Form Of Pay To Stay Severance Agreement

EXHIBIT 10.56


PAY TO STAY SEVERANCE AGREEMENT


This Agreement is made by and between Aastrom Biosciences, Inc., a Michigan Corporation ("Employer") and _______________ ("Employee"), with respect to the existing Employment Agreement pursuant to which Employer has employed Employee.


RECITALS


A. Employer currently employs Employee as _________________________ ___________.


B. Employer is experiencing difficult financing circumstances, such that the job security for Employee with Employer is not favorable. However, Employer needs to retain the employment services of Employee to enable Employer to try to implement its business plan during these difficult circumstances.


C. This Agreement is being entered into to provide Employee with sufficient incentives and encouragements for Employee to remain with Employer, notwithstanding the possibility of the occurrence in the future of (i) a Change in Control (as defined below) event for Employer, or (ii) a liquidation of Employer.


D. As used in this Agreement, the following terms shall have the following meanings:


"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 theft, material act of dishonesty or fraud, or
intentional falsification of any records of Employer;


(ii) Employee's improper use or disclosure of confidential or
proprietary information of Employer;


(iii) Employee's gross negligence or willful misconduct in the performance of Employee's assigned duties (but not mere unsatisfactory performance);


(iv) Employee's conviction (including any plea of guilty or nolo contendre) of a crime of moral turpitude causing material harm to the reputation or standing of Employer or which materially impairs Employee's ability to perform his duties for Employer.


"Change in Control" shall mean the occurrence of any of the following
----------------- events:


(i) All or substantially all of the assets of Employer are sold;


(ii) Employer is acquired by another company, by merger or by acquisition of the stock of the Company, after which the previous shareholders of Employer own less than 50% of all of the voting stock of the surviving entity.


WHEREFORE, the parties mutually agree as follow:


1. Severance Pay.
-------------


(a) On the condition that Employee continues to remain employed by Employer for so long as Employer reasonably needs the employment services of Employee, or up through April 30, 2000, whichever occurs sooner, then upon a termination of Employee's employment (for reasons other than Cause), Employer shall pay to Employee a lump sum severance payment equal to six times Employee's regular monthly base salary plus accrued vacation, less applicable and customary payroll deductions.


(b) During such employment, Employer shall continue to pay Employee at Employee's existing salary level; and any reduction or cessation in said salary payment shall constitute a termination of employment without Cause which entitles Employee to the severance pay.


(c) If Employee is still employed by the Employer as of Apr ...