Document:

Exhibit 10.7

 

BioSphere Medical, Inc.

 

Form of Restricted Stock Agreement

Granted Under 1997 Stock Incentive Plan

 

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

 

For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:

 

1.                                       Purchase
of Shares.

 

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

 

2.                                       Purchase
Option.

 

(a)                                  In
the event that the Participant ceases to [be employed by/serve as a director
of] 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 right
and option (the “Purchase Option”) to purchase from the Participant, for a sum
of $            
per share (the “Option Price”), some or all of the Unvested Shares (as defined
below).

 

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

 

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

 

 

[(c)                              For
purposes of this Agreement, employment with the Company shall include
employment with a parent or subsidiary of the Company.]

 

3.                                       [Automatic
Sale Upon Vesting.

 

[The
Agreement may contain the following provision if the employee or director
elects to establish an automatic trading program under the Agreement.]

 

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

 

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

 

(c)                                  The
Participant represents to the Company that, as of the date hereof, he is not
aware of any material nonpublic information about the Company or the Common
Stock.  The Participant and the Company
have structured this Agreement to constitute a “binding contract” relating to
the sale of Common Stock pursuant to this Section 3, consistent with the
affirmative defense to liability under Section 10(b) of the Securities
Exchange Act of 1934 under Rule 10b5-1(c) promulgated under such Act.]

 

4.                                       Exercise
of Purchase Option and Closing.

 

(a)                                  The
Company may exercise the Purchase Option by delivering or mailing to the
Participant (or his estate), within 90 days after the termination of the
employment or director service of the Participant with the Company, a written
notice 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 is
not so exercised by the giving of such a notice within such 90-day period, the
Purchase Option shall automatically expire and terminate effective upon the
expiration of such 90-day period.

 

(b)                                 Within
10 days after delivery to the Participant of the Company’s notice of the
exercise of the Purchase Option pursuant to subsection (a) above, the
Participant (or his estate) shall, pursuant to the provisions of the Joint
Escrow Instructions referred to in Section 6 below, tender to the Company
at its principal offices the certificate or certificates representing the
Shares which the Company has elected to purchase in accordance with the terms
of this Agreement, duly endorsed in blank or with duly endorsed stock powers
attached thereto, all in form suitable for the transfer of such Shares to the
Company.  Promptly following its receipt
of such certificate or certificates, the Company shall pay to the Participant
the aggregate Option Price for such Shares (provided that any

 

 

delay in making such
payment shall not invalidate the Company’s exercise of the Purchase Option with
respect to such Shares).

 

(c)                                  After
the time at which any Shares are required to be delivered to the Company for
transfer to the Company pursuant to subsection (b) above, the Company
shall not pay any dividend to the Participant on account of such Shares or
permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.

 

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

 

(e)                                  The
Company shall not purchase any fraction of a Share upon exercise of the
Purchase Option, and any fraction of a Share resulting from a computation made
pursuant to Section 2 of this Agreement shall be rounded to the nearest
whole Share (with any one-half Share being rounded upward).

 

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

 

5.                                       Restrictions
on Transfer.

 

(a)                                  The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of, by operation of law or otherwise (collectively “transfer”) any
Shares, or any interest therein, that are subject to the Purchase Option,
except that the Participant may transfer such Shares to or for the benefit of
any spouse, children, parents, uncles, aunts, siblings, grandchildren and any
other relatives approved by the Board of Directors (collectively, “Approved
Relatives”) or to a trust established solely for the benefit of the Participant
and/or Approved Relatives, provided that such Shares shall remain subject to
this Agreement (including without limitation the restrictions on transfer set
forth in this Section 5 and the Purchase Option) and such permitted
transferee shall, as a condition to such transfer, deliver to the Company a
written instrument confirming that such transferee shall be bound by all of the
terms and conditions of this Agreement

 

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

 

6.                                       Escrow.

 

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

 

 

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

 

7.                                       Restrictive
Legends.

 

All
certificates representing Shares shall have affixed thereto a legend in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:

 

“The
shares of stock represented by this certificate are subject to restrictions on
transfer and an option to purchase set forth in a certain Restricted Stock
Agreement between the corporation and the registered owner of these shares (or
his predecessor in interest), and such Agreement is available for inspection
without charge at the office of the Secretary of the corporation.”

 

8.                                       Provisions
of the Plan.

 

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

 

9.                                       Withholding
Taxes; Section 83(b) Election.

 

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

 

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

 

THE
PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY AND
NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF
THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON THE PARTICIPANT’S BEHALF.

 

 

10.                                 Miscellaneous.

 

(a)                                  No
Rights to Continued Service.  The
Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 2
hereof is earned only by continuing service to the Company (not through the act
of being hired, elected or purchasing shares hereunder).  The Participant further acknowledges and
agrees that the transactions contemplated hereunder and the vesting schedule set
forth herein do not constitute an express or implied promise of continued
engagement as an employee or director for the vesting period, for any period,
or at all.

 

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

 

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

 

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

 

(e)                                  Notice.   All notices required or permitted hereunder
shall be in writing and deemed effectively given upon personal delivery or five
days after deposit in the United States Post Office, by registered or certified
mail, postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 9(e).

 

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

 

(g)                                 Entire
Agreement.  This Agreement and the
Plan constitute the entire agreement between the parties, and supersedes all
prior agreements and understandings, relating to the subject matter of this
Agreement.

 

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

 

(i)                                     Governing
Law.  This Agreement shall be
construed, interpreted and enforced in accordance with the internal laws of the
State of Delaware without regard to any applicable conflicts of laws.

 

(j)                                     Participant’s
Acknowledgments.  The Participant
acknowledges that he or she: (i) has read this Agreement; (ii) has been
represented in the preparation, negotiation, and execution of this Agreement by
legal counsel of the Participant’s own choice or has voluntarily declined to
seek such counsel; (iii) understands the terms and consequences of this
Agreement; (iv) is fully

 

 

aware of the legal and
binding effect of this Agreement; and (v) understands that the law firm of
Wilmer Cutler Pickering Hale and Dorr LLP, is acting as counsel to the Company
in connection with the transactions contemplated by the Agreement, and is not
acting as counsel for the Participant.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

 

	
   

  	
  BIOSPHERE
  MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1050
  Hingham Street

  	
   

  
	
   

  	
   

  	
  Rockland,
  MA 02370

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name
  of Participant]

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
								

 

 

Exhibit A

 

BIOSPHERE MEDICAL, INC.

 

Joint Escrow Instructions

 

             ,
20     

 

                                         

[Secretary]

BioSphere Medical, Inc.

1050
Hingham Street

Rockland, MA 02370

 

Dear Sir:

 

As
Escrow Agent for BioSphere Medical, Inc., a Delaware corporation, and its
successors in interest under the Restricted Stock Agreement (the “Agreement”)
of even date herewith, to which a copy of these Joint Escrow Instructions is
attached (the “Company”), and the undersigned person (“Holder”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of the Agreement in accordance with the following instructions:

 

1.                                       Appointment.  Holder irrevocably authorizes the Company to
deposit with you any certificates evidencing Shares (as defined in the
Agreement) to be held by you hereunder and any additions and substitutions to
said Shares.  For purposes of these Joint
Escrow Instructions, “Shares” shall be deemed to include any additional or
substitute property.  Holder does hereby
irrevocably constitute and appoint you as his attorney-in-fact and agent for
the term of this escrow to execute with respect to such Shares all documents
necessary or appropriate to make such Shares negotiable and to complete any
transaction herein contemplated.  Subject
to the provisions of this Section 1 and the terms of the Agreement, Holder
shall exercise all rights and privileges of a stockholder of the Company while
the Shares are held by you.

 

2.                                       Closing
of Purchase.

 

(a)                                  Upon
any purchase by the Company of the Shares pursuant to the Agreement, the
Company shall give to Holder and you a written notice specifying the purchase
price for the Shares, as determined pursuant to the Agreement, and the time for
a closing hereunder (the “Closing”) at the principal office of the
Company.  Holder and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

 

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

 

 

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

 

4.                                       Duties
of Escrow Agent.

 

(a)                                  Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.

 

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

 

(c)                                  You
are hereby expressly authorized to disregard any and all warnings given by any
of the parties hereto or by any other person or entity, excepting only orders
or process of courts of law, and are hereby expressly authorized to comply with
and obey orders, judgments or decrees of any court.  If you are uncertain of any actions to be
taken or instructions to be followed, you may refuse to act in the absence of
an order, judgment or decrees of a court. 
In case you obey or comply with any such order, judgment or decree of
any court, you shall not be liable to any of the parties hereto or to any other
person 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)                                 You
shall not be liable in any respect on account of the identity, authority or
rights of the parties executing or delivering or purporting to execute or
deliver the Agreement or any documents or papers deposited or called for
hereunder.

 

(e)                                  You
shall be entitled to employ such legal counsel and other experts as you may
deem necessary properly to advise you in connection with your obligations
hereunder and may rely upon the advice of such counsel.

 

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

 

(g)                                 If
you reasonably require other or further instruments in connection with these
Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.

 

(h)                                 It
is understood and agreed that if you believe a dispute has arisen with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you

 

 

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

 

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

 

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

 

5.                                       Notice.  Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days’ advance written notice to each
of 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)                                  By
signing these Joint Escrow Instructions, you become a party hereto only for the
purpose of said Joint Escrow Instructions, and you do not become a party to the
Agreement.

 

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

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  BIOSPHERE
  MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date
  Signed:

  	
   

  	
   

  
	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
										

 

 

Exhibit B

 

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

 

 

FOR VALUE RECEIVED, I
hereby 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 Corporation
represented by Certificate(s) Number                      herewith,
and do hereby irrevocably constitute and appoint                                     attorney
to transfer the said stock on the books of the Corporation with full power of
substitution in the premises.

 

	
   

  	
  Dated: 

  
	
   

  	
   

  
	
  IN PRESENCE OF

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

NOTICE:
The signature(s) to this assignment must correspond with the name as written
upon the face of the certificate, in every particular, without alteration,
enlargement, or any change whatever and must be guaranteed by a commercial
bank, trust company or member firm of the Boston, New York or Midwest Stock
Exchange.Exhibit 10.28

 

November 18,
2004

 

Gary M. Saxton

1622 Eagle Drive

Sunnyvale, CA  94087

 

Dear Gary:

 

We are
pleased to invite you to join us as an employee of BioSphere Medical, Inc. (the
“Company”).  On behalf of the Company, I
set forth in this letter agreement the terms of your offer of at-will
employment with the Company:

 

1.                                       Employment;
Location; Duties.

 

You will be employed to serve on a full-time basis as
Vice President, Marketing and Sales, and will be based at the Company’s
headquarters.  You will be subject to the
supervision of, and shall have such authority as is delegated to you by, the
Chief Executive Officer of the Company. 
Assuming you accept this offer, your employment will begin on November 18,
2004.

 

By accepting employment with the Company, you will be
agreeing to undertake the duties and responsibilities inherent in such position
and such other duties and responsibilities as the Chief Executive Officer shall
from time to time reasonably assign to you. 
You agree to devote your entire business time, attention and energies to
the business and interests of the Company during your employment.  You also agree to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the Company.

 

2.                                       Compensation.

 

2.1                                 Base
Salary.  Your initial base salary
will be $195,000, less applicable taxes and withholdings, paid semi-monthly in
accordance with the Company’s payroll practices (“Base Salary”).  Such salary and pay schedule may be
adjusted from time to time, in accordance with normal business practice and in
the sole discretion of the Company’s Board of Directors.

 

2.2                                 Bonus.  You will be entitled to receive an annual
bonus in an amount equal to up to 40% of your then current base salary, to be
paid based upon your achievement of milestones and objectives to be mutually
agreed upon annually by you and the Compensation Committee of the Board of
Directors, provided that you remain an employee of the Company at the time such
bonuses are customarily paid.

 

2.3                                 Other
Benefits. You shall be eligible to participate in all benefit programs that
the Company establishes and generally makes available to its employees, if any,
to the extent that your position, tenure, salary, age, health and other
qualifications make you eligible to

 

 

participate, including but not limited to the Company’s
health insurance plan, 401(k) plan, and policies governing paid time off.  In addition, you shall be entitled to three
(3) weeks paid vacation per year, subject to the Company’s policies and
procedures, to be taken at such times as may be approved by the Company’s Chief
Executive Officer or his designee.  The
Company reserves the right to amend and/or terminate any plan, benefit, or program
at any time with or without notice or publication.

 

2.4                                 Option.  Subject to approval by the Compensation
Committee of the Board of Directors, on or about the Commencement Date you will
be granted, pursuant to the Company’s 1997 Stock Incentive Plan (the “Plan”)
(a) an option to purchase 150,000 shares of Common Stock, $0.01 par value
(“Common Stock”) of the Company pursuant to the terms and conditions of the
Plan and a stock option agreement issued thereunder, such option to be
exercisable at a price per share equal to the closing price of the Company’s
Common Stock on the NASDAQ Stock Market on date of grant, such option to vest
and become exercisable, subject to your continued employment, at a rate of 20%
of the total shares underlying the option on the first anniversary of the date
of grant and as to an additional 20% at the end of each full year thereafter
and (b) an option, to purchase 50,000 shares of the Company’s Common Stock
pursuant to the terms and conditions of the Plan and a stock option agreement
issued thereunder, such option to be exercisable at a price per share equal to
the closing price of the Company’s Common Stock on the date of grant, such
option to vest and become exercisable, subject to your continued employment, at
a rate of 33.3333% of the total shares underlying the option on the first
anniversary of the date on which the Company books revenue from the commercial
sale of its products in excess of $25.0 million (as reflected on the Company’s
financial statements prepared in accordance with generally accepted accounting
principles in the United States) in any continuous 12-month period and as to an
additional 33.3333% at the end of each full year thereafter; provided that such
option shall vest, in any event, on the end of the seventh year after the date
of grant.

 

2.5                                 Reimbursement
of Expenses.  The Company shall
reimburse you for all reasonable travel, entertainment and other expenses
incurred or paid by you in connection with, or related to, the performance of
your duties, responsibilities or services as an employee of the Company, in
accordance with policies and procedures, and subject to limitations, adopted by
the Company from time to time.

 

2.6                                 Moving
Expenses.  The Company shall
reimburse you for (a) customary moving expenses, (b) commission,
origination and closing costs associated with the sale of your home in
California and purchase of a home in Massachusetts, and (c) temporary
living and commuting expenses (consisting of airfare, temporary housing and
expenses incident thereto), in an aggregate amount not to exceed $175,000,
subject to any applicable taxes or withholdings.

 

3.                                       Termination
Upon or in Anticipation of a Change in Control.

 

3.1                                 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)
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 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, until the
date 12 months after the date of termination, 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 4 or Section  5 during such 12 month
period.  The payment to you of the
amounts payable under this Section 3.1 
shall be contingent upon your execution of a release in a form
reasonably acceptable to the Company and (ii) shall constitute your sole remedy
in the event of a termination of your employment in the circumstances set forth
in this Section 3.1.

 

3.2                                 “Cause”
shall, for the purposes of Section 3.1, mean (a) your willful and
continued failure to substantially perform your reasonable assigned duties
(other than any such failure resulting from incapacity due to physical or
mental illness), which failure is not cured within 30 days after a written
demand for substantial performance is received by you from the Board which
specifically identifies the manner in which the Board believes you have not
substantially performed your duties; or (b) your willful engagement in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company.  For purposes of this Section 3.2,
no act or failure to act by you shall be considered “willful” unless it is
done, or omitted to be done, in bad faith and without reasonable belief that
your action or omission was in the best interests of the Company.

 

3.3                                 “Change
in Control” means an event or occurrence set forth in any one or more of
subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):

 

(a)                                  the
acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company
if, after such acquisition, such Person beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the
then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
directly from the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company, unless the
Person exercising, converting or exchanging such security acquired such
security directly from the Company or an underwriter or agent of the Company),
(ii) any acquisition by the Company, (iii)

 

 

any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i) and (ii) of subsection (c) of this Section 1.1;
or

 

(b)                                 such
time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any
date a member of the  Board (i) who was a
member of the Board on the date of the execution of this letter agreement or
(ii) who was nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however,
that there shall be excluded from this clause (ii) any individual whose initial
assumption of office occurred as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person
other than the Board; or

 

(c)                                  the
consummation of a merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other disposition
of all or substantially all of the assets of the Company in one or a series of
transactions (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (i)
all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors, respectively, of the resulting or
acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns
the Company or substantially all of the Company’s assets either directly or
through one or more subsidiaries) (such resulting or acquiring corporation is
referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership, immediately prior to such Business Combination,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively; and (ii) no Person (excluding any employee benefit
plan (or related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior to the
Business Combination); or

 

(d)                                 approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

 

 

4.                                       Non-Competition
and Non-Solicitation.

 

4.1                                 Restricted
Activities.  While you are employed
by the Company and for a period of one year after the termination or cessation
of such employment for any reason, you will not directly or indirectly:

 

(a)                                  Engage
in any business or enterprise (whether as owner, partner, officer, director,
employee, consultant, investor, lender or otherwise, except as the holder of
not more than 1% of the outstanding stock of a publicly-held company) that is
competitive with the Company’s business in the field of embolotherapy,
including but not limited to any business or enterprise that develops,
manufactures, markets, licenses, sells or provides any product or service in
the field of embolotherapy that competes with any product or service in the
field of embolotherapy developed, manufactured, marketed, licensed, sold or
provided, or planned to be developed, manufactured, marketed, licensed, sold or
provided, by the Company or any of its subsidiaries while you were employed by
the Company; or

 

(b)                                 Either
alone or in association with others (i) solicit, or permit any
organization directly or indirectly controlled by you to solicit, any employee
of the Company to leave the employ of the Company, or (ii) solicit for
employment, hire or engage as an independent contractor, or permit any
organization directly or indirectly controlled by you to solicit for
employment, hire or engage as an independent contractor, any person who was
employed by the Company at the time of the termination or cessation of your
employment with the Company; provided, that this clause (ii) shall not
apply to the solicitation, hiring or engagement of any individual whose
employment with the Company has been terminated for a period of six months or
longer.

 

4.2                                 Extension.  If you violate the provisions of Section 4.1,
you shall continue to be bound by the restrictions set forth in Section 4.1
until a period of one year has expired without any violation of such
provisions.

 

4.3                                 Interpretation.  If any restriction set forth in Section 4.1
is found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic area as to which
it may be enforceable.

 

4.4                                 Equitable
Remedies.  The restrictions contained
in this Section 4 are necessary for the protection of the business and
goodwill of the Company and are considered by you to be reasonable for such
purpose.  You agree that any breach of
this Section 4 is likely to cause the Company substantial and irrevocable
damage which is difficult to measure. 
Therefore, in the event of any such breach or threatened breach, you
agree that the Company, in addition to such other remedies which may be
available, shall have the right to obtain an injunction from a court
restraining such a breach or threatened breach and the right to specific
performance of the provisions of this Section 4 and you hereby waive the
adequacy of a remedy at law as a defense to such relief.

 

 

5.             Proprietary Information and
Developments.

 

5.1                                 Proprietary
Information.

 

(a)                                  You
agree that all information, whether or not in writing, of a private, secret or
confidential nature concerning the Company’s business, business relationships
or financial affairs (collectively, “Proprietary Information”) is and shall be
the exclusive property of the Company. 
By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, customer and supplier
lists, and contacts at or knowledge of customers or prospective customers of
the Company.  You will not disclose any
Proprietary Information to any person or entity other than employees of the
Company or use the same for any purposes (other than in the performance of your
duties as an employee of the Company) without written approval by an officer of
the Company, either during or after your employment with the Company, unless
and until such Proprietary Information has become public knowledge without
fault by you or unless required by law.

 

(b)                                 You
agree that all files, letters, memoranda, reports, records, data, sketches,
drawings, laboratory notebooks, program listings, or other written,
photographic, or other tangible material containing Proprietary Information,
whether created by you or others, which shall come into your custody or
possession, shall be and are the exclusive property of the Company to be used
by you only in the performance of your duties for the Company.  All such materials or copies thereof and all
tangible property of the Company in your custody or possession shall be
delivered to the Company, upon the earlier of (i) a request by the Company
or (ii) termination of your employment. 
After such delivery, you shall not retain any such materials or copies
thereof or any such tangible property.

 

(c)                                  You
agree that your obligation not to disclose or to use information and materials
of the types set forth in paragraphs (a) and (b) above, and your
obligation to return materials and tangible property, set forth in
paragraph (b) above, also extends to such types of information, materials
and tangible property of customers of the Company or suppliers to the Company
or other third parties who may have disclosed or entrusted the same to the
Company or to you.

 

5.2                                 Developments.

 

(a)                                  You
will make full and prompt disclosure to the Company of all inventions,
improvements, discoveries, methods, developments, software, and works of
authorship, whether patentable or not, which are created, made, conceived or
reduced to practice by you or under your direction or jointly with others
during your employment by the Company, whether or not during normal working
hours or on the premises of the Company (all of which are collectively referred
to in this letter agreement as “Developments”).

 

(b)                                 You
agree to assign and do hereby assign to the Company (or any person or entity
designated by the Company) all your right, title and interest in and to all
Developments and all related patents, patent applications, copyrights and
copyright applications.

 

 

However, this paragraph (b) shall not apply to Developments which
do not relate to the business or research and development conducted or planned
to be conducted by the Company at the time such Development is created, made,
conceived or reduced to practice and which are made and conceived by you not
during normal working hours, not on the Company’s premises and not using the
Company’s tools, devices, equipment or Proprietary Information.  You understand that, to the extent this
letter agreement shall be construed in accordance with the laws of any state
which precludes a requirement in an employee agreement to assign certain
classes of inventions made by an employee, this paragraph (b) shall be
interpreted not to apply to any invention which a court rules and/or the
Company agrees falls within such classes. 
You also hereby waive all claims to moral rights in any Developments.

 

(c)                                  You
agree to cooperate fully with the Company, both during and after your
employment with the Company, with respect to the procurement, maintenance and
enforcement of copyrights, patents and other intellectual property rights (both
in the United States and foreign countries) relating to Developments.  You shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its
rights and interests in any Development. 
You further agree that if the Company is unable, after reasonable
effort, to secure your signature on any such papers, any executive officer of
the Company shall be entitled to execute any such papers as your agent and
attorney-in-fact, and you hereby irrevocably designate and appoint each
executive officer of the Company as your agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the Company
may deem necessary or desirable in order to protect its rights and interests in
any Development, under the conditions described in this sentence.

 

5.3                                 United
States Government Obligations.  You
acknowledge that the Company from time to time may have agreements with other
parties or with the United States Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work.  You agree to be bound by all
such obligations and restrictions which are made known to you and to take all
appropriate action necessary to discharge the obligations of the Company under
such agreements.

 

5.4                                 Equitable
Remedies.  The restrictions contained
in this Section 4 are necessary for the protection of the business and
goodwill of the Company and are considered by you to be reasonable for such
purpose.  You agree that any breach of
this Section 4 is likely to cause the Company substantial and irrevocable
damage which is difficult to measure. 
Therefore, in the event of any such breach or threatened breach, you
agree that the Company, in addition to such other remedies which may be
available, shall have the right to obtain an injunction from a court
restraining such a breach or threatened breach and the right to specific performance
of the provisions of this Section 4 and you hereby waive the adequacy of a
remedy at law as a defense to such relief.

 

 

6.                                       Conflicts.

 

You represent that you are not bound by any employment
contract, restrictive covenant or other restriction preventing you from
entering into employment with or carrying out your responsibilities for the
Company, or which is in any way inconsistent with the terms of this letter.

 

7.                                       Successors
and Assigns.  

 

This letter agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation with which, or into which, the Company may be merged
or which may succeed to the Company’s assets or business, provided, however,
that your obligations are personal and shall not be assigned by you.  Notwithstanding the foregoing, if the Company
is merged with or into a third party which is engaged in multiple lines of
business, or if a third party engaged in multiple lines of business succeeds to
the Company’s assets or business, then for purposes of Section 4.1(a), the
term “Company” shall mean and refer to the business of the Company as it
existed immediately prior to such event and as it subsequently develops and not
to the third party’s other businesses.

 

8.                                       At-Will
Status, Authorization to Work and Choice of Law.

 

This letter shall not be construed as an agreement,
either express or implied, to employ you for any stated term, and shall in no
way alter the Company’s policy of employment at will, under which both you and
the Company remain free to terminate the employment relationship, with or
without cause, at any time, with or without notice.  Similarly, nothing in this letter shall be
construed as an agreement, either express or implied, to pay you any compensation
or grant you any benefit beyond the end of your employment with the Company
except as described in Section 3.1.

 

You agree to provide to the Company, within three days
of your hire date, documentation of your eligibility to work in the United
States, as required by the Immigration Reform and Control Act of 1986.  You may need to obtain a work visa in order
to be eligible to work in the United States. 
If that is the case, your employment with the Company will be
conditioned upon your obtaining a work visa in a timely manner as determined by
the Company.

 

This letter agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(without reference to the conflicts of laws provisions thereof).  Any action, suit or other legal proceeding
arising under or relating to any provision of this letter agreement shall be
commenced only in a court of the Commonwealth of Massachusetts (or, if
appropriate, a federal court located within Massachusetts), and the Company and
the Employee each consents to the jurisdiction of such a court.  The Company and the Employee each hereby
irrevocably waive any right to a trial by jury in any action, suit or other
legal proceeding arising under or relating to any provision of this letter
agreement.

 

If
this letter correctly sets forth the terms under which the Company will employ
you, please sign the enclosed duplicate of this letter in the space provided
below and return it to me.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard J. Faleschini

  	
   

  
	
   

  	
  Name:

  	
  Richard
  J. Faleschini

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
					

 

 

The foregoing correctly
sets forth the terms of my

at-will employment by BioSphere Medical, Inc.,

including
but not limited to Sections 4 and 5 above.

 

	
  /s/ Gary M.
  Saxton

  	
   

  	
   

  
	
  Gary M. Saxton

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
  11/18/04

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