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Sample Business Contracts

1996 Employee Stock Purchase Plan - Aastrom Biosciences Inc.

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                           AASTROM BIOSCIENCES, INC.

                       1996 EMPLOYEE STOCK PURCHASE PLAN


     1.   ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
          --------------------------------------- 

          1.1    ESTABLISHMENT. The Biosciences, Inc. 1996 Employee Stock
Purchase Plan (the "Plan") is hereby established effective as of the effective
date of the initial registration by the Company of its Stock under Section 12 of
the Exchange Act (the "Effective Date").

          1.2    PURPOSE.  The purpose of the Plan to provide Eligible Employees
of the Participating Company Group with an opportunity to acquire a proprietary
interest in the Company through the purchase of Stock. The Company intends that
the Plan shall qualify as an "employee stock purchase plan" under Section 423 of
the Code (including any amendments or replacements of such section), and the
Plan shall be so construed.

          1.3    TERM OF PLAN.  The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.

     2.   DEFINITIONS AND CONSTRUCTION.
          ---------------------------- 

          2.1    DEFINITIONS.  Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:

                 (a) "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).

                 (b) "CODE" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

                 (c) "COMMITTEE" means a committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board. Unless the powers of the Committee have been specifically limited, the
Committee shall have all of the powers of the Board granted herein, including,
without limitation, the power to amend or terminate the Plan at any time,
subject to the terms of the Plan and any applicable limitations imposed by law.

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                 (d) "COMPANY" means Biosciences, Inc., a Michigan corporation,
or any successor corporation thereto.

                 (e) "COMPENSATION" means, with respect to an Offering Period
under the Plan, all amounts paid in cash in the forms of base salary,
commissions, overtime, bonuses, annual awards, other incentive payments, shift
premiums, and all other compensation paid in cash during such Offering Period
before deduction for any contributions to any plan maintained by a Participating
Company and described in Section 401(k) or Section 125 of the Code. Compensation
shall not include reimbursements of expenses, allowances, long-term disability,
workers' compensation or any amount deemed received without the actual transfer
of cash or any amounts directly or indirectly paid pursuant to the Plan or any
other stock purchase or stock option plan.

                 (f) "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.

                 (g) "EMPLOYEE" means any person treated as an employee
(including an officer or a director who is also treated as an employee) in the
records of a Participating Company and for purposes of Section 423 of the Code;
provided, however, that neither service as a director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.

                 (h) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                 (i) "FAIR MARKET VALUE" means, as of any date, if there is then
a public market for the Stock, the closing price of a share of Stock (or the
mean of the closing bid and asked prices of a share of Stock if the Stock is so
reported instead) as reported on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System, the NASDAQ National Market System or such
other national or regional securities exchange or market system constituting the
primary market for the Stock. If the relevant date does not fall on a day on
which the Stock is trading on NASDAQ, the NASDAQ National Market System or other
national or regional securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date, or such other appropriate day as shall
be determined by the Board, in its sole discretion. If there is then no public
market for the Stock, the Fair Market Value on any relevant date shall be as
determined by the Board without regard to any restriction other than a
restriction which, by its terms, will never lapse. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date shall
be deemed to be the public offering price set forth in the final prospectus
filed with the Securities and Exchange Commission in connection with the initial
public offering of the Stock.

                                       2
<PAGE>
 
                 (j) "OFFERING" means an offering of Stock as provided in
Section 6.

                 (k) "OFFERING DATE" means, for any Offering Period, the first
day of such Offering Period.

                 (l) "OFFERING PERIOD" means a period determined in accordance
with Section 6.1.

                 (m) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

                 (n) "PARTICIPANT" means an Eligible Employee participating in
the Plan.

                 (o) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation which the Board determines should be
included in the Plan. The Board shall have the sole and absolute discretion to
determine from time to time what Parent Corporations or Subsidiary Corporations
shall be Participating Companies.

                 (p) "PARTICIPATING COMPANY GROUP" means, at any point in time,
the Company and all other corporations collectively which are then Participating
Companies.

                 (q) "PURCHASE DATE" means, for any Purchase Period, the last
day of such Purchase Period.

                 (r) "PURCHASE PERIOD" means a period determined in accordance
with Section 6.2.

                 (s) "PURCHASE PRICE" means the price at which a share of Stock
may be purchased pursuant to the Plan, as determined in accordance with Section
9.

                 (t) "PURCHASE RIGHT" means an option pursuant to the Plan to
purchase such shares of Stock as provided in Section 8 which may or may not be
exercised at the end of an Offering Period. Such option arises from the right of
a Participant to withdraw such Participant's accumulated payroll deductions (if
any) and terminate participation in the Plan or any Offering therein at any time
during a Purchase Period.

                 (u) "STOCK" means the common stock, no par value, of the
Company, as adjusted from time to time in accordance with Section 4.2.

                                       3
<PAGE>
 
                 (v) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

         2.2  CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
use of the term "or" shall include the conjunctive as well as the disjunctive.

     3.  ADMINISTRATION.  The Plan shall be administered by the Board, including
         --------------                                                         
any duly appointed Committee of the Board.  All questions of interpretation of
the Plan or of any Purchase Right shall be determined by the Board and shall be
final and binding upon all persons having an interest in the Plan or such
Purchase Right.  Subject to the provisions of the Plan, the Board shall
determine all of the relevant terms and conditions of Purchase Rights granted
pursuant to the Plan; provided, however, that all Participants granted Purchase
Rights pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code.  All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.

     4.  SHARES SUBJECT TO PLAN.
         ---------------------- 

         4.1  MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be two hundred fifty thousand (250,000) (on a
post-split basis following the two-for-three reverse stock split of the Stock
approved by the Board on April 30, 1996) and shall consist of authorized but
unissued or reacquired shares of the Stock, or any combination thereof. If an
outstanding Purchase Right for any reason expires or is terminated or canceled,
the shares of Stock allocable to the unexercised portion of such Purchase Right
shall again be available for issuance under the Plan.

         4.2  ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company, or
in the event of any merger (including a merger effected for the purpose of
changing the Company's domicile), sale of assets or other reorganization in
which the Company is a party, appropriate adjustments shall be made in the
number and class of shares subject to the Plan, to the Per Offering Share Limit
set forth in Section 8.1 and to each Purchase Right and in the Purchase Price.

     5.  ELIGIBILITY.
         ----------- 

         5.1  EMPLOYEES ELIGIBLE TO PARTICIPATE. Any Employee of a Participating
Company is eligible to participate in the Plan except the following:

                 (a) Employees who are customarily employed by the Participating
Company Group for twenty (20) hours or less per week;

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<PAGE>
 
                 (b) Employees who are customarily employed by the Participating
Company Group for not more than five (5) months in any calendar year; and

                 (c) Employees who own or hold options to purchase or who, as a
result of participation in the Plan, would own or hold options to purchase,
stock of the Company or of any Parent Corporation or Subsidiary Corporation
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of such corporation within the meaning of Section
423(b)(3) of the Code.

         5.2  LEASED EMPLOYEES EXCLUDED. Notwithstanding anything herein to the
contrary, any individual performing services for a Participating Company solely
through a leasing agency or employment agency shall not be deemed an "Employee"
of such Participating Company.

     6.   OFFERINGS.
          --------- 

          6.1 OFFERING PERIODS. Except as otherwise set forth below, the Plan
shall be implemented by sequential Offerings of approximately twenty-four (24)
months duration (an "OFFERING PERIOD"); provided, however that the first
Offering Period shall commence on the Effective Date and end on August 31, 1998
(the "INITIAL OFFERING PERIOD"). Subsequent Offerings shall commence on the
first days of March and September of each year and end on the last days of the
second February and August, respectively, occurring thereafter. Notwithstanding
the foregoing, the Board may establish a different term for one or more
Offerings or different commencing or ending dates for such Offerings; provided,
however, that no Offering may exceed a term of twenty-seven (27) months. An
Employee who becomes an Eligible Employee after an Offering Period has commenced
shall not be eligible to participate in such Offering but may participate in any
subsequent Offering provided such Employee is still an Eligible Employee as of
the commencement of any such subsequent Offering. Eligible Employees may not
participate in more than one Offering at a time. In the event the first or last
day of an Offering Period is not a business day, the Company shall specify the
business day that will be deemed the first or last day, as the case may be, of
the Offering Period.

          6.2 PURCHASE PERIODS. Each Offering Period shall consist of four (4)
consecutive purchase periods of approximately six (6) months duration
(individually, a "PURCHASE PERIOD"). The Purchase Period commencing on the
Offering Date of the Initial Offering Period shall end on February 28, 1997. A
Purchase Period commencing on the first day of March shall end on the last day
of the next following August. A Purchase Period commencing on the first day of
September shall end on the last day of the next following February.
Notwithstanding the foregoing, the Board may establish a different term for one
or more Purchase Periods or different commencing or ending dates for such
Purchase

                                       5
<PAGE>
 
Periods.  In the event the first or last day of a Purchase Period is not a
business day, the Company shall specify the business day that will be deemed the
first or last day, as the case may be, of the Purchase Period.

          6.3  GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL. Notwithstanding any
other provision of the Plan to the contrary, any Purchase Right granted pursuant
to the Plan shall be subject to (a) obtaining all necessary governmental
approvals or qualifications of the sale or issuance of the Purchase Rights or
the shares of Stock and (b) obtaining stockholder approval of the Plan.
Notwithstanding the foregoing, stockholder approval shall not be necessary in
order to grant any Purchase Right granted in the Plan's Initial Offering Period;
provided, however, that the exercise of any such Purchase Right shall be subject
to obtaining stockholder approval of the Plan.

     7.   PARTICIPATION IN THE PLAN.
          ------------------------- 

          7.1 INITIAL PARTICIPATION. An Eligible Employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements of Section 5 and delivering to the Company's payroll office or
other office designated by the Company not later than the close of business for
such office on the last business day before such Offering Date (the
"SUBSCRIPTION DATE") a subscription agreement indicating the Employee's election
to participate in the Plan and authorizing payroll deductions. An Eligible
Employee who does not deliver a subscription agreement to the Company's payroll
or other designated office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such Employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.

          7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (a) ceases to be an Eligible Employee, (b)
withdraws from the Plan pursuant to Section 14.2 or (c) terminates employment as
provided in Section 15. If a Participant automatically may participate in a
subsequent Offering Period pursuant to this Section 7.2, then the Participant is
not required to file any additional subscription agreement for such subsequent
Offering Period in order to continue participation in the Plan. However, a
Participant may file a subscription agreement with respect to a subsequent
Offering Period if the Participant desires to change any of the Participant's
elections contained in the Participant's then effective subscription agreement.

                                       6
<PAGE>
 
     8.   RIGHT TO PURCHASE SHARES.
          ------------------------ 

          8.1 PURCHASE RIGHT. Except as set forth below, during an Offering
Period each Participant in such Offering Period shall have a Purchase Right
consisting of the right to purchase that number of whole shares of Stock arrived
at by dividing Fifty Thousand Dollars ($50,000) by the Fair Market Value of a
share of Stock on the Offering Date of such Offering Period; provided, however,
that such number shall not exceed five thousand (5,000) shares (the "Per
Offering Share Limit"). Shares of Stock may only be purchased through a
Participant's payroll deductions pursuant to Section 10.

          8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding the
foregoing, if the Board shall establish an Offering Period of less than twenty-
three and one-half (23 1/2) months or more than twenty-four and one-half (24
1/2) months in duration, (a) the dollar amount in Section 8.1 shall be
determined by multiplying $2,083.33 by the number of months in the Offering
Period and rounding to the nearest whole dollar, and (b) the Per Offering Share
Limit shall be determined by multiplying 208.33 shares by the number of months
in the Offering Period and rounding to the nearest whole share. For purposes of
the preceding sentence, fractional months shall be rounded to the nearest whole
month.

     9.  PURCHASE PRICE.  The Purchase Price at which each share of Stock may be
         --------------                                                         
acquired in a given Offering Period pursuant to the exercise of all or any
portion of a Purchase Right granted under the Plan shall be set by the Board;
provided, however, that the Purchase Price shall not be less than eighty-five
percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on
the Offering Date of the Offering Period, or (b) the Fair Market Value of a
share of Stock on the Purchase Date of the Offering Period.  Unless otherwise
provided by the Board prior to the commencement of an Offering Period, the
Purchase Price for that Offering Period shall be eighty-five percent (85%) of
the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date
of the Offering Period, or (b) the Fair Market Value of a share of Stock on the
Purchase Date of the Offering Period.

     10.  ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.  Shares of
          --------------------------------------------------------            
Stock which are acquired pursuant to the exercise of all or any portion of a
Purchase Right for an Offering Period may be paid for only by means of payroll
deductions from the Participant's Compensation accumulated during the Offering
Period.  Except as set forth below, the amount of Compensation to be deducted
from a Participant's Compensation during each pay period shall be determined by
the Participant's subscription agreement.

          10.1 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
in the Plan.

                                       7
<PAGE>
 
          10.2 LIMITATIONS ON PAYROLL DEDUCTIONS. The amount of payroll
deductions with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll deductions effective as of a future
Offering Date, as determined by the Board. Amounts deducted from Compensation
shall be reduced by any amounts contributed by the Participant and applied to
the purchase of Company stock pursuant to any other employee stock purchase plan
qualifying under Section 423 of the Code.

          10.3 ELECTION TO DECREASE OR STOP PAYROLL DEDUCTIONS. During an
Offering Period, a Participant may elect to decrease the amount deducted or stop
deductions from his or her Compensation by filing an amended subscription
agreement with the Company on or before the "Change Notice Date." The "CHANGE
NOTICE DATE" shall initially be the seventh (7th) day prior to the end of the
first pay period for which such election is to be effective; however, the
Company may change such Change Notice Date from time to time. A Participant may
not elect to increase the amount deducted from the Participant's Compensation
during an Offering Period.

          10.4 PARTICIPANT ACCOUNTS. Individual Plan accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.

          10.5 NO INTEREST PAID. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.

          10.6 COMPANY ESTABLISHED PROCEDURES. The Company may, from time to
time, establish or change (a) a minimum required payroll deduction amount for
participation in an Offering, (b) limitations on the frequency or number of
changes in the rate of payroll deduction during an Offering, (c) an exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars, (d)
payroll deduction in excess of or less than the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of subscription agreements, (e) the date(s) and manner by which the
Fair Market Value of a share of Stock is determined for purposes of
administration of the Plan, or (f) such other limitations or procedures as
deemed advisable by the Company in the Company's sole discretion which are
consistent with the Plan and in accordance with the requirements of Section 423
of the Code.

     11. PURCHASE OF SHARES.
         ------------------ 

          11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Offering or

                                       8
<PAGE>
 
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole shares of Stock arrived at by
dividing the total amount of the Participant's accumulated payroll deductions
for the Purchase Period by the Purchase Price; provided, however, in no event
shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant's Purchase Right.
No shares of Stock shall be purchased on a Purchase Date on behalf of a
Participant whose participation in the Offering or the Plan has terminated on or
before such Purchase Date.

          11.2 RETURN OF CASH BALANCE. Any cash balance remaining in the
Participant's Plan account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole share of Stock, the Company may establish
procedures whereby such cash is maintained in the Participant's Plan account and
applied toward the purchase of shares of Stock in the subsequent Purchase Period
or Offering Period.

          11.3 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant disposes of some or
all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the foreign, federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.

          11.4 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which such Purchase Right relates shall expire immediately upon the end of such
Offering Period.

     12.  MARKET STAND-OFF PERIOD.  No Participant shall, for a period of 180
          -----------------------                                            
days following the Purchase Date upon which a share of Stock is acquired,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose (other than to donees who agree to be similarly bound) of such share
of Stock.  The restriction on transfer of this Section 12 shall terminate
immediately upon a Transfer of Control, as defined in Section 16.

     13.  LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.
          ---------------------------------------------------------- 

          13.1 FAIR MARKET VALUE LIMITATION. Notwithstanding any other provision
of the Plan, no Participant shall be entitled to purchase shares of Stock

                                       9
<PAGE>
 
under the Plan (or any other employee stock purchase plan which is intended to
meet the requirements of Section 423 of the Code sponsored by the Company or a
Parent Corporation or Subsidiary Corporation at a rate which exceeds $25,000 in
Fair Market Value, which Fair Market Value is determined for shares purchased
during a given Offering Period as of the Offering Date for such Offering Period
(or such other limit as may be imposed by the Code), for each calendar year in
which the Participant participates in the Plan (or any other employee stock
purchase plan described in this sentence).

          13.2 PRO RATA ALLOCATION. In the event the number of shares of Stock
which might be purchased by all Participants in the Plan exceeds the number of
shares of Stock available in the Plan, the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.

          13.3 RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall have no
rights as a stockholder by virtue of the Participant's participation in the Plan
until the date of the issuance of a stock certificate for the shares of Stock
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate is issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Participating Company Group or interfere in any way with any right
of the Participating Company Group to terminate the Participant's employment at
any time.

     14.  WITHDRAWAL.
          ---------- 

          14.1 WITHDRAWAL FROM AN OFFERING. A Participant may withdraw from an
Offering by signing and delivering to the Company's payroll or other designated
office a written notice of withdrawal on a form provided by the Company for such
purpose. Such withdrawal may be elected at any time prior to the end of an
Offering Period; provided, however, if a Participant withdraws after the
Purchase Date for a Purchase Period of an Offering, the withdrawal shall not
affect shares of Stock acquired by the Participant in such Purchase Period.
Unless otherwise indicated, withdrawal from an Offering shall not result in a
withdrawal from the Plan or any succeeding Offering therein. By withdrawing from
an Offering effective as of the close of a given Purchase Date, a Participant
may have shares of Stock purchased on such Purchase Date and immediately
commence participation in the new Offering commencing immediately after such
Purchase Date. A Participant is prohibited from again participating in an
Offering at any time following withdrawal from such Offering. The Company may
impose, from time to time, a requirement that the notice of withdrawal be on
file with the Company's payroll office or other designated office for a
reasonable period prior to the effectiveness of the Participant's withdrawal
from an Offering.

                                       10
<PAGE>
 
          14.2 WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the
Plan by signing and delivering to the Company's payroll office or other
designated office a written notice of withdrawal on a form provided by the
Company for such purpose. Withdrawals made after a Purchase Date shall not
affect shares of Stock acquired by the Participant on such Purchase Date. In the
event a Participant voluntarily elects to withdraw from the Plan, the
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by again
satisfying the requirements of Sections 5 and 7.1. The Company may impose, from
time to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office or other designated office for a reasonable period
prior to the effectiveness of the Participant's withdrawal from the Plan.

          14.3 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's withdrawal
from an Offering or the Plan pursuant to Sections 14.1 or 14.2, respectively,
the Participant's accumulated payroll deductions which have not been applied
toward the purchase of shares of Stock shall be returned as soon as practicable
after the withdrawal, without the payment of any interest, to the Participant,
and the Participant's interest in the Offering or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.

          14.4 AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the Fair Market Value
of a share of Stock on a Purchase Date of an Offering (other than the final
Purchase Date of such Offering) is less than the Fair Market Value of a share of
Stock on the Offering Date for such Offering, then every Participant shall
automatically (a) be withdrawn from such Offering at the close of such Purchase
Date and after the acquisition of shares of Stock for such Purchase Period and
(b) be enrolled in the Offering commencing on the first business day subsequent
to such Purchase Period. A Participant may elect not to be automatically
withdrawn from an Offering Period pursuant to this Section 14.4 by delivering to
the Company not later than the close of business on the last day before the
Purchase Date a written notice indicating such election.


                                       11
<PAGE>
 
     15.  TERMINATION OF EMPLOYMENT OR ELIGIBILITY.  Termination of a
          ----------------------------------------                   
Participant's employment with a Participating Company for any reason, including
retirement, disability or death or the failure of a Participant to remain an
Eligible Employee, shall terminate the Participant's participation in the Plan
immediately.  In such event, the payroll deductions credited to the
Participant's Plan account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
rights under the Plan shall terminate.  Interest shall not be paid on sums
returned to a Participant pursuant to this Section 15.  A Participant whose
participation has been so terminated may again become eligible to participate in
the Plan by again satisfying the requirements of Sections 5 and 7.1.

     16.   TRANSFER OF CONTROL.
           ------------------- 

          16.1   DEFINITIONS.

                 (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company a party; (iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or (iv) a liquidation or dissolution of the
Company.
                 (b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

          16.2 EFFECT OF TRANSFER OF CONTROL ON PURCHASE RIGHTS. In the event of
a Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING

                                       12
<PAGE>
 
CORPORATION"), may assume the Company's rights and obligations under the Plan or
substitute substantially equivalent Purchase Rights for stock of the Acquiring
Corporation.  If the Acquiring Corporation elects not to assume or substitute
for the outstanding Purchase Rights, the Board may, in its sole discretion and
notwithstanding any other provision herein to the contrary, adjust the Purchase
Date of the then current Purchase Period to a date on or before the date of the
Transfer of Control, but shall not adjust the number of shares of Stock subject
to any Purchase Right.  All Purchase Rights which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer of
Control nor exercised as of the date of the Transfer of Control shall terminate
and cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Purchase Rights immediately prior to an Ownership Change
Event described in Section 16.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of section 1504(a) of the Code
without regard to the provisions of section 1504(b) of the Code, the outstanding
Purchase Rights shall not terminate unless the Board otherwise provides in its
sole discretion.

     17.  NONTRANSFERABILITY OF PURCHASE RIGHTS.  A Purchase Right may not be
          -------------------------------------                              
transferred in any manner otherwise than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant.  The Company, in its absolute discretion, may impose
such restrictions on the transferability of the shares purchasable upon the
exercise of a Purchase Right as it deems appropriate and any such restriction
shall be set forth in the respective subscription agreement and may be referred
to on the certificates evidencing such shares.

     18.  REPORTS.  Each Participant who exercised all or part of his or her
          -------                                                           
Purchase Right for a Purchase Period shall receive, as soon as practicable after
the Purchase Date of such Purchase Period, a report of such Participant's Plan
account setting forth the total payroll deductions accumulated, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the remaining cash balance to be refunded or retained in the
Participant's Plan account pursuant to Section 11.2, if any.  Each Participant
shall be provided information concerning the Company equivalent to that
information generally made available to the Company's common stockholders.

     19.  RESTRICTION ON ISSUANCE OF SHARES.  The issuance of shares under the
          ---------------------------------                                   
Plan shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities.  A Purchase Right may not
be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable foreign, federal or state securities laws or other
law or regulations.  In addition, no Purchase Right may be exercised unless (a)
a

                                       13
<PAGE>
 
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained.  As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.

     20.  LEGENDS.  The Company may at any time place legends or other
          -------                                                     
identifying symbols referencing any applicable foreign, federal or state
securities law restrictions or any provision convenient in the administration of
the Plan on some or all of the certificates representing shares of Stock issued
under the Plan.  The Participant shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in order to
carry out the provisions of this Section.  Unless otherwise specified by the
Company, legends placed on such certificates may include but shall not be
limited to the following:

          "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.  THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE ______________, 19__.  THE REGISTERED
HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S
NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."

          "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN, PURSUANT TO WHICH THE SHARES MAY NOT BE SOLD,
TRANSFERRED, OR DISPOSED OF (OTHER THAN TO DONEES WHO AGREE TO BE SIMILARLY
BOUND) UNTIL ___________, 19__."

     21.  NOTIFICATION OF SALE OF SHARES.  The Company may require the
          ------------------------------                              
Participant to give the Company prompt notice of any disposition of shares

                                       14
<PAGE>
 
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right.  The Company may require that until such time as a Participant
disposes of shares acquired upon exercise of a Purchase Right, the Participant
shall hold all such shares in the Participant's name (and not in the name of any
nominee) until the lapse of the time periods with respect to such Purchase Right
referred to in the preceding sentence.  The Company may direct that the
certificates evidencing shares acquired by exercise of a Purchase Right refer to
such requirement to give prompt notice of disposition.

     22.  AMENDMENT OR TERMINATION OF THE PLAN.  The Board may at any time amend
          ------------------------------------                                  
or terminate the Plan, except that (a) such termination shall not affect
Purchase Rights previously granted under the Plan, except as permitted under the
Plan, and (b) no amendment may adversely affect a Purchase Right previously
granted under the Plan (except to the extent permitted by the Plan or as may be
necessary to qualify the Plan as an employee stock purchase plan pursuant to
Section 423 of the Code or to obtain qualification or registration of the shares
of Stock under applicable foreign, federal or state securities laws).  In
addition, an amendment to the Plan must be approved by the stockholders of the
Company within twelve (12) months of the adoption of such amendment if such
amendment would authorize the sale of more shares than are authorized for
issuance under the Plan or would change the definition of the corporations that
may be designated by the Board as Participating Companies.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing AASTROM Biosciences, Inc. 1996 Employee Stock Purchase Plan was
duly adopted by the Board of Directors of the Company on April 30, 1996.


                                    /s/ Todd E. Simpson
                                    -------------------------- 
                                    Todd E. Simpson, Secretary

                                       15
<PAGE>
 
                           AASTROM BIOSCIENCES, INC.
                       1996 EMPLOYEE STOCK PURCHASE PLAN
                             SUBSCRIPTION AGREEMENT



[_]  Original Application


[_]  Change in Percentage of Payroll Deductions

     I hereby elect to participate in the 1996 Employee Stock Purchase Plan (the
"Plan") of AASTROM Biosciences, Inc. (the "COMPANY") and subscribe to purchase
shares of the Company's common stock as determined in accordance with the terms
of the Plan.

     I hereby authorize payroll deductions in the amount of ______________
percent (in 1% increments not to exceed 10%) of my "COMPENSATION" (as defined in
the Plan) from each paycheck throughout the "OFFERING PERIOD" (as defined in the
Plan) in accordance with the terms of the Plan.  I understand that these payroll
deductions will be accumulated for the purchase of shares of common stock of the
Company at the applicable purchase price determined in accordance with the Plan.
I further understand that, except as otherwise set forth in the Plan, shares
will be purchased for me automatically on the last day of each Purchase Period
unless I withdraw from the Plan or from the Offering by giving written notice to
the Company or unless I terminate employment.

     I further understand that I will automatically participate in each
subsequent Offering which commences immediately after the last day of an
Offering in which I am participating under the Plan until such time as I file
with the Company a notice of withdrawal from the Plan on such form as may be
established from time to time by the Company or I terminate employment.

     Shares purchased for me under the Plan should be issued in the name set
forth below.  (I understand that shares may be issued either in my name alone or
together with my spouse as community property or in joint tenancy.)

          NAME:
                   -------------------------------------------------------------
          ADDRESS:
                   -------------------------------------------------------------

          MY SOCIAL SECURITY NUMBER:
                                     -------------------------------------------

     I hereby authorize withholding from my compensation in order to satisfy the
foreign, federal, state and local tax withholding obligations, if any, which may
arise upon my purchase of shares under the Plan and/or upon my disposition of
shares I acquired under the Plan.  I hereby agree that until I dispose of the
shares, unless otherwise permitted by the Company, I will hold all shares I
acquire under the Plan in the name entered above (and not in the name of any
nominee) for at least two (2) years from the first day of the Offering Period in
which, and at least one (1) year from the Purchase Date on which, I acquired
such shares.  I further agree that I will promptly notify the Chief Financial
Officer of the Company in writing of any transfer of such shares prior to the
end of the periods referred to in the preceding sentence.

     I am familiar with the provisions of the Plan and hereby agree to
participate in the Plan subject to all of the provisions thereof.  I understand
that any shares purchased under the Plan are subject to a 180-day "market stand-
off" period, as provided in the Plan.  I understand that the Board of Directors
of the Company reserves the right to amend the Plan and my right to purchase
stock under the Plan as may be necessary to qualify the Plan as an employee
stock purchase plan as defined in section 423 of the Internal Revenue Code of
1986, as amended, or to obtain qualification or registration of the Company's
common stock to be issued out of the Plan under applicable foreign, federal and
state securities laws.  I understand that the effectiveness of this subscription
agreement is dependent upon my eligibility to participate in the Plan.


Date: ________________________     Signature: _______________________________

                                   Name Printed: ____________________________

                                       16
<PAGE>
 
                           AASTROM BIOSCIENCES, INC.
                       1996 EMPLOYEE STOCK PURCHASE PLAN
                              NOTICE OF WITHDRAWAL

     I hereby elect to withdraw from the current offering (the "CURRENT
OFFERING") of the common stock of AASTROM Biosciences, Inc. (the "COMPANY")
under the Company's 1996 Employee Stock Purchase Plan (the "PLAN").

     MAKE ONE ELECTION UNDER SECTION A AND ONE ELECTION UNDER SECTION B:

A.   Current Offering.  As to my participation in the current purchase period
     ----------------
     (the "Current Purchase Period") of the Current Offering under the Plan, I
     elect as follows (check one):

______  1.  I elect to terminate my participation in the Current Purchase Period
            immediately.

            I hereby request that all payroll deductions credited to my account
            under the Plan (if any) not previously used to purchase shares under
            the Plan shall not be used to purchase shares on the last day of the
                           ---
            Current Purchase Period. Instead, I request that all such amounts be
            paid to me as soon as practicable. I understand that this election
            immediately terminates my interest in the Current Offering.

______  2.  I elect to terminate my participation in the Current Offering
            following my purchase of shares on the last day of the Current
            Purchase Period.

            I hereby request that all payroll deductions credited to my account
            under the Plan (if any) not previously used to purchase shares under
            the Plan shall be used to purchase shares on the last day of the
            Current Purchase Period.  I understand that this election will
            terminate my interest in the Current Offering immediately following
            such purchase.  I request that any cash balance remaining in my
            account under the Plan after my purchase of shares be returned to me
            as soon as practicable.

     I understand that if no election is made as to participation in the Current
Offering under the Plan, I will be deemed to have elected to participate in the
Current Offering.

B.   Future Offerings.  As to my participation in future offerings of common
     ----------------                                                       
     stock under the Plan, I elect as follows (check one):

______  1.  I elect to participate in future offerings under the Plan.

            I understand that by making this election I will participate in the
            next offering under the Plan commencing subsequent to the Current
            Offering, and in each subsequent offering commencing immediately
            after the last day of an offering in which I participate, until such
            time as I elect to withdraw from the Plan or from any such
            subsequent offering.

______  2.  I elect not to participate in future offerings under the Plan.
                    ---
            I understand that by making this election I terminate my interest in
            the Plan and that no further payroll deductions will be made unless
            I elect in accordance with the Plan to become a participant in
            another offering under the Plan.


     I understand that if no election is made as to participation in future
offerings under the Plan, I will be deemed to have elected to participate in
such future offerings.


Date:                    Signature:
      ----------------              -------------------------------------------

                         Name Printed:
                                       ----------------------------------------

                                       17