EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is entered into as of June 11, 2004,
by and between Aastrom Biosciences, Inc., a Michigan corporation ("Employer")
and James A. Cour ("Employee").

      NOW, THEREFORE, the parties agree as follows:

      1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.

      2. DUTIES Employee is engaged as President and Chief Operating Officer.
Employee shall perform faithfully and diligently the duties customarily
performed by persons in the position for which employee is engaged, together
with such other reasonable and appropriate duties as Employer shall designate
from time to time. Employee shall devote Employee's full business time and
efforts to the rendition of such services and to the performance of such duties.
As a full-time employee of Employer, Employee shall not be entitled to provide
consulting services or other business or scientific services to any other party,
without the prior written consent of Employer.

      3. COMPENSATION

            3.1 BASE SALARY During the term of this Agreement, as compensation
for the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of Two
Hundred Sixty Thousand Dollars ($260,000), payable in semi-monthly installments,
less required deductions for state and federal withholding tax, Social Security
and all other employee taxes and payroll deductions. The base salary shall be
subject to review and adjustment on an annual basis.

      4. TERM

            4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence on or before July 6, 2004.

            4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this right
of termination at will, Employer shall first either (i) discuss with Employee
the needs of Employer and why Employee no longer meets those needs, or (ii)
discuss with Employee any concerns or dissatisfactions which Employer has with
Employee's performance, and give to Employee a reasonable opportunity to remedy
those concerns or dissatisfactions, to the reasonable satisfaction of Employer.

            4.3 TERMINATION FOR CAUSE Either party may terminate this employment
relationship immediately upon notice to the other party in the event of any good
cause, such as a default, dishonesty, neglect of duties, failure to perform by
the other party, or death or disability of Employee.

            4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.

      5. FRINGE BENEFITS

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            5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.

            5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.

      6. INVENTION, TRADE SECRETS AND CONFIDENTIALITY

            6.1 DEFINITIONS

                  6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or
know-how related thereto, relating to any present or anticipated business or
activities of Employer.

                  6.1.2 Trade Secret Defined. As used herein "Trade Secret"
means, without limitation, any document or information relating to Employer's
products, processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.

            6.2 INVENTIONS

                  6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.

                  6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."

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                  6.2.3 Exclusion Notice. The Assignment by Employee of
Inventions under this Agreement does not apply to any Inventions which are owned
or controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.

                  6.2.4 Patents and Copyrights; Attorney-in Fact. Both before
and after termination of this Agreement (and with reasonable compensation paid
by Employer to Employee after termination), Employee agrees to assist the
Employer to apply for, obtain and enforce patents on, and to apply for, obtain
and enforce copyright protection and registration of, the Inventions described
in Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer's request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee's agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.

            6.3 TRADE SECRETS

                  6.3.1 Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer in any Trade Secrets of
Employer. Employee acknowledges and agrees that any and all Trade Secrets of
Employer, whether developed by Employee alone or in conjunction with others or
otherwise, shall be and are the property of Employer.

                  6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.

                  6.3.3 Confidential Information of Others. Employee represents
and warrants that if Employee has any confidential information belonging to
others, Employee will not use or disclose to Employer any such information or
documents. Employee represents that his employment with Employer will not
require him to violate any obligation to or confidence with any other party.

            6.4 NO ADVERSE USE Employee will not at any time use Employer's
Trade Secrets or Inventions in any manner which may directly or indirectly have
an adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.

            6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information belonging to
Employer or pertaining to Trade Secrets or Inventions. Employee shall not take
any materials, property, documents or other information, or any reproduction or
excerpt thereof, belonging to Employer or containing or pertaining to any Trade
Secrets or Inventions.

            6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute

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proceedings in any court of competent jurisdiction, either in law or in equity,
to enjoin Employee from violating any of the terms of this Section 6, to enforce
the specific performance by Employee of any of the terms of this Section 6, and
to obtain damages for any of them, but nothing herein contained shall be
construed to prevent such remedy or combination of remedies as Employer may
elect to invoke. The failure of Employer to promptly institute legal action upon
any breach of this Section 6 shall not constitute a waiver of that or any other
breach hereof.

      7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not be a shareholder, lender or agent of any
other entity which is engaged in any business of the same nature as, or in
competition with, the business in which Employer is now engaged, or in which
Employer becomes engaged during the term of Employee's employment, or which is
involved in science or technology which is similar to Employer's science or
technology. Furthermore, the employee may not act as an officer, director,
employee, or consultant to any other corporation without express written consent
from the Employer's Governance and Nominating Committee of the Board of
Directors.

      8. GENERAL PROVISIONS

            8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.

            8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.

            8.3 ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties with respect to the employment of Employee. This Agreement
supersedes all prior agreements, understandings, negotiations and representation
with respect to the employment relationship.

            8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Employer. Employee shall not be entitled to assign any
of Employee's rights or obligations under this Agreement.

            8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.

            8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.

            8.7 EMPLOYMENT ELIGIBILITY During the term of this Agreement,
Employee shall maintain citizenship in the United States or documentation to
establish employment eligibility in compliance with the Federal Immigration
Reform and Control Act of 1986.

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      9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.

EMPLOYER:

Aastrom Biosciences, Inc.

By:   ______________________________
      Alan Wright
      SVP Administrative & Financial Operations/CFO

EMPLOYEE:

____________________________________
James A. Cour

Address:    ______________________________

            ______________________________

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                                    EXHIBIT A

                            List of Prior Inventions
                                 (Section 6.2.3)

None, other than the following:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

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Source: OneCLE Business Contracts.