Collaborative Product Development Agreement (Bioreactor Assembly And Tubing Kit)

EXHIBIT 10.13



COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT

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Bioreactor Assembly

Tubing Kit



TABLE OF CONTENTS

----------------- Page

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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- (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-

COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT

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Bioreactor Assembly





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").



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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.







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,



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



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



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 req ...