EX-10.28



 




EXHIBIT 10.28





EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of January 1, 2004 between William Lehmann,
an individual (“Employee”), and Advanced Biotherapeutics, Inc. (“ABT”), a wholly-owned subsidiary
of Athersys, Inc., a Delaware corporation (“Athersys”), (together “the Company”).



RECITALS:




     A. ABT, d.b.a. Athersys, Inc., is engaged in the competitive business of developing, marketing
and selling certain core biotechnologies for the diagnosis and treatment of genetic and infectious
disease.



     B. ABT desires to employ Employee on the terms and conditions set forth in this Agreement.



     C. Employee is willing to accept employment on the terms and conditions expressed in this
Agreement.



     D. ABT and Employee desire to terminate the Employment Agreement, by and between William
Lehmann and ABT, dated as of September 10, 2001, as amended on November 14, 2001, which is hereby
superceded in its entirety by this Agreement.



AGREEMENTS:




     NOW, THEREFORE, the parties agree as follows:




	1.	 	Employment. ABT agrees to employ Employee, and Employee agrees to serve ABT, on the
terms and conditions set forth in this Agreement.






	 	(a)	 	Term. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement will begin on January 1, 2004 (the “Effective
Date”) and continue through the fourth anniversary of the Effective Date (the
“Employment Period”). The Employment Period will automatically be extended for one
additional year on each anniversary of the Effective Date beginning on the fourth
anniversary of the Effective Date unless (i) this Agreement is terminated as provided
in Section 4, or (ii) either Employee or ABT gives written notice of termination of
this Agreement to the other at least thirty (30) days prior to such date.
	 
	 	(b)	 	Position and Duties. Employee will serve as Executive Vice President
of Corporate Development and Finance of ABT and will have such responsibilities, duties
and authority as are customary of an Executive Vice President of a company the size and
structure of ABT (or any position to which Employee may be promoted after the date of
this Agreement) and as may from time to time be assigned to Employee by the Board of
Directors of ABT (the “Board”) that are consistent with such responsibilities, duties,
authority and applicable law.





 









 





	 	 	 	Employee will devote substantially all of his working time and effort to the
business and affairs of ABT.






	 	(c)	 	Place of Performance. In connection with Employee’s employment by ABT,
Employee will be based at the principal executive offices of ABT in the greater
Cleveland, Ohio area.
	 
	 	(d)	 	Continuous Employment. For all purposes under this Agreement, the
Employee shall be considered to have been continuously employed by ABT without regard
to any change of duties or position of the Employee, including transfers between and
among ABT and its affiliates, so long as Employee is continuously employed by ABT or
any of its affiliates, including Athersys.






	2.	 	Compensation and Related Matters. As compensation and consideration for the
performance by Employee of Employee’s duties, responsibilities and covenants pursuant to this
Agreement, ABT will pay Employee the amounts and benefits set forth below:






	 	(a)	 	Salary. ABT will pay to Employee an annual base salary (“Base Salary”)
during the Employment Period at a rate of Two Hundred Fifty Thousand Dollars
($250,000.00) commencing on January 1, 2004, such salary to be paid in substantially
equal installments no less frequently than monthly. The Base Salary may be increased
from time to time by the Board in its sole discretion and, if so increased, will not
thereafter during the term of this Agreement be decreased. The Board will review the
Base Salary at least annually to determine, in its sole discretion, whether an increase
is appropriate. Compensation of Employee by salary payments will not be deemed
exclusive and will not prevent Employee from participating in any other compensation or
benefit plan of ABT.
	 
	 	(b)	 	Bonus. During the Employment Period, Employee will participate in any
incentive plans that may in the future be made generally available to officers of ABT
in comparable positions. In addition, Employee will be eligible for the performance
bonus as set forth on Exhibit A.
	 
	 	(c)	 	Expenses. Employee will be entitled to receive prompt reimbursement
for all reasonable and customary travel and entertainment expenses or other
out-of-pocket business expenses incurred by Employee during the Employment Period in
fulfilling Employee’s duties and responsibilities under this Agreement, including all
expenses of travel and living expenses while away from home on business or at the
request of and in the service of ABT, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by ABT.
	 
	 	(d)	 	Other Benefits. Employee will be entitled during the Employment Period
to participate, on the same basis as other employees of ABT in similar positions, in
all of the employee benefit plans and arrangements of ABT and enjoy all of the
perquisites for which substantially all of the other employees of ABT in similar
positions are from time to time generally eligible, as determined from time to time




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	 	 	 	by the Board (including, without limitations each retirement, thrift and profit
sharing plan, group life insurance and accident plan, medical and/or dental
insurance plan, and disability plan); provided, however, that a change may be made
to a plan in which salaried employees of ABT participate, including termination of
any such plan, arrangement or perquisite, if it does not result in a proportionately
greater reduction in the rights of or benefits to Employee as compared with the
other salaried employees of ABT or is required by law or a technical change.
Employee will be entitled to participate in and receive benefits under any employee
benefit plan, arrangement or perquisite made available by ABT in the future to its
employees in similar positions, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans, arrangements and perquisites.
Also, ABT shall purchase for Employee a life insurance policy in the amount of $1
million for the benefit of the family of Employee. Nothing paid to Employee under
any plan, arrangement or perquisite presently in effect or made available in the
future will be deemed to be in lieu of the salary payable to Employee pursuant to
paragraph (a) of this Section 2.






	 	(e)	 	Vacations. During the Employment Period, Employee will be entitled to
paid vacation in each calendar year, determined in accordance with ABT’s vacation
policy, but in all events in an amount of not less than three (3) weeks per calendar
year. Employee will also be entitled to all paid holidays and personal days given by
ABT to its employees during the Employment Period.






	3.	 	Termination. The Employment Period may be terminated under the following
circumstances:






	 	(a)	 	Death. The Employment Period will terminate upon Employee’s death.
	 
	 	(b)	 	Disability. If, in the written opinion of a qualified physician
selected by ABT and agreed to by Employee (or if no agreement is reached within thirty
(30) days of the commencement of discussions between ABT and Employee, then of a
qualified physician agreed upon by the physician selected by ABT and a physician
selected by Employee), Employee becomes unable to perform his duties under this
Agreement due to physical or mental illness, ABT may terminate the Employment Period.
	 
	 	(c)	 	Cause. ABT may terminate the Employment Period for Cause. For
purposes of this Agreement, ABT will have “Cause” to terminate the Employment Period as
a result of any of the following events: (i) the commission of an act of fraud,
embezzlement, theft or other criminal act constituting a felony; (ii) the willful or
wanton disregard of the rules or policies of the Company or its Subsidiaries which
results in a material loss, damage or injury to the Company or its Subsidiaries; (iii)
the repeated failure of Employee to perform duties consistent with Employee’s position
or to follow or comply with the reasonable directives of the Company’s or its
Subsidiaries’ Board of Directors or Employee’s superiors after having been given notice
thereof (e.g., the insubordination of Employee); or (iv) the material breach of any
provision contained in a written non-competition,




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	 	 	 	confidentiality or non-disclosure agreement between the Company or any of its
Subsidiaries and Employee.






	 	(d)	 	Good Reason. Employee may terminate the Employment Period for Good
Reason. For purposes of this Agreement, “Good Reason” includes the occurrence of any
of the following circumstances, without Employee’s express consent, unless such
circumstances are fully corrected prior to the Date of Termination (as defined in
paragraph (g) of this Section 4) specified in the Notice of Termination (as defined in
paragraph (f) of this Section 4) given in respect thereof and such circumstances do not
reoccur: (A) a diminution in Employee’s position, duties, responsibilities or authority
(unless such diminution occurs during periods when Employee is unable to perform all or
substantially all of Employee’s duties and/or responsibilities as a result of
Employee’s illness (either physical or mental) or other incapacity); (B) a reduction in
either Employee’s annual rate of Base Salary or level of participation in any bonus or
incentive plan for which he is eligible under Section 2(b); (C) an elimination or
reduction of Employee’s participation in any benefit plan generally available to
employees of ABT in similar positions, unless ABT continues to offer Employee benefits
substantially similar to those made available by such plan; provided, however, that a
change to a plan in which salaried employees of ABT generally participate, including
termination of any such plan, if it does not result in a proportionately greater
reduction in the rights of or benefits to Employee as compared with the other salaried
employees of ABT or is required by law or a technical change, will not be deemed to be
Good Reason; (D) failure to provide facilities or services which are suitable to
Employee’s position and adequate for the performance of Employee’s duties and
responsibilities; (E) failure of any successor (whether direct or indirect, by purchase
of stock or assets, merger, consolidation or otherwise) to ABT to assume ABT’s
obligations under this Agreement, as contemplated by Section 6; (F) any purported
termination by ABT of the Employment Period which is not effected pursuant to a Notice
of Termination satisfying the requirements of paragraph (f) of this Section 4 (and for
purposes of this Agreement no such purported termination will be effective); (G) a
change in the location of ABT’s principal executive offices to outside the greater
Cleveland, Ohio area; (H) a termination of the Employment Period by Employee within
ninety (90) days following a Change in Control (as defined in paragraph (h) of this
Section 4); provided, however, that Good Reason will not exist if Employee has accepted
employment with the successor entity and such successor entity has assumed this
Agreement; (I) a breach of this Agreement by ABT; or (J) any similar circumstances
which Employee reasonably believes are contrary to this Agreement. Employee’s right to
terminate the Employment Period pursuant to this paragraph (d) will not be affected by
Employee’s incapacity due to physical or mental illness. Employee’s continued
employment will not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason; provided, however, that Employee will be deemed
to have waived his rights pursuant to circumstances constituting Good Reason if
Employee has not provided to ABT a Notice of Termination within ninety (90) days
following his knowledge of the circumstances constituting Good Reason.




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	 	(e)	 	Non-Extension. ABT or Employee may terminate the Employment Period by
providing the notice described in Section 1(a)(ii) hereof.
	 
	 	(f)	 	Notice of Termination. Any termination of the Employment Period by ABT
or by Employee (other than a termination pursuant to paragraph (a) of this Section 4)
must be communicated by written Notice of Termination to the other party in accordance
with Section 9. For purposes of this Agreement, a “Notice of Termination” means a
notice which indicates the specific termination provision in this Agreement relied upon
and sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employment Period under the provision so indicated.
	 
	 	(g)	 	Date of Termination. “Date of Termination” means (i) if the Employment
Period is terminated pursuant to paragraph (a) above, the date of Employee’s death,
(ii) if the Employment Period is terminated pursuant to paragraph (b) above, thirty
(30) days after Notice of Termination is given (provided that Employee has not returned
to the full-time performance of Employee’s duties during such thirty (30) day period),
(iii) if the Employment Period is terminated pursuant to paragraph (c) or (d) above,
the date specified in the Notice of Termination which, in the case of a termination by
ABT for Cause will not be less than fifteen (15) days from the date such Notice of
Termination is given, and, in the case of a termination by Employee pursuant to Section
4(d), such date will not be less than fifteen (15) days nor more than thirty (30) days
from the date such Notice of Termination is given, (iv) if the Employment Period is
terminated by ABT other than for Cause, thirty (30) days from the date Employee is
notified of such termination, or (v) if Employee terminates the Employment Period and
fails to provide written notice to ABT of such termination, the date of such
termination.
	 
	 	(h)	 	Change in Control. For purposes of this Agreement, a “Change in
Control” will occur (i) upon the sale or other disposition to a person, entity or group
(as such term is used in Rule 13d-5 promulgated under the Securities Exchange Act of
1934, as amended) (such a person, entity or group being referred to as an “Outside
Party”) of 50% or more of the consolidated assets of Athersys taken as a whole, or (ii)
if shares representing a majority of the voting power of Athersys are acquired by a
person or group (as such term is used in Rule 13d-5 promulgated under the Securities
Exchange Act of 1934, as amended) of persons other than the holders of the capital
stock of Athersys as of the date of this Agreement, or (iii) if following an
underwritten public offering of equity securities of Athersys pursuant to an effective
registration statement under the Securities Act of 1933, as amended, the individuals
who are directors of Athersys immediately following the effective date of such public
offering (or individuals nominated by such directors) no longer constitute a majority
of the whole Board.






	4.	 	Compensation Upon Termination.




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	 	(a)	 	Disability. During any period that Employee fails to perform his
duties under this Agreement as a result of incapacity due to physical or mental
illness, Employee will continue to receive his full Base Salary at the rate then in
effect for such period (offset by any payments to Employee received pursuant to
disability benefit plans maintained by ABT) and all other compensation and benefits
under this Agreement (including pro rata payment for vacation days not taken) until the
Employment Period is terminated pursuant to Section 4(b) and for a period of twelve
(12) months from the date of such termination.
	 
	 	(b)	 	Cause or Death. If the Employment Period is terminated by ABT for
Cause or by Employee other than for Good Reason or as a result of Employee’s death, ABT
will pay to Employee his full Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given and all other unpaid amounts, if
any, to which Employee is entitled as of the Date of Termination, including any bonus
owed pursuant to Section 2(b), expenses owed pursuant to Section 2(c) and amounts under
any compensation plan or program of ABT, at the time such payments are due and ABT
will, thereafter, have no further obligations to Employee under this Agreement.
	 
	 	(c)	 	Good Reason. If (i) in breach of this Agreement, ABT terminates the
Employment Period (it being understood that a purported termination for disability
pursuant to Section 4(b) or for Cause which is disputed and finally determined not to
have been proper will be a termination by ABT in breach of this Agreement), or (ii)
Employee terminates the Employment Period for Good Reason; then






	 	(i)	 	ABT will continue to pay to Employee his full Base Salary for a
period of six months from the Date of Termination at the rate in effect at the
time Notice of Termination is given and all other unpaid amounts, if any, to
which Employee is entitled as of the Date of Termination, including any bonus
owed pursuant to Section 2(b) and any expenses owed pursuant to Section 2(c);
provided, however, if during such six month period, Employee violates any
provision of the Agreement for Disclosure of Confidential Information between
Employee and Athersys, then ABT will not be required to make any further
payments to Employee; and
	 
	 	(ii)	 	ABT will permit Employee, at Employee’s option and expense, to
continue the participation of Employee for a period of eighteen (18) months in
all medical, life and other employee “welfare” benefit plans and programs in
which Employee was entitled to participate immediately prior to the Date of
Termination provided that Employee’s continued participation is possible under
the general terms and provisions of such plans and programs. Employee agrees
that the period of coverage under such plans shall count against such plans’
obligation to provide continuation coverage pursuant to the requirements of
Part 6 of Subtitle B




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	 	 	 	of Title I of the Employee Retirement Income Security Act of 1974, as
amended (“COBRA”).






	 	(d)	 	Mitigation. Employee will be required to mitigate the amount of any
payment provided for in this Section 5 by seeking other employment or otherwise, and
the amount of any payment or benefit provided for in this Section 5 will be reduced by
any compensation earned by Employee as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by Employee to
ABT, or otherwise.
	 
	 	(e)	 	Survival of Obligations. The obligations of ABT to make payments and
provide benefits under this Section 5 will survive the termination of this Agreement.






	5.	 	Successors and Assigns. This Agreement and all rights of Employee under this
Agreement will inure to the benefit of and be enforceable by Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributes, devises and
legatees. If Employee dies while any amounts would still be payable to him under this
Agreement if he had continued to live, all such amounts, unless otherwise provided in this
Agreement, will be paid in accordance with the terms of this Agreement to Employee’s devisee,
legatee, or other designee or, if there be no such designee, to Employee’s estate. This
Agreement and all rights of ABT under this Agreement will inure to the benefit of and be
enforceable by ABT’s successors or assigns. Employee hereby consents to the assignment by ABT
of all of its rights and obligations hereunder to any successor to ABT by merger or
consolidation or purchase of all or substantially all of ABT’s assets, provided such
transferee or successor assumes the liabilities of ABT hereunder.






	6.	 	Employee Representations: Employee represents and warrants to ABT that (i) the
execution, delivery and performance of this Agreement by Employee does not and will not
conflict with, breach, violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Employee is a party or by which Employee is bound, (ii)
Employee is not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by ABT, this Agreement shall be the valid and binding obligation of
Employee, enforceable in accordance with its terms.






	7.	 	Withholding of Taxes. ABT may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes as ABT is required to withhold pursuant to any
applicable law, regulation or ruling.






	8.	 	Notice. Notices, demands and all other communications provided for in this Agreement
will be in writing and will be deemed to have been duly given when delivered, if delivered
personally, or (unless otherwise specified) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, and when received if delivered otherwise,
addressed as follows:




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If to Employee:





William Lehmann

                                        

                                        , OH                     


If to ABT:





Advanced Biotherapeutics, Inc., d.b.a. Athersys, Inc.

3201 Carnegie Avenue

Cleveland, Ohio 44115-2634

Attention: President & Chief Executive Officer


Copy to:





Christopher M. Kelly, Esq.

Jones Day

North Point, 901 Lakeside Avenue

Cleveland, Ohio 44114


or to such other address as any party may have furnished to the other in writing, except that
notices of change of address will be effective only upon receipt.





	9.	 	Amendment and Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
parties hereto. No waiver by either party to this Agreement at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement to be
performed by such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No course of conduct or failure or
delay in enforcing the provisions of this Agreement shall affect the validity, binding effect
or enforceability of this Agreement.
	 
	10.	 	Choice of Law. The validity, interpretation, construction and performance of this
Agreement will be governed by the laws of the State of Ohio without regard to its conflicts of
law principles.






	11.	 	Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.






	12.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original but all of which together will constitute one and the
same instrument.




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	13.	 	Captions. The headings of paragraphs are included solely for convenience of
reference only and are not part of this Agreement and will not be used in construing it.






	14.	 	Consent to Jurisdiction and Forum. Employee expressly and irrevocably agrees that
ABT may bring any action, whether at law or in equity, arising out of or based upon this
Agreement in the State of Ohio or in any federal court therein. Employee irrevocably consents
to personal jurisdiction in such court and to accept service of process in accordance with the
provisions of the laws of the State of Ohio.






	15.	 	Entire Agreement. This Agreement sets forth the entire agreement of the parties in
respect of the subject matter contained in this Agreement and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party; and any prior agreement
of the parties in respect of the subject mater contained in this Agreement is terminated and
canceled.





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



	 	 	 	 	 	 	 	 	 	 	 
	Advanced Biotherapeutics, Inc.	 	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gil Van Bokkelen 	 	 	 	By:	 	/s/ William Lehmann 	 	 
	 

	 	 

Gil Van Bokkelen
	 	 	 	 	 	 

William Lehmann
	 	 
	 

	 	President & Chief Executive Officer	 	 	 	 	 	 	 	 






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