Document:

Exhibit 10.4

 

Exhibit 10.4

			
	 	 	 
	 	 	 
	Warrant No. [     ]
	 	Number of Shares: [          ]

(subject to adjustment)
	 	 	 
	Date of Issuance: October ___, 2007	 	 
	 	 	 
	Original Issue Date (as defined in subsection 

2(a)): October ___, 2007	 	 

Aastrom Biosciences, Inc.

Common Stock Purchase Warrant

(Void after [___])

     Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), for value received, hereby
certifies that [                    ], or its registered assigns (the “Registered Holder”), is
entitled, subject to the terms and conditions set forth below, to purchase from the Company, at any
time or from time to time after the six-month and one day anniversary of the date of issuance and
on or before 5:00 p.m. (New York time) on April [  ], 2013 (the “Exercise Period”), [     ] shares
of Common Stock, no par value per share, of the Company (“Common Stock”), at a purchase price of
$[_______] per share. The shares purchasable upon exercise of this Warrant, and the purchase price
per share, each as adjusted from time to time pursuant to Section 2 of this Warrant, are
hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively. This
Warrant is one of a series of Warrants issued by the Company in connection with an offering of
Common Stock, pursuant to (and shall be entitled to certain applicable rights contained in) those
certain purchase agreements dated as of October [    ], 2007 (the “Purchase Agreements”), each
between the Company and the investor signatory thereto, and of like tenor, except as to the number
of shares of Common Stock subject thereto (collectively, the “Company Warrants”).

     1. Exercise.

          (a) Exercise for Cash. The Registered Holder may, at its option, elect to exercise
this Warrant, in whole or in part and at any time or from time to time during the Exercise Period,
by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly
executed by or on behalf of the Registered Holder, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment in full, in lawful
money of the United States, of the Purchase Price payable in respect of the number of Warrant
Shares purchased upon such exercise. A facsimile signature of the Registered Holder on the
purchase form shall be sufficient for purposes of exercising this Warrant, provided that the
Company receives the Registered Holder’s original signature within three (3) business days
thereafter.

          (b) Cashless Exercise.

               (i) In the event that the Registration Statement relating to the Warrants is no longer
effective under the Securities Act of 1933, as amended, the Registered Holder may, at its option,
elect to exercise this Warrant, in whole or in part, during the Exercise Period, on a cashless
basis, by surrendering this Warrant, with the purchase form appended

 

 

hereto as Exhibit I duly executed by or on behalf of the Registered Holder, at the
principal office of the Company, or at such other office or agency as the Company may designate, by
canceling a portion of this Warrant in payment of the Purchase Price payable in respect of the
number of Warrant Shares purchased upon such exercise. In the event of an exercise pursuant to
this subsection 1(b), the number of Warrant Shares issued to the Registered Holder shall be
determined according to the following formula:

X = Y(A-B)
           
A

	 	 	 	 	 
	Where:

	 	X =
	 	the number of Warrant Shares that shall be issued to the
Registered Holder;
	 
	 	 	 	 
	 

	 	Y =
	 	the number of Warrant Shares for which this Warrant is being exercised
(which shall include both the number of Warrant Shares issued to the Registered Holder
and the number of Warrant Shares subject to the portion of the Warrant being cancelled
in payment of the Purchase Price);
	 
	 	 	 	 
	 

	 	A =
	 	the Fair Market Value (as defined below) of one share of Common Stock; and
	 
	 	 	 	 
	 

	 	B =
	 	the Purchase Price then in effect.

               (ii) The Fair Market Value per share of Common Stock shall be determined as follows:

                    (1) If the Common Stock is listed on a national securities exchange, the Nasdaq National
Market or another nationally recognized trading system as of the Exercise Date, the Fair Market
Value per share of Common Stock shall be deemed to be the closing price per share of Common Stock
thereon on the trading day immediately preceding the Exercise Date (provided, that,
if no such price is reported on such day, the Fair Market Value per share of Common Stock shall be
determined pursuant to clause (2) below).

                    (2) If the Common Stock is not listed on a national securities exchange, the Nasdaq National
Market or another nationally recognized trading system as of the Exercise Date, the Fair Market
Value per share of Common Stock shall be deemed to be the amount most recently determined by the
Board of Directors of the Company (the “Board”) to represent the fair market value per share of the
Common Stock (including without limitation a determination for purposes of granting Common Stock
options or issuing Common Stock under any plan, agreement or arrangement with employees of the
Company); and, upon request of the Registered Holder, the Board (or a representative thereof)
shall, as promptly as reasonably practicable but in any event not later than 10 days after such
request, notify the Registered Holder of the Fair Market Value per share of Common Stock and
furnish the Registered Holder with reasonable documentation of the Board’s determination of such
Fair Market Value. Notwithstanding the foregoing, if the Board has not made such a determination
within the three-month period prior to the Exercise Date, then (A) the Board shall make, and shall
provide or cause to be provided to the Registered Holder notice of, a determination of the Fair
Market

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Value per share of the Common Stock within 15 days of a request by the Registered Holder that
it do so, and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall be delayed
until such determination is made and notice thereof is provided to the Registered Holder.
Notwithstanding the foregoing, in the event the Registered Holder disagrees with the determination
of the Board as to the calculation of Fair Market Value for purposes of this subsection (2), Fair
Market Value shall be determined by any member of the NASD or other nationally recognized appraisal
firm selected mutually by the holders of Company Warrants holding 60% of the number of shares of
Common Stock then subject to Company Warrants and the Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD or nationally recognized appraisal firm, one
of which shall be selected by the holders of Company Warrants holding 60% of the number of shares
of Common Stock then subject to Company Warrants and one of which shall be selected by the Company.

          (c) Exercise Date. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this Warrant shall have
been surrendered to the Company as provided in subsection 1(a) or 1(b) above (the “Exercise Date”).
At such time, the person or persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise as provided in subsection 1(c) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such certificates.

          (d) Issuance of Certificates. As soon as practicable after the exercise of this
Warrant in whole or in part, and in any event within three (3) business days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered
Holder, or as the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to
which the Registered Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant
Shares equal (without giving effect to any adjustment therein) to the number of such shares called
for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so
exercised.

               provided, that, in addition to any other rights available to the Registered
Holder, if the Company fails to deliver to the Registered Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise by the close of business on the third
Trading Day after the date of exercise, and if after such third Trading Day the Registered Holder
is required by its broker to purchase (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Registered Holder of the Warrant Shares which the
Registered Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1)
pay in cash to the Registered Holder the amount by which (x) the Registered Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was
required to deliver to the Registered Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was executed, and (2) at the
option of the Registered Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or deliver to the Registered Holder the
number of shares of Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example, if the Registered Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company
shall be required to pay the Registered Holder $1,000. The Registered Holder shall provide the
Company written notice indicating the amounts payable to the Registered Holder in respect of the
Buy-In, together with applicable confirmations and other evidence reasonably requested by the
Company. Nothing herein shall limit a Registered Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant
to the terms hereof. “Trading Day” means a day on which the Common Stock is traded on a
Trading Market. “Trading Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market,
the AMEX, the New York Stock Exchange or the Nasdaq National Market.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or
from time to time after the date on which this Warrant was first issued (or, if this Warrant was
issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date
on which such original warrant was first issued) (the “Original Issue Date”) effect a subdivision
of the outstanding Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase
Price then in effect immediately before the combination shall be

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proportionately increased. Any adjustment under this paragraph shall become effective at the
close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at
any time, or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Purchase Price then in effect by a fraction:

                    (1) the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date, and

                    (2) the denominator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution;

provided, however, that if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed therefor, the
Purchase Price shall be recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be
made in the Purchase Price pursuant to subsections 2(a) or 2(b), the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately
prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such
adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustments for Other Dividends and Distributions. In the event the Company at
any time or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned surplus,
determined in accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon exercise hereof, in
addition to the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company, cash or other property which the Registered Holder would have been
entitled to receive had this Warrant been exercised on the date of such event and had the
Registered Holder thereafter, during the period from the date of such event to and including the
Exercise Date, retained any such securities receivable

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during such period, giving application to all adjustments called for during such period under
this Section 2 with respect to the rights of the Registered Holder.

          (e) Adjustment for Reorganization. If there shall occur any reorganization,
recapitalization, reclassification, consolidation or merger involving the Company in which the
Common Stock is converted into or exchanged for securities, cash or other property (other than a
transaction covered by subsections 2(a) or 2(d)) (collectively, a “Reorganization”), then,
following such Reorganization, the Registered Holder shall receive upon exercise hereof the kind
and amount of securities, cash or other property which the Registered Holder would have been
entitled to receive pursuant to such Reorganization if such exercise had taken place immediately
prior to such Reorganization. In any such case, appropriate adjustment (as determined reasonably
and in good faith by the Board of Directors of the Company) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter of the Registered
Holder, to the end that the provisions set forth in this Section 2 (including provisions with
respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any securities, cash or other property thereafter
deliverable upon the exercise of this Warrant. This Warrant shall remain exercisable for the full
term of the Exercise Period notwithstanding any Reorganization.

          (f) Adjustments for Fundamental Transactions. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company with or into
another Person, (B) the Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property (each
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the
Registered Holder shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction,
the number of shares of Common Stock of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on
the amount of Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Registered Holder shall be
given the same choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section 3(f) and insuring that this Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent transaction analogous to
a Fundamental Transaction.

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          (g) Notice of Adjustments. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall give notice thereof to the Registered Holder, which
notice shall state the number of Warrant Shares (and other securities or property) purchasable upon
the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or
property) after such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made. Upon the
occurrence of each adjustment of the Purchase Price pursuant to this Section 2, the Company at its
expense shall give notice of such adjustment of the Purchase Price to the Registered Holder, which
notice shall (i) state the number of Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant, (ii) the Purchase Price of such Warrant Shares (and other
securities or property) after such adjustment, and (iii) set forth the computation by which such
adjustment was made.

     3. Fractional Shares. The Company shall not be required upon the exercise of this
Warrant to issue any fractional shares, but shall pay the value thereof to the Registered Holder in
cash on the basis of the Fair Market Value per share of Common Stock, as determined pursuant to
subsection 2(e) above.

     4. Transfers, etc.

          (a) The Company will maintain a register containing the name and address of the Registered
Holder of this Warrant. The Registered Holder may change its address as shown on the warrant
register by written notice to the Company requesting such change.

          (b) Subject to compliance with any applicable securities laws and the terms and conditions set
forth in this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part,
upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit
II hereto) at the principal office of the Company (or, if another office or agency has been
designated by the Company for such purpose, then at such other office or agency). The Company
shall promptly register any such transferee requested by the prior Registered Holder as the
Registered Holder hereof.

     5. No Impairment. The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder against impairment. The Company shall take all commercially
reasonable steps to maintain the listing and trading of the Company’s shares of Common Stock on the
Nasdaq Capital Market or a national exchange. If the Company fails to make, when due, any payments
provided for hereunder, or fails to comply with any other provision of this Warrant, the Company
shall pay to the Holder such amounts as shall be sufficient to cover any third party costs and
expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Registered Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.

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     6. Limitation on Exercise. Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the Registered Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary
to insure that, following such exercise (or other issuance), the total number of shares of Common
Stock then beneficially owned by such Registered Holder and its Affiliates (as defined below) and
any other Persons (as defined below) whose beneficial ownership of Common Stock would be aggregated
with the Registered Holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), does not exceed 4.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each
delivery of a purchase form hereunder will constitute a representation by the Registered Holder
that it has evaluated the limitation set forth in this paragraph and determined that issuance of
the full number of Warrant Shares requested in such purchase form is permitted under this
paragraph. This provision shall not restrict the number of shares of Common Stock which a
Registered Holder may receive or beneficially own in order to determine the amount of securities or
other consideration that such Registered Holder may receive in the event of a merger or other
business combination or reclassification involving the Company as contemplated in Section 2(e) of
this Warrant. This restriction may not be waived. For purposes of this Section 1(d), “Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person as such terms are used in and construed
under Rule 144. With respect to a Registered Holder, any investment fund or managed account that
is managed on a discretionary basis by the same investment manager as such Registered Holder will
be deemed to be an Affiliate of such Purchaser. For purposes of this Section 1(d), “Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.

     7. Notices of Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or
securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of stock of any class or any other securities, or to receive
any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of
the Company, any consolidation or merger of the Company with or into another corporation, or any
transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will send or cause to be sent to the Registered Holder a
notice specifying, as the case may be, (i) the record date for such dividend, distribution or
right, and the amount and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed, as of

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which the holders of record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date
for the event specified in such notice.

     8. Reservation of Stock; Registration. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant, such number of
Warrant Shares and other securities, cash and/or property, as from time to time shall be issuable
upon the exercise of this Warrant. The Warrant Shares issuable upon exercise of this Warrant shall
be registered at the sole expense of the Company pursuant to the Registration Statement (or, if
necessary, another registration statement with the SEC) described in the Purchase Agreement in
order to permit the free tradability of the Warrant Shares without restriction.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Registered Holder, properly endorsed, to the Company at the
principal office of the Company, the Company will, subject to the provisions of Section 4 hereof,
issue and deliver to or upon the order of the Registered Holder, at the Company’s expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as the Registered Holder
(upon payment by the Registered Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock (or other
securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Registered
Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next business day delivery,
to the address last furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection herewith shall be
mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery, to the Company at its principal
office set forth below. If the Company should at any time change the location of its principal
office to a place other than as set forth below, it shall give prompt written notice to the
Registered Holder and thereafter all references in this Warrant to the location of its principal
office at the particular time shall be as so specified in such notice. All such notices and
communications shall be deemed delivered one business day after being sent via a reputable
international overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Shareholder. Until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a shareholder of the Company.
Notwithstanding the foregoing, in the event (i) the Company effects a split of the Common Stock by
means of a stock dividend and the Purchase Price of and the number of Warrant Shares are adjusted
as of the date of the distribution of the dividend (rather than as of the record date for such
dividend), and (ii) the Registered Holder exercises this Warrant between the record date and the
distribution date for such stock dividend, the Registered Holder shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon
such exercise, notwithstanding the fact that such shares were not outstanding as of the close of
business on the record date for such stock dividend.

     12. Amendment or Waiver. Any term of this Warrant may be amended or waived (either
generally or in a particular instance and either retroactively or prospectively) with the written
consent of the Company and the holders of Company Warrants representing at least two-thirds the
number of shares of Common Stock then subject to outstanding Company Warrants. Notwithstanding the
foregoing, (a) this Warrant may be amended and the observance of any term hereunder may be waived
without the written consent of the Registered Holder only in a manner which applies to all Company
Warrants in the same fashion and (b) the number of Warrant Shares subject to this Warrant and the
Purchase Price of this Warrant may not be amended, and the right to exercise this Warrant may not
be waived, without the written consent of the Registered Holder (it being agreed that an amendment
to or waiver under any of the provisions of Section 2 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Purchase Price). The Company shall give prompt
written notice to the Registered Holder of any amendment hereof or waiver hereunder that was
effected without the Registered Holder’s written consent. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.

     13. Specific Performance. The Company acknowledges and agrees that the Registered
Holder may be irreparably damaged if any provision of this Warrant is not performed in accordance
with its terms or otherwise breached. Accordingly, the Company agrees that the Registered Holder
may be entitled, subject to a determination by a court of competent jurisdiction, to injunctive
relief to prevent any such failure of performance or breach and to enforce specifically this
Warrant and any terms and provisions hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of
the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of
the parties.

     15. Governing Law. This Warrant will be governed by and construed in accordance with
the internal laws of the State of New York (without reference to the conflicts of law provisions
thereof). The Company hereby irrevocably consents to the non-exclusive jurisdiction of the state
and federal courts located in New York City, New York in connection with any action or proceeding
arising out of or relating to this Warrant. In any such litigation the Company agrees that the
service thereof may be made by certified or registered mail directed to the Company at the address
of its principal executive office as set forth in its public filings with the Securities and
Exchange Commission.

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     16. Facsimile Signatures. This Warrant may be executed by facsimile signature.

* * * * * * *

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     EXECUTED as of the Date of Issuance indicated above.

	 	 	 	 	 
	 	AASTROM BIOSCIENCES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

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EXHIBIT I

PURCHASE FORM

			
	 	 	 
	To: Aastrom Biosciences, Inc.
	 	Dated: ___

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___),
hereby elects to purchase (check applicable box):

     o ___ shares of the Common Stock of Aastrom Biosciences, Inc. covered by such Warrant; or

     o the maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in subsection 1(b).

     The undersigned herewith makes payment of the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check applicable box or
boxes):

	 	o	 	$___ in lawful money of the United States; and/or

	 	o	 	the cancellation of such portion of the attached Warrant as is exercisable for
a total of ___ Warrant Shares (using a Fair Market Value of $______ per share for
purposes of this calculation) ; and/or

	 	o	 	the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 1(b), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in subsection 1(b).

	 	 	 	 	 
	 	 	 
	 	Signature:  	
 	 
	 	 	 
	 	Address:  	
 	 
	 	 	 
	 	  	
 	 

 

 

EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED, ______ hereby sells, assigns and transfers all of
the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of
shares of Common Stock of Aastrom Biosciences, Inc. covered thereby set forth below, unto:

	 	 	 	 	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares

	 	 	 
	 
	 	 
	Dated: _______________________

	 	Signature: _____________________________
	 
	 	 
	Signature Guaranteed:
	 	 
	 
	 	 
	By: ________________________

	 	 

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.Exhibit
      4.1

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

       

    

    FLOATING
      RATE NON-CUMULATIVE GUARANTEED

    SERIES
      6
      PREFERRED SECURITIES,

    PAR
      VALUE
      $25.00 PER SECURITY

     

    

    
      
        	
                NUMBER:
                  1

              	
                NO.
                  OF SHARES: 14,000,000

              
	
                CUSIP:  

              	 
	
                AMOUNT:
                  $350,000,000 (*)

              	 

      

    UNLESS
      THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
      TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), THE BANK OF NEW YORK, AS TRANSFER
      AGENT AND REGISTRAR, OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
      PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE OR ANY
      PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
      AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
      MADE
      TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
      OR
      OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
      HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

    

    SANTANDER
      FINANCE PREFERRED, S.A. UNIPERSONAL

    

    INCORPORATED
      UNDER THE LAWS OF THE KINGDOM OF SPAIN

    

    This
      certifies that CEDE & CO., as nominee of The Depository Trust Company is the
      registered holder of the number of shares indicated on the records of the
      Transfer Agent and Registrar of Floating Rate Non-Cumulative Guaranteed Series
      6
      Preferred Securities, par value $25.00 per security, of Santander Finance
      Preferred, S.A. Unipersonal, with corporate address at Ciudad Grupo Santander,
      Avda. de Cantabria S/N, Edificio Encinar 28660 Boadilla del Monte, Madrid,
      Spain, registered with the Mercantile Registry of Madrid under Volume 19747,
      Folio 171, Section 8, Sheet M-347560  and with tax identification
      number A- 83916395 (hereinafter called the “Company”), subject to the Memorandum
      and Articles of Association of the Company, transferable on the books of the
      Company upon surrender of this Certificate properly endorsed by the holder
      in
      person or by duly authorized attorney.  This Certificate is not valid
      unless countersigned by the Transfer Agent and Registrar.

    

    The
      Series
      6 Preferred Securities have been documented in a public deed granted before
      the
      Notary Public of Madrid, Spain, Mr. Antonio Morenís Giles under 4,007 of the
      official files of the Notary Public of Madrid Mr. Manuel Richi
      Alberti.

    

    

    Witness
      the signatures of the duly authorized officers of the Company

    

    Date:

    
 

    
      	
              
                

              

            	
              
                

              

            
	
              Name:
                José Antonio Soler Ramos

            	
              Name:
                Pablo Roig Garcia Bernalt

            
	
              Title:   Chairman

            	
              Title:   Director

            

    

    

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    COUNTERSIGNED
      AND REGISTERED

    THE
      BANK
      OF NEW YORK

    TRANSFER
      AGENT AND REGISTRAR

    

     

    
      
        	By:
                	 
	 	Authorized
                Officer
	 	 

      

    

             

    

    (*)  Equal
      to Euros [*] based on the [*] spot exchange rate of the USS [*] = Euros 1 on
      [
      ]

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    [GLOBAL
      RULE 144A CERTIFICATE - REVERSE]

    

    GUARANTEE

    

    THE
      HOLDER
      OF THIS SECURITY IS ENTITLED TO THE BENEFITS, AND IS SUBJECT TO THE LIMITATIONS,
      OF THE PAYMENT AND GUARANTEE AGREEMENT, DATED AS OF MARCH 5, 2007(THE
      "GUARANTEE"), EXECUTED AND DELIVERED BY BANCO SANTANDER, S.A. (THE “BANK”) FOR
      THE HOLDERS FROM TIME TO TIME OF THIS SECURITY. COPIES OF THE GUARANTEE ARE
      AVAILABLE UPON WRITTEN REQUEST TO THE SECRETARY OF SANTANDER FINANCE PREFERRED,
      S.A. UNIPERSONAL (THE “COMPANY”).

    

    

    DESCRIPTION
      OF THE SERIES 6 PREFERRED SECURITIES

     

    DISTRIBUTIONS

     

    Non-cumulative
      cash distributions on the exchange Series 6 preferred securities (the
“Distributions”) accrue from the date of original issuance and are payable
      quarterly in arrears on March 5, June 5, September 5 and December 5 in each
      year, commencing on June 5, 2007.

     

    Payment
      of
      cash distributions in any year on the exchange Series 6 preferred securities
      and
      on all other series of Preferred Securities, as defined below (both issued
      and
      which may, in the future, be issued or guaranteed by the Bank) is limited by
      the
      amount of the Distributable Profits (as defined below) of the Bank for the
      previous year, and to any limitations that may be imposed by Spanish banking
      regulations on capital adequacy for credit institutions, as determined in
      accordance with guidelines and requirements of the Bank of Spain and other
      Spanish law as in effect from time to time.  Distributions shall not
      be payable to the extent that:

     

    
      	
               

            	
              •

            	
              the
                aggregate of such Distributions, together with (a) any other distributions
                previously paid during the then-current fiscal year (defined as the
                accounting year of the Bank) and (b) any distributions proposed to
                be paid
                during the then-current Distribution Period (as defined below), in
                each
                case on or in respect of Preferred Securities (including the Series
                6
                preferred securities) would exceed the Distributable Profits of the
                immediately preceding fiscal year;
                or

            

    

     

    
      	
               

            	
              •

            	
              even
                if Distributable Profits are sufficient, if under applicable Spanish
                banking regulations relating to capital adequacy requirements affecting
                financial institutions which fail to meet their required capital
                ratios on
                a parent company only basis or on a consolidated basis, the Bank
                would be
                prevented at such time from making payments on its ordinary shares
                or on
                Preferred Securities issued by the
                Bank.

            

    

     

    ‘‘Preferred
      Securities’’ means (as the case may be) any preferred securities
      (participaciones preferentes) issued under Spanish Law 13/1985, or other
      securities or instruments equivalent to preferred securities issued by the
      Company, or by any other subsidiary of the Bank which are entitled to the
      benefit of a guarantee ranking pari passu with the Bank’s obligations
      under the Guarantee, or any such securities or instruments issued by the Bank
      and ranking pari passu with the Bank’s obligations under the
      Guarantee.

     

    The
      term
“distribution” refers to any distributions paid or to be paid on the Preferred
      Securities.

     

    “Distributable
      Profits” means, for any fiscal year, the reported net profit (calculated in
      compliance with the regulations of the Bank of Spain) of the Bank, determined
      after tax and extraordinary items for such

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    year,
      as
      derived from the non-consolidated audited profit and loss account of the Bank,
      irrespective of whether shareholders’ meeting approval is still pending,
      prepared in accordance with generally applicable accounting standards in Spain
      and Bank of Spain requirements and guidelines, each as in effect at the time
      of
      such preparation. In the event that on any Distribution payment date, the audit
      of the non-consolidated profit and loss account has not been completed, the
      reference to be used to calculate the Distributable Profits will be the balance
      of the unaudited non-consolidated profit and loss account of the Bank as
      reported in the financial statements delivered to the Bank of Spain in respect
      of December 31st of the preceding fiscal year.

     

    If
      Distributions are not paid in full on the exchange Series 6 preferred
      securities, all distributions paid upon the exchange Series 6 preferred
      securities and all other Preferred Securities will be paid pro rata among the
      exchange Series 6 preferred securities and all such other Preferred Securities,
      so that the amount of the distribution payment per security will have the same
      relationship to each other that the nominal or par value per security of the
      exchange Series 6 preferred securities and all other Preferred Securities bear
      to each other.

     

    If
      Distributions are not paid on the exchange Series 6 preferred securities on
      the
      Distribution Payment Date in respect of the relevant Distribution Period as
      a
      consequence of the above limitations on Distributions or are paid partially,
      then the right of the holders of the exchange Series 6 preferred securities
      to
      receive a Distribution or an unpaid part thereof in respect of the relevant
      Distribution Period will be lost and neither the Company nor the Bank will
      have
      any obligation to pay the Distribution accrued or part thereof for such
      Distribution Period or to pay any interest thereon, whether or not Distributions
      on the exchange Series 6 preferred securities are paid for any future
      Distribution Period.

     

    The
      Distributions payable on the exchange Series 6 preferred securities are paid
      at
      a floating rate.  The Distribution payable in respect of any
      Distribution Period (defined as the period from and including one Distribution
      payment date (or, in the case of the first Distribution Period, the issuance
      date) to but excluding the next Distribution payment date) will be computed
      on
      the basis of twelve 30-day months and a 360-day year.

     

    Distributions
      on the exchange Series 6 preferred securities will be payable to the record
      holders thereof as they appear on the register for the exchange Series 6
      preferred securities on record dates, which will be on the 15th calendar day
      preceding the relevant payment dates.  We have been informed by DTC
      that distributions on Global Preferred Securities (as defined below) will be
      paid over to DTC participants in respect of their record holdings on the record
      date. In the event that any date on which Distributions are payable on the
      exchange Series 6 preferred securities is not a day on which banks in the city
      of Madrid (Spain) and The City of New York are open for business and on which
      foreign exchange dealings may be conducted in the city of Madrid (Spain) and
      The
      City of New York (a “business day”), then payment of the Distribution payable on
      such date will be made on the next day which is a business day (and without
      any
      interest or other payment in respect of any such delay).

     

    Except
      as
      hereinabove provided, holders of the Company’s exchange Series 6 preferred
      securities will have no right to participate in the profits of the
      Company.

     

    Optional
      Redemption

     

    The
      exchange Series 6 preferred securities are redeemable, at the option of the
      Company, subject to the prior consent of the Bank of Spain, in whole but not
      in
      part, on or after June 5, 2017, upon not less than 30 nor more than 60 days’
notice prior to the relevant redemption date by mail to each record holder,
      at

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    the
      redemption price of $25.00 per exchange Series 6 preferred security, plus the
      accrued and unpaid Distribution for the then-current Distribution Period to
      the
      date fixed for redemption.

     

    If
      the
      Company gives notice of redemption of the exchange Series 6 preferred
      securities, then by 12:00 Noon, New York City time on the relevant redemption
      date, the Company will:

     

    
      	
               

            	
              •

            	
              irrevocably
                deposit with the paying agent funds sufficient to pay the foregoing
                redemption price, including the amount of accrued and unpaid Distribution
                for the then-current Distribution Period to the date fixed for redemption;
                and

            

    

     

    
      	
               

            	
              •

            	
              give
                the paying agent irrevocable instructions and authority to pay the
                redemption price to the holders of the exchange Series 6 preferred
                securities.

            

    

     

    If
      the
      notice of redemption has been given, and the funds deposited as required, then
      on the date of such deposit:

    
       

      
        	
                 

              	
                •

              	
                distributions
                  on the exchange Series 6 preferred securities called for redemption
                  shall
                  cease;

              

      

       

      
        	
                 

              	
                •

              	
                such
                  exchange Series 6 preferred securities will no longer be considered
                  outstanding; and

              

      

    

          

    
      	
               

            	
              •

            	
              the
                holders will no longer have any rights as holders except the right
                to
                receive the redemption price.

            

    

     

    If
      either
      the notice of redemption has been given and the funds are not deposited as
      required on the date of such deposit or if the Company or the Bank improperly
      withholds or refuses to pay the redemption price of the exchange Series 6
      preferred securities, Distributions will continue to accrue at the rate
      specified from the redemption date to the date of actual payment of the
      redemption price.

     

    In
      order
      to comply with certain Spanish capital adequacy regulations, neither the Company
      nor the Bank nor any of their respective subsidiaries shall at any time purchase
      exchange Series 6 preferred securities, without the prior consent of the Bank
      of
      Spain, and in any event not earlier than March 5, 2017. Notwithstanding the
      foregoing, if Spanish law were to change and such purchases are permitted before
      March 5, 2017, then, subject to applicable law, the Company, the Bank and any
      of
      their respective subsidiaries may at any time and from time to time purchase
      outstanding exchange Series 5 preferred securities by tender, in the open market
      or by private agreement.

     

    Any
      exchange Series 6 preferred securities so purchased by the Company shall be
      immediately cancelled.

     

    Rights
      upon Liquidation

     

    If
      the
      Company is voluntarily or involuntarily liquidated, dissolved or wound-up,
      the
      holders of outstanding exchange Series 6 preferred securities will be entitled
      to receive out of the assets that are available to be distributed to holders,
      and before any assets are distributed to holders of ordinary shares or any
      other
      class of shares of the Company ranking junior to the exchange Series 6 preferred
      securities as to participation in assets, but together with holders of any
      other
      Preferred Securities of the Company ranking equally with the exchange Series
      6
      preferred securities as to participation in assets, the following liquidation
      distribution:

     

    
      
        	
                 

              	
                •

              	
                $25.00
                  per exchange Series 6 preferred security,
                  plus

              

      

       

    

    
      	
               

            	
              •

            	
              an
                amount equal to the accrued and unpaid Distributions for the then-current
                Distribution Period up to the date of
                payment.

            

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    If
      at the
      time that any liquidation distribution is to be paid, proceedings are also
      pending or have been commenced for the voluntary or involuntary liquidation,
      dissolution or winding-up of the Bank or for a reduction in the Bank’s
      shareholders’ equity pursuant to Article 169 of the Spanish Corporations Act
      (Ley de Sociedades Anónimas), then the liquidation distribution to be
      paid to the holders:

    
       

      
        	
                 

              	
                •

              	
                of
                  all Preferred Securities of the
                  Company;

              

      

      
         

        
          	
                   

                	
                  •

                	
                  of
                    all Preferred Securities of other subsidiaries of the Bank;
                    and

                

        

        
           

          
            	
                     

                  	
                    •

                  	
                    of
                      Preferred Securities issued by the
                      Bank,

                  

          

           

        

      

    

    will
      be
      limited to and not exceed the amount that would have been paid as the
      liquidation distribution from the assets of the Bank (after payment in full
      in
      accordance with Spanish law of all creditors of the Bank, including holders
      of
      subordinated debt but excluding holders of any guarantee or any other
      contractual right expressed to rank equally with or junior to the Guarantee),
      had all such Preferred Securities been issued by the Bank, and

     

    
      	
               

            	
              •

            	
              ranked
                junior to all liabilities of the
                Bank;

            

    

     

    
      	
               

            	
              •

            	
              ranked
                pari passu with the most senior Preferred Securities which could
                have been issued by the Bank (if any);
                and

            

    

     

    
      	
               

            	
              •

            	
              ranked
                senior to the Bank’s ordinary
                shares.

            

    

     

    The
      above
      limitation will apply even if the Company has at the time sufficient assets
      to
      pay the liquidation distribution to the holders of all Preferred Securities
      issued by it, including the exchange Series 6 preferred securities.

     

    If
      the
      foregoing liquidation distribution relating to the exchange Series 6 preferred
      securities and other Preferred Securities cannot be made in full due to the
      limitation described above, then all payments will be made pro rata in the
      proportion that the amount available for payment bears to the full amount that
      would have been payable, had there been no such limitation.

     

    Upon
      receipt of payment of the liquidation distribution, holders of exchange Series
      6
      preferred securities will have no right or claim on any of the remaining assets
      of either the Company or the Bank.

     

    Except
      as
      provided in the second paragraph above with respect to any liquidation or
      winding up of the Bank or a reduction in its shareholders equity, the Bank
      will
      not permit, and will not take any action to cause, the liquidation, dissolution
      or winding-up of the Company.

     

     Voting
      Rights

     

    The
      holders of exchange Series 6 preferred securities will not have any voting
      rights unless either the Company or the Bank, under the Guarantee, fails to
      pay
      Distributions in full on the exchange Series 6 preferred securities for four
      consecutive Distribution Periods.  In such event, the holders of
      outstanding exchange Series 6 preferred securities, together with the holders
      of
      any other series of Preferred Securities of the Company then also having the
      right to vote for the election of directors, acting as a single class without
      regard to series, will be entitled to:

     

    
      	
               

            	
              •

            	
              appoint
                two additional members of the board of directors of the
                Company;

            

    

     

    
      	
               

            	
              •

            	
              remove
                any such board member from office;
                and

            

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

       

    

    
      	
               

            	
              •

            	
              appoint
                another person(s) in place of such
                member(s).

            

    

     

    This
      can
      be accomplished by either:

          

    
      	
               

            	
              •

            	
              written
                notice given to the Company by the holders of a majority in liquidation
                preference; or

            

    

     

    
      	
               

            	
              •

            	
              an
                ordinary resolution passed by the holders of a majority in liquidation
                preference of the securities present in person or by proxy at a special
                general meeting of the holders convened for that
                purpose.

            

    

     

    If
      the
      written notice of the holders is not given as provided in the preceding
      paragraph, the board of directors of the Company, or a duly authorized committee
      of the board of directors, is required to convene a special general meeting
      for
      the above purpose, not later than 30 days after this entitlement
      arises.

     

    If
      the
      board of directors of the Company, or its duly authorized committee, fails
      to
      convene this meeting within the required 30-day period, the holders of 10%
      in
      liquidation preference of the outstanding exchange Series 6 preferred securities
      and other Preferred Securities of the Company are entitled to convene the
      meeting. The Company will determine the place where the separate general meeting
      will be held.

     

    Immediately
      following a resolution for the appointment or the removal of additional members
      to the board of directors, the special general meeting of holders shall give
      notice of such to:

     

    
      	
               

            	
              (1)

            	
              the
                board of directors of the Company so that it may, where necessary,
                call a
                general meeting of the shareholders of the Company;
                and

            

    

     

    
      	
               

            	
              (2)

            	
              the
                shareholder of the Company, so that they may hold a general meeting
                of
                shareholders.

            

    

     

    The
      shareholder of the Company has undertaken to vote in favor of the appointment
      or
      removal of the directors so named by the special general meeting of the holders
      and to take all necessary measures in such regard.

     

    Once
      distributions have been paid in full in respect of the exchange Series 6
      preferred securities for four consecutive Distribution Periods and any other
      Preferred Securities of the Company in respect of such distribution periods
      as
      set out in their own terms and conditions, any member of the board of directors
      of the Company that has been appointed in the manner described in the preceding
      paragraphs is required to vacate office.

     

    Under
      the
      Articles of the Company, its board of directors must have a minimum of three
      members and a maximum of eleven members. At the date of the public deed of
      issuance of the exchange Series 6 preferred securities, the board of directors
      of the Company has four directors.

     

    Any
      amendments or abrogation of the rights, preferences and privileges of the
      exchange Series 6 preferred securities will not be effective, unless otherwise
      required by applicable law and except:

     

    
      	
               

            	
              •

            	
              with
                the consent in writing of the holders of at least two-thirds of the
                outstanding exchange Series 6 preferred securities;
                or

            

    

     

    
      	
               

            	
              •

            	
              with
                the sanction of a special resolution passed at a separate general
                meeting
                by the holders of at least two-thirds of the outstanding exchange
                Series 6
                preferred securities.

            

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

       

    

    If
      the
      Company, or the Bank under any guarantee, has paid in full the most recent
      distribution payable on each series of the Company’s Preferred Securities, the
      Company, the holders of its ordinary shares, or its board of directors may,
      without the consent or sanction of the holders of its Preferred
      Securities:

     

    
      	
               

            	
              •

            	
              take
                any action required to issue additional Preferred Securities or authorize,
                create and issue one or more other series of Preferred Securities
                of the
                Company ranking equally with the exchange Series 6 preferred securities,
                as to the participation in the profits and assets of the Company,
                without
                limit as to the amount; or

            

    

     

    
      	
               

            	
              •

            	
              take
                any action required to authorize, create and issue one or more other
                classes or series of shares of the Company ranking junior to the
                Preferred
                Securities, as to the participation in the profits or assets of the
                Company.

            

    

     

    However,
      if the Company, or the Bank under any guarantee, has not paid in full the most
      recent distribution payable on each series of Preferred Securities, then the
      prior consent of the holders of at least two thirds in liquidation preference
      of
      the outstanding Preferred Securities of the Company will be required to carry
      out such actions.  Such consent may be granted in writing by the
      holders, or with the sanction of a special resolution passed at a separate
      general meeting of holders.

     

    The
      vote
      of the holders of exchange Series 6 preferred securities is not required to
      redeem and cancel the exchange Series 6 preferred securities. Spanish law does
      not impose any restrictions on the ability of holders of Preferred Securities
      who are not residents or citizens of Spain to hold or vote such Preferred
      Securities.

     

    If
      the
      shareholders of the Company propose a resolution providing for the liquidation,
      dissolution or winding-up of the Company, the holders of all the outstanding
      Preferred Securities of the Company:

     

    
      	
               

            	
              •

            	
              will
                be entitled to receive notice of and to attend the general meeting
                of
                shareholders called to adopt this resolution;
                and

            

    

     

    
      	
               

            	
              •

            	
              will
                be entitled to hold a separate and previous general meeting of holders
                and
                vote together as a single class without regard to series on such
                resolution, but not on any other
                resolution.

            

    

     

    The
      above
      resolution will not be effective unless approved by the holders of a majority
      in
      liquidation preference of all outstanding Preferred Securities of the
      Company.

     

    The
      result
      of the above mentioned vote shall be disclosed at the general shareholders
      meeting as well as the fact that the shareholder of the Company has undertaken
      to vote in the correspondent general shareholders meeting in conformity with
      the
      vote of the separate general meeting of holders.

     

    Notice,
      attendance, or approval is not required if the liquidation, dissolution and
      winding-up of the Company is initiated due to:

     

    
      	
               

            	
              •

            	
              the
                liquidation, dissolution or, winding up of the Bank;
                or

            

    

     

    
      	
               

            	
              •

            	
              a
                reduction in shareholders equity of the Bank under Article 169 of
                the
                Corporations Law of Spain.

            

    

     

    The
      Company shall cause a notice of any meeting at which the holders of exchange
      Series 6 preferred securities are entitled to vote, to be mailed to each record
      holder of exchange Series 6 preferred securities. This notice will include
      a
      statement regarding:

          

    
      	
               

            	
              •

            	
              the
                date, time and place of the
                meeting;

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    
      	
               

            	
              •

            	
              a
                description of any resolution to be proposed for adoption at the
                meeting
                at which the holders are entitled to vote;
                and

            

    

     

    
      	
               

            	
              •

            	
              instructions
                for the delivery of proxies.

            

    

     

    Special
      General Meetings

     

    A
      Special
      General Meeting (the “Special General Meeting”), which will be constituted by
      all holders of preferred securities of the Company, will be called by the board
      of directors of the Company.

     

    The
      quorum
      shall be the holders of preferred securities holding one-quarter of the
      liquidation preference of all preferred securities of the Company issued and
      outstanding.  If the attendance of one-quarter of the holders of
      preferred securities issued and outstanding cannot be obtained, such Special
      General Meeting may be re-convened one day after the first meeting and such
      meeting shall be validly convened irrespective of the number of preferred
      securities present or represented.

     

    In
      a
      Special General Meeting all resolutions shall be made by the majority set out
      in
“Voting Rights” above, and will be binding on all of the holders of such
      preferred securities, including those not in attendance and
      dissenters.

     

    All
      holders of preferred securities who are able to show that they held their
      securities five days prior to the date of the Special General Meeting shall
      be
      entitled to attend with the right to speak and vote.  Holders of
      preferred securities shall prove that they held preferred securities in the
      manner and subject to the requirements set out in the announcement published
      when convening such Special General Meeting. Holders of the preferred securities
      may delegate their representation to another person, by an individual signed
      letter for each meeting.

     

    The
      convening of a Special General Meeting will be carried out in accordance with
      the rules governing the calling and holding of meetings of holders of each
      series of preferred securities.

     

    A
      Special
      General Meeting of holders of the preferred securities will be convened (i)
      so
      long as any restricted Series 6 preferred security is listed on the London
      Stock
      Exchange and the London Stock Exchange so requires by publication in an English
      language newspaper in London (which is expected to be the Financial Times)
      or,
      if such publication is not practicable but is required by the rules of the
      London Stock Exchange, in a leading daily newspaper in English and having
      general circulation in Europe, (ii) in accordance with the requirements of
      any
      security exchange on which the exchange Series 6 preferred securities are listed
      and (iii) by mail to DTC (in each case not less that 30 nor more than 60 days
      prior to the date of the act or event to which such notice, request or
      communication relates).

     

    Registrar,
      Transfer Agent and Paying Agent

     

    The
      Bank
      of New York, located at 101 Barclay Street, New York, New York 10286 at the
      time
      of the issuance of the public deed, will act as registrar, transfer agent and
      paying agent for the exchange Series 6 preferred securities, which together
      with
      its successors and assigns, we will refer to as “ the Paying
      Agent.”

     

    Ranking
      of the Series 6 Preferred Securities

     

    The
      exchange Series 6 preferred securities will rank (a) junior to all liabilities
      of the Company including subordinated liabilities, (b) pari passu with
      each other and with any other series of Preferred Securities of the Company
      and
      (c) senior to the Company’s ordinary shares.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    The
      holders of exchange Series 6 preferred securities by their subscription or
      acquisition waive any different priority that Spanish law or regulations could
      grant at any time, and particularly those arising from articles 92 and 158
      of
      Law 22/2003 (Ley Concursal), if any.

     

    Transfer

     

    The
      transfer of a Series 6 Preferred Security, and the benefit of the Guarantee,
      may
      be registered by surrendering the certificate evidencing the Series 6 Preferred
      Security to be transferred together with the form of transfer endorsed on it
      duly completed and executed, at the office of the registrar.

     

    The
      Company will register transfers of Series 6 Preferred Securities without charge
      but with payment (or the giving of such indemnity for the benefit of the Company
      as the registrar may require) for any tax or other governmental charges, which
      may be imposed in relation to the transfer.

     

    The
      Company will not register the transfer of any Series 6 Preferred Securities
      after such securities have been called for redemption.

     

    Replacement
      of Lost Certificates

     

    If
      any
      certificate for exchange Series 6 preferred securities is mutilated or alleged
      to have been lost, stolen or destroyed, a new certificate representing the
      same
      security may be issued to the record holder upon request but subject to either
      delivery of the old certificate or (if alleged to have been lost, stolen or
      destroyed) compliance with such preconditions of indemnity and payment of the
      Company’s and Paying Agent’s out-of-pocket expenses related to such request as
      the board of directors of the Company may then determine.

     

    Miscellaneous

     

    Exchange
      Series 6 preferred securities are not subject to any mandatory redemption or
      sinking fund provisions.  Holders of exchange Series 5 preferred
      securities have no preemptive rights.

     

    -11-

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