EXHIBIT 10.74
RETENTION BONUS AGREEMENT
This Agreement is made by and between Aastrom Biosciences, Inc., a
Michigan Corporation ("Aastrom") and Xxxx X. Xxxxxx ("Employee"), as a
supplement to the existing Employment Agreement pursuant to which Aastrom has
employed Employee.
RECITALS
X. Xxxxxxx currently employs Employee in the position of Senior
Vice President Administrative & Financial Operations.
B. This Agreement is being entered into to provide Employee with
sufficient incentives and encouragements for Employee to remain with Aastrom,
notwithstanding the possibility of the occurrence in the future of (i) a Merger
Transaction (as defined below) event for Aastrom, or (ii) an Acquisition
Transaction event for Aastrom (as defined below), and to provide certain
benefits in the event that Employee is terminated due to the occurrence of a
Merger Transition or Acquisition Transaction.
C. As used in this Agreement, the following terms shall have the
following meanings:
"Acquisition Transaction" means Aastrom acquiring another company, by
merger or purchase of assets, with Aastrom remaining in control of the surviving
entity after the acquisition; provided, however, an Acquisition Transaction is
only a transaction which will result in significant changes in Aastrom's
operations and management activities, and not a transaction in which Aastrom
merely acquires only limited assets or limited technology which does not result
in significant operational and management activity changes for Aastrom.
"Cause" means the occurrence of any of the following events, as
determined by the Board of Directors of Aastrom, in good faith:
(i) Employee's theft, material act of dishonesty, fraud,
or intentional falsification of any records of
Aastrom;
(ii) Employee's improper use or disclosure of confidential
or proprietary information of Aastrom;
(iii) Employee's gross negligence or willful misconduct in
the performance of Employee's assigned duties (but
not mere unsatisfactory performance);
(iv) Employee's conviction (including any plea of guilty
or nolo contendre) of a crime of moral turpitude
causing material harm to the reputation or standing
of Aastrom or which materially impairs Employee's
ability to perform his duties for Aastrom.
(v) Employee fails to perform or breaches standard duties
and such performance issues are not satisfactorily
corrected following written description of such
performance failure or breach.
"Change in Control" shall mean the occurrence of any of the following
events:
(i) All or substantially all of the assets of Aastrom are
sold;
(ii) Aastrom is acquired by another company, by merger or
by acquisition of the stock of the Company, after
which the previous shareholders of Aastrom own less
than 50% of all of the voting stock of the surviving
entity.
"Merger Transaction" means a transaction pursuant to which Aastrom is
acquired by another entity, thereby resulting in a Change in Control of Aastrom.
WHEREFORE, the parties mutually agree as follow:
1. Change of Control Severance Pay.
(a) With respect to a Merger Transaction, in the event
Employee's employment is terminated by Aastrom (or its surviving successor
entity) without Cause during the period of time between the execution of the
definitive agreement for the Merger Transaction and the first anniversary of the
consummation of the Merger Transaction, then Aastrom (or its surviving successor
entity) shall pay to Employee a lump sum severance payment equal to six (6)
months of Employee's then current salary rate, less customary payroll
deductions.
(b) During such employment, Aastrom (or its surviving
successor entity) shall continue to pay Employee at Employee's then current
salary level; and any reduction or cessation in said salary payment shall
constitute a termination of employment without Cause which entitles Employee to
the severance pay.
(c) During such employment prior to the first anniversary
of the consummation of the Merger Transaction, in the event Aastrom (or its
surviving successor entity) requires Employee to relocate to a job site more
than 75 miles away from Ann Arbor, Michigan, as a condition to retaining
Employee's job, and Employee is unwilling to so relocate, and Employee's
employment is terminated by Aastrom (or its surviving successor entity), then
such a termination shall be a termination of employment without Cause which
entitles Employee to the severance pay.
(d) Employee and Aastrom acknowledge the foregoing
severance pay is in lieu of, and in replacement of, and supersedes all other
prior agreements for severance pay to Employee.
(e) Aastrom retains and reserves the right to terminate
the employment of Employee at any time, with or without Cause. Upon a
termination without Cause with respect to a Merger Transaction, the severance
pay specified in Section 1(a) above shall become payable. For avoidance of
doubt, said severance payment shall not be owed if Employee's termination is for
Cause, or if Employee voluntarily terminates employment for reasons other than
as specified in Sections 1(b) or 1(c) hereof.
(f) No director, officer or shareholder of Aastrom shall
have any personal liability for the payment of any severance to Employee.
2. Retention Bonus for Merger Transaction. With respect to a
Merger Transaction, if Employee remains employed by the surviving successor
entity through the first anniversary following the consummation of the Merger
Transaction, then the surviving successor entity shall pay to Employee a
retention bonus equal to six (6) months of Employee's then current salary rate,
less customary payroll deductions.
3. Retention Bonus for Acquisition Transaction. With respect to
an Acquisition Transaction, if Employee remains employed by Aastrom through the
first anniversary of the consummation of the Acquisition Transaction, then
Aastrom shall pay to Employee a retention bonus equal to six (6) months of
Employee's then current salary rate, less customary payroll deductions. However,
if Employee's employment is terminated by Aastrom without Cause during the one
(1) year period immediately following the consummation of the Acquisition
Transaction, then the retention bonus shall be paid, not withstanding the fact
that the employment had not continued up through the first anniversary.
4. Exclusive Remedy. The parties acknowledge and agree that the
payments specified herein constitute Employee's sole and exclusive remedy for
any alleged injury or other damages arising
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out of a termination of Employee's employment under circumstances described
herein. Accordingly, as a condition to receipt of said payments, Employee shall
sign a customary and reasonable release form, pursuant to which Employee
acknowledges and agrees that Employee has no claims against Aastrom or any
director, officer, shareholder or agent of Aastrom, or any successor in interest
to Aastrom, with respect to any employment matters or termination of employment
(excepting only for accrued salary, accrued vacation leave and reimbursement of
customary business expenses incurred on behalf of the Company, all in the
ordinary course of business.
5. General.
(a) Prior Understandings. This Agreement supersedes and
replaces all prior agreements and understandings with respect to severance
payments upon termination of Employee's employment with Aastrom, and with
respect to retention bonus.
(b) Successors. This Agreement shall bind and inure to
the benefit of the parties' successors, assigns, heirs and legal
representatives.
(c) Amendments. This Agreement may be modified, amended
or superseded only by a written document signed by both parties, and shall
become a binding obligation of the acquiring entity in a Merger Transaction.
(d) Tax Withholding. The payments to be made pursuant to
this Agreement will be subject to customary withholding of applicable income and
employment taxes.
(e) No Personal Liability. No director, officer or
shareholder of Aastrom shall have any personal liability for the payment of any
severance to Employee.
(f) Consultation. Employee acknowledges that this
Agreement confers significant legal rights on Employee, and also involves
Employee waiving other potential rights he might have under other agreements and
laws. Employee acknowledges that Aastrom has encouraged Employee to consult with
Employee's own legal, tax, and financial advisers before signing the Agreement;
and that Employee has had adequate time to do so before signing this Agreement.
(g) Counterparts. This Agreement may be executed in
counterparts, and each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of July 22, 2002.
EMPLOYER
AASTROM BIOSCIENCES, INC.,
a Michigan Corporation
/s/ R. Xxxxxxx Xxxxxxxxx
By : _______________________________________
R. Xxxxxxx Xxxxxxxxx, Ph.D.
Its: President & Chief Executive Officer
EMPLOYEE
/s/ Xxxx X. Xxxxxx
_______________________________________________
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