EX-10.2






Exhibit 10.2




EXECUTION COPY




REGISTRATION RIGHTS AGREEMENT




REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 27, 2008, by and between
AASTROM BIOSCIENCES, INC., a Michigan corporation, (the “Company”), and FUSION CAPITAL FUND II,
LLC, an Illinois limited liability company (together with it permitted assigns, the “Buyer”).
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings
set forth in the Common Stock Purchase Agreement by and between the parties hereto, dated as of the
date hereof (as amended, restated, supplemented or otherwise modified from time to time, the
"Purchase Agreement”).



WHEREAS:




A. The Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to issue to the Buyer (i) up to Fifteen Million Dollars ($15,000,000) of the Company’s
common stock, no par value per share (the “Common Stock”) (the “Purchase Shares”), and (ii) such
number of shares of Common Stock as is required pursuant to Section 4(e) of the Purchase Agreement
(the “Commitment Shares"); and



B. To induce the Buyer to enter into the Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and
applicable state securities laws.



NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyer hereby agree as follows:



1. DEFINITIONS.



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



a. "Investor” means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.



b. "Person” means any person or entity including any corporation, a limited liability company,
an association, a partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.



c. "Register,” “registered,” and “registration” refer to a registration effected by preparing
and filing one or more registration statements of the Company in compliance with the 1933 Act and
pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on
a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such
registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).



d. "Registrable Securities” means the Purchase Shares which have been, or which may from time
to time be, issued or issuable to the Investor upon purchases of the Available Amount under the
Purchase Agreement (without regard to any limitation or restriction on purchases) and the
Commitment Shares issued or issuable to the Investor and any shares of capital stock issued or
issuable with respect to the Purchase Shares, the Commitment Shares or the Purchase Agreement as a
result of any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitation on purchases under the Purchase Agreement.



e. "Registration Statement” means the registration statement of the Company covering only the
sale of the Registrable Securities.



2. REGISTRATION.



a. Mandatory Registration. The Company shall within ten (10) Business Days from the
date hereof file with the SEC the Registration Statement. The Registration Statement shall
register only the Registrable Securities and no other securities of the Company. The Investor and
its counsel shall have a reasonable opportunity to review and comment upon such registration
statement or amendment to such registration statement and any related prospectus prior to its
filing with the SEC. Investor shall furnish all information reasonably requested by the Company
for inclusion therein. The Company shall use its best efforts to have the Registration Statement
or amendment declared effective by the SEC at the earliest possible date. The Company shall use
reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415
promulgated under the 1933 Act and available for sales of all of the Registrable Securities at all
times until the earlier of (i) the date as of which the Investor may sell all of the Registrable
Securities without restriction pursuant to Rule 144 promulgated under the 1933 Act (or successor
thereto) or (ii) the date on which (A) the Investor shall have sold all the Registrable Securities
and no Available Amount remains under the Purchase Agreement (the “Registration Period”). The
Registration Statement (including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.



b. Rule 424 Prospectus. The Company shall, as required by applicable securities
regulations, from time to time file with the SEC, pursuant to Rule 424 promulgated under the 1933
Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such prospectus prior to its filing with the SEC.
The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1)
Business Day from the date the Investor receives the final version of such prospectus.



c. Sufficient Number of Shares Registered. In the event the number of shares
available under the Registration Statement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement or file a new registration statement
(a ”New Registration Statement”), so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than ten (10) Business Days after the necessity therefor
arises. The Company shall use it reasonable best efforts to cause such amendment and/or New
Registration Statement to become effective as soon as practicable following the filing thereof.



3. RELATED OBLIGATIONS.



With respect to the Registration Statement and whenever any Registrable Securities are to be
registered pursuant to Section 2(b) including on any New Registration Statement, the Company shall
use its reasonable best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:



a. The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to any registration statement and the prospectus used in connection
with such registration statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep the Registration Statement or any New Registration
Statement effective at all times during the Registration Period, and, during such period, comply
with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities
of the Company covered by the Registration Statement or any New Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in such registration
statement.



b. The Company shall permit the Investor to review and comment upon the Registration Statement
or any New Registration Statement and all amendments and supplements thereto at least two (2)
Business Days prior to their filing with the SEC, and not file any document in a form to which
Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon
the Registration Statement or any New Registration Statement and any amendments or supplements
thereto within two (2) Business Days from the date the Investor receives the final version thereof.
The Company shall furnish to the Investor, without charge, any correspondence from the SEC or the
staff of the SEC to the Company or its representatives relating to the Registration Statement or
any New Registration Statement.



c. Upon request of the Investor, the Company shall furnish to the Investor, (i) promptly after
the same is prepared and filed with the SEC, at least one copy of such registration statement and
any amendment(s) thereto, including financial statements and schedules, all documents incorporated
therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a
copy of the prospectus included in such registration statement and all amendments and supplements
thereto (or such other number of copies as the Investor may reasonably request) and (iii) such
other documents, including copies of any preliminary or final prospectus, as the Investor may
reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by the Investor.



d. The Company shall use reasonable best efforts to (i) register and qualify the Registrable
Securities covered by a registration statement under such other securities or “blue sky” laws of
such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the effectiveness thereof
during the Registration Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of
the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.



e. As promptly as practicable after becoming aware of such event or facts, the Company shall
notify the Investor in writing of the happening of any event or existence of such facts as a result
of which the prospectus included in any registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, and promptly prepare a supplement or amendment to such registration statement
to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to
the Investor (or such other number of copies as the Investor may reasonably request). The Company
shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a registration statement or any
post-effective amendment has become effective (notification of such effectiveness shall be
delivered to the Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to any registration statement
or related prospectus or related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a registration statement would be appropriate.



f. The Company shall use its reasonable best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of any registration statement, or the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investor of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such purpose.



g. The Company shall (i) cause all the Registrable Securities to be listed on each securities
exchange on which securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section.



h. The Company shall cooperate with the Investor to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to any registration statement and enable such certificates to be
in such denominations or amounts as the Investor may reasonably request and registered in such
names as the Investor may request.



i. The Company shall at all times provide a transfer agent and registrar with respect to its
Common Stock.



j. If reasonably requested by the Investor, the Company shall (i) immediately incorporate in a
prospectus supplement or post-effective amendment such information as the Investor believes should
be included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being sold,
the purchase price being paid therefor and any other terms of the offering of the Registrable
Securities; (ii) make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any registration statement.



k. The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by the registration statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.



l. Within one (1) Business Day after any registration statement which includes the Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investor) confirmation that such registration statement has been declared effective
by the SEC in the form attached hereto as Exhibit A. Thereafter, if requested by the Buyer
at any time, the Company shall require its counsel to deliver to the Buyer a written confirmation
whether or not the effectiveness of such registration statement has lapsed at any time for any
reason (including, without limitation, the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of the Registrable
Securities.



m. The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to any registration statement.



4. OBLIGATIONS OF THE INVESTOR.



a. The Company shall notify the Investor in writing of the information the Company reasonably
requires from the Investor in connection with any registration statement hereunder. The Investor
shall furnish to the Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable Securities and shall execute
such documents in connection with such registration as the Company may reasonably request.



b. The Investor agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of any registration statement hereunder.



c. The Investor agrees that, upon receipt of any notice from the Company of the happening of
any event or existence of facts of the kind described in Section 3(f) or the first sentence of
3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to
any registration statement(s) covering such Registrable Securities until the Investor’s receipt of
the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e). Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the Investor’s receipt
of a notice from the Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e) and for which the Investor has not yet settled.



5. EXPENSES OF REGISTRATION.



All reasonable expenses, other than sales or brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.



6. INDEMNIFICATION.



a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend the Investor, each Person, if any, who controls the Investor, the members, the
directors, officers, partners, employees, agents, representatives of the Investor and each Person,
if any, who controls the Investor within the meaning of the 1933 Act or the Securities Exchange Act
of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in
settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory
agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact
in the Registration Statement, any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement or any New Registration Statement or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”). The Company shall reimburse each Indemnified Person promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in conformity with information furnished
in writing to the Company by such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement, any New Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant
to Section 3(c) or Section 3(e); (ii) with respect to any superceded prospectus, shall not inure to
the benefit of any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any person controlling
such person) if the untrue statement or omission of material fact contained in the superceded
prospectus was corrected in the revised prospectus, as then amended or supplemented, if such
revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section
3(e), and the Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding
such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure
of the Investor to deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investor pursuant to Section 9.



b. In connection with the Registration Statement or any New Registration Statement, the
Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement or any New Registration Statement, each
Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an “Indemnified Party”), against any Claim
or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information about the Investor set forth on
Exhibit B attached hereto and furnished to the Company by the Investor expressly for use in
connection with such registration statement; and, subject to Section 6(d), the Investor will
reimburse any legal or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale
of Registrable Securities pursuant to such registration statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to
Section 9.



c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing interests between
such Indemnified Person or Indemnified Party and any other party represented by such counsel in
such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party or Indemnified Person which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or proceeding effected
without its written consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.



d. The indemnification required by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.



e. The indemnity agreements contained herein shall be in addition to (i) any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.



7. CONTRIBUTION.



To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of such Registrable
Securities.



8. REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.



With a view to making available to the Investor the benefits of Rule 144 promulgated under the
1933 Act or any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration (“Rule 144”), the
Company agrees, at the Company’s sole expense, to:



a. make and keep public information available, as those terms are understood and defined in
Rule 144;



b. file with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and



c. furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon
written request, (i) a written statement by the Company that it has complied with the reporting and
or disclosure provisions of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to permit the Investor to
sell such securities pursuant to Rule 144 without registration.



d. take such additional action as is requested by the Investor to enable the Investor to sell
the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such
legal opinions, consents, certificates, resolutions and instructions to the Company’s Transfer
Agent as may be requested from time to time by the Investor and otherwise fully cooperate with
Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144.



The Company agrees that damages may be an inadequate remedy for any breach of the terms and
provisions of this Section 8 and that Investor shall, whether or not it is pursuing any remedies at
law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without
having to post any bond or other security, upon any breach or threatened breach of any such terms
or provisions.




	 	9.	 	ASSIGNMENT OF REGISTRATION RIGHTS.





The Company shall not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investor. The Investor may not assign its rights under this Agreement
without the written consent of the Company, other than to an affiliate of the Investor controlled
by Steven G. Martin or Joshua B. Scheinfeld.



10. AMENDMENT OF REGISTRATION RIGHTS.



Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor.



11. MISCELLANEOUS.



a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is
deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the registered owner of such Registrable Securities.



b. Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have been delivered:
(i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:



	 	 	 	 	 
	If to the Company:
	 	 	 	 
	Aastrom Biosciences, Inc.

	24 Frank Lloyd Wright Drive

	P.O. Box 376
Ann Arbor, MI 48106
Telephone:
	 	 	734-930-5555	 
	Facsimile:
	 	 	734-665-0485	 
	Attention:
	 	Chief Executive Officer






	 	 	 	 	 
	With a copy to:
	 	 	 	 
	Allan J. Reich
Seyfarth Shaw LLP
	 	 	 	 
	131 South Dearborn, Suite 2400

	Chicago, Illinois 60603

	Telephone:
	 	 	312-460-5650	 
	Facsimile:
	 	 	312-460-7650	 






	 	 	 	 	 
	If to the Investor:
	 	 	 	 
	Fusion Capital Fund II, LLC

	222 Merchandise Mart Plaza, Suite 9-112

	Chicago, IL 60654
Telephone:
	 	 	312-644-6644	 
	Facsimile:
	 	 	312-644-6244	 
	Attention:
	 	Steven G.  Martin






or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3) Business
Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.



c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.



d. The corporate laws of the State of Michigan shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of Illinois, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Illinois or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting the City
of Chicago, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices
to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



e. This Agreement and the Purchase Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Purchase Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.



f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and
be binding upon the permitted successors and assigns of each of the parties hereto.



g. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.



h. This Agreement may be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.



i. Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.



j. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent and no rules of strict construction will be applied against any
party.



k. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.



* * * * * *





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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.




THE COMPANY:




AASTROM BIOSCIENCES, INC.



By: /s/ George W. Dunbar, Jr. 

Name: George W. Dunbar, Jr.

Title: Chief Executive Officer





BUYER:




FUSION CAPITAL FUND II, LLC



BY: FUSION CAPITAL PARTNERS, LLC



BY: SGM HOLDINGS CORP.




By: /s/ Steven G. Martin 

Name: Steven G. Martin

Title: President




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EXHIBIT A



TO REGISTRATION RIGHTS AGREEMENT




FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT




[Date]



[TRANSFER AGENT]


     


     



Re: [     ]



Ladies and Gentlemen:



We are counsel to AASTROM BIOSCIENCES, INC., a Michigan corporation (the “Company”), and have
represented the Company in connection with that certain Common Stock Purchase Agreement, dated as
of      , 2008 (the “Purchase Agreement”), entered into by and between the Company and Fusion
Capital Fund II, LLC (the “Buyer”) pursuant to which the Company has agreed to issue to the Buyer
shares of the Company’s Common Stock, no par value per share (the “Common Stock”), in an amount up
to Fifteen Million Dollars ($15,000,000) (the “Purchase Shares”), in accordance with the terms of
the Purchase Agreement. In connection with the transactions contemplated by the Purchase Agreement,
the Company has registered with the U.S. Securities & Exchange Commission the following shares of
Common Stock:




	 	(1)	 	     shares of Common Stock to be issued upon purchase from the Company by
the Buyer from time to time (the “Purchase Shares.”).






	 	(2)	 	1,936,317 shares of Common Stock which have been issued to the Buyer as a
commitment fee (the “Initial Commitment Shares”).






	 	(3)	 	1,936,317 additional Commitment Shares to be issued in connection with each
purchase of Purchase Shares (the “Additional Commitment Shares” and together with the
Initial Commitment Shares, the “Commitment Shares.”).





Pursuant to the Purchase Agreement, the Company also has entered into a Registration Rights
Agreement, dated as of      , 2008, with the Buyer (the “Registration Rights Agreement”) pursuant
to which the Company agreed, among other things, to register the Purchase Shares, and the
Commitment Shares under the Securities Act of 1933, as amended (the “1933 Act”). In connection
with the Company’s obligations under the Purchase Agreement and the Registration Rights Agreement,
on      , 2008, the Company filed a Registration Statement (File No. 333-     ) (the
“Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
sale of the Purchase Shares, and the Commitment Shares.



In connection with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration Statement effective
under the 1933 Act at      P.M. on      , 200     and we have no knowledge, after telephonic
inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and
the Purchase Shares, and the Commitment Shares are available for sale under the 1933 Act pursuant
to the Registration Statement and may issued without any restrictive legend.



Very truly yours,



[Company Counsel]



By:     



CC: Fusion Capital Fund II, LLC



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EXHIBIT B




TO REGISTRATION RIGHTS AGREEMENT




Information About The Investor Furnished To The Company By The Investor

Expressly For Use In Connection With The Registration Statement




As of the date of the Purchase Agreement, Fusion Capital beneficially owned 78,463 shares of
common stock of the Company. Steven G. Martin and Joshua B. Scheinfeld, the principals of Fusion
Capital, are deemed to be beneficial owners of all of the shares of common stock owned by Fusion
Capital. Messrs. Martin and Scheinfeld have shared voting and investment power over the shares
being offered under the prospectus filed with the SEC in connection with the transactions
contemplated under the Purchase Agreement. Fusion Capital is not a licensed broker dealer or an
affiliate of a licensed broker dealer.




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