EMPLOYMENT AGREEMENT
EXHIBIT 99.1
This Employment Agreement (this “Agreement”) is entered into as of July 17, 2006, by and
between Aastrom Biosciences, Inc., a Michigan corporation (“Employer”), and Xxxxxx X. Xxxxxx
(“Employee”).
AGREEMENTS
1. Definitions. As used in this Agreement, the following terms shall have the following meanings:
“Acquiring Corporation” means the surviving, successor or purchasing corporation or
parent corporation thereof, in a Change in Control, as the case may be.
“Cause” means the occurrence of any of the following events, as determined by the
Board of Directors of Employer, in good faith:
(i) Employee’s material breach of any of Employee’s material duties or obligations to
Employer, which breach is not cured to the reasonable satisfaction of Employer’s Board within
fifteen (15) days after Employee’s receipt of a written notice describing the breach;
(ii) Employee’s theft, material act of dishonesty or fraud, or intentional falsification of
any records, applicable to Employer;
(iii) Employee’s breach of Employer’s Employee Proprietary Information and Invention Agreement
or any other agreement with the Employer covering the use or disclosure of confidential or
proprietary information of Employer, the ownership of intellectual property or restrictions on
competition;
(iv) Employee’s gross negligence or willful misconduct in the performance of Employee’s
assigned duties (but not mere unsatisfactory performance); or
(v) Employee’s indictment of a crime causing material harm to the reputation or standing of
Employer or which materially impairs Employee’s ability to perform his duties for Employer.
“Change in Control” means the occurrence of any of the following:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding
securities of Employer under an employee benefit plan of Employer, becomes the “beneficial owner”
(as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of Employer representing 50% or more of (A) the outstanding shares of common stock of
Employer or (B) the combined voting power of Employer’s then-outstanding securities;
(ii) Employer is party to a merger or consolidation which results in the holders of voting
securities of Employer outstanding immediately prior thereto failing to continue to
represent
(either by remaining outstanding or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting power of the voting securities of Employer or such
surviving entity outstanding immediately after such merger or consolidation; or
(iii) the sale or disposition of all or substantially all of Employer’s assets (or
consummation of any transaction having similar effect).
“Commencement Date” means July 17, 2006.
“Current Residence” means Employee’s residence in California as of May 2006.
“Disability” means that:
(i) Employee has been incapacitated by bodily injury, illness or disease so as to be prevented
thereby from effectively performing Employee’s duties;
(ii) Such incapacity shall have continued for a period of six (6) consecutive months; and
(iii) Such incapacity will, in the opinion of a qualified physician, be long-term, which shall
mean a period exceeding twelve (12) months.
“Employer” means Aastrom Biosciences, Inc., a Michigan corporation, and, following a
Change in Control, any Successor that agrees to assume all of the terms and provisions of this
Agreement, or a Successor which otherwise becomes bound by operation of law to this Agreement.
“Good Reason” means the occurrence of any of the following conditions, without
Employee’s informed written consent, which condition(s) remain(s) in effect fifteen (15) days after
written notice to Employer of Employee’s disapproval of the condition(s) and Employee’s written
statement to treat the continuation of the condition(s) as a “Good Reason” condition:
(i) an adverse change of Employee’s job title as Chief Executive Officer;
(ii) a change in Employee’s position as Chief Executive Officer that materially reduces his
level of responsibility;
(iii) a change in Employee’s reporting relationship that results in Employee no longer
reporting directly to the Board of Directors;
(iv) a material adverse change to Employee’s Initial Base Salary, except for reductions that
are comparable to reductions generally applicable to similarly-situated senior executive employees
of Employer;
(v) Employee is asked to relocate, without his consent, to an area that is farther than a
50-mile radius from the current headquarters of Employer; or
(vi) any material breach of this Agreement by Employer.
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“New Residence” means the Employee’s new principal place of residency (including
purchase or rental of home) located in the greater Ann Arbor, Michigan area.
“Relocation Costs” means the following actual out-of-pocket costs incurred by the
Employee:
(i) Coach class airfare for Employee’s family to move from Employee’s Current Residence to the
New Residence, or, in the alternative, reimbursement of reasonable automobile operating costs (gas,
tolls, etc.), not to exceed the current IRS permitted per mile allowances, for up to two
automobiles required to move the Employee’s family.
(ii) Cost for packing, shipping, and unloading personal household furnishings and belongings
from Employee’s Current Residence to the New Residence, including temporary storage as needed.
(iii) Shipment of up to two personal vehicle from California to Ann Arbor, Michigan, via
common carrier.
(iv) Costs for temporary living accommodations for up to three months of apartment rental or
hotel charges in Xxx Arbor for Employee and his wife, until moving into New Residence.
(v) Costs for coach air fare for Employee and his wife to travel to Xxx Arbor for up to four
(4) round trips during transition from Current Residence to New Residence.
(vi) Costs for legal review of agreements, not to exceed $10,000.
(vii) The aggregate of all of the above-described costs shall not exceed $75,000 without prior
written agreement of Employer, which consent shall not be withheld unreasonably.
“Successor” means Employer and any successor or assign to substantially all of its
business and/or assets.
2. Employment. Employer hereby engages Employee, and Employee hereby accepts such engagement, upon
the terms and conditions set forth herein.
3. Duties.
3.1 Full-Time CEO. Employee is engaged as President and Chief Executive Officer. Employee
shall perform faithfully and diligently the duties customarily performed by persons in the position
for which employee is engaged, together with such other reasonable and appropriate duties as
Employer shall designate from time to time. Employee shall devote Employee’s full business time
and efforts to the rendition of such services and to the performance of such duties.
3.2 Board of Directors. Employee shall also serve as a member of Employer’s Board of
Directors, subject to periodic election by shareholders.
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3.3 Outside Activities. As a full-time employee of Employer, Employee shall not provide
consulting services, board of director services, or other business or scientific services to any
other party, without the prior written consent of Employer. Attached hereto as Exhibit A
is Employer’s consent for certain outside activities.
4. Compensation and Fringe Benefits.
4.1 Base Salary. During the term of this Agreement, as compensation for the proper and
satisfactory performance of all duties to be performed by Employee hereunder, Employer shall pay to
Employee a base salary of Three Hundred Seventy-Five Thousand Dollars ($375,000) per year, payable
in arrears in equal semi-monthly installments, less required deductions for state and federal
withholding tax, Social Security and all other employee taxes and payroll deductions. The base
salary shall be subject to review and adjustment on an annual basis, as of September, commencing in
2007. The base salary shall not be reduced, except for reductions generally applicable to
similarly-situated senior executive employees of Employer.
4.2 Inventive Bonus Compensation. Employee shall be eligible to receive the incentive bonus
compensation as described in Exhibit B attached hereto.
4.3 Customary Fringe Benefits. Employee shall be entitled to such fringe benefits as Employer
customarily makes available to Employer’s top executives (“Fringe Benefits”). Such Fringe Benefits
shall include vacation leave, sick leave, health insurance coverage, and 401k plan participation.
Employer reserves the right to change the Fringe Benefits on a prospective basis, at any time,
effective upon delivery of written notice to Employee.
4.4 Vacation. Employee is entitled to twenty (20) days of vacation in each calendar year.
4.5 Accumulation. Employee shall earn and accumulate unused vacation and sick leave in
accordance with the Company’s policy in effect from time to time. Further, Employee shall not be
entitled to receive payments in lieu of Fringe Benefits, other than for unused vacation leave
earned and accumulated at the time the employment relationship terminates.
4.6 Relocation.
4.6.1 Xxx Arbor. Employee agrees to relocate his principal place of residency (including
purchase or rental of home) to the greater Ann Arbor, Michigan area within four (4) months after
the Commencement Date.
4.6.2 Relocation Costs. Employer shall pay for the Relocation Costs either directly or by
reimbursement to Employee, upon presentation of appropriate invoices and/or receipts for the
expenditures and expenses for the Relocation Costs.
5. Term.
5.1 Commencement Date. The employment relationship pursuant to this Agreement shall commence
on the Commencement Date.
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5.2 Termination at Will. Employer and Employee acknowledge and agree that Employer’s
employment currently is “at will” and that their employment relationship may be terminated by
either party at any time, with or without Cause.
6. Payments Upon Termination.
6.1 Payment of Compensation Upon Termination. Upon termination of Employee’s employment with
the Company, Employee shall be entitled to be paid his base salary through the effective date of
such termination, as full compensation for any and all claims of Employee under this Agreement or
otherwise, except as set forth in Section 6.2.
6.2 Payment of Severance Upon Termination.
6.2.1 Severance. In the event Employee’s employment is terminated by Employer without Cause,
or in the event of Employee’s termination of his employment for Good Reason, then Employer shall
pay to Employee the severance payments as specified in
Exhibit C attached hereto.
6.2.2 Continued Medical Coverage. In the event Employee’s employment is terminated, then
Employee shall be entitled to elect continued medical insurance coverage in accordance with
applicable provisions of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”).
6.2.3 Right to Terminate. Employer retains and reserves the right to terminate the employment
of Employee at any time, with or without Cause. For avoidance of doubt, said severance payment
shall not be owed if Employee’s termination is for Cause, if Employee voluntarily terminates
employment without Good Reason, or if Employee’s employment terminates as a result of Employee’s
death or disability.
6.2.4 No Liability. No director, officer or shareholder of Employer shall have any personal
liability for the payment of any severance to Employee.
6.3 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 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,
in the form attached hereto as Exhibit D, pursuant to which Employee acknowledges and
agrees that Employee has no claims against Employer or any director, officer, shareholder or agent
of Employer, or any successor in interest to Employer, 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 Employer, all in the ordinary
course of business, or any incentive sale bonus to which Employee may be entitled, if any).
7. General Provisions.
7.1 Attorneys’ Fees. In the event of any dispute or breach arising with respect to this
Agreement, the party prevailing in any negotiations or proceedings for the resolution or
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enforcement thereof shall be entitled to recover from the losing party reasonable expenses,
attorneys’ fees and costs incurred therein.
7.2 Amendments. No amendment or modification of the terms or conditions of this Agreement
shall be valid unless in writing and signed by both parties hereto. There shall be no
implied-in-fact contracts modifying the terms of this Agreement. However, the noncumulation of
benefits provision of Section 7.6 shall apply to any subsequent agreement, unless (i) such
provision is explicitly disclaimed in the subsequent agreement, and (ii) the subsequent agreement
has been authorized by the Board of Directors of the Employer or a committee thereof.
7.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the employment of Employee, other than (i) the agreements relating to the
Employer’s stock option grants to Employee, and (ii) policies and agreements referenced in Section
9 below. This Agreement, together with the items referenced above, supersedes all prior
agreements, understandings, negotiations and representation with respect to the employment
relationship.
7.4 Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable
by the Employee’s personal and legal representatives, executors, administrators, successors, heirs,
distributees, devises and legatees.
7.5 No Limitation of Regular Benefit Plans. This Agreement is not intended to and shall not
affect, limit or terminate any plans, programs, or arrangements of Employer that are regularly made
available to a significant number of employees or officers of the Employer, including without
limitation Employer’s stock option plans.
7.6 Noncumulation of Benefits. Employee may not cumulate cash severance payments under both
this Agreement and another agreement. If Employee has any other binding written agreement with
Employer which provides that, upon a Change in Control or termination of employment, Employee shall
receive one or more of the benefits described in Sections 6 of this Agreement (i.e., the payment of
cash compensation), then with respect to those benefits the aggregate amounts payable under this
Agreement shall be reduced by the amounts paid or payable under such other agreements.
7.7 No Assignment of Benefits. The rights of any person to payments or benefits under this
Agreement shall not be made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditors process, and any action in violation of this Section 7.7 shall be
void.
7.8 Notices. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered, when mailed, if
mailed by U.S. registered or certified mail, return receipt requested and postage prepaid, or when
shipped, if shipped by nationally known reputable overnight delivery service and shipping charges
prepaid. In the case of Employee, notices shall be addressed to Employee at the home address which
he most recently communicated to the Employer, in writing. In the
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case of the Employer, notices
shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
7.9 No Duty to Mitigate. Employee shall not be required to mitigate the amount of any payment
contemplated by this Agreement (whether by seeking employment with a new employer or in any other
manner), nor shall any such payment be reduced by any earnings that Employee may receive from any
other source except as otherwise provided herein.
7.10 No Representations. Employee acknowledges that in entering into this Agreement Employee
is not relying and has not relied on any promise, representation or statement made by or on behalf
of the Employer which is not set forth in this Agreement.
7.11 Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Michigan, without regard to its choice of
law rules.
7.12 Waiver. Either party’s failure to enforce any provision of this Agreement shall not in
any way be construed as a waiver of any such provision, or prevent that party thereafter from
enforcing each and every other provision of this Agreement.
7.13 Severable Provisions. The provisions of this Agreement are severable, and if any one or
more provisions may be determined to be judicially unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.
7.14 Tax Withholding. The payments to be made pursuant to this Agreement will be subject to
customary withholding of applicable income and employment taxes.
7.15 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 Employer 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.
7.16 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.
7.17 Excess Parachute Payment. In the event that any payment or benefit received or to be
received by Employee pursuant to this Agreement or otherwise would subject Employee to any excise
tax pursuant to Section 4999 of the Code due to the characterization of such payment or benefit as
an excess parachute payment under Section 280G of the Code, Employee may elect in his sole
discretion to reduce the amounts of any payments or benefits otherwise called for under this
Agreement in order to avoid such characterization.
7.18 Arbitration. Either party to this Agreement may submit any dispute under this Agreement
for binding arbitration of the dispute before an arbitrator mutually acceptable to both parties,
the arbitration to be held in Ann Arbor, Michigan, in accordance with the arbitration rules of the
American Arbitration Association, as then in effect. If the parties are unable to
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mutually agree
upon an arbitrator, then the arbitration proceedings shall be held before three arbitrators, one of
which shall be designated by Employer, one of which shall be designated by Employee, and the third
of which shall be designated mutually by the first two arbitrators in accordance with the
arbitration rules referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add to, or subtract
from, any of the Agreement’s provisions. The arbitrator(s) shall have the power to compel
attendance of witnesses at the hearing. Any court having jurisdiction may enter a judgment based
upon such arbitration. The decision of the arbitrator(s) shall be final and binding on the parties
to this Agreement and without appeal to any court. Upon execution of this Agreement, Employee
shall be deemed to have waived any right to commence litigation proceedings regarding this
Agreement outside of arbitration without the express written consent of the Employer.
7.19 ERISA. The severance compensation provided by Section 6.2 of this Agreement constitutes
an unfunded compensation arrangement for a member of a select group of the Employer’s management
and any exemptions under ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
7.20 Reporting and Disclosure. Employer, from time to time, shall provide government agencies
with such reports concerning this Agreement as may be required by law, and Employer shall provide
the Employee with such disclosure concerning this Agreement as may be required by law or as the
Employer may deem appropriate.
8. Employee’s Representations. Employee represents and warrants that Employee (i) is free to enter
into this Agreement and to perform each of the terms and covenants contained herein, (ii) is not
restricted or prohibited, contractually or otherwise, from entering into and performing this
Agreement, and (iii) will not be in violation or breach of any other agreement by reason of
Employee’s execution and performance of this Agreement.
9. Company Policies. Employee agrees to comply with Employer’s (i) Proprietary Information and
Invention Agreement, (ii) Employee Handbook, (iii) Code of Business Conduct and Ethics, and (iv)
Board and Company policies.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.
| EMPLOYER: | ||||||
| Aastrom Biosciences, Inc. | ||||||
| By: | /s/ R. Xxxxxxx Xxxxxxxxx | |||||
| EMPLOYEE: | ||||||
| /s/ Xxxxxx X. Xxxxxx | ||||||
| Xxxxxx X. Xxxxxx | ||||||
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EXHIBIT A
OUTSIDE ACTIVITIES
(SECTION 3.3)
(SECTION 3.3)
Subject to the following, Company approves Employee continuing his existing Board positions
with Competitive Technologies, Sonus Pharmaceuticals, and Auburn University MBA Advisory Board:
(1) Estimated time commitments aggregating to approximately 6 to 14 days per year are hereby
approved by Company.
(2) To the extent that actual workday time missed from Company due to these outside Board
duties exceeds five (5) workdays per year, then such excess missed time will be treated as part of
Employee’s 20 days per year vacation leave time.
(3) Actual time devoted to these outside activities must not impair Employee’s full and
complete performance of his responsibilities to Company.
(4) Areas of business and technology for the two companies must not be competitive with
Company.
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EXHIBIT B
INCENTIVE BONUS COMPENSATION
(SECTION 4.2)
(SECTION 4.2)
1. Target Cash Bonus. Participation in Employer’s cash performance bonus program, as
determined by Employer’s Board of Directors, for up to 40% of Employee’s Base Salary (i.e., up to
$150,000 for first year).
2. Stock Options:
2.1 Initial stock options to purchase 2,500,000 shares, having an exercise price equal to
public stock price at date of grant.
2.1.1 80% of these shares (2,000,000 shares) are subject to time vesting, of which 25% will
vest on first anniversary, and remaining 75% will vest monthly over years two, three and four,
during Employee’s continued full-time employment.
2.1.2 20% of these shares (500,000 shares) are subject to performance vesting, as described in
item 2.3 below, as well as to time vesting over four years.
2.1.3 Said initial stock options will be evidenced by two separate option agreements, as
follows:
(a) option to purchase 750,000 shares, issued pursuant to Company’s 2004 Equity Incentive
Plan, having vesting on the 80% and 20% basis as stated in 2.1.1 and 2.1.2 above (i.e., 600,000
time only; and 150,000 performance and time), which option will be an “ISO” to the extent permitted
by applicable tax rules; and
(b) option to purchase 1,750,000 shares, issued outside of the 2004 Equity Inventive Plan, as
an “inducement option” (and not an “ISO”), having vesting on the 80% and 20% basis as stated in
2.1.1 and 2.1.2 above (i.e., 1,400,000 time only; and 350,000 performance and time).
2.2 Annual “refresher” new stock option grant targeted for 400,000 each September (starting
2007), subject to both (i) 25% annual time vesting on first anniversary, and remaining 75% vesting
monthly, over following three years; and also (ii) subject to performance vesting.
2.3 The performance vesting criteria will be based upon measurable objectives from Company’s
Business Plan, for Company and Employee, as mutually set by Company’s Board and Employee; with the
achievement determination to be made in good faith by the Board.
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3. Accelerated Vesting for Stock Options:
3.1 Change of Control of Company, plus double trigger of termination of employment by Company
without Cause, or by employee for Good Reason, within one year after Change of Control:
Accelerated vesting for all stock options.
3.2 Termination of employment by Company without Cause after first anniversary, or by employee
for Good Reason, and without Change of Control: Accelerated vesting for 50% of unvested stock
options.
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EXHIBIT C
SEVERANCE PAYMENTS
(SECTION 6.2)
SEVERANCE PAYMENTS
(SECTION 6.2)
1. Change of Control, plus the double trigger of termination of employment by Company without
Cause, or by Employee for Good Reason: Company to make severance payment equal to:
(a) If termination is by Company - two times annual base salary and one times targeted annual
cash bonus.
(b) If termination is by Employee for Good Reason – one times annual base salary and 50% of
targeted annual cash bonus.
2. Termination of employment by Company without Cause or by Employee for Good Reason, and without
Change of Control: Company to make severance payment equal to one times annual base salary.
3. Company shall delay payment of severance payments to minimize impact of IRC Sections 409A
(deferred compensation). Parties to use “carve out” approach, at Employee’s election, to minimize
impact of 280G (golden parachute payments). No Company payment for any taxes imposed on employee.
4. In consideration of the severance payments and accelerated vesting of stock options as specified
in Exhibit B(3), upon any employment termination, release of all possible claims by Employee as set
forth in Exhibit D.
5. No duty of Employee to “mitigate” compensation loss, and no offset for any new
employment/compensation received by Employee.
6. All severance payments are subject to such deductions as may be required for withholding taxes,
Social Security, and other employee taxes and deductions.
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EXHIBIT D
(SECTION 6.3)
(SECTION 6.3)
TO AASTROM BIOSCIENCES, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
RELEASE AGREEMENT
THIS AGREEMENT (“Agreement”) is made by and between Xxxxxx X. Xxxxxx (“Executive”) and Aastrom
Biosciences, Inc. (the “Company”).
RECITALS
A. Executive has terminated employment as an executive officer of Company, effective
, .
B. Executive has been given the opportunity to review this Agreement, to consult with legal
counsel, and to ascertain his rights and remedies.
C. Executive and Company, without any admission of liability, desire to settle with finality,
compromise, dispose of, and release any and all claims and demands asserted or which could be
asserted arising out of Executive’s employment at and separation from Company.
In consideration of the foregoing and of the promises and mutual covenants contained herein,
it is hereby agreed between Executive and Company as follows:
AGREEMENT
1. In exchange for the good and valuable consideration set forth in that certain Employment
Agreement, made as of July , 2006, between the Company and Executive (the “Employment
Agreement”), Executive hereby releases, waives and discharges any and all manner of action, causes
of action, claims, rights, charges, suits, damages, debts, demands, obligations, attorneys fees,
and any and all other liabilities or claims of whatsoever nature, whether in law or in equity,
known or unknown, including, but not limited to, age discrimination under The Age Discrimination In
Employment Act of 1967 (as amended), employment discrimination prohibited by other federal, state
or local laws, and any other claims, which Executive has claimed or may claim or could claim in any
local, state or federal or other forum, against Company, its directors, officers, employees,
agents, attorneys, successors and assigns as a result of or relating to Executive’s employment at
and separation from Company and as an officer of Company as a result of any acts or omissions by
Company or any of its directors, officers, employees, agents, attorneys, successors or assigns
(“Covered Acts or Omissions”) which occurred prior to the date of this Agreement; excluding only
(i) those to compel the payment of amounts due to Executive as provided in the Employment
Agreement, (ii) enforcement of any rights of Executive under any stock option agreements with the
Company or (iii) those for indemnification under the Company’s articles of incorporation, bylaws or
applicable law by reason of his service as an officer or director of the Company.
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2. Executive agrees to immediately return to Company all property, assets, manuals, materials,
information, notes, reports, agreements, memoranda, customer lists, formulae, data, know-how,
inventions, trade secrets, processes, techniques, and all other assets, materials and information
of any kind or nature, belonging or pertaining to Company (“Company Information and Property”),
including, but not limited to, computer programs and diskettes or other media for electronic
storage of information containing Company Information and Property, in Executive’s possession, and
Executive shall not retain copies of any such Company Information and Property. Executive further
agrees that from and after the date hereof he will not remove from Company’s offices any Company
Information and Property, nor retain possession or copies of any Company Information and Property.
3. Executive agrees that he shall never make any statement that negatively affects the
goodwill or good reputation of the Company, or any officer or director of Company, except as
required by law, and except that such statements may be made to members of the Board of Directors
of the Company.
4. Executive covenants and agrees that he shall never commence or prosecute, or knowingly
encourage, promote, assist or participate in any way, except as required by law, in the
commencement or prosecution, of any claim, demand, action, cause of action or suit of any nature
whatsoever against Company or any officer, director, employee or agent of Company (“Covered
Litigation”) that is based upon any claim, demand, action, cause of action or suit released
pursuant to this Agreement or involving or based upon the Covered Acts and Omissions.
5. Executive further agrees that he has read this Agreement carefully and understands all of
its terms.
6. Executive understands and agrees that he was advised to consult with an attorney and did so
prior to executing this Agreement.
7. Executive understands and agrees that he has been given twenty-one (21) days within which
to consider this Agreement.
8. Executive understands and agrees that he may revoke this Agreement for a period of seven
(7) calendar days following the execution of this Agreement (the “Revocation Period”). This
Agreement is not effective until this revocation period has expired. Executive understands that
any revocation, to be effective, must be in writing and either (a) postmarked within seven (7) days
of execution of this Agreement and addressed to Aastrom Biosciences, Inc., 00 Xxxxx Xxxxx Xxxxx,
Xxx Xxxxx, Xxxxxxxx 00000 or (b) hand delivered within seven (7) days of execution of this
Agreement to Aastrom Biosciences, Inc., 00 Xxxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx 00000.
Executive understands that if revocation is made by mail, mailing by certified mail, return receipt
requested, is recommended to show proof of mailing.
9. In agreeing to sign this Agreement and separate from Company, Executive is doing so
completely voluntarily and of his own free-will and without any encouragement or pressure from
Company and agrees that in doing so he has not relied on any oral statements or explanations made
by Company or its representatives.
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10. Both parties agree not to disclose the terms of this Agreement to any third party, except
as is required by law, or as is necessary for purposes of securing counsel from either parties’
attorneys or accountants.
11. This Agreement shall not be construed as an admission of wrongdoing by Company.
12. This Agreement contains the entire agreement between Executive and Company regarding the
matters set forth herein. Any modification of this Agreement must be made in writing and signed by
Executive and each of the entities constituting the Company.
13. This Agreement shall be governed by and construed in accordance with the domestic laws of
the State of Michigan, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Michigan or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Michigan.
14. In the event any provision of this Agreement or portion thereof is found to be wholly or
partially invalid, illegal or unenforceable in any judicial proceeding, then such provision shall
be deemed to be modified or restricted to the extent and in the manner necessary to render the same
valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.
15. If there is a breach or threatened breach of the provisions of this Agreement, Company
may, in addition to other available rights and remedies, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violation of, any of the provisions of this Agreement.
16. In the event that Executive violates the terms of this Agreement, in addition to other
available rights and remedies, the Company shall be released of all of its remaining obligations
under the Severance Agreement.
The parties hereto have entered into this Agreement as of this day of
, .
| AASTROM BIOSCIENCES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
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15
