Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made as of the 3rd day of April,
2013, between Aastrom Biosciences, Inc., a Michigan corporation (the “Company”),
and Daniel Orlando (the “Executive”).

 

WHEREAS, the Company desires to continue to employ the Executive and the
Executive desires to be employed by the Company on the terms contained herein.

 

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

 

1.                                      Position and Duties.  The Executive
shall serve as the Chief Business Officer of the Company and shall have such
powers and duties as may from time to time be prescribed by the Chief Executive
Officer of the Company (the “CEO”) or other authorized executive, provided that
such duties are consistent with the Executive’s position or other positions that
he may hold from time to time.  The Executive shall devote his full working time
and efforts to the business and affairs of the Company.  Notwithstanding the
foregoing, the Executive may engage in religious, charitable or other community
activities as long as such services and activities are disclosed to the Board
and do not materially interfere with the Executive’s performance of his duties
to the Company as provided in this Agreement.

 

2.                                      Compensation and Related Matters.

 

(a)                                 Base Salary.  The Executive’s initial annual
base salary shall be $285,000.  The Executive’s base salary shall be
redetermined annually by the CEO in consultation with the Company’s Compensation
Committee.  The base salary in effect at any given time is referred to herein as
“Base Salary.”  The Base Salary shall be payable in a manner that is consistent
with the Company’s usual payroll practices for senior executives.

 

(b)                                 Incentive Compensation.  The Executive shall
be eligible to receive cash incentive compensation as determined by the CEO in
consultation with the Company’s Compensation Committee from time to time.  The
Executive’s target annual incentive compensation shall be Forty Percent (40%) of
his Base Salary.  The Executive shall receive a cash incentive payment of
$35,000 for his service to the Company as interim Chief Executive Officer,
payable in the Company’s next payroll following execution of this Agreement. The
Executive shall also be eligible to earn the payment set forth on Exhibit A upon
achievement of the milestone set forth on Exhibit A.  To be eligible for an
incentive compensation or milestone payment, the Executive must be employed by
the Company on the day such incentive compensation is paid.

 

(c)                                  Options.  From time to time and at the
discretion of management and the Board of Directors, the Company may grant to
the Executive options to purchase shares of the Company’s common stock at an
exercise price equal to the fair market value of the Company’s common stock on
the effective date of grant.  Such options will be subject to the terms and
conditions of the Company’s 2009 Omnibus Incentive Plan, as may be amended
and/or restated

 

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from time to time, or such other similar equity plan and form of stock option
agreement, in each case duly adopted by the Company, and such options will be
subject to approval by the Board of Directors.

 

(d)                                 Expenses.  The Executive shall be entitled
to receive prompt reimbursement for all reasonable business expenses incurred by
him in performing services hereunder, in accordance with the policies and
procedures then in effect and established by the Company for its senior
executive officers.

 

(e)                                  Customary Fringe Benefits.  Executive shall
be entitled to such fringe benefits as Aastrom customarily makes available to
Aastrom’s senior executives (collectively, “Fringe Benefits”). The Fringe
Benefits shall include sick leave, health insurance coverage, and 401k plan
participation, in accordance with the terms and provisions of such plans,
policies and arrangements as adopted by Aastrom from time to time during the
term of this Agreement. By action of the Board, Aastrom reserves the right to
change the Fringe Benefits on a prospective basis, at any time, effective upon
delivery of written notice to Executive. Executive 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.

 

(f)                                   Paid Time Off.  Executive is entitled to
16.67 hours per month, equaling twenty five (25) days per year, of paid time
off, pro rated for any partial calendar year during the term of this Agreement,
in accordance with Aastrom’s Paid Time Off policy. Executive also shall be
entitled to such paid holidays as are established by Aastrom for all regular
full-time employees.

 

3.                                      Termination.  The Executive’s employment
hereunder may be terminated without any breach of this Agreement under the
following circumstances:

 

(a)                                 Death.  The Executive’s employment hereunder
shall terminate upon his death.

 

(b)                                 Disability.  The Company may terminate the
Executive’s employment if he is disabled and unable to perform the essential
functions of the Executive’s then existing position or positions under this
Agreement with or without reasonable accommodation for a period of 180 days
(which need not be consecutive) in any 12-month period.  If any question shall
arise as to whether during any period the Executive is disabled so as to be
unable to perform the essential functions of the Executive’s then existing
position or positions with or without reasonable accommodation, the Executive
may, and at the request of the Company shall, submit to the Company a
certification in reasonable detail by a physician selected by the Company to
whom the Executive or the Executive’s guardian has no reasonable objection as to
whether the Executive is so disabled or how long such disability is expected to
continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue.  The Executive shall cooperate with any reasonable
request of the physician in connection with such certification.  If such
question shall arise and the Executive shall fail to submit such certification,
the Company’s determination of such issue shall be binding on the Executive. 
Nothing in this Section 3(b) shall be construed to waive the Executive’s rights,
if any, under existing law

 

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including, without limitation, the Family and Medical Leave Act of 1993, 29
U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101
et seq.

 

(c)                                  Termination by Company for Cause.  The
Company may terminate the Executive’s employment hereunder for Cause by a vote
of the Board at a meeting of the Board called and held for such purpose.  For
purposes of this Agreement, “Cause” shall mean:  (i) conduct by the Executive
constituting a material act of misconduct in connection with the performance of
his duties, including, without limitation, misappropriation of funds or property
of the Company or any of its subsidiaries or affiliates other than the
occasional, customary and de minimis use of Company property for personal
purposes; (ii) the commission by the Executive of any felony or a misdemeanor
involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the
Executive that would reasonably be expected to result in material injury or
reputational harm to the Company or any of its subsidiaries and affiliates if he
were retained in his position; (iii) continued non-performance by the Executive
of his duties hereunder (other than by reason of the Executive’s physical or
mental illness, incapacity or disability) which has continued for more than 15
days following written notice of such non-performance from the CEO; (iv) a
breach by the Executive of any of the provisions contained in Section 7 of this
Agreement; (v) a material violation by the Executive of the Company’s written
employment policies, or (vi) failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement authorities,
after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such
investigation or the inducement of others to fail to cooperate or to produce
documents or other materials in connection with such investigation.

 

(d)                                 Termination Without Cause.  The Company may
terminate the Executive’s employment hereunder at any time without Cause.  Any
termination by the Company of the Executive’s employment under this Agreement
which does not constitute a termination for Cause under Section 3(c) and does
not result from the death or disability of the Executive under Section 3(a) or
(b) shall be deemed a termination without Cause.

 

(e)                                  Termination by the Executive.  The
Executive may terminate his employment hereunder at any time for any reason,
including but not limited to Good Reason.  For purposes of this Agreement, “Good
Reason” shall mean that the Executive has complied with the “Good Reason
Process” (hereinafter defined) following the occurrence of any of the following
events:  (i) a material diminution in the Executive’s responsibilities,
authority or duties; (ii) a material diminution in the Executive’s Base Salary
except for across-the-board salary reductions based on the Company’s financial
performance similarly affecting all or substantially all senior management
employees of the Company; or (iii) the material breach of this Agreement by the
Company.  “Good Reason Process” shall mean that (i) the Executive reasonably
determines in good faith that a “Good Reason” condition has occurred; (ii) the
Executive notifies the Company in writing of the first occurrence of the Good
Reason condition within 15 days of the first occurrence of such condition;
(iii) the Executive cooperates in good faith with the Company’s efforts, for a
period not less than 15 days following such notice (the “Cure Period”), to
remedy the condition; (iv) notwithstanding such efforts, the Good Reason
condition continues to exist; and (v) the Executive terminates his employment
within 15 days after the end of the Cure Period.  If the Company cures the Good
Reason condition during the Cure Period, Good Reason shall be deemed not to have
occurred.

 

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(f)                                   Notice of Termination.  Except for
termination as specified in Section 3(a), any termination of the Executive’s
employment by the Company or any such termination by the Executive shall be
communicated by written Notice of Termination to the other party hereto.  For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon.

 

(g)                                  Date of Termination.  “Date of Termination”
shall mean:  (i) if the Executive’s employment is terminated by his death, the
date of his death; (ii) if the Executive’s employment is terminated on account
of disability under Section 3(b), by the Company for Cause under Section 3(c) or
by the Company under Section 3(d), the date on which Notice of Termination is
given; (iii) if the Executive’s employment is terminated by the Executive under
Section 3(e) without Good Reason, 30 days after the date on which a Notice of
Termination is given, and (iv) if the Executive’s employment is terminated by
the Executive under Section 3(e) with Good Reason, the date on which a Notice of
Termination is given after the end of the Cure Period.  Notwithstanding the
foregoing, in the event that the Executive gives a Notice of Termination to the
Company, the Company may unilaterally accelerate the Date of Termination and
such acceleration shall not result in a termination by the Company for purposes
of this Agreement.

 

4.                                      Compensation Upon Termination.

 

(a)                                 Termination Generally.  If the Executive’s
employment with the Company is terminated for any reason, the Company shall pay
or provide to the Executive (or to his authorized representative or estate) any
earned but unpaid base salary, incentive compensation earned but not yet paid,
unpaid expense reimbursements, accrued but unused vacation and any vested
benefits the Executive may have under any employee benefit plan of the Company
(the “Accrued Benefit”) on or before the time required by law but in no event
more than 30 days after the Executive’s Date of Termination.

 

(b)                                 Termination by the Company Without Cause or
by the Executive with Good Reason.  If the Executive’s employment is terminated
by the Company without Cause as provided in Section 3(d), or the Executive
terminates his employment for Good Reason as provided in Section 3(e), then the
Company shall, through the Date of Termination, pay the Executive his Accrued
Benefit.  In addition:

 

(i)                                     subject to the Executive signing a
general release of claims in favor of the Company and related persons and
entities in a form and manner satisfactory to the Company (the “Release”) within
the 21-day period following the Date of Termination and the expiration of the
seven-day revocation period for the Release, the Company shall pay the Executive
an amount equal to nine (9) months of the Executive’s Base Salary (the
“Severance Amount”).  The Severance Amount shall be paid out in substantially
equal installments in accordance with the Company’s payroll practice over nine
(9) months, beginning on the first payroll date that occurs after the date on
which the Release is effective.  Solely for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), each installment payment
is considered a separate payment.  Notwithstanding the foregoing, if the
Executive breaches any of the provisions

 

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contained in Section 7 of this Agreement, all payments of the Severance Amount
shall immediately cease; and

 

(ii)                                  upon the Date of Termination, all stock
options and other stock-based awards held by the Executive in which the
Executive would have vested if he had remained employed for an additional nine
(9) months following the Date of Termination shall vest and become exercisable
or nonforfeitable as of the Date of Termination; and

 

(iii)                               subject to the Executive’s eligibility for
and election of continuation of health, dental and vision benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall contribute the active employee’s rate of premium towards such
COBRA coverage for up to nine (9) months, and the Executive’s share of such
premium shall be withheld from the Severance Amount.  The Executive may continue
to participate in COBRA benefits following the expiration of the
nine (9) months, at his sole cost, provided that he remains eligible for such
participation.

 

5.                                      Change in Control Payment.  The
provisions of this Section 5 set forth certain terms of an agreement reached
between the Executive and the Company regarding the Executive’s rights and
obligations upon the occurrence of a Change in Control of the Company.  These
provisions are intended to assure and encourage in advance the Executive’s
continued attention and dedication to his assigned duties and his objectivity
during the pendency and after the occurrence of any such event.  These
provisions shall apply in lieu of, and expressly supersede, the provisions of
Section 4(b) regarding severance pay and benefits upon a termination of
employment, if such termination of employment occurs within twelve (12) months
after the occurrence of the first event constituting a Change in Control.  These
provisions shall terminate and be of no further force or effect beginning twelve
(12) months after the occurrence of a Change in Control.

 

(a)                                 Change in Control.  If within twelve (12)
months after a Change in Control, the Executive’s employment is terminated by
the Company without Cause as provided in Section 3(d) or the Executive
terminates his employment for Good Reason as provided in Section 3(e), then,

 

(i)                                     subject to the signing of the Release by
the Executive within 30 days after the Date of Termination and the expiration of
the seven-day revocation period for the Release, the Company shall pay the
Executive a lump sum in cash in an amount equal to nine (9) months of the
Executive’s current Base Salary (or the Executive’s Base Salary in effect
immediately prior to the Change in Control, if higher).  Such payment shall be
paid on the first payroll date that occurs after the date on which the Release
is effective; and

 

(ii)                                  notwithstanding anything to the contrary
in any applicable option agreement or stock-based award agreement, all stock
options and other stock-based awards held by the Executive shall immediately
accelerate and become fully exercisable or nonforfeitable as of the Date of
Termination; and

 

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(iii)                               subject to the Executive’s eligibility for
and election of continuation of health, dental and vision benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall contribute the active employee’s rate of premium towards such
COBRA coverage for up to nine (9) months, and the Executive’s share of such
premium shall be withheld from the Severance Amount.  The Executive may continue
to participate in COBRA benefits following the expiration of the
nine (9) months, at his sole cost, provided that he remains eligible for such
participation.

 

(b)                                 Additional Limitation.

 

(i)                                     Anything in this Agreement to the
contrary notwithstanding, in the event that the amount of any compensation,
payment or distribution by the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, calculated in a manner consistent with Section 280G
of the Code and the applicable regulations thereunder (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the
Code, the following provisions shall apply:

 

(A)                               If the Severance Payments, reduced by the sum
of (1) the Excise Tax and (2) the total of the Federal, state, and local income
and employment taxes payable by the Executive on the amount of the Severance
Payments which are in excess of the Threshold Amount, are greater than or equal
to the Threshold Amount, the Executive shall be entitled to the full benefits
payable under this Agreement.

 

(B)                               If the Threshold Amount is less than (x) the
Severance Payments, but greater than (y) the Severance Payments reduced by the
sum of (1) the Excise Tax and (2) the total of the Federal, state, and local
income and employment taxes on the amount of the Severance Payments which are in
excess of the Threshold Amount, then the Severance Payments shall be reduced
(but not below zero) to the extent necessary so that the sum of all Severance
Payments shall not exceed the Threshold Amount.  In such event, the Severance
Payments shall be reduced in the following order:  (1) cash payments not subject
to Section 409A of the Code; (2) cash payments subject to Section 409A of the
Code; (3) equity-based payments and acceleration; and (4) non-cash forms of
benefits.  To the extent any payment is to be made over time (e.g., in
installments, etc.), then the payments shall be reduced in reverse chronological
order.

 

(ii)                                  For the purposes of this Section 5(b),
“Threshold Amount” shall mean three times the Executive’s “base amount” within
the meaning of Section 280G(b)(3) of the Code and the regulations promulgated
thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax
imposed by Section 4999 of the Code, and any interest or penalties incurred by
the Executive with respect to such excise tax.

 

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(iii)                               The determination as to which of the
alternative provisions of Section 5(b)(i) shall apply to the Executive shall be
made by a nationally recognized accounting firm selected by the Company (the
“Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the Date of
Termination, if applicable, or at such earlier time as is reasonably requested
by the Company or the Executive.  For purposes of determining which of the
alternative provisions of Section 5(b)(i) shall apply, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals for the calendar year in which the
determination is to be made, and state and local income taxes at the highest
marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.  Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.

 

(b)                                 Definitions.  For purposes of this
Section 5, the following terms shall have the following meanings:

 

“Change in Control” shall mean 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
“Act”) (other than the Company, any of its subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its subsidiaries), together with
all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the “beneficial owner” (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50 percent or more of the combined voting power of the
Company’s then outstanding securities having the right to vote in an election of
the Board (“Voting Securities”) (in such case other than as a result of an
acquisition of securities directly from the Company); or

 

(ii)                                  the consummation of (A) any consolidation
or merger of the Company where the stockholders of the Company, immediately
prior to the consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is defined in Rule 13d-3
under the Act), directly or indirectly, shares representing in the aggregate
more than 50 percent of the voting shares of the Company issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), or (B) any sale or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single plan)
of all or substantially all of the assets of the Company.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Voting Securities outstanding, increases the proportionate number of Voting
Securities beneficially owned by any person to 50 percent or more of the
combined voting power of all of the then outstanding Voting

 

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Securities; provided, however, that if any person referred to in this sentence
shall thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company) and immediately thereafter beneficially owns 50 percent or more of the
combined voting power of all of the then outstanding Voting Securities, then a
“Change in Control” shall be deemed to have occurred for purposes of the
foregoing clause (i).

 

6.                                      Section 409A.

 

(a)                                 Anything in this Agreement to the contrary
notwithstanding, if at the time of the Executive’s separation from service
within the meaning of Section 409A of the Code, the Company determines that the
Executive is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit
that the Executive becomes entitled to under this Agreement on account of the
Executive’s separation from service would be considered deferred compensation
subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of
the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code,
such payment shall not be payable and such benefit shall not be provided until
the date that is the earlier of (A) six months and one day after the Executive’s
separation from service, or (B) the Executive’s death.  If any such delayed cash
payment is otherwise payable on an installment basis, the first payment shall
include a catch-up payment covering amounts that would otherwise have been paid
during the six-month period but for the application of this provision, and the
balance of the installments shall be payable in accordance with their original
schedule.

 

(b)                                 All in-kind benefits provided and expenses
eligible for reimbursement under this Agreement shall be provided by the Company
or incurred by the Executive during the time periods set forth in this
Agreement.  All reimbursements shall be paid as soon as administratively
practicable, but in no event shall any reimbursement be paid after the last day
of the taxable year following the taxable year in which the expense was
incurred.  The amount of in-kind benefits provided or reimbursable expenses
incurred in one taxable year shall not affect the in-kind benefits to be
provided or the expenses eligible for reimbursement in any other taxable year. 
Such right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit.

 

(c)                                  To the extent that any payment or benefit
described in this Agreement constitutes “non-qualified deferred compensation”
under Section 409A of the Code, and to the extent that such payment or benefit
is payable upon the Executive’s termination of employment, then such payments or
benefits shall be payable only upon the Executive’s “separation from service.” 
The determination of whether and when a separation from service has occurred
shall be made in accordance with the presumptions set forth in Treasury
Regulation Section 1.409A-1(h).

 

(d)                                 The parties intend that this Agreement will
be administered in accordance with Section 409A of the Code.  To the extent that
any provision of this Agreement is ambiguous as to its compliance with
Section 409A of the Code, the provision shall be read in such a manner so that
all payments hereunder comply with Section 409A of the Code.  The parties agree
that this Agreement may be amended, as reasonably requested by either party, and
as may be

 

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necessary to fully comply with Section 409A of the Code and all related
rules and regulations in order to preserve the payments and benefits provided
hereunder without additional cost to either party.

 

(e)                                  The Company makes no representation or
warranty and shall have no liability to the Executive or any other person if any
provisions of this Agreement are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from, or the
conditions of, such Section.

 

7.                                      Confidential Information, Noncompetition
and Cooperation.

 

(a)                                 Confidential Information.  As used in this
Agreement, “Confidential Information” means information belonging to the Company
which is of value to the Company in the course of conducting its business and
the disclosure of which could result in a competitive or other disadvantage to
the Company.  Confidential Information includes, without limitation, financial
information, reports, and forecasts; inventions, improvements and other
intellectual property; trade secrets; know-how; designs, processes or formulae;
software; market or sales information or plans; customer lists; and business
plans, prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Company.  Confidential Information includes
information developed by the Executive in the course of the Executive’s
employment by the Company, as well as other information to which the Executive
may have access in connection with the Executive’s employment.  Confidential
Information also includes the confidential information of others with which the
Company has a business relationship.  Notwithstanding the foregoing,
Confidential Information does not include information in the public domain,
unless due to breach of the Executive’s duties under Section 7(b).

 

(b)                                 Confidentiality.  The Executive understands
and agrees that the Executive’s employment creates a relationship of confidence
and trust between the Executive and the Company with respect to all Confidential
Information.  At all times, both during the Executive’s employment with the
Company and after its termination, the Executive will keep in confidence and
trust all such Confidential Information, and will not use or disclose any such
Confidential Information without the written consent of the Company, except as
may be necessary in the ordinary course of performing the Executive’s duties to
the Company.

 

(c)                                  Documents, Records, etc.  All documents,
records, data, apparatus, equipment and other physical property, whether or not
pertaining to Confidential Information, which are furnished to the Executive by
the Company or are produced by the Executive in connection with the Executive’s
employment will be and remain the sole property of the Company.  The Executive
will return to the Company all such materials and property as and when requested
by the Company.  In any event, the Executive will return all such materials and
property immediately upon termination of the Executive’s employment for any
reason.  The Executive will not retain with the Executive any such material or
property or any copies thereof after such termination.

 

(d)                                 Noncompetition and Nonsolicitation.  During
the Executive’s employment with the Company and for twelve (12) months
thereafter, regardless of the reason for the

 

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termination, the Executive (i) will not, directly or indirectly, whether as
owner, partner, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any Competing Business (as
hereinafter defined); (ii) will refrain from directly or indirectly employing,
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Company (other than
terminations of employment of subordinate employees undertaken in the course of
the Executive’s employment with the Company); and (iii) will refrain from
soliciting or encouraging any customer or supplier to terminate or otherwise
modify adversely its business relationship with the Company.  The Executive
understands that the restrictions set forth in this Section 7(d) are intended to
protect the Company’s interest in its Confidential Information and established
employee, customer and supplier relationships and goodwill, and agrees that such
restrictions are reasonable and appropriate for this purpose.  For purposes of
this Agreement, the term “Competing Business” shall mean an autologous or
allogeneic cell therapy technology business focused on the development of
therapies for the treatment of severe, chronic cardiovascular diseases conducted
anywhere in the world which is competitive with the business which the Company
or any of its affiliates conducts or proposes to conduct at any time during the
employment of the Executive.  Notwithstanding the foregoing, the Executive may
own up to one percent (1%) of the outstanding stock of a publicly held
corporation which constitutes or is affiliated with a Competing Business.

 

(e)                                  Third-Party Agreements and Rights.  The
Executive hereby confirms that the Executive is not bound by the terms of any
agreement with any previous employer or other party which restricts in any way
the Executive’s use or disclosure of information or the Executive’s engagement
in any business.  The Executive represents to the Company that the Executive’s
execution of this Agreement, the Executive’s employment with the Company and the
performance of the Executive’s proposed duties for the Company will not violate
any obligations the Executive may have to any such previous employer or other
party.  In the Executive’s work for the Company, the Executive will not disclose
or make use of any information in violation of any agreements with or rights of
any such previous employer or other party, and the Executive will not bring to
the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.

 

(f)                                   Litigation and Regulatory Cooperation. 
During and after the Executive’s employment, the Executive shall cooperate fully
with the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Company which relate to events or occurrences that transpired while the
Executive was employed by the Company.  The Executive’s full cooperation in
connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times.  During
and after the Executive’s employment, the Executive also shall cooperate fully
with the Company in connection with any investigation or review of any federal,
state or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while the Executive was employed by the
Company.  The Company shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive’s performance
of obligations pursuant to this Section 7(f).

 

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(g)                                  Injunction.  The Executive agrees that it
would be difficult to measure any damages caused to the Company which might
result from any breach by the Executive of the promises set forth in this
Section 7, and that in any event money damages would be an inadequate remedy for
any such breach.  Accordingly, subject to Section 8 of this Agreement, the
Executive agrees that if the Executive breaches, or proposes to breach, any
portion of this Agreement, the Company shall be entitled, in addition to all
other remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual damage
to the Company.

 

8.                                      Arbitration of Disputes.  Any
controversy or claim arising out of or relating to this Agreement or the breach
thereof or otherwise arising out of the Executive’s employment or the
termination of that employment (including, without limitation, any claims of
unlawful employment discrimination whether based on age or otherwise) shall, to
the fullest extent permitted by law, be settled by arbitration in any forum and
form agreed upon by the parties or, in the absence of such an agreement, under
the auspices of the American Arbitration Association (“AAA”) in Detroit,
Michigan in accordance with the Employment Dispute Resolution Rules of the AAA,
including, but not limited to, the rules and procedures applicable to the
selection of arbitrators.  In the event that any person or entity other than the
Executive or the Company may be a party with regard to any such controversy or
claim, such controversy or claim shall be submitted to arbitration subject to
such other person or entity’s agreement.  Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.  This
Section 8 shall be specifically enforceable. Notwithstanding the foregoing, this
Section 8 shall not preclude either party from pursuing a court action for the
sole purpose of obtaining a temporary restraining order or a preliminary
injunction in circumstances in which such relief is appropriate; provided that
any other relief shall be pursued through an arbitration proceeding pursuant to
this Section 8.

 

9.                                      Consent to Jurisdiction.  To the extent
that any court action is permitted consistent with or to enforce Section 8 of
this Agreement, the parties hereby consent to the jurisdiction of the Superior
Court of the State of Michigan and the United States District Court for the
District of Michigan.  Accordingly, with respect to any such court action, the
Executive (a) submits to the personal jurisdiction of such courts; (b) consents
to service of process; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction or
service of process.

 

10.                               Integration.  This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements between the parties concerning such subject
matter, including without limitation, the Employment Offer Letter by and between
the Company and the Executive dated as of August 20, 2012; provided that the
Employee Proprietary Information Nondisclosure and Assignment of Intellectual
Property Agreement, the Acknowledgment regarding the Statement of Company Policy
on Insider Trading and Disclosure, the Acknowledgment of the Statement of
Company Policy on the Code of Business Conduct and Ethics and the
Acknowledgement regarding the Company’s Colleague Handbook shall remain in full
force and effect.

 

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11.                               Withholding.  All payments made by the Company
to the Executive under this Agreement shall be net of any tax or other amounts
required to be withheld by the Company under applicable law.

 

12.                               Successor to the Executive.  This Agreement
shall inure to the benefit of and be enforceable by the Executive’s personal
representatives, executors, administrators, heirs, distributees, devisees and
legatees.  In the event of the Executive’s death after his termination of
employment but prior to the completion by the Company of all payments due him
under this Agreement, the Company shall continue such payments to the
Executive’s beneficiary designated in writing to the Company prior to his death
(or to his estate, if the Executive fails to make such designation).

 

13.                               Enforceability.  If any portion or provision
of this Agreement (including, without limitation, any portion or provision of
any section of this Agreement) shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

 

14.                               Survival.  The provisions of this Agreement
shall survive the termination of this Agreement and/or the termination of the
Executive’s employment to the extent necessary to effectuate the terms contained
herein.

 

15.                               Waiver.  No waiver of any provision hereof
shall be effective unless made in writing and signed by the waiving party.  The
failure of any party to require the performance of any term or obligation of
this Agreement, or the waiver by any party of any breach of this Agreement,
shall not prevent any subsequent enforcement of such term or obligation or be
deemed a waiver of any subsequent breach.

 

16.                               Notices.  Any notices, requests, demands and
other communications provided for by this Agreement shall be sufficient if in
writing and delivered in person or sent by a nationally recognized overnight
courier service or by registered or certified mail, postage prepaid, return
receipt requested, to the Executive at the last address the Executive has filed
in writing with the Company or, in the case of the Company, at its main offices,
attention of the Board.

 

17.                               Amendment.  This Agreement may be amended or
modified only by a written instrument signed by the Executive and by a duly
authorized representative of the Company.

 

18.                               Governing Law.  This is a Michigan contract
and shall be construed under and be governed in all respects by the laws of the
State of Michigan, without giving effect to the conflict of laws principles of
such State.  With respect to any disputes concerning federal law, such disputes
shall be determined in accordance with the law as it would be interpreted and
applied by the United States Court of Appeals for the Sixth Circuit.

 

19.                               Counterparts.  This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original; but such counterparts shall together
constitute one and the same document.

 

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20.                               Successor to Company.  The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and agree to perform this Agreement to
the same extent that the Company would be required to perform it if no
succession had taken place.  Failure of the Company to obtain an assumption of
this Agreement at or prior to the effectiveness of any succession shall be a
material breach of this Agreement.

 

21.                               Gender Neutral.  Wherever used herein, a
pronoun in the masculine gender shall be considered as including the feminine
gender unless the context clearly indicates otherwise.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.

 

 

AASTROM BIOSCIENCES, INC.

 

 

 

 

 

/s/ Dominick C. Colangelo

 

By:

Dominick C. Colangelo

 

Its:

Chief Executive Officer and President

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Daniel Orlando

 

Daniel Orlando

 

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Exhibit A

 

Payment

 

Milestone

 

$

40,000

 

Board approval of a strategic license or similar collaboration agreement with a
third party on terms acceptable to the Board, which agreement is executed before
December 31, 2013 and remains in effect on December 31, 2013

 

 

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