EMPLOYMENT AGT BET THE CO AND ALAN K SMITH

EXHIBIT 10.23



EMPLOYMENT AGREEMENT



This Employment Agreement (the "Agreement") is entered into as of 26 October 1995, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation ("Employer") and ALAN K. SMITH ("Employee").



NOW, THEREFORE, the parties agree as follows:



1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby accepts such engagement, upon the terms and conditions set forth herein.



2. DUTIES Employee is engaged as a Vice President Research. 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. As a full-time employee of Employer, Employee shall not be entitled to provide consulting services or other business or scientific services to any other party, without the prior written consent of Employer.



3. COMPENSATION



3.1 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 Employee at an annual salary rate of One Hundred Twenty Two Thousand Five Hundred Dollars ($122,500), payable in arrears in equal bi-weekly 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.



4. TERM



4.1 COMMENCEMENT The employment relationship pursuant to this Agreement shall commence November 13, 1995.



4.2 TERMINATION AT WILL Although Employer and Employee anticipate a long and mutually rewarding employment relationship, either party may terminate this Agreement, without cause, upon fourteen (14) days' prior written notice delivered to the other. It is expressly understood and agreed that the employment relationship is "at will", and with no agreement for employment for any specified term, and with no agreement for employment for so long as Employee performs satisfactorily. Provided, however, before Employer exercises this right of termination at will, Employer shall first either (i) discuss with Employee the needs of Employer and why Employee no longer meets those needs, or (ii) discuss with Employee any concerns or dissatisfactions which



Employer has with Employee's performance, and give to Employee a reasonable opportunity to remedy those concerns or dissatisfactions, to the reasonable satisfaction of Employer. Should, for some reason, Employee's involuntary termination without cause be necessary, severance compensation equal to four (4) months' salary will be paid, along with compensation for any accumulated vacation time.



4.3 TERMINATION FOR CAUSE Either party may terminate this employment relationship immediately upon notice to the other party in the event of any good cause, such as a default, dishonesty, neglect of duties, failure to perform by the other party, or death or disability of Employee.



4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for cause, Employee shall be entitled to the compensation set forth as "base salary" herein, prorated to the effective date of such termination as full compensation for any and all claims of Employee under this Agreement.



5. FRINGE BENEFITS



5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such fringe benefits as Employer customarily makes available to employees of Employer engaged in the same or similar position as Employee ("Fringe Benefits"). Such Fringe Benefits may include vacation leave, sick leave, and health insurance coverage. Employer reserves the right to change the Fringe Benefits on a prospective basis, at any time, effective upon delivery of written notice to Employee.



5.2 ACCUMULATION Employee shall not earn and accumulate unused vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate sick leave or other Fringe Benefits in excess of an unused amount equal to twice the amount earned for one year. Further, Employee shall not be entitled to receive payments in lieu of said Fringe Benefits, other than for unused vacation leave earned and accumulated at the time the employment relationship terminates.



6. INVENTIONS, TRADE SECRETS AND CONFIDENTIALITY



6.1 DEFINITIONS



6.1.1 Invention Defined. As used herein "Invention" means inventions, discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to processes, methods, formulas, techniques, materials, devices, designs, programs (including computer programs), computer graphics, apparatus, products, as well as improvements thereof or know- how related thereto, relating to any present or anticipated business or activities of Employer.



6.1.2 Trade Secret Defined. As used herein "Trade Secret" means, without limitation, any document or information relating to Employer's



products, processes or services, including documents and information relating to Inventions, and to the research, development, engineering or manufacture of Inventions, and to Employer's purchasing, customer or supplier lists, which documents or information have been disclosed to Employee or known to Employee as a consequence of or through Employee's employment by Employer (including documents, information or Inventions conceived, originated, discovered or developed by Employee), which is not generally known in the relevant trade or industry.



6.2 INVENTIONS



6.2.1 Disclosure. Employee shall disclose promptly to Employer each Invention, whether or not ...