This Charter specifies the scope of the responsibilities of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Aastrom Biosciences, Inc. (the “Company”) and the manner in which those responsibilities shall be performed, including its structure, processes and membership requirements.

The primary purpose of the Committee is to review and recommend to the Board the compensation and benefits for the Company’s executive officers and directors. In carrying out these responsibilities, the Committee shall review all components of executive officer and director compensation for consistency with the Committee’s compensation philosophy and Strategy as in effect from time to time.

The Committee is also responsible for administering the Company’s Stock Option Plans and Stock Incentive Programs, and for producing an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.

The Committee shall be comprised of three or more directors, each of whom shall meet the independence requirements established by the Nasdaq listing standards; provided, that one director who does not meet the independence criteria of Nasdaq may, subject to the approval of the Board, serve as the Committee pursuant to, and subject to the limitation under, the “exceptional and limited circumstances” exception provided under Nasdaq’s rules.

The Members of the Committee shall be appointed, and may be removed or replaced, by the Board at any time, with or without cause. Resignation or removal of a director from the Board, for whatever reason, shall automatically constitute resignation or removal, as applicable, from the Committee.  Vacancies occuring, for whatever reason, may be filled by the Board.  Unless the Board elects a chairperson, the member of the Committee may designate a chairperson by majority vote of the full Committee membership. The Committee may delegate duties or responsibilities to subcommittees or to one member of the Committee.

A majority of the members shall represent a quorum of the Committee, and any action approved by at least a majority of the members shall represent the valid action of the Committee.  In lieu of a meeting, the Committee may act by unanimous written consent in accordance with the Company's Bylaws.

The Committee shall have the authority to obtain advice or assistance from consultants, legal counsel, accounting or other advisers as appropriate, provided that:

• The Compensation Committee is authorized to, and must, have direct responsibility for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel or other adviser retained by the Compensation Committee and the Company must provide for appropriate funding, as determined by the Compensation Committee, for payment of reasonable compensation to any such compensation consultant, legal counsel or other adviser; and
• Before any compensation consultant, legal counsel or other adviser (other than (1) in-house legal counsel or (2) any compensation consultant, legal counsel or other adviser whose role is limited to the following activities for which no disclosure would be required under Item 407(e)(3)(iii) of Regulation S-K: (i) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employeess or (ii) providing information that either is not customized based on parameters that are not developed by the compensation consultant, legal cousel or other adviser and about which the compensation consultant, legal counsel or other adviser does not provide advice) is selected by, or provides advice to, the Compensation Committee, the Compensation Committee shall take into consideration the following factors:
  • The provision of other servies to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
  • The amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
  • The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
  • Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Compensation Committee;
  • Any stock of the company owned by the compensation consultant, legal counsel or other adviser; and
    • Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.
    • Prohibit the Company from engaging a compensation consultant engaged by the Compensation Committee, or an affiliate of any such compensation consultant, to provide any other services to the Company without the approval of the Compensation Committee.

The Committee shall meet from time to time as it deems necessary, but not less frequently than once a year, to review the compensation of the executive officers, and directors and to fulfill its responsibilities hereunder, and may meet with management and directors at any time it deems appropriate to discuss any matters before the Committee. The Committee shall record minutes of the proceedings of all meetings.