Exhibit 10.5


 


ACKNOWLEDGEMENT
AND AMENDMENT AGREEMENT


 


This Acknowledgement and Amendment Agreement
(the “Acknowledgement”) is dated December 23, 2008, and is entered
into by and between Willard W. Hennemann (the “Employee”), and BioSphere
Medical, Inc., a Delaware corporation (the “Company”).


 


WHEREAS, the Employee and the Company have
entered into a certain letter agreement dated February 8, 2008 regarding
the Employee’s employment with the Company (the “Letter Agreement”); and


 


WHEREAS, the parties desire to modify the
provisions of the Letter Agreement.


 


NOW, THEREFORE, in consideration of the
mutual covenants contained herein and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the undersigned
hereby agree as follows:


 


1.                                       The Letter Agreement is
hereby amended as follows:


 


(a)                                  Section 4.1 is hereby
deleted in its entirety and replaced with the following new Section 4.1:


 


“4.1                           In the event
your at-will employment is terminated by the Company without Cause (as defined
below) in anticipation of, or within twelve months after, a Change in Control
(as defined below), the Company shall continue to pay to you your salary as in
effect on the date of termination and the amount of the annual bonus paid to
you for the fiscal year immediately preceding the date of termination (payable
in annualized monthly installments) (the “Salary Payment”) and shall, provided
you elect to receive group medical insurance pursuant to the federal “COBRA”
law,  29 U.S.C. § 1161 et  seq.,
provide to you (so long as you are entitled to COBRA coverage) reimbursement
for the share of the premium for group medical and dental that is paid by the
Company for active and similarly-situated employees who receive the same type
of coverage, (the “Healthcare Reimbursement Payment” and with the Salary
Payments, the “Severance Payment” for a period of 12 months, provided, however,
that the Company’ s obligation to make the aforesaid payments or provide the
aforesaid benefits shall immediately terminate in the event that you violate
the provisions of Section 5 or Section  6 during such 12 month
period.  The payment to you of the
Severance Payment under this Section 4.1 shall be contingent upon your
execution and non-revocation of a release in a form reasonably acceptable to
the Company within 30 days of the date of termination and (ii) shall
constitute your sole remedy in the event of a termination of your employment in
the circumstances set forth in this Section 4.1.  The payments and benefits shall
commence 60 days following the date of termination, provided that the
release has been properly executed and not revoked as of such date, or, if the
release has been executed and any applicable revocation period has expired
prior to the 60th day following the date of termination, then
the payments and benefits may commence prior to the 60th day but 


 

















 


no sooner than the 30th day following the date of termination. 
Notwithstanding the foregoing, if the 60th day following
the date of termination occurs in the calendar year following the termination,
then the payments shall commence no earlier than January 1 of such
subsequent calendar year.


 


Payments to the Employee
under this Section 4.1 shall be bifurcated into two portions, consisting
of a portion that does not constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and a portion that does constitute nonqualified
deferred compensation.  Payments
hereunder shall first be made from the portion that does not consist of
nonqualified deferred compensation until it is exhausted and then shall be made
from the portion that does constitute nonqualified deferred compensation.  Notwithstanding the foregoing, because the
Employee is a “specified employee” as defined in Section 409A (a)(3)(B)(i) of
the Code, the commencement of the delivery of any such payments that constitute
nonqualified deferred compensation will be delayed to the date that is 6 months
and one day after the Employee’ termination of employment (the “Earliest
Payment Date”) unless payable upon the Employee’s death.  Any payments that are delayed pursuant to the
preceding sentence shall be paid on the Earliest Payment Date.  The determination of whether, and the extent
to which, any of the payments to be made to the Employee hereunder are
nonqualified deferred compensation shall be made after the application of all
applicable exclusions under Treasury Reg. § 1.409A-1(b)(9).  Any payments that are intended to qualify for
the exclusion for separation pay due to involuntary separation from service set
forth in Reg. § 1.409A-1(b)(9)(iii) must be paid no later than the last
day of the second taxable year of the Employee following the taxable year of
the Employee in which the Employee’s termination of employment occurs.”


 


(b)                                 Section 10 is hereby
deleted in its entirety and replaced with the following new Section 10:


 


“10.                           Section 409A.


 


Notwithstanding anything
else to the contrary in this agreement, to the extent that any of the payments
that may be made hereunder constitute “nonqualified deferred compensation”,
within the meaning of Section 409A and the Employee is a “specified
employee” upon his separation (as defined under Section 409A), the timing
of any such payment following the separation date shall be modified if, absent
such modification, such payment would otherwise be subject to penalty under Section 409A.  In any event, the Company makes no
representation or warranty and shall have no liability to the Employee or to
any other person if any provisions of this agreement are determined to
constitute “nonqualified deferred compensation” subject to Section 409A
but do not satisfy the requirements of that section.


 


It is intended that each
installment of the severance payments and benefits provided hereunder shall be
treated as a separate “payment” for purposes of Section 409A.  Neither the Company nor the Employee shall
have the right to accelerate or defer 


 


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the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A.”


 


2.                                       The parties acknowledge and
agree that all other provisions of the Letter Agreement shall remain in full
force and effect.


 


3.                                       This Acknowledgement shall
be governed by and construed and interpreted in accordance with the substantive
laws of the Commonwealth of Massachusetts without regard to its principles of
conflicts of law.


 


4.                                       This Acknowledgement may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.


 


[Remainder of Page Intentionally
Left Blank]


 


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IN WITNESS WHEREOF, the Parties have executed
this Acknowledgement and Amendment Agreement as of the date first above
written.


 


	
   

  	
  BIOSPHERE MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J. Faleschini

  
	
   

  	
  Richard J. Faleschini

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Williard W. Hennemann

  
	
   

  	
  Willard W. Hennemann

  
	
   

  	
  Vice President of New Product and Business 

  Development

  



 


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