shares of Common Stock of theCompany, the certificate or certificates representing the shares of CommonStock of the Company to be delivered shall be duly executed in blank by theOptionee or shall be accompanied by a stock power duly executed in blanksuitable for purposes of transferring such shares to the Company.  Fractional shares of Common Stock of theCompany will not be accepted in payment of the purchase price of sharesacquired upon exercise of this option.

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## (d)           Restrictions on Use of OptionStock.  Notwithstanding theforegoing, no shares of Common Stock of the Company may be tendered in paymentof the purchase price of shares purchased upon exercise of this option if theshares to be so tendered were acquired within twelve (12) months before thedate of such tender, through the exercise of an option granted under the Planor any other stock option or restricted stock plan of the Company.

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# 5.             Deliveryof Shares; Compliance With Securities Laws, etc.

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## (a)           General.  The Company shall, upon payment of the optionprice for the number of shares purchased and paid for, make prompt delivery ofsuch shares to the Optionee, provided that if any law or regulation requiresthe Company to take any action with respect to such shares before the issuancethereof, then the date of delivery of such shares shall be extended for theperiod necessary to complete such action.

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## (b)           Listing, Qualification, etc.  This option shall be subject to therequirement that if, at any time, counsel to the Company shall determine thatthe listing, registration or qualification of the shares subject hereto uponany securities exchange or under any state or federal law, or the consent orapproval of any governmental or regulatory body, or that the disclosure ofnon-public information or the satisfaction of any other condition is necessaryas a condition of, or in connection with, the issuance or purchase of shareshereunder, this option may not be exercised, in whole or in part, unless suchlisting, registration, qualification, consent or approval, disclosure orsatisfaction of such other condition shall have been effected or obtained onterms acceptable to the Board of Directors. Nothing herein shall

 

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## be deemed to require the Company to apply for, effect or obtain suchlisting, registration, qualification or disclosure, or to satisfy such othercondition.

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# 6.             Nontransferabilityof Option.  This option is personaland no rights granted hereunder may be transferred, assigned, pledged orhypothecated in any way (whether by operation of law or otherwise) nor shallany such rights be subject to execution, attachment or similar process, exceptthat this option may be transferred (i) by will or the laws of descent anddistribution or (ii) pursuant to a qualified domestic relations order asdefined in Section 414(p) of the Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwisedispose of this option or of such rights contrary to the provisions hereof, orupon the levy of any attachment or similar process upon this option or suchrights, this option and such rights shall, at the election of the Company,become null and void.

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# 7.             NoSpecial Employment or Similar Rights. Nothing contained in the Plan or this option shall be construed ordeemed by any person under any circumstances to bind the Company to continuethe employment or other relationship of the Optionee with the Company for theperiod within which this option may be exercised.

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# 8.             Rightsas a Shareholder.  The Optionee shallhave no rights as a shareholder with respect to any shares which may bepurchased by exercise of this option (including, without limitation, any rightsto receive dividends or non-cash distributions with respect to such shares)unless and until a certificate representing such shares is duly issued anddelivered to the Optionee.  No adjustmentshall be made for dividends or other rights for which the record date is priorto the date such stock certificate is issued.

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# 9.             AdjustmentProvisions.

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## (a)           General.  If, through or as a result of any merger,consolidation, sale of all or substantially all of the assets of the Company,reorganization, recapitalization, reclassification, stock dividend, stocksplit, reverse stock split or other similar transaction, (i) theoutstanding shares of Common Stock are increased or decreased or are exchangedfor a different number or kind of shares or other securities of the Company, or(ii) additional shares or new or different shares or other securities of theCompany or other non-cash assets are distributed with respect to such shares ofCommon Stock or other securities, the Optionee shall, with respect to thisoption or any unexercised portion hereof be entitled to the rights andbenefits, and be subject to the limitations, set forth in Section 15(a) of thePlan.

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## (b)           Board Authority to MakeAdjustments.  Any adjustments underthis Section 9 will be made by the Board of Directors, whose determination asto what adjustments, if any, will be made and the extent thereof, will befinal, binding and conclusive.  Nofractional shares will be issued pursuant to this option on account of any suchadjustments.

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# 10.           Mergers,Consolidation, Distributions, Liquidation, etc.  In the event of a merger or consolidation orsale of all, or substantially all, of the assets of the Company in whichoutstanding shares of Common Stock are exchanged for securities, cash or otherproperty of any other corporation or business entity, or in the event of aliquidation of the Company, prior to the Expiration Date or termination of thisoption, the Optionee shall, with respect to this

 

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# option or any unexercised portion hereof, be entitled to the rights andbenefits, and be subject to the limitations, set forth in Section 16(a) of thePlan.

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# 11.           WithholdingTaxes.  The Company’s obligation todeliver shares upon the exercise of this option shall be subject to theOptionee’s satisfaction of all applicable federal, state and local income andemployment tax withholding requirements.

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# 12.           Noncompetition/Nonsolicitation.  Optionee agrees that for a period of one (1)year from the date of termination, the Optionee will not, directly orindirectly:

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### (i)  as an individual proprietor,partner, stockholder, officer, employee, director, joint venturer, investor,lender, consultant or in any other capacity whatsoever, develop, design,produce, market, sell or render, or assist any other person in developing,designing, producing, marketing, selling or rendering) products or servicescompetitive with those developed, designed, produced, marketed, sold or renderedby the Company while Optionee was employed by (or, acting as a consultant to)the Company; or

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### (ii)  solicit, divert, or takeaway, or attempt to divert or to take away, the business or patronage of any ofthe clients, customer or accounts, or prospective clients, customers oraccounts, of the Company which were contacted, solicited or served by theOptionee while employed by (or, acting as a consultant to) the Company.

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# 13.           Miscellaneous.

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## (a)           Except as provided herein, thisoption may not be amended or otherwise modified unless evidenced in writing andsigned by the Company and the Optionee.

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## (b)           All notices under this option shallbe mailed or delivered by hand to the parties at their respective addresses setforth on the above Notice of Grant or at such other address as may bedesignated in writing by either of the parties to one another.

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## (c)           This option shall be governed by andconstrued in accordance with the laws of the Commonwealth of Massachusetts.

 

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