Sample Business Contracts


Collaborative Product Development Agreement - Aastrom Biosciences Inc. and Ethox Corp.

Collaboration Forms


                  COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
                  -------------------------------------------
   
                              Bioreactor Assembly
                                      and
                                   Tubing Kit

                               TABLE OF CONTENTS
                               -----------------


                                                                            Page
                                                                            ----
                                                                      
1.   Responsibilities of Aastrom...........................................  2
     1.1   Project Management..............................................  2
     1.2   Specifications..................................................  2

2.   Responsibilities of Company...........................................  2
     2.1   Design Collaboration............................................  2
     2.2   Delivery of Products............................................  3
     2.3   Maintenance of Adequate Facilities and Manufacturing Practices..  3
     2.4   No Subcontracting...............................................  4
     2.5   Inventory Insurance.............................................  4
     2.6   Transit.........................................................  4
     2.7   Financial Condition.............................................  4

3.   Acceptance Procedures.................................................  4

4.   Compensation..........................................................  5

5.   Company's Warranty....................................................  5

6.   Records; Inspection...................................................  5

7.   Patent Infringement; Insurance........................................  6
     7.1   Patent Infringement.............................................  6
     7.2   Insurance.......................................................  6

8.   Exclusivity...........................................................  6
     8.1   Continuing Prohibition..........................................  6
     8.2   No Similar Product..............................................  6
     8.3   Disclosure......................................................  6

9.   Ownership of Technology; Confidentiality..............................  7
     9.1   Ownership of Technology.........................................  7
     9.2   Confidential Information........................................  7
           (a)  Title to Confidential Information and Related Documents....  8
           (b)  Nondisclosure or Use of Confidential Information...........  8
           (c)  Protection of Confidential Information.....................  8

                                      -i-
<PAGE>
 

                                                                       
           (d)  Confidential Information.................................... 8
     9.3   Other Design Contractors......................................... 8
     9.4   Privacy of Agreement............................................. 9

10.  Term................................................................... 9

11.  Default and Termination................................................ 9
     11.1  Breach........................................................... 9
     11.2  Remedy........................................................... 10

12.  Miscellaneous.......................................................... 10
     12.1  Independent Contractors.......................................... 10
     12.2  Causes Beyond Control............................................ 10
     12.3  Successors and Assigns........................................... 10
     12.4  Applicable Law................................................... 11
     12.5  Severability..................................................... 11
     12.6  Entire Agreement; Modification and Waiver........................ 11
     12.7  Counterparts..................................................... 11
     12.8  Dispute Resolution............................................... 11
     12.9  Notices.......................................................... 11


Exhibits:
-------- 

     A    Description of Product
     B    Company's Project Plan
     C    Specifications for the Product
     D    Manufacturing Drawings

                                     -ii-
<PAGE>
 
                  COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
                  -------------------------------------------

                              Bioreactor Assembly

                                      and

                                   Tubing Kit


     This Agreement (the "Agreement") is entered into as of 11/8, 1994, by and
                                                            ----              
between Aastrom Biosciences, Inc., a Michigan corporation ("Aastrom"),
and Ethox Corp., a New York corporation ("Company").

                                    RECITALS
                                    --------

     A.  Aastrom is in the final stages of research and development for a
proprietary, manually operated, bioreactor assembly and custom tubing kit
(collectively hereinafter referred to as the "Product" and individually referred
to as the "Bioreactor" or the "Tubing Kit").  The Product is more fully
described on Exhibit A attached hereto.

     B.  Aastrom has completed working prototype models of the Product; and
Aastrom now needs to obtain pre-production units of the Product for laboratory
and clinical evaluation.

     C.  Company has expertise and experience in the development and manufacture
of medical products which are somewhat similar to the Product.  Company is
prepared to collaborate with Aastrom for completing the necessary design work on
the Product to enable Company to manufacture the Product.

     D.  Company has prepared a Project Plan, attached hereto as Exhibit B,
which specifies the Company's resources and activities to be applied and used
for performing this Agreement.  Said Project Plan includes Company's pricing and
an estimate of the time, materials and costs for Company to perform under this
Agreement as the design stood at the time on April 10, 1994.  With changes in
the design and specifications it is contemplated that Company pricing and
estimates will be subject to change.

     E.  Aastrom has contracted with Roecker Design Group, and Aastrom may also
contract with other design specialists for assistance with specified aspects of
the Product (collectively called the "Other Design Contractors"), subject to the
provisions hereof.

                                       1
<PAGE>
 
                                   AGREEMENT

     NOW, THEREFORE, the parties hereby agree as follows:

          1.   Responsibilities of Aastrom.
               --------------------------- 

               1.1  Project Management.  Aastrom shall be responsible for
                    ------------------
overall project management relating to the development of the Product.

               1.2  Specifications.  Aastrom shall collaborate with Company and
                    --------------
the Other Design Contractors on completing the design work for the Product. With
assistance from Company as more fully described in Section 2 below, Aastrom
shall develop the final specifications and functional requirements for the
Product, including applicable test criteria (the "Specifications"). It shall be
solely Aastrom's responsibility to assure that the Specifications are safe and
effective and to make the decision that the Specifications are complete. Upon
completion of the Specifications, Aastrom shall promptly provide Company with a
copy of the Specifications, and if the parties mutually agree, the
Specifications shall be attached as Exhibit C hereto. Prior to completion of the
Specifications, the parties shall use the preliminary design specifications
referenced on Exhibit C.

          2.   Responsibilities of Company.
               --------------------------- 

               2.1  Design Collaboration.  Company shall collaborate with
                    --------------------
Aastrom and the Other Design Contractors to assist Aastrom in completing the
design work for the Product. Company shall perform its responsibilities under
this Agreement in accordance with the Project Plan attached hereto as Exhibit B;
provided, however, it is understood that with changes in the design and
specifications, it is contemplated that Company's pricing and estimates of time,
materials and costs will be subject to change. Without limiting the foregoing,
Company shall:

                    (a) Assist Aastrom with respect to planning for all
manufacturing issues that are likely to arise in connection with the design work
and development of the Product, including issues relating to the manufacturing
process development and validation, component sourcing, and the creation of
Device Master record documentation requirements.

                    (b) Prepare working drawings in accordance with the
Specifications for manufacturing and testing the Product (the "Manufacturing
Drawings"), which Manufacturing Drawings shall be owned by Aastrom and shall,
subject to the prior written approval of Aastrom and Company, ultimately be
attached hereto as Exhibit D. Said Manufacturing Drawings shall include the
Device Master Record and (i) specifications for component parts to be acquired
from specified vendors, (ii) drawings and specifications for component parts,
(iii) test and acceptance procedures and criteria, (iv) subassembly
specifications,

                                       2
<PAGE>
 
drawings and requirements, and (v) product specific manufacturing procedures,
routing and processes.  Said Manufacturing Drawings may reference general
policies and procedures of Company, such as Company's quality system; and
Company's general policies and procedures shall remain the property of Company.
As modifications are made from time to time to the Manufacturing Drawings by
mutual agreement, Company shall furnish to Aastrom an updated copy thereof.

                    (c) Prepare a gamma sterilization validation plan and
conduct the required laboratory tests to achieve a 10/-6/ sterility assurance
level for the Product.

                    (d) To the extent required for submittal to the U.S. Food
and Drug Administration ("FDA") for Aastrom's IDE and/or PMA, prepare a detailed
description of Company's manufacturing methods, processes, procedures and
facility applicable to Aastrom's Product.

               2.2  Delivery of Products. Following Aastrom's determination that
                    --------------------
the Manufacturing Drawings prepared by Company are in accordance with the
Specifications, Company shall manufacture and deliver to Aastrom at its Ann
Arbor, Michigan facility a number of the prototypes of the Products, in
compliance with the Specifications and the Manufacturing Drawings, for use in
clinical tests of the Product. The exact number of the Product to be
manufactured, and the delivery schedule thereof, shall be as specified by
Aastrom in separate purchase orders, subject to Company's approval, which
approval will not be withheld unreasonably. Said purchase orders normally will
be for 15 units of the Bioreactor at a time, with delivery to be within three
weeks, and for 150 units of the Tubing Kit at a time, with delivery to be within
eight weeks. The pricing on said purchase orders shall be in accordance with the
pricing set forth in Exhibit B; provided, however, it is understood that with
changes in the design and specifications, it is contemplated that Company's
pricing and estimates of time, materials and costs will be subject to change. As
Aastrom's tests of the Product proceed, and depending on the outcome of those
tests, Aastrom may place additional purchase orders for the same or larger lot
sizes of the Product; and Company shall manufacture and sell said additional
units of the Product on the same terms and conditions as set forth above.

               2.3  Maintenance of Adequate Facilities and Manufacturing
                    ----------------------------------------------------  
Practices. Company shall maintain adequate personnel and facilities to perform
--------- 
its obligations under this Agreement. Company shall manufacture and assemble all
of the Product in an environment where good manufacturing practices ("GMP") are
followed. Inasmuch as Company's FDA facility registration and inspection record
are extremely important to Aastrom's ability to obtain prompt FDA approval for
the Product, Company hereby agrees to use its best efforts to maintain in good
standing all appropriate FDA facility registrations and inspection records.
Company shall immediately report to Aastrom in writing any adverse events,
circumstances, or potential problems relating to Company's FDA registrations and
inspections that

                                       3
<PAGE>
 
could adversely affect availability or approval of the Product.  Company shall
allow Aastrom and its agents (such agent to be acceptable to Ethox, with
approval not to be unreasonably withheld) to review and inspect Company's
facilities, FDA compliance files, and correspondence to and from the FDA
regarding inspections, registrations, and audits that pertain to the Product or
the Aastrom's regulatory submission.  To the extent Aastrom shall determine that
European Economic Community standards apply to Company's facility and
manufacturing practices for units of the Product to be used in Europe, Aastrom
will provide details of said standards to Company, and Company shall make every
reasonable effort to comply with said standards.

          2.4  No Subcontracting.  No part of Company's obligations under this
               -----------------                                              
Agreement which are being subcontracted by Company will be changed without
Aastrom's approval if such change would impact Aastrom's FDA approval, without
the prior written approval of Aastrom.

          2.5  Inventory Insurance.  All inventory of components and materials
               -------------------                                            
purchased by Company to make the Products shall be owned by Company and shall be
insured against risk of loss by Company.  Any components and materials purchased
by Aastrom and delivered to Company for Company to use to make the Products
shall be covered by Company's insurance policy for risk of loss while said items
remain in Company's facility.

          2.6  Transit.  Company shall arrange for shipment of the Products by a
               -------                                                          
common carrier approved by Aastrom, to a destination specified by Aastrom.  The
costs of shipment and insurance during transit shall be borne by Aastrom.  Title
and risk of loss to the Products shall pass from Company to Aastrom when the
Products are delivered to a common carrier for shipment to Aastrom's
designation.

          2.7  Financial Condition.  Company and Aastrom shall each give written
               -------------------                                              
notification to the other of any material adverse financial condition affecting
either, including without limitation the lack of resources available to enable
either to fully and promptly perform its obligations under this Agreement on
schedule, and any other conditions which may jeopardize or impair the full and
prompt performance by either of its obligations under this Agreement.  Said
notification shall be given within five (5) days after the occurrence or
realization of said adverse condition.

     3.   Acceptance Procedures.  Delivery of each unit of the Product
          ---------------------                                       
shall be deemed accepted by Aastrom unless Company is notified in writing of
Aastrom's rejection of such delivery within thirty (30) days after the delivery
date due to a non-conformance with the Specifications and/or the Manufacturing
Drawings (which shall include acceptance criteria).  In such case, Aastrom shall
advise Company of Aastrom's acceptance criteria and the details of how Aastrom
believes that there has been a non-conformance.  In the event Company receives

                                       4
<PAGE>
 
such notice and advise, Company shall diligently attempt to promptly resolve any
such non-conformance.  In the event Company cannot resolve any such non-
conformance and deliver a Product that conforms to the Specifications and the
Manufacturing Drawings within a time period not to exceed six (6) weeks of
receipt of such notice, Aastrom may pursue remedies pursuant to Section 12
below.

     4.   Compensation.  Aastrom shall compensate Company for Company's
          ------------                                                 
assistance, manufacture and assembly of the Products on a "time and materials"
basis, as further described on Exhibit B.  Company shall submit to Aastrom a
monthly invoice for said work, together with such supporting details as Aastrom
may reasonably request.  Aastrom shall pay said invoice within thirty (30) days
after the invoice and supporting details are received by Aastrom.

     5.   Company's Warranty.  Company warrants that each unit of the
          ------------------                                         
Product shall comply in all respects with the Specifications and the
Manufacturing Drawings and shall be free from defects in material and
workmanship.  Company shall either repair or replace or provide to Aastrom full
credit for the purchase price of any Product which Aastrom finds to be defective
due to Company's failure to comply with said warranty.  If credit is not given
by Company, then any such warranty repairs or replacements shall be completed
within a time period not to exceed six (6) weeks of the date on which Company
receives notice of any such non-compliance.  All shipping and other costs
incurred in connection with the repair or replacement of any such non-complying
Product shall be for the account of Company.  Company further warrants that the
manufacture, assembly and delivery of the Products hereunder shall be (i) in
compliance with all applicable federal, state and local laws, rules, regulations
and executive orders known or reasonably expected to be known by Company, and
(ii) performed in a professional, workmanlike manner in accordance with
prevailing industry standards.

               THE WARRANTIES SET FORTH IN THIS SECTION 5 ARE EXCLUSIVE AND IN
LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED.


     6.   Records; Inspection.  Company shall keep accurate and complete
          -------------------                                           
records with respect to its work and manufacture of the Product to the extent
necessary to attempt to satisfy any FDA requirements and to verify the time
worked and material costs invoiced by Company to Aastrom.  At Aastrom's request,
Company shall allow Aastrom or its accountant to inspect and audit such records.
Additionally, at Aastrom's request, Company shall allow Aastrom and/or Aastrom's
consultant (such consultant to be subject to Ethox's approval, and such approval
will not be unreasonably withheld) to inspect the facility where the Products
are manufactured.  All inspections shall be upon reasonable notice and during
regular business hours and shall require execution of confidentiality agreements
satisfactory to Company.

                                       5
<PAGE>
 
     7.  Patent Infringement; Insurance.
         ------------------------------ 

         7.1  Patent Infringement.  Aastrom shall indemnify and hold Company
              -------------------                                           
harmless from any loss, damage, or cost (including reasonable attorneys' fees
and expenses) arising from any claim that the Product or its operation infringes
a United States patent, trademark, copyright, or other proprietary right,
including trade secrets.  In the event any lawsuit for which indemnity is
applicable, Aastrom will control the defense and selection of defense counsel,
and Company will be entitled to participate therein (at Company's expense) by
selecting co-counsel reasonably satisfactory to Aastrom.  Aastrom shall have the
right to direct and control such defense, to settle any dispute.  Company shall
be responsible for payment of any settlement to which Company has consented, and
such consent shall not be unreasonably withheld.  In conducting the defense and
negotiating any settlement, Aastrom's counsel shall give due consideration to
suggestions of Company's co-counsel.

         7.2  Insurance.  Company and Aastrom shall each provide and maintain
              ---------                                                      
$1 million comprehensive general liability insurance and product liability
insurance .  Company will furnish to Aastrom, and Aastrom will furnish to
Company, certificates of insurance evidencing that such insurance is in effect.
Aastrom's requirement hereunder is contingent upon its successful obtaining of
such coverage.

     8.  Exclusivity.
         ----------- 

         8.1  Continuing Prohibition.  At all times both during and after the
              ----------------------                                         
term of this Agreement, Company shall not make or sell, or enable others to make
or sell, the Product which is the subject of this Agreement, excepting only for
making and selling the Product for Aastrom.

         8.2  No Similar Product.  During the term of this Agreement,  (i)
              ------------------                                          
Company shall not manufacture, assemble, produce, ship or in any other way make
available for use or distribution, by any party other than Aastrom, any product
or system which is functionally similar to the Product, and (ii) Company shall
not in any way accept engagement with, or render service to, any other
individual, firm or corporation, as a consultant, instructor, expert, designer,
manufacturer or producer, or act in any other capacity, which engagement or
rendition of services involves the development or production of any product or
system which is functionally similar to the Product.  As used in this section, a
hematopoietic stem cell expansion product or system is not "functionally
                                                       ---              
similar" if it utilizes distinctly different methods or distinctly different
disposable components than are utilized for Aastrom's Product.

         8.3  Disclosure.  Company advises Aastrom that Company is currently
              ----------                                                    
manufacturing a line of products referred to as the Stericell product line which
are used for cell culture, and a product named Stempak which is utilized for

                                       6
<PAGE>
 
stem cell processing.  In addition, Company has contract relationships, and is
working with other companies to develop relationships, for cell processing
devices which, to the best of Company's belief, function in a significantly
different manner than Aastrom's Product.

     9.  Ownership of Technology; Confidentiality.
         ---------------------------------------- 

         9.1  Ownership of Technology.
              ----------------------- 

              (a) Except as set forth in Section 9.1(c) below, Aastrom shall
retain and own all right, title, and interest in any invention, technology or
development, whether or not patentable, which it now has or which arises in
connection with the Product during the course of the Company's performance of
this Agreement. Any invention made by Company in connection with Company's work
with the Product, which invention is an improvement or variation to the Product,
shall be owned by Aastrom and assigned to Aastrom by Company. Company shall
cooperate with Aastrom and take all steps reasonably required, including
executing assignments, to aid Aastrom in securing any patent or other protection
which may be appropriate, and Aastrom shall bear the expense in connection
therewith.

              (b) All tools and tooling which were paid for by Aastrom (either
separately or as part of the price for the Product sold by Company to Aastrom)
shall be owned by Aastrom.  The Manufacturing Drawings (including the device
master records) shall be owned by Aastrom.

              (c) Company shall retain all of its right, title, and interest in
and to its proprietary knowledge in fabrication methods which it currently has,
and in and to such additional knowledge in fabrication methods Company may
develop at its sole expense (and for which Aastrom is not invoiced) as a part of
the Company's performance of this Agreement. As to any fabrication methods
developed by Company from efforts for which Aastrom is invoiced, said
fabrication methods shall be deemed developed for Aastrom as a "work for hire,"
and Aastrom shall have sole ownership thereof. Company shall retain a royalty
free license to make, use, sell or otherwise promote any such fabrication
methods which are developed by Company but owned by Aastrom, so long as such
undertaking does not directly or indirectly cause competition to Aastrom
products or business activities.

         9.2  Confidential Information.  The parties recognize that during the
              ------------------------                                        
course of Company's performance of this Agreement, it may be necessary that
either or both parties be given access to certain Confidential Information of
the other.  The following subparagraphs shall be applicable to such Confidential
Information and the words "Recipient" and "Disclosing Party" shall be

                                       7
<PAGE>
 
interchangeable as between Aastrom and Company as appropriate under the
circumstances.

              (a) Title to Confidential Information and Related Documents.
                  -------------------------------------------------------  
Recipient hereby acknowledges that the Confidential Information and all related
documents, drawings, sketches, designs, products, or samples disclosed or
furnished hereunder are the sole and exclusive property of Disclosing Party.
Recipient hereby agrees to return all such documents, drawings, sketches,
designs, products, or samples furnished to it hereunder, together with all
copies thereof except for one archive copy, promptly upon the request of
Disclosing Party.

              (b) Nondisclosure or Use of Confidential Information.  Recipient
                  ------------------------------------------------            
hereby agrees that it shall hold all Confidential Information disclosed to it in
strict confidence, that it will use the same only for the purpose of performing
this Agreement and for no other purpose whatsoever, and that it will not
disclose the same to any third parties (except to its employees to the extent
such disclosure is necessary for purposes of performing this Agreement) except
to the extent Disclosing Party agrees to in writing.

              (c) Protection of Confidential Information. Recipient agrees that
                  --------------------------------------
it will observe reasonable precautions and procedures to protect and preserve
all Confidential Information and related documents, drawings, sketches, designs,
products, or samples disclosed or furnished to it hereunder, using such
precautions which shall be no less rigorous than those used by Recipient to
protect its own trade secrets and confidential data. In addition, Recipient
warrants that it has or will obtain written agreements of confidentiality with
its employees for the protection of information of the subject nature both
during and after employment.

              (d) Confidential Information.  "Confidential Information" as used
                  ------------------------                                     
herein shall mean all information, discoveries, inventions, improvements or
innovations which are maintained as confidential by the party having the same.
Provided, however, Confidential Information shall not include information,
discoveries, inventions, improvements, or innovations (a) which at the time of
disclosure is a part of the public domain; (b) which subsequently becomes a part
of the public domain by publication or otherwise through no fault of Recipient;
(c) which Recipient can show was contained in its possession at the time of
disclosure; (d) which is subsequently disclosed to Recipient by a third party
not in violation of any rights of, or obligations to, Disclosing Party; or (e)
which is disclosed in a patent or publication anywhere.

          9.3 Other Design Contractors.  To the extent any Confidential
              ------------------------                                 
Information of Company is to be furnished to the Roecker Design Group or any
Other Design Contractors, it shall be the obligation of Aastrom to provide
Company with confidentiality agreements executed by such design contractors, and
said confidentiality agreements shall be in a form reasonably acceptable to
Company.

                                       8
<PAGE>
 
          9.4  Privacy of Agreement.  Neither party shall make any reference to
               --------------------                                            
this Agreement or any provision hereof in any publicly disseminated literature,
printed matter, or other publicity issued by or for it, except (i) as required
by law, (ii) in connection with a public or private offer or sale of securities,
a business collaboration or transaction, or a governmental or industry
regulatory communication, or (iii) in a fashion and at a time mutually agreed
upon by both parties after the execution of this Agreement.  After release of
the product for commercial sale, Company may add Aastrom to Company's list of
customers and may show external product photographs for marketing purposes, and
Aastrom may add Company to Aastrom's list of vendors and subcontractors.

     10.  Term.  The term of this Agreement shall commence on the date first
          ----                                                        
written above and shall continue in full force and effect until completion
of Aastrom's need for the Products, or until terminated as set forth herein.
Either party may terminate this Agreement without cause upon at least six (6)
months' prior written notice.  Upon any termination of this Agreement, (i) both
parties shall fully perform all of their obligations accruing up through the
date of termination and (ii) Company will immediately deliver to Aastrom the
Manufacturing Drawings, all tools and tooling owned by Aastrom, and any
prototypes, components, information, and work-in-process related to the Product.
Additionally, to the extent applicable, the obligations under Sections 5, 6, 7,
8, 9 and 12 shall survive any termination of this Agreement.

     11.  Default and Termination.
          ----------------------- 

          11.1  Breach.  The occurrence of any one or more of the following
                ------                                                     
events shall constitute an event of default hereunder, and upon the expiration
of any applicable time period for a cure, shall constitute a breach of this
Agreement, giving rise to the rights identified in Section 11.2 hereof:

                (a) If Aastrom shall default hereunder in the payment of funds
when due and such default continues for a period of thirty (30) days after
written notice thereof;

                (b) If either party fails to faithfully perform or observe any
agreement or condition to be performed by such party, and if such default
continues for a period of thirty (30) days after written notice thereof,
specifying the nature of such default;

                (c) If any proceeding is commenced by or for either party under
any of the bankruptcy laws, or if either party is adjudged insolvent by any
court, makes an assignment for the benefit of creditors, or enters into a
general extension agreement with creditors;

                                       9
<PAGE>
 
                (d) If Company shall breach its obligation to timely give credit
for or to repair any non-conforming Product prototype pursuant to Section 3; or

                (e) If either party shall breach its obligations set forth in
Sections 8 or 9 hereof.

          11.2  Remedy.  In addition to all rights and remedies provided under
                ------                                                        
law, the nondefaulting party shall have the right, in the event of default, to
terminate this Agreement and any obligations imposed on such nondefaulting party
hereunder, provided, however, that, to the extent applicable, the obligations
under Sections 5, 6, 7, 8, 9, and 13 shall survive any termination of this
Agreement.

     12.  Miscellaneous.
          ------------- 

          12.1  Independent Contractors.  The relationship between Aastrom and
                -----------------------                                       
Company hereunder shall be that of independent contractors, and nothing in this
Agreement shall be deemed to constitute a joint venture, partnership, agency or
employer/employee arrangement between the parties.  Neither party shall have any
authority or power to bind the other party or to contract in the name of, or
make any representations or warranties, express or implied, on behalf of the
other party, or otherwise create any liability against the other party in any
way for any purpose.

          12.2  Causes Beyond Control.  The parties hereto shall not be
                ---------------------                                  
responsible for any loss or breach due to delay in delivery or performance
hereunder caused by governmental regulations, controls or directions, outbreak
of a state of emergency, hostilities, civil commotion, riots, epidemics, acts of
God, other natural casualties, fires, strikes, walkouts or other similar cause
or causes beyond the control of the parties.  In the event that any party shall
be delayed in, or prevented from, performing its obligations under this
Agreement as a result of any of the foregoing, such party shall promptly notify
the other party of such delay or cessation in performance.  In the event that
such party is unable to resume performance hereunder within sixty (60) days of
the date on which its performance was suspended, the other party shall have the
right to terminate this Agreement upon ten (10) days prior written notice.

          12.3  Successors and Assigns.  Neither party shall have a right to
                ----------------------                                      
assign, transfer or otherwise dispose of its rights under this Agreement or to
assign the burdens hereof, without the prior written consent of the other party.
Notwithstanding the foregoing, the rights and obligations of a party shall
automatically transfer to a successor entity, without the need for any consent,
in the event of a merger between the party and the successor, or in the event of
a sale of substantially all of the assets of that party to the successors.

                                       10
<PAGE>
 
          12.4  Applicable Law.  The construction of this Agreement, and the
                --------------                                              
rights and liabilities of the parties hereto, shall be governed by the laws of
the State of Michigan.

          12.5  Severability.  Each term, condition or provision of this
                ------------                                            
Agreement shall be viewed as separate and distinct, and in the event that any
such term, condition or provision shall be held by a court of competent
jurisdiction to be invalid, the remaining provisions shall continue in full
force and effect.

          12.6  Entire Agreement; Modification and Waiver.  This Agreement
                -----------------------------------------                 
contains the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings between them relating to the
subject matter hereof.  This Agreement may not be amended or modified except by
an instrument in writing, signed by duly authorized representatives of both
parties.  The waiver, express or implied, by any party of any right hereunder or
of any failure to perform or breach hereof by any other party shall not be
deemed to constitute a waiver of any other right hereunder or of any claim in
respect of any other failure to perform or breach.

          12.7  Counterparts.  This Agreement may be executed in counterparts
                ------------                                                 
all of which together shall constitute one and the same instrument.

          12.8  Dispute Resolution.  Any controversy or claim arising out of or
                ------------------                                             
relating to this Agreement, or the breach or interpretation hereof, shall be
resolved through good faith negotiation between the principals of the parties
hereto.  Any controversy or claim not resolved by mutual agreement shall be
submitted to binding arbitration in Cleveland, Ohio, or in such other city as
the parties may mutually agree, in accordance with the rules of the American
Arbitration Association ("AAA") as then in effect; and judgment upon the award
rendered in such arbitration shall be final and may be entered in any court
having jurisdiction thereof.  Notice of the demand for arbitration shall be
filed in writing with the other party to this Agreement and with the AAA.  In no
event shall the demand for arbitration be made after the date when institution
of legal or equitable proceedings based on such claim, dispute or other matter
in question would be barred by the applicable statute of limitations.  This
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law.  The party most prevailing in said arbitration, as determined
by the arbitrator based upon the parties' respective claims and positions, shall
be entitled to recover from the non-prevailing party all attorneys' fees and
other costs incurred in connection with the arbitration proceeding.

          12.9  Notices.  All notices and other communications permitted or
                -------                                                    
required under this Agreement shall be in writing and shall be deemed to have
been given when received at the addresses set forth on the signature page
hereof, or at such other address as may be specified by one party in writing to
the other.

                                       11
<PAGE>
 
Said written notice may be given by mail, telecopy, rush delivery service,
personal delivery or any other means.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                   AASTROM:

                                         AASTROM BIOSCIENCES, INC.
                                         a Michigan corporation

                                         By:
                                           Name:  /s/ R. DOUGLAS ARMSTRONG
                                                  ------------------------
                                           Title: President/CEO
                                                  ------------------------
                                         Address:   P. O. Box 376
                                                    Ann Arbor, MI 48106
                                                    Attn:  James Maluta
                                                    Fax:  (313) 665-0485

                                   COMPANY:

                                         ETHOX CORP.
                                         a New York corporation

                                         By:      /s/ FRANK P. WILTON
                                                  ------------------- 
                                           Name:  Frank P. Wilton
                                           Title: President
                                         Address:   251 Seneca Street
                                                    Buffalo, NY
                                                    Attn:  Frank P. Wilton
                                                    Fax:   (716) 842-4040

                                       12
<PAGE>
 
                                    EXHIBITS



     A         Description of Product (Bioreactor Assembly and Custom Tubing
               Kit)

     B         Company's Project Plan

     C         Specifications for the Product

     D         Manufacturing Drawings for the Product

                                       13
<PAGE>
 
                                   EXHIBIT A

                             Description of Product

          *








                    *CONFIDENTIAL PORTION REDACTED AND FILED
                         SEPARATELY WITH THE COMMISSION

<PAGE>
 
                                   EXHIBIT  B

                             Company's Project Plan


          *







                    *CONFIDENTIAL PORTION REDACTED AND FILED
                         SEPARATELY WITH THE COMMISSION

<PAGE>
 
                                   EXHIBIT C

                         Time and Quantity Schedule --
                              Preproduction Units

          *







                    *CONFIDENTIAL PORTION REDACTED AND FILED
                         SEPARATELY WITH THE COMMISSION

<PAGE>
 
                                  EXHIBIT  C-1

                       Pricing for Precommercial Units/1/



          *







                    *CONFIDENTIAL PORTION REDACTED AND FILED
                         SEPARATELY WITH THE COMMISSION

<PAGE>
 
                                   EXHIBIT D

                 Manufacturing Drawings (Device Master Record)
                                for the Product

                        (to be added per Section 2.1(b))


          *







                    *CONFIDENTIAL PORTION REDACTED AND FILED
                         SEPARATELY WITH THE COMMISSION


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