Document:

EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights
Agreement (this “Agreement”) is made and entered
into as of February 17, 2006, by and among BioSphere Medical, Inc., a
Delaware corporation (the “Company”), and
the investors signatory hereto (each, an “Investor” and
collectively, the “Investors”).

 

This Agreement is made
pursuant to the Securities Purchase Agreement, dated as of the date hereof
among the Company and the Investors (the “Purchase Agreement”).

 

The Company and the
Investors hereby agree as follows:

 

1.                                       Definitions. Capitalized terms used and not otherwise defined herein that are defined
in the Purchase Agreement will have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms have the
respective meanings set forth in this Section 1:

 

“Advice” has
the meaning set forth in Section 6(d).

 

“Effective
Date” means, as to the Registration Statement, the date on
which such Registration Statement is first declared effective by the Commission.

 

“Effectiveness
Date” means the earlier of: (a) the 90th day
following the Closing Date, and (b) the fifth Trading Day following the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments.

 

“Effectiveness
Period” has the meaning set forth in Section 2(a).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Filing
Date” means the 30th day following the Closing
Date.

 

“Holder”
or “Holders” means the holder or holders,
as the case may be, from time to time of Registrable Securities.

 

“Indemnified
Party” has the meaning set forth in Section 5(c).

 

“Indemnifying
Party” has the meaning set forth in Section 5(c).

 

“Losses”
has the meaning set forth in Section 5(a).

 

“New York
Courts” means the state and federal courts sitting in the
City of New York, Borough of Manhattan.

 

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended
or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable
Securities” means:  (i) the
Shares and (ii) any securities issued or issuable with respect to the
Shares upon any stock split, dividend or other distribution, recapitalization
or similar event. Notwithstanding the foregoing, the term Registrable
Securities shall not include (a) any securities that have been registered
under the Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with such registration statement, or (b) any
securities that have been publicly sold pursuant to Rule 144.

 

“Registration
Statement” means the registration statement required to be
filed in accordance with Section 2(a), including the Prospectus,
amendments and supplements to such registration statements or Prospectus,
including pre- and post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference therein.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shares”
means the shares of Common Stock issued or issuable to the Investors pursuant
to the Purchase Agreement.

 

2.                                       Registration.

 

(a)                                  On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415,
on Form S-3 (or, if the Company is not then eligible to 

 

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utilize such form for such purpose, on such other
form appropriate for such purpose). The Registration Statement shall
contain (except if otherwise required pursuant to written comments received
from the Commission upon a review of the Registration Statement) the “Plan of
Distribution” attached hereto as Annex A. The Company shall cause the
Registration Statement to be declared effective under the Securities Act as
soon as possible but, in any event, no later than its Effectiveness Date, and shall
use its reasonable best efforts to keep the Registration Statement continuously
effective under the Securities Act until the date which is the earliest of (i) three
years after its Effective Date, (ii) such time as all of the Registrable
Securities covered by the Registration Statement have been publicly sold by the
Holders, or (iii) such time as all of the Registrable Securities covered
by the Registration Statement may be sold by the Holders pursuant to Rule 144(k)
as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company’s transfer agent
and the affected Holders (the “Effectiveness Period”).
By 9:30 a.m. (New York City time) on the Business Day immediately
following the Effective Date, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final prospectus to
be used in connection with sales pursuant to the Registration Statement
(whether or not such filing is technically required under such Rule).

 

(b)                                  If: (i) the Registration
Statement is not filed on or prior to the Filing Date (if the Company files the
Registration Statement without affording the Holders the opportunity to review
and comment on the same as required by Section 3(a) hereof, the
Company shall not be deemed to have satisfied this clause (i)), or (ii) the
Registration Statement is not declared effective by the Commission on or prior
to its required Effectiveness Date or if by the Business Day immediately
following the Effective Date the Company shall not have filed a “final”
prospectus for the Registration Statement with the Commission under Rule 424(b) (whether
or not such a prospectus is actually required by such Rule), or (iii) after
the Effective Date, without regard for the reason thereunder or efforts
therefore, the Registration Statement ceases for any reason to be effective and
available to the Holders as to all Registrable Securities at any time prior to
the expiration of its Effectiveness Period for more than an aggregate of 30
Trading Days (which need not be consecutive) (any such failure or breach being
referred to as an “Event,” and
for purposes of clauses (i) or (ii) the date on which such Event
occurs, or for purposes of clause (iii) the date which such 30 Trading
Day-period is exceeded, being referred to as “Event Date”),
then in addition to any other rights the Holders may have hereunder or
under applicable law: (x) on each such Event Date the Company shall pay to each
Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 2.0% of the aggregate Investment Amount paid by such Holder for Shares
pursuant to the Purchase Agreement; and (y) on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by such
date) until the applicable Event is cured, the Company shall pay to each Holder
an amount in cash, as partial liquidated damages and not as a penalty, equal to
3.0% of the aggregate Investment Amount paid by such Holder for Shares pursuant
to the Purchase Agreement. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 6% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law) to
the Holder, accruing daily from the date such partial liquidated damages are
due until such amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply on a daily
pro-rata basis for any portion of a month prior to the cure of an Event, except
in the case of the first Event Date.

 

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(c)                                  Each
Holder agrees to furnish to the Company a completed Questionnaire in the form attached
to this Agreement as Annex B, or other form reasonably acceptable
to the Company (a “Selling Holder
Questionnaire”). The Company shall not be required to include the
Registrable Securities of a Holder in the Registration Statement and shall not
be required to pay any liquidated or other damages under Section 2(b) to
any Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to
the requirements set forth in Section 3(a)).

 

3.                                       Registration Procedures.

 

In connection with the
Company’s registration obligations hereunder, the Company shall:

 

(a)                                  Not
less than four Trading Days prior to the filing of the Registration Statement
or any related Prospectus or any amendment or supplement thereto, furnish to
each Holder copies of the “Selling Stockholders” section of such document,
the “Plan of Distribution” and any risk factor contained in such document that
addresses specifically this transaction or the Selling Stockholders, as
proposed to be filed which documents will be subject to the review of such
Holder. The Company shall not file the Registration Statement, any Prospectus
or any amendments or supplements thereto in which the “Selling Stockholder” section thereof
differs from the disclosure received from a Holder in its Selling Holder
Questionnaire (as amended or supplemented).

 

(b)                                 (i) 
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for its
Effectiveness Period; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly
as reasonably possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and, as promptly
as reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement that would not result in the disclosure to the Holders of material
and non-public information concerning the Company; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act with respect to the Registration Statement and the disposition of all
Registrable Securities covered by the Registration Statement.

 

(c)                                  Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A) below,
not less than three Trading Days prior to such filing and, in the case of (v) below,
not less than three Trading Days prior to the financial statements in the
Registration Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether
there will be a “review” of the Registration Statement and whenever the Commission
comments in writing on the Registration Statement (the Company shall provide
true and complete copies thereof and all written responses thereto to each of
the Holders that pertain to the Holders as a Selling 

 

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Stockholder or to the Plan of Distribution, but not
information which the Company believes would constitute material and non-public
information); and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or
for additional information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement covering
any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that
makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

(d)                                 Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

 

(e)                                  Furnish
to each Holder, without charge, at least one conformed copy of the Registration
Statement and each amendment thereto and all exhibits to the extent requested
by such Person (including those previously furnished) promptly after the filing
of such documents with the Commission.

 

(f)                                    Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

 

(g)                                 Prior
to any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of all jurisdictions within the United States, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement.

 

(h)                                 Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to the Registration Statement, which certificates shall be
free, to the extent permitted by the 

 

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Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.

 

(i)                                     Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly
as reasonably possible, prepare a supplement or amendment, including a post-effective
amendment, to the affected Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, the Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

 

4.                                       Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with
respect to filings required to be made with any Trading Market on which the
Common Stock is then listed for trading, and (B) in compliance with
applicable state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is reasonably requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel
for the Company, (v) Securities Act liability insurance, if the Company so
desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.

 

5.                                       Indemnification.

 

(a)                                  Indemnification
by the Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, investment advisors, partners, members and employees of each of them,
each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in 

 

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light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been corrected. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the transactions contemplated by this Agreement.

 

(b)                                 Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
arising solely out of or based solely upon: (x) such Holder’s failure to comply
with the prospectus delivery requirements of the Securities Act or (y) any
untrue statement of a material fact contained in the Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent that, (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement (it being understood that the Holder has approved Annex
A hereto for this purpose), such Prospectus or such form of Prospectus
or in any amendment or supplement thereto or (2) in the case of an
occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or  defective and prior to the receipt by such
Holder of an Advice or an amended or supplemented Prospectus, but only if and
to the extent that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the proceeds
(which proceeds shall be less underwriting discounts and commissions) received
by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

 

(c)                                  Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified 

 

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Party”), such Indemnified Party
shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.

 

An Indemnified Party
shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

All fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within 30 Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such
Indemnified Party to undertake to reimburse promptly all such fees and expenses
to the extent it is finally judicially determined that such Indemnified Party
is not entitled to indemnification hereunder).

 

(d)                                 Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is unavailable
to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in 

 

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question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable attorneys’ or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.

 

The parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.

 

The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified
Parties.

 

6.                                       Miscellaneous.

 

(a)                                  Remedies.
In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be,
in addition to being entitled to exercise all rights granted by law and under
this Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

 

(b)                                 No
Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not during the Effectiveness
Period enter into any agreement providing any such right to any of its security
holders.

 

(c)                                  Compliance.
Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement.

 

(d)                                 Discontinued
Disposition. Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any 

 

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event of the kind described in Section 3(c), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it
is advised in writing (the “Advice”) by
the Company that the use of the applicable Prospectus may be resumed, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide appropriate
stop orders to enforce the provisions of this paragraph.

 

(e)                                  Piggy-Back
Registrations. If at any time during the Effectiveness Period  there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or any part of
such Registrable Securities such holder requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of registration rights.

 

(f)                                    Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this Section 6(f), may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of no less than a majority in interest of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of certain Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of
at least a majority of the Registrable Securities to which such waiver or
consent relates.

 

(g)                                 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading
Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the
Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:

 

10

 

	
   

  	
  If to the
  Company:

  	
   

  	
  BioSphere
  Medical, Inc.

  
	
   

  	
   

  	
   

  	
  1050 Hingham
  St.

  
	
   

  	
   

  	
   

  	
  Rockland,
  Massachusetts 02370

  
	
   

  	
   

  	
   

  	
  Attn: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
  Facsimile: (781) 681-5093

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy
  to:

  	
   

  	
  Wilmer
  Cutler Pickering Hale and Dorr LLP

  
	
   

  	
   

  	
   

  	
  60 State
  Street

  
	
   

  	
   

  	
   

  	
  Boston,
  Massachusetts 02109

  
	
   

  	
   

  	
   

  	
  Attn: Susan
  W. Murley, Esq.

  
	
   

  	
   

  	
   

  	
  Facsimile: (617) 526-5000

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to a Investor:

  	
   

  	
  To the address set forth under such Investor’s name
  on the signature pages hereto.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to any other Person who is then the registered
  Holder:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  To the address of such Holder as it appears in the
  stock transfer books of the Company

  
					

 

or such other address as may be
designated in writing hereafter, in the same manner, by such Person.

 

(h)                                 Successors
and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. The Company may not assign its rights
or obligations hereunder without the prior written consent of each Holder. Each
Holder may assign their respective rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.

 

(i)                                     Execution
and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile or other electronic
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile or other electronic signature
were the original thereof.

 

(j)                                     Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party hereto hereby
irrevocably submits to the jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of 

 

11

 

delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding
to enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.

 

(k)                                  Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.

 

(l)                                     Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

(m)                               Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(n)                                 Independent
Nature of Investors’ Obligations and Rights. The obligations of each
Investor under this Agreement are several and not joint with the obligations of
each other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement. Nothing
contained herein or in any Transaction Document, and no action taken by any
Investor pursuant thereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement or any other Transaction Document. Each Investor acknowledges
that no other Investor will be acting as agent of such Investor in enforcing
its rights under this Agreement. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided
with the same Registration Rights Agreement for the purpose of closing a
transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

 

12

 

IN WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first
written above.

 

	
   

  	
  BIOSPHERE MEDICAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Martin Joyce

  
	
   

  	
  Title:

  	
  Executive Vice President, Chief Financial Officer

  
						

 

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK

SIGNATURE PAGES OF INVESTORS TO FOLLOW]

 

13

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

 

 

	
   

  	
  NAME
  OF INVESTING ENTITY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ADDRESS
  FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Street:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tel:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  
									

 

14

 

Annex A

 

Plan of
Distribution

 

The selling stockholders
and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed
or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:

 

•                  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
investors;

 

•                  block trades in
which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;

 

•                  purchases by a
broker-dealer as principal and resale by the broker-dealer for its account;

 

•                  an exchange
distribution in accordance with the rules of the applicable exchange;

 

•                  privately
negotiated transactions;

 

•                  to cover short
sales made after the date that this registration statement is declared
effective by the Commission;

 

•                  broker-dealers may agree
with the selling stockholders to sell a specified number of such shares at a
stipulated price per share;

 

•                  a combination of
any such methods of sale; and

 

•                  any other method
permitted pursuant to applicable law.

 

The selling stockholders may also
sell shares under Rule 144 under the Securities Act, if available, rather
than under this prospectus.

 

Broker-dealers engaged by
the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts
from the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.

 

The selling stockholders may from
time to time pledge or grant a security interest in some or all of the shares
of our common stock owned by them and, if they default in the performance of
their secured obligations, the pledgees or secured parties may offer and
sell shares of our common stock from time to time under this prospectus, or
under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.

 

15

 

Upon our being notified
in writing by a selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of our common stock through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing:

 

•                                          the
name of each such selling stockholder and of the participating
broker-dealer(s);

 

•                                          the
number of shares involved;

 

•                                          the
price at which such the shares of our common stock were sold;

 

•                                          the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable;

 

•                                          that
such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and

 

•                                          other
facts material to the transaction.

 

In addition, upon
our being notified in writing by a selling stockholder that a donee or pledgee
intends to sell more than 500 shares of our common stock, a supplement to this
prospectus will be filed if then required in accordance with applicable
securities law.

 

The selling stockholders
also may transfer the shares of our common stock in other circumstances,
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

 

The selling stockholders
and any broker-dealers or agents that are involved in selling the shares may be
deemed to be “underwriters” within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased
by them may be deemed to be underwriting commissions or discounts under
the Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of the securities will be
paid by the selling stockholder and/or the purchasers. Each selling stockholder
has represented and warranted to us that it acquired the securities subject to
this registration statement in the ordinary course of such selling stockholder’s
business and, at the time of its purchase of such securities such selling
stockholder had no agreements, plans or understandings, directly or indirectly,
with any person to distribute any such securities.

 

We have advised each
selling stockholder that it may not use shares registered on this
registration statement to cover short sales of our common stock made prior to
the date on which this registration statement shall have been declared
effective by the Commission. If a selling stockholder uses this prospectus for
any sale of our common stock, it will be subject to the prospectus delivery
requirements of the Securities Act. The selling stockholders will be
responsible to comply with the applicable provisions of the Securities Act and
Exchange Act, and the rules and regulations promulgated under the
Securities Act and Exchange Act, including, 

 

16

 

without
limitation, Regulation M, as applicable to such selling stockholders in
connection with resales of their respective shares under this registration
statement.

 

We are required to pay
all fees and expenses incident to the registration of the shares of common
stock registered under this registration statement, but we will not receive any
proceeds from the sale of the common stock. We have agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.

 

17

 

Annex B

 

BIOSPHERE MEDICAL, INC.

 

Selling Securityholder Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Common Stock”),
of BioSphere Medical, Inc., a Delaware corporation (the “Company”) understands that the Company has filed or intends
to file with the Securities and Exchange Commission (the “Commission”)
a Registration Statement for the registration and resale of the Registrable Securities,
in accordance with the terms of the Registration Rights Agreement, dated as of February 17,
2006 (the “Registration Rights Agreement”), among
the Company and the Investors named therein. A copy of the Registration Rights
Agreement is available from the Company upon request at the address set forth
below. All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed thereto in the Registration Rights Agreement.

 

The undersigned hereby
provides the following information to the Company and represents and warrants
that such information is accurate:

 

QUESTIONNAIRE

 

1.                                      Name.

 

	
   

  	
  (a)

  	
  Full
  Legal Name of Selling Securityholder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Full
  Legal Name of Registered Holder (if not the same as (a) above) through
  which Registrable Securities Listed in Item 3 below are held:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Full
  Legal Name of Natural Control Person (which means a natural person who
  directly or indirectly alone or with others has power to vote or dispose of
  the securities covered by the questionnaire):

  
	
   

  	
   

  	
   

  

 

2.  Address for Notices
to Selling Securityholder:

 

 

Telephone:

 

18

 

Fax:

Contact Person:

 

3.  Beneficial Ownership of Registrable
Securities:

 

	
   

  	
   

  	
  Type
  and Principal Amount of Registrable Securities beneficially owned:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

4.  Broker-Dealer Status:

 

(a)                                  Are you a
broker-dealer?

 

Yes   o       No  o

 

Note:                   If yes, the Commission’s
staff has indicated that you should be identified as an underwriter in the
Registration Statement.

 

(b)                                 Are you an affiliate
of a broker-dealer?  (For purposes of
this response, an “affiliate” of, or person “affiliated” with a specific
person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.)

 

Yes   o       No  o

 

(c)                                  If you are an
affiliate of a broker-dealer, identify the registered broker-dealer and
describe the nature of the affiliation.

 

 

(d)                                 Do you certify
that you bought the Registrable Securities in the ordinary course of business,
and at the time of the purchase of the Registrable Securities to be resold, you
had no agreements, plans or understandings, directly or indirectly, with any
person to distribute the Registrable Securities?

 

Yes   o       No
 o

 

Note:                   If no, the Commission’s
staff has indicated that you should be identified as an underwriter in the
Registration Statement.

 

19

 

5.  Beneficial Ownership of Other Securities of
the Company Owned by the Selling Securityholder.

 

Except as set forth below in this
Item 5, the undersigned is not the beneficial or registered owner of any
securities of the Company other than the Registrable Securities listed above in
Item 3.

 

Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 

 

6.  Relationships with the Company:

 

Except as set forth below, neither
the undersigned nor any of its affiliates, officers, directors or principal
equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during the
past three years.

 

State
any exceptions here:

 

 

The undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof and prior to
the Effective Date for the Registration Statement.

 

By signing below, the
undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 6 and the inclusion of such information in the
Registration Statement and the related prospectus. The undersigned understands
that such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

 

IN WITNESS WHEREOF the
undersigned, by authority duly given, has caused this Notice and Questionnaire
to be executed and delivered either in person or by its duly authorized agent.

 

	
  Dated:

  	
   

  	
   

  	
  Beneficial Owner:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
								

 

20

 

PLEASE
FAX OR E-MAIL A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE,
AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Attn: 
Patrick J. Cammarata, Esq.

Facsimile:  (617) 526-5000

Email: patrick.cammarata@wilmerhale.com

 

21Exhibit
10.1

EXECUTIVE COMPENSATION PLAN

Plan Year 2006 January
through September — Amended 2-16-06

Steve VanTassel

 

I.                                         Annual Base Salary:  $230,000

 

II.                                     Performance Incentive
Bonus (IB): $75,000 for nine month period.  Your 2006 Incentive Bonus will be paid
quarterly based on the following criteria:

 

100% of the Performance
Incentive bonus is based on the achievement of the  operating profit targets for the Hospitality
division of SoftBrands.

 

	
   

  	
   

  	
   

  	
   

  	
  Operating Profits

  	
   

  	
  Payment Eligibility

  	
   

  
	
   

  	
  Q2

  	
  (Jan — Mar 06

  	
  )

  	
  2nd Quarter
  Target

  	
   

  	
  33

  	
  %

  
	
   

  	
  Q3

  	
  (Apr —Jun 06

  	
  )

  	
  3rd Quarter
  Target

  	
   

  	
  66

  	
  %

  
	
   

  	
  Q4

  	
  (Jul — Sep 06

  	
  )

  	
  Nine month Goal

  	
   

  	
  100

  	
  %

  

 

 

 

Performance Incentive Payments — An advance of 1/3 of your bonus will be
paid quarterly based on the attainment of the operating profit metric.   Payments from prior quarters (Q2 and Q3)
that were not achieved will be paid if the six or nine month targets are
achieved.

 

Threshold for Operating Profit
Goal — Hospitality
must achieve 90% of the targeted quarterly revenue goal to be eligible for the
bonus payments.  If Hospitality achieves
90% of the targeted goal, you will be eligible for 50% of your targeted
incentive bonus.   For achievement of
each percentage above 90%, you will receive an additional 5% of your target to
a maximum of 100%.

 

III.                                 Should you leave the company for
any reason; any bonus “not yet received” will be forfeited.

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