FORM OF INDEMNIFICATION AGT

EXHIBIT 10.1



INDEMNIFICATION AGREEMENT





This Agreement is made as of __________, between Aastrom Biosciences, Inc., a Michigan corporation (the "Company"), and those certain officers and directors of the Company designated on the signature page of this Agreement as Indemnitees (hereinafter referred to individually as an "Indemnitee" and collectively as the "Indemnitees").





A. It is essential to the Company to attract and retain as directors and officers the most capable persons available.



B. Both the Company and Indemnitees recognize the increased risk of litigation and other claims being asserted against directors and officers of companies in today's environment.



C. While basic protection against undue risk of personal liability of directors and officers may be provided through insurance coverage, it has become increasingly difficult to obtain such insurance on terms providing reasonable protection at reasonable cost.



D. The Restated Articles of Incorporation and the Bylaws of the Company permit the Company to indemnify and advance expenses to its directors and officers to the full extent permitted by law; and Indemnitees have been serving and continue to serve as directors and officers of the Company in part in reliance on such Restated Articles of Incorporation and Bylaws.



E. In recognition of Indemnitees' need for substantial protection against personal liability, the increasing difficulty in obtaining satisfactory insurance coverage, and Indemnitees' reliance on the aforesaid Restated Articles of Incorporation and Bylaws, and in part to provide Indemnitees with specific contractual assurance that the protection promised by the Restated Articles of Incorporation and Bylaws will be available to Indemnitees (regardless of, among other things, any amendment to or revocation of such Restated Articles of Incorporation or Bylaws or any change in the composition of the Company's Board of Directors), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitees to the fullest extent permitted by law and as set forth in this Agreement, and, to the extent insurance coverage is maintained, for the continued coverage of Indemnitees under the Company's directors' and officers', liability insurance policies.



NOW, THEREFORE, in consideration of Indemnitees' service to the Company, or Indemnitees' service to another enterprise at the request of the Company, the parties hereto agree as follows:



1. Certain Definitions. As used herein, the following terms shall

------------------- refer to the following events or have the following meanings, as the case may be:



a. Change in Control is an event which shall be deemed to have

----------------- occurred if any one or more of the following events occur: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) hereafter becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing twenty percent or more of the total voting power represented by the Company's then outstanding Voting Securities, excluding, however, a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company; or (ii) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds of the directors then still in office, cease for any reason to constitute a majority of the Board of Directors; or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all the Company's assets.



b. Claim means (i) any threatened, pending or completed action,

----- suit or proceeding, whether civil, criminal, administrative or investigative, or (ii) any inquiry or investigation, whether instituted by the Company or any other party, that any of the Indemnitees in good faith believes might lead to the institution of any such action, suit or proceeding.



c. Expenses means, without limitation, attorneys' fees and all

-------- other costs, expenses and obligations paid or incurred in connection with (i) investigating, defending, being a witness in or participating in (including on appeal), any Claim relating to any Indemnifiable Event, or (ii) preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event.

d. Indemnifiable Event means any event or occurrence related to

------------------- the fact that any of the Indemnitees is or was a director, officer, employee, agent, trustee or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by any of the Indemnitees in any such capacity for which under applicable law a California corporation may indemnify Indemnitees, as such law exists from time to time.



e. Indemnitees means the officers and directors of the Company

----------- as of the date of this Agreement and any future duly elected officers and directors of the Company designated on and executing the signature page of this Agreement as Indemnitees. "Indemnitee" means any one of the Indemnitees.



f. Independent Legal Counsel means an attorney or firm of

------------------------- attorneys, selected in accordance with the provisions of Section 3, who shall not have otherwise performed services within the last three years for the Company or the Indemnitee seeking indemnification (other than services with respect to matters concerning the rights of any of the Indemnitees under this Agreement).



g. Reviewing Party means (i) Independent Legal Counsel or (ii)

--------------- any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board who is not a party to the particular Claim for which Indemnitee is seeking indemnification.



h. Voting Securities means any securities of the Company

----------------- which entitle their holders to vote generally in the election of directors.



2. Basic Indem ...