Consulting Agreement

EXHIBIT 10.26



CONSULTING AGREEMENT



This Consulting Agreement (the "Agreement") is entered into as of July 1, 1995, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation ("Company") and STEPHEN G. EMERSON, M.D., Ph.D. ("Consultant"), with respect to the following facts:





A. Consultant is an employee of the University of Pennsylvania

("Employer").



B. Company desires to obtain the consulting services of Consultant, and

Consultant desires to provide such consulting services, as set forth

in this Agreement.





NOW, THEREFORE, the parties agree as follows:



1. ENGAGEMENT. Company hereby appoints Consultant, and Consultant

hereby accepts such appointment, upon the terms and conditions

set forth herein.



2. ASSIGNMENT. Consultant is engaged as a consultant for the

following described assignments:



2.1 Assist Company in the planning, design, direction,

supervision and implementation of Company's research

programs and clinical trials.



2.2 Assist Company with investor relations, financing and other

needed presentations.



2.3 Assist Company in such other matters and areas as may be

mutually approved by Consultant and Company.



Consultant shall perform such consulting services at times and

places which are mutually convenient to Company and Consultant,

with Consultant making himself available for at least

approximately eight (8) hours per month at Company's facility.



3. RESTRICTIONS. Consultant shall not perform any consulting or

other services for any other commercial party which is engaged in

research, development, technology, or products which are similar

to or competing with that of Company.

4. COMPENSATION. As compensation for Consultant performing the

consulting services pursuant to this Agreement, Company shall pay

to Consultant a consulting fee of $3,125 (Three Thousand One

Hundred Twenty Five Dollars) per calendar quarter, payable

quarterly in arrears, as of the last day of the months of

September, December, March and June. Consultant shall be

entitled to reimbursement for necessary out-of-pocket

expenditures incurred in the performance of his consulting

services, but subject to Consultant's obtaining the preapproval

of Company prior to Consultant incurring said expenditures.



5. TERM. The term of this Agreement shall commence on July 1, 1995,

and shall continue until June 30, 1996, unless sooner terminated

in accordance with the provisions hereof.



6. TERMINATION.



6.1 Termination Without Cause. Either party may terminate this

Agreement without cause upon not less than thirty (30) days'

prior written notice delivered to the other. The death of

Consultant shall automatically terminate this Agreement.



6.2 Termination for Cause. The non-defaulting party shall have

the right to terminate this Agreement upon the occurrence of

any of the following events, and the expiration of any

applicable period of cure: (a) the failure of Company to

make any payment within ten (10) days after the date of

receipt of a written notice from Consultant stating that a

payment is past due; (b) the failure of Consultant to

perform the assignment to the reasonable satisfaction of

Company; (c) the failure of a party to comply with any other

term or condition of this Agreement, and the expiration of

ten (10) days after written notice thereof, specifying the

nature of such default, without cure; and (d) any attempt by

Consultant to assign or otherwise transfer Consultant's

rights hereunder.



7. INDEPENDENT CONTRACTOR. The parties expressly intend and agree

that Consultant is acting as an independent contractor and not as

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an employee of Company. Consultant retains sole and absolute

discretion, control, and judgment in the manner and means of

carrying out the assignment, except as to the policies and

procedures set forth herein. Consultant underst ...