<PAGE>
                                                                   Exhibit 10.23

Confidential


[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.

                        DEVELOPMENT AND SUPPLY AGREEMENT

This AGREEMENT is made and entered into this 30th day of November, 2001 (the
"Effective Date") by and between HOLLISTER-STIER LABORATORIES LLC, having a
principal place of business at 3525 North Regal Street, Spokane, Washington
99207-5788 ("Hollister-Stier") and ACUSPHERE, INC., having a principal place of
business at University Park at M.I.T., 38 Sidney Street, Cambridge,
Massachusetts 02139 ("Client"). Each of Hollister-Stier and Client are referred
herein individually as "Party" and collectively as the "Parties"


                                 WITNESSETH THAT

WHEREAS, Hollister-Stier has expertise, personnel, and experience in formulation
and/or finishing of pharmaceutical products and has the facilities to
manufacture such products and is willing to provide such manufacturing services
to client companies in the pharmaceutical area; and

WHEREAS, Client has a commercial interest in the manufacture of the Products (as
hereafter defined and identified from time to time upon mutual agreement by the
Parties) and requests the services of Hollister-Stier in manufacturing of such
Products for clinical trials pursuant to the Product Development Programs
identified from time to time upon mutual agreement by the Parties and
Hollister-Stier desires to manufacture such Products on behalf of Client
pursuant to such Product Development Programs and in accordance with the terms
and conditions contained herein.
NOW THEREFORE, the Parties agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

1.       As used in this Agreement, the following definitions shall apply:

         1.1      "AAA" shall have the meaning provided such term in Section
                  13.3.

         1.2      "All Applicable Laws and Regulations" shall mean all Federal,
                  State, and Local laws and regulations and, where applicable,
                  guidance documents promulgated by the FDA and being currently
                  utilized within the pharmaceutical industry to manufacture the
                  applicable type of Intermediate(s) and Product(s) that apply
                  to the services being provided hereunder by Hollister-Stier,
                  including but not limited to , the Federal Food Drug, and
                  Cosmetic Act (the "Act") as amended, and the regulations
                  promulgated thereunder, and the requirements of other domestic
                  or foreign governmental authorities made known to
                  Hollister-Stier by Client, as all of such laws, regulations or
                  requirements may be amended or reenacted from time to time.

         1.3      "Affiliate" shall mean any corporation or non-corporate
                  entity, which directly or indirectly controls, is controlled
                  by, or is under common control with a Party. A corporation or
                  non-corporate entity shall be regarded as in control of
                  another corporation if it owns or directly or indirectly
                  controls at least fifty percent (50%) of the voting stock of
                  the other corporation or (a) in the absence of the ownership
                  of at least fifty percent (50%) of the voting stock of a
                  corporation or

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Confidential

                  (b) in the case of a non-corporate entity, the power to direct
                  or cause the direction of the management and policies of such
                  corporation or non-corporate entity, as applicable.

         1.4      "Agreement" means this agreement, as it may from time to time
                  be supplemented or modified by written amendment(s) signed by
                  the Parties.

         1.5      "Active Pharmaceutical Ingredient (API)" shall mean the active
                  ingredient of the Intermediate(s) and/or Product(s).

         1.6      "Batch" or "Lot" shall mean, with respect to Products or
                  Intermediates each separate and distinct quantity of Product
                  or Intermediate, as the case may be, processed under
                  continuous conditions and designated by a batch or lot number.

         1.7      "cGMP Regulations" means Current Good Manufacturing Practices
                  as defined from time to time under the Act, as codified in 21
                  CFR parts 200 and 211 and any guidelines or guidances
                  promulgated by the FDA and being currently utilized within the
                  pharmaceutical industry to manufacture the applicable type of
                  product(s).

         1.8      "Certificate of Analysis (COA)" shall mean a document
                  certifying a Batch or Lot of Product meets all established and
                  mutually agreed upon Specifications as referenced, signed and
                  dated by a duly authorized representative of the Quality
                  Control or Quality Assurance Department of Client or
                  Hollister-Stier as the case may be.

         1.9      "Certificate of Testing (COT)" shall mean a document
                  certifying that certain tests mutually agreed upon in writing
                  by the Parties and conducted by Hollister-Stier on a Batch or
                  Lot of Intermediate and/or Product meet all established and
                  mutually agreed upon Specifications as referenced, signed and
                  dated by a duly authorized representative of the Quality
                  Control or Quality Assurance Department of Hollister-Stier.

         1.10     "Chemicals and Materials" shall mean the chemicals (other than
                  the intermediate), and other materials such as vials required
                  to manufacture and bulk package the Intermediate(s) and
                  Product(s) in accordance with the Intermediate(s) and
                  Product(s) Specifications.

         1.11     "Client" shall have the meaning provided such term in the
                  introductory paragraph to this Agreement.

         1.12     "Client Property" shall have the meaning provided such term in
                  Section 2.10.

         1.13     "Client's Technology Package" shall mean such technical
                  information to be supplied by Client to Hollister-Stier to
                  permit Hollister-Stier to carry out its obligations hereunder,
                  including but not limited to, Client's raw material and
                  manufacturing component specifications, Intermediate and
                  Product Specifications; manufacturing and analytical testing
                  equipment provided to Hollister-Stier by Client, manufacturing
                  equipment Installation Qualification (IQ) and Operational
                  Qualification (OQ) protocols, manufacturing and analytical
                  testing Standard Operating Procedures (SOP's), including
                  cleaning procedures; analytical method validation reports and
                  analytical testing method transfer protocols developed in
                  conjunction with Hollister-Stier which detail the specific
                  analytical testing methods to be used and the acceptance
                  criteria Hollister-Stier must satisfy to be qualified to
                  perform such analytical testing methods; manufacturing filter
                  validation reports (as applicable); Process Simulation
                  (Intermediate)/Media Fill (Product) Manufacturing Batch
                  Production Records, Intermediate and Product Manufacturing
                  Batch Production Records; Intermediate and Product Storage
                  specifications, and Product bulk shipping and label
                  specifications.

         1.14     "Confidential Information" shall mean any confidential
                  information of Hollister-Stier or which Hollister-Stier is
                  required to keep confidential that has been or will be
                  communicated by Hollister-Stier to Client or otherwise learned
                  by Client in connection with its performance of this

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                  Agreement, and any such information of Client or which Client
                  is required to keep confidential from time to time
                  communicated by Client to Hollister-Stier or otherwise learned
                  by Hollister-Stier in connection with its performance under
                  this Agreement, including, without limitation, Client's
                  Technology Package trade secrets, business methods, operating
                  procedures, manufacturing methods and processes, results of
                  clinical trials, financial information (including projections)
                  and processes, pricing, cost, supplier, manufacturing,
                  marketing and customer information, whether of a written, oral
                  or visual nature.

         1.15     "Conformance Verification Testing" shall have the meaning
                  provided such term in Section 7.11.

         1.16     "Costs" shall have the meaning provided such term in Section
                  4.

         1.17     "CTM" shall mean Clinical Trial Material (Product) to be used
                  for clinical trials, as opposed to product to be used for
                  commercial sale.

         1.18     "Effective Date" shall have the meaning provided such term in
                  the introductory paragraph of this Agreement.

         1.19     "FDA" means the United States Food and Drug Administration or
                  any successor organization and all agencies under their direct
                  control.

         1.20     "Hollister-Stier" shall have the meaning provided such term in
                  the introductory paragraph to this Agreement.

         1.21     "Hollister-Stier Property" shall have the meaning provided
                  such term in Section 2.8.

         1.22     "Indemnified Party" and "Indemnifying Party" shall have the
                  meanings provided such terms in Section 11.3.1.

         1.23     "Information" shall have the meaning set forth in Article 8 of
                  this Agreement.

         1.24     "Intermediate" shall mean a chemical compound formed as an
                  intermediate step in the Manufacturing Process between the
                  starting material(s) and the final Product.

         1.25     "Manufacturing Process" shall mean the process for
                  manufacturing the Intermediate(s) and/or the Product(s) as
                  precisely defined in Manufacturing Procedures.

         1.26     "Manufacturing Procedures" shall mean the precise, written
                  records of the Manufacturing Process for the Intermediate(s)
                  and Product(s), mutually developed and agreed to by the
                  Parties and which may be modified from time to time as agreed
                  to in writing by the Parties.

         1.27     "Party" and "Parties" shall have the meanings provided such
                  terms in the introductory paragraph to this Agreement.

         1.28     "Specifications" shall mean (1) the Intermediate and Product
                  performance parameters for which an Intermediate Product must
                  comply to be considered acceptable and (2) the written record
                  of the Intermediate and Product requirements annexed hereto
                  within the applicable Product Development Program Documents,
                  which specifications maybe amended from time to time by
                  written agreement of the Parties.

         1.29     "Product(s)" shall mean those products as set forth from time
                  to time within the appropriate Product Development Program
                  Documents annexed hereto.

         1.30     "Product Development Programs" shall mean the development
                  programs for the Intermediate(s) and Product(s) as agreed to
                  by the Parties and as described in the Product Development
                  Program Documents appended hereto from time to time as
                  Exhibits. The documents for each Product


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                  Development Program will be consolidated within a single
                  Exhibit (e.g., Exhibit A will contain documents relating to
                  the AI-850 Product Development Program).

         1.31     "Program Technology" shall have the meaning provided such term
                  in Section 2.10.

         1.32     "Third Party" shall mean any party other than Client,
                  Hollister-Stier and their respective Affiliates.

         1.33     "Third Party Claim" shall have the meaning provided such term
                  in Section 11.3.1



                                    ARTICLE 2

                               PRODUCT DEVELOPMENT

2.       Client shall provide and/or transfer to Hollister-Stier Client's
         Technology Package, solely for the purpose of Hollister-Stier carrying
         out its obligations under this Agreement.

         2.1      Client and Hollister-Stier shall jointly prepare and agree to
                  in writing Product Development Program Documents for each
                  Product, which shall incorporate the following:

                  2.1.1    A Product Development Schedule;

                  2.1.2    the stages in which the Product Development Program
                           is to be carried out (if any) and whether the
                           commencement of each stage is dependent on successful
                           completion of the previous stage;

                  2.1.3    identify the facilities, staffing, supplies and
                           equipment required for the Product Development
                           Program;

                  2.1.4    which Party is responsible for performing the various
                           tasks or stages of the Product Development Program;

                  2.1.5    set of objective criteria whereby it can be assessed
                           whether the Product Development Program (and any
                           stages thereof) have achieved its objectives;

                  2.1.6    identify all documentation (including regulatory
                           documentation) and other deliverables to be provided
                           by Hollister-Stier to Client;

                  2.1.7    a good faith estimate of the number of Batches or
                           Lots required to complete the Product Development
                           Program;

                  2.1.8    identify equipment provided by Client to
                           Hollister-Stier;

                  2.1.9    define Product Development Program costs; and

                  2.1.10   define Product Development Program payment schedule
                           in accordance with applicable milestones.

         2.2      Hollister-Stier shall provide written monthly reports to
                  Client, the content and format of said reports to be mutually
                  agreed on in writing by the Parties, detailing the status of
                  each Product Development Program.


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         2.3      Hollister-Stier shall respond in a timely manner to Client's
                  inquiries regarding the status of any Product Development
                  Program and keep Client reasonable informed of interim results
                  on an informal basis, including if requested, periodic
                  meetings at Hollister-Stier's facility to discuss Product
                  Development Program progress.

         2.4      Upon completion of a Product Development Program,
                  Hollister-Stier will provide Client with a written report of
                  the results, which have been developed, compiled or learned
                  during the course of the Product Development Program,
                  including other relevant manufacturing documentation such as
                  stability data, all as more particularly described in Exhibit
                  within the applicable Product Development Program Documents.

         2.5      Hollister-Stier and Client may from time to time negotiate in
                  good faith changes to any Product Development Program in the
                  event that:

                  2.5.1    Client's requirements change and, as a result, Client
                           determines that requirements stated in the Product
                           Development Program are no longer valid or needed.

                  2.5.2    Client requires additional services.

                  2.5.3    The standards or requirements with respect to the
                           Product Development Program need to be changed.

                  2.5.4    Either Party determines that a modification is
                           desirable.

                  2.5.5    Any modification shall be effective only when
                           approved in writing by the Parties.

         2.6      Each Party shall provide the other Party, in a timely fashion,
                  with all relevant information, documentation and data
                  necessary or appropriate for the Parties performance
                  hereunder. If requested by a Party to provide support or
                  information the other Party shall provide the support or
                  information within five (5) business days of the request,
                  unless additional time is requested based on a reasonable
                  explanation provided within five (5) business days of the
                  request. In the event a Party is to review or approve any
                  information, documentation, data or other materials supplied
                  by the other Party, such review or approval shall be completed
                  within five(5) business days, unless additional time is
                  requested based on a reasonable explanation provided within
                  five (5) business days of the request. Hollister-Stier and
                  Client shall cooperate in the performance of this Agreement
                  and each Party shall deal honestly and in good faith with the
                  other Party.

         2.7      Hollister-Stier shall ensure that all Chemicals and Materials
                  supplied by Hollister-Stier on behalf of the Product
                  Development Program(s) are suitable for use under this
                  Agreement, comply with Applicable Laws and Regulations
                  (including without limitation those relating to the import of
                  such materials) and receive all required governmental and
                  regulatory approvals, including without limitation customs and
                  FDA approvals.

         2.8      Ownership of Tangible Materials: Subject to Sections 2.9, 2.10
                  and 2.11, Client shall retain ownership of all information,
                  documents and materials (whether in electronic or written
                  form) which Client provides to Hollister-Stier in connection
                  with the performance of Product Development Programs
                  hereunder, and Client shall have full possession of, and all
                  rights to use, all reports, documents and other tangible
                  materials which Hollister-Stier provides to Client as part of
                  the results of such Product Development Programs. Information,
                  documents and materials provided by Client, and any copies
                  thereof, shall be returned to the Client by Hollister-Stier at
                  the conclusion of Product Development Programs.

         2.9      Hollister-Stier Property: Client acknowledges that
                  Hollister-Stier possesses certain inventions, processes,
                  know-how, trade secrets, improvements, other intellectual
                  properties and other assets, including but not limited to
                  procedures and techniques, computer technical expertise,
                  software, and certain technical expertise and conceptual
                  expertise in the area of drug processing and

                                       5
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                  manufacturing which have been independently developed by
                  Hollister-Stier or its Affiliates without the benefit of any
                  information provided by Client (collectively "Hollister-Stier
                  Property"). Client and Hollister-Stier agree that any
                  Hollister-Stier Property or improvements thereto which are
                  used, improved, modified or developed by Hollister-Stier under
                  or during the term of this Agreement are the product of
                  Hollister-Stier's technical expertise possessed and developed
                  by Hollister-Stier or it Affiliates prior to or during the
                  performance of this Agreement and are the sole and exclusive
                  property of Hollister-Stier or its Affiliates, as the case may
                  be.

         2.10     Client Property: Hollister-Stier acknowledges that Client
                  possesses certain inventions, processes, know-how, trade
                  secrets, improvements, other intellectual properties and other
                  assets, including but not limited to procedures and
                  techniques, computer technical expertise, software, and
                  certain technical expertise and conceptual expertise relating
                  to the Intermediate(s) and Product(s), which have been
                  independently developed by Client or its Affiliates without
                  the benefit of any information provided by Hollister-Stier
                  (collectively "Client Property"). Client and Hollister-Stier
                  agree that any Client Property or improvements thereto which
                  are used, improved, modified or developed by Client under or
                  during the term of this Agreement are the product of Client's
                  technical expertise possessed and developed by Client or its
                  Affiliates prior to or during the performance of this
                  Agreement and are the sole and exclusive property of Client or
                  its Affiliates, as the case may be.

         2.11     Ownership and Rights to Inventions and Technology: All
                  inventions, technology and information, whether patentable or
                  not (other than those described in Section 2.9, which shall be
                  owned by Hollister-Stier pursuant to Section 2.9), conceived,
                  reduced to practice or created by either Party and/or its
                  agents during the performance of this Agreement ("Program
                  Technology"), shall be owned by the Client; provided, however,
                  to the extent that any such inventions relates to the
                  production processes not related to manufacture of the
                  Intermediate(s) and Product(s), the Client shall grant and
                  hereby grants to Hollister-Stier a royalty free,
                  non-exclusive, world-wide, irrevocable license to practice
                  such Program Technology in facilities owned, operated,
                  licensed, rented or otherwise controlled by Hollister-Stier.
                  Client shall be responsible for the costs of filing,
                  prosecution and maintenance for patents and patent
                  applications on Program Technology and shall have full control
                  over such filing, provided that the decision to proceed with
                  any such filing shall be solely at the discretion of the
                  Client.



                                    ARTICLE 3

                   FACILITIES, STAFFING, SUPPLIES & EQUIPMENT

3.       Renovations to Hollister-Stier facilities are required to perform the
         Product Development Program(s). Such renovations will provide Client
         with CTM and early commercial scale-up capability for manufacturing
         Intermediates and Products. The renovations will create a manufacturing
         area dedicated to Client. Excess capacity of this dedicated area not
         utilized by Client may be used by Hollister-Stier upon written approval
         from Client. Such approval will not be unreasonably withheld. Client's
         equipment as defined herein may not be used by Hollister-Stier or
         Hollister-Stier clients.

         3.1      Hollister-Stier shall maintain at all times sufficient
                  staffing, supplies and equipment necessary for it to perform
                  Product Development Program(s) in accordance with the terms of
                  this Agreement. Client, in accordance with this Agreement,
                  shall provide and/or disclose to Hollister-Stier certain
                  materials, equipment and know-how, defined as the Client's
                  Technology Package.

         3.2      Client shall provide Hollister-Stier with the use of certain
                  analytical and manufacturing equipment as defined in Product
                  Development Program Documents.


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         3.2.1    During the term of this Agreement, Client shall, at its sole
                  expense and in a timely manner, deliver the equipment to
                  Hollister-Stier for installation and use solely in performing
                  the Product Development Program(s). The Parties shall
                  cooperate in the installation, calibration, confirmation,
                  qualification, validation, maintenance, cleaning and handling
                  of the equipment. As and to the extent reflected within the
                  applicable Product Development Program Documents annexed to
                  this Agreement, the calibration of the equipment will be at
                  Hollister-Stier's cost, but Client shall have the right to
                  review and approve all installation, calibration,
                  confirmation, qualification, validation, maintenance,
                  operation and cleaning procedures and data for the equipment
                  as stated within the applicable Product Development Program
                  Documents annexed to this Agreement. Cost for maintenance and
                  any requalification/revalidation of the equipment during the
                  term of this Agreement shall be borne by Hollister-Stier
                  except for such costs which are associated with the condition
                  of the equipment when it was delivered to Hollister-Stier,
                  which costs shall be borne by Client. During the term of this
                  Agreement, the equipment shall be exclusively dedicated to the
                  production of the Intermediate(s) and Product(s).

         3.2.2    At all times Client shall retain all legal and equitable title
                  to the equipment. While the equipment is located on
                  Hollister-Stier's premises, Hollister-Stier shall promptly
                  notify Client of any damages to the equipment. Any cost to
                  repair equipment that is damaged while in the custody of
                  Hollister-Stier, except to the extent caused by Client, will
                  be at Hollister-Stier's sole cost and expense. Hollister-Stier
                  must receive oral approval from Client, which will not be
                  unreasonably withheld, conditioned or delayed, before any
                  repairs to the equipment are performed. Hollister-Stier will
                  provide timely, written documentation to Client detailing the
                  repairs made to the equipment. Upon Client's written request,
                  or any termination or expiration of this Agreement, the
                  equipment and equipment related documentation (including all
                  calibration certificates and reports, use and cleaning logs,
                  confirmation, qualification, validation and maintenance
                  documents) shall be promptly returned to Client in good
                  condition, usual wear and tear excepted. Hollister-Stier shall
                  make its premises and personnel available during normal
                  business hours to assist with the removal and return of the
                  equipment, along with all equipment related documentation.
                  Client shall be responsible for all cost and expenses for the
                  removal of the equipment. The Parties shall reasonably
                  cooperate with regard to the restoration of the Product
                  Development Program facilities. While the equipment is located
                  on their premises, Hollister-Stier shall (1) at its sole
                  expense, safeguard and care for the equipment, subject to
                  normal wear and tear, (2) not grant any person a security
                  interest, lien or any other rights or interest in or to the
                  equipment; and (3) not remove, deface, alter, obscure or
                  obliterate any mark, tag or other information or
                  identification or statement of ownership placed on the
                  equipment by Client.

                                    ARTICLE 4

                        PRODUCT DEVELOPMENT PROGRAM COSTS

4.       The costs that are to be incurred for a Product Development Program
         (the "Costs") shall be defined in Exhibits as part of Product
         Development Program Documents. Such Costs shall be estimated based on
         anticipated manpower and overhead requirements for the tasks set forth
         in the Product Development Program and the anticipated costs of
         Chemicals and Materials, but shall exclude the cost of API's which
         shall be procured by Client and provided by Client to Hollister-Stier
         at Client's sole expense. Client shall pay or reimburse Hollister-Stier
         for the Costs described in the Product Development Program in the
         amounts set forth in the Product Development Program Documents and in
         accordance with the procedures set forth in Section 4.1 below. In
         addition, Client shall, for such expenses and costs that are expressly
         authorized in writing in advance by Client, separately pay
         Hollister-Stier, on an as-costs-are-incurred basis in accordance with
         Section 4.1, (1) for all reasonable and necessary travel and lodging
         expenses reasonably incurred in the performance of this Agreement which
         have been

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         requested and approved by Client, (2) for Hollister-Stier's cost of
         auditing any supplier of Chemicals or Materials not currently on
         Hollister-Stier's list of approved suppliers, and (3) Hollister-Stier's
         cost for any specialized equipment or tooling associated with equipment
         changes required at the facility to manufacture the Intermediate(s) and
         Product(s). In the event Client and Hollister-Stier agree that
         additional manufacturing activities are necessary to complete a Product
         Development Program, the costs shall be negotiated in good faith by the
         Parties.


         4.1      Invoices and Payment: Hollister-Stier will submit invoices to
                  Client reflecting the work completed in accordance with the
                  applicable milestones described in the applicable Product
                  Development Program Documents. Client shall pay all
                  uncontested Hollister-Stier invoices issued pursuant to this
                  Agreement within thirty (30) days of the date thereof. Client
                  shall, within the thirty (30) day period notify
                  Hollister-Stier regarding any contested amounts or questions
                  regarding an invoice or invoice item. Hollister-Stier agrees
                  to respond to requests by Client to clarify questions on any
                  invoice or invoice item, and Client agrees it will use its
                  commercially reasonable best efforts to resolve contested
                  invoice items in a timely fashion. Hollister-Stier
                  acknowledges and agrees that Client is not obligated to pay
                  such contested amounts otherwise due and payable within the
                  thirty (30) day period until such time as the contested issues
                  are resolved to the satisfaction of both Parties, and that
                  Client will not be subject to any penalty or finance charge
                  for such withheld payments. All payments due hereunder to
                  Hollister-Stier shall be sent to Hollister-Stier at the times
                  set forth herein by wire transfer of funds via the Federal
                  Reserve Wire Transfer System to US Bank, ABA #125000105,
                  Spokane, Washington. Beneficiary: Hollister-Stier Laboratories
                  LLC, Account # 153590920671, Swift Code USBKUS44JMT.

                  All amounts not paid when due, with the exception of contested
                  invoices as described herein, shall bear interest from the due
                  date at the rate of one and one-half percent (1.5%) per month
                  (or such other percentage, if lower, as shall not exceed the
                  maximum rate permitted by law).

                  The Costs shall not include sales, use, consumption, or excise
                  taxes of any taxing authority. Hollister-Stier shall notify
                  Client of any such tax at the execution of this Agreement or
                  upon learning that such taxes are applicable to any of the
                  Product(s) contemplated by this Agreement. The amount of such
                  taxes, if any, will be added to the Costs and shall be
                  reflected in the invoices submitted to Client by
                  Hollister-Stier pursuant to this Agreement. Client shall pay
                  the amount of such taxes to Hollister-Stier in accordance with
                  the payment provisions of this Agreement.



                                    ARTICLE 5

                                  MANUFACTURING

5.       The Parties agree to the following provisions regarding the
         manufacturing of CTM batches within a Product Development Program:

         5.1      Prior to initiating any aseptic process validation and Batch
                  or Lot manufacturing, the Parties shall prepare and agree upon
                  Manufacturing Procedures for the Intermediate(s) and
                  Product(s), which when prepared and agreed to by the Parties
                  shall be annexed to this Agreement.

         5.2      Prior to initiating any aseptic process validation and Batch
                  or Lot manufacturing, the Parties shall prepare and agree upon
                  Master Quality Control analytical testing methods and
                  procedures for testing the Chemicals and Materials,
                  Intermediate(s) and Product(s) for conformance to the
                  Specifications, which when prepared and agreed to by the
                  Parties shall be annexed to this Agreement. In addition, the
                  Parties shall prepare and agree upon Master Quality Control
                  analytical testing method transfer protocols (as applicable)
                  that detail the specific analytical

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                  testing methods to be transferred and the acceptance criteria
                  Hollister-Stier must satisfy to be qualified to perform such
                  analytical testing methods, which when prepared and agreed to
                  by the Parties shall be annexed to this Agreement.

         5.3      Prior to initiating any aseptic process validation and Batch
                  or Lot manufacturing, Hollister-Stier will provide Client with
                  a list of all applicable Standard Operating Procedures
                  (SOP's), including revision numbers, for the equipment,
                  utilities, facilities, and other systems related to the
                  manufacturing, inspection, testing, bulk packaging and storage
                  of the Intermediate(s) and Product(s). Client will review all
                  applicable SOP's and any revisions thereto related to the
                  equipment, utilities, facilities, and other systems relating
                  to the manufacturing, inspection, testing, bulk packaging, and
                  storage of the Intermediate(s) and Product(s).



                                    ARTICLE 6

                             DELIVERY OF PRODUCT(S)

6.       The Parties agree to the following provisions regarding delivery of
         Product(s):

         6.1      In accordance with the manufacturing milestones established by
                  the Parties and detailed within the applicable Product
                  Development Program Documents annexed to this Agreement,
                  Hollister-Stier shall produce and deliver the Product(s) to
                  the Client in single shipments at the option and request of
                  Client using a carrier expressly approved in writing by the
                  Parties, and pursuant to the Client's shipping requirements
                  defined within the applicable Product Development Program
                  Documents annexed to this Agreement and using
                  Hollister-Stier's or Client's bulk shipping container(s) as
                  mutually agreed upon by the Parties. Product delivered to
                  Client shall be shipped F.O.B. Hollister-Stier, Spokane, WA,
                  either freight collect or freight prepaid to a location
                  designated by Client.

         6.2      Hollister-Stier shall retain appropriate representative
                  samples at controlled storage temperatures, as agreed upon in
                  writing by the Parties and detailed in applicable Product
                  Development Program Documents, from each batch of Intermediate
                  and Product for record keeping, testing and regulatory
                  purposes. As applicable, the amount of samples retained will
                  be twice the quantity required to carry out all of the tests
                  required by the Intermediate and Product Specifications, with
                  the exception of sterility and LAL testing. Documented
                  accountability of all samples must be maintained.



                                    ARTICLE 7

                                 QUALITY CONTROL

7.       Hollister-Stier and Client agree to the following Quality Control
         Procedures:

         7.1      Before authorizing shipment of any Batch or Lot of Product,
                  Hollister-Stier shall conduct and complete quality control
                  testing of the Intermediate and Batch or Lot of Product (as
                  applicable) according to Product Development Program Documents
                  and confirm in writing that the Intermediate and Batch or Lot
                  of Product (1) were manufactured according to Manufacturing
                  Procedures and All Applicable laws and Regulations and (2)
                  meet the applicable Specifications.

                  7.1.1    Client and Hollister-Stier agree that for certain
                           Product Development Programs to be mutually agreed
                           upon in writing between the Parties, the Client shall
                           conduct and complete testing of the Intermediate and
                           Batch or Lot of Product (as applicable)

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                           according to Specifications. The extent and
                           responsibility of such testing will be mutually
                           agreed upon in writing by the Parties. For such
                           testing that may be performed by Hollister-Stier
                           under such a Product Development Program,
                           Hollister-Stier shall conduct such testing according
                           to the Specifications. Regardless of the
                           aforementioned, Hollister-Stier remains responsible
                           for confirming in writing that the Intermediate and
                           Product (1) were manufactured according to
                           Manufacturing Procedures and All Applicable Laws and
                           Regulations and (2) meet the applicable
                           Specifications.

         7.2      As per Section 7.1.1, each Intermediate and Batch or Lot of
                  Product shall be accompanied by a Certificate of Analysis
                  (COA).

         7.3      Each Batch or Lot shall be accompanied by a copy of the
                  Manufacturing Procedures for the delivered Batch or Lot of
                  Product and Batch or Lot of Intermediate used to manufacture
                  the delivered Batch or Lot of Product, including all test data
                  for the Batches and including all documents and test data
                  pertinent to Hollister-Stier's facilities, systems and
                  utilities involved in the manufacture of the Batches, all of
                  which are to be certified, stamped and signed by authorized
                  Hollister-Stier Quality Assurance personnel as being accurate
                  and complete and in accordance with this Agreement.

         7.4      Hollister-Stier may, at its sole discretion, transmit the
                  information specified in Sections 7.2 and 7.3 of this
                  Agreement separately from the applicable Batch or Lot of
                  Product, but Hollister-Stier acknowledges that such separate
                  transmission shall be made at or about the time of the
                  shipment of the Batch or Lot of Product.

         7.5      Hollister-Stier shall immediately notify Client and provide
                  complete documentation regarding any known deviations and or
                  errors by Hollister-Stier personnel from procedures set forth
                  in:

                  7.5.1    Manufacturing Procedures
                  7.5.2    Equipment procedures
                  7.5.3    Analytical test methods
                  7.5.4    Utilities, facility or other systems

         7.6      Hollister-Stier shall immediately notify Client and provide
                  complete documentation regarding of any out-of-specification
                  test data or results pertaining to any testing carried out in
                  relation to the manufacture of the Intermediate(s) and/or
                  Product(s) or operation of the facilities involved in the
                  manufacturing of the Intermediate(s) and/or Product(s).

         7.7      Hollister-Stier shall obtain Client's written approval prior
                  to implementing any further manufacturing, retesting or
                  resampling in connection with a deviation, error or out-of
                  specification test data or result for the Intermediate(s)
                  and/or Product(s), except for further manufacturing, retesting
                  or resampling procedures specifically authorized under Client
                  approved procedures in effect prior to the occurrence of the
                  deviation, error or the out-of-specification test data or
                  result.

         7.8      Except as provided in a procedure approved in writing by
                  Client, Hollister-Stier acknowledges and agrees that it shall
                  not rework or reprocess any non-conforming raw materials,
                  in-process materials, Intermediate(s) or Product(s).
                  Deviations undertaken by Hollister-Stier, unless expressly
                  approved in advance by Client, remain the responsibility of
                  Hollister-Stier.

         7.9      Any failure of any aseptic validation batch (media fill) or
                  Batches of Intermediate(s) or Product(s) resulting from such
                  deviations or errors by Hollister-Stier personnel shall be the
                  responsibility of Hollister-Stier. Hollister-Stier, at its
                  total expense, will be responsible for replacing a Batch of
                  Intermediate or Product that is rejected because of such
                  deviations or errors by Hollister-Stier personnel.


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         7.10     Hollister-Stier is responsible for formally investigating and
                  documenting any failures to follow or deviations from
                  Manufacturing Procedures or analytical testing procedures, any
                  test or in-process test which fails to meet Specifications or
                  any failure of the equipment, utilities, facility or other
                  systems used to manufacture the Intermediate(s) and
                  Product(s), in accordance with Hollister-Stier's procedures
                  and cGMP Regulations. Such investigation shall be completed,
                  documented and provided to Client in a timely manner.

         7.11     Non-Conforming Intermediate or Product: Client from time to
                  time may conduct verification testing of Batches or Lots of
                  Intermediate(s) or Product(s) in accordance with the
                  Specifications ("Conformance Verification Testing"). Such
                  Conformance Verification Testing shall be initiated promptly
                  upon receipt of any Batches or Lots and shall be completed
                  within thirty (30) days. Client shall have the right to
                  reject, and to revoke any acceptances for, any Batches or Lots
                  of Intermediate(s) and all Batches or Lots of Product(s) made
                  from such Batches or Lots of Intermediate(s) that fail to meet
                  Specifications (including stability where a stability
                  specification is established and failure is due to a
                  manufacturing deficiency) and other material requirements
                  under this Agreement (including Intermediate or Product
                  determined not to have been manufactured in accordance with
                  this Agreement).

                  7.11.1   All claims of non-conformance arising from the
                           Conformance Verification Testing, except for good
                           cause, shall be deemed waived unless made by the
                           Client in writing and received by Hollister-Stier
                           within forty-five (45) days of Client's receipt of
                           the documentation specified in Sections 7.2 and 7.3.

                  7.11.2   If, after its own analysis of the Intermediate or
                           Product Batch(es) or Lot(s), or other information,
                           Hollister-Stier confirms the non-conformity,
                           Hollister-Stier shall manufacture and ship a
                           replacement Batch(es) or Lot(s) for the
                           non-conforming Batch(es) or Lot(s) or shipment at its
                           expense.

                  7.11.3   If, after its own analysis of the Intermediate or
                           Product Batch(es) or Lot(s), Hollister-Stier does not
                           confirm the non-conformity, the Parties shall in good
                           faith agree to retest the Batch(es) or Lot(s) or
                           otherwise in good faith attempt to agree on a
                           resolution of the issue. In the event that the
                           Parties cannot resolve the issue, the Parties shall
                           submit the disputed Batch(es) or Lot(s) to a mutually
                           agreed independent testing laboratory or other expert
                           for testing and review. That laboratory's or expert's
                           finding shall be binding on the Parties, absent
                           manifest error.

                  7.11.4   Hollister-Stier shall bear such expense of the
                           independent laboratory testing or other expert review
                           if testing or expert review confirms the
                           non-conformity of the Batch(es) or Lot(s) with
                           applicable Specifications, and Client shall bear such
                           expenses otherwise.

                  7.11.5   In the event that any Batch(es) or Lot(s) is
                           ultimately agreed or determined to not meet the
                           Specifications, Hollister-Stier shall at Client's
                           election use its commercially reasonable best efforts
                           to promptly (but no longer than within sixty (60)
                           days from the date of such agreement or
                           determination) manufacture and ship a replacement
                           Batch(es) or Lot(s) for the non-conforming Batch(es)
                           or Lot(s) at its expense.

                  7.11.6   Client shall return, or cause its designee to return,
                           any rejected or revoked Batch(es) or Lot(s) to
                           Hollister-Stier if so instructed by Hollister-Stier,
                           at Hollister-Stier's expense.

                  7.11.7   In the event that any Batch(es) or Lot(s) are
                           ultimately agreed or found to meet the Specifications
                           and other applicable requirements, Client shall
                           accept and pay for the Batch(es) or Lot(s).



                                    ARTICLE 8




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                                 CONFIDENTIALITY


8.       In carrying out Product Development Program(s) it is recognized by
         Hollister-Stier and Client that each may have to disclose to the other
         Confidential Information. Since both parties wish to assume that
         Confidential Information is properly protected they hereby agree as
         follows:

         8.1      Form of Disclosure: Confidential Information may be disclosed
                  in either oral, written or electronic form.

         8.2      Obligations: The receiving Party agrees to hold Confidential
                  Information in strict confidence and to use it only for the
                  purposes under this Agreement. The receiving Party agrees not
                  to disclose the Confidential Information to any Third Party
                  unless prior written authorization has been obtained from the
                  disclosing Party. These obligations shall not apply to:

                  8.2.1    Information which, at the time of disclosure, is in
                           the public domain.

                  8.2.2    Information which, after disclosure, becomes part of
                           the public domain by publication or otherwise, except
                           by breach of this Agreement by the receiving Party.

                  8.2.3    Information which the receiving Party can demonstrate
                           by its written records was in the receiving Party's
                           possession at the time of the disclosure, and which
                           was not acquired directly or indirectly, from the
                           disclosing party.

                  8.2.4    Information which is lawfully disclosed to the
                           receiving Party on a non-confidential basis by a
                           Third Party who is not obligated to the Disclosing
                           Party or any other Third Party to retain such
                           information in confidence.

                  8.2.5    Information which results from research and
                           development by the receiving Party independent of
                           such disclosure as shown by competent evidence.

                  8.2.6    Information which is required to be disclosed by
                           legal process; provided, in each case the Party so
                           disclosing such Information timely informs the other
                           Party and used its best efforts to limit the
                           disclosure and maintain confidentiality to the extent
                           possible and permits the other Party to attempt by
                           appropriate legal means to limit such disclosure.



                                    ARTICLE 9

                                HOLLISTER-STIER'S
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

9.       Hollister-Stier represents, warrants and covenants to Client as
         follows:

         9.1      Commercially Reasonable Best Efforts: Hollister-Stier shall
                  use its commercially reasonable best efforts to perform the
                  services contemplated hereunder in accordance with the Product
                  Development Programs, it being recognized, however, that since
                  the services are of a development nature, there can be no
                  guarantee that the Product Development Programs will be
                  successfully completed, or successfully completed within the
                  contemplated time frame, despite Hollister-Stier's
                  commercially reasonable best efforts to do so. However,
                  following the successful completion of the required media fill
                  Batches, Hollister-Stier will be responsible for manufacturing
                  the Intermediate(s) and Product(s) to Specifications agreed
                  upon by the Parties in writing. If Hollister-Stier is, for any
                  reason, unable to meet any contemplated time frame in a
                  Product Development Program, it shall immediately notify
                  Client of same, as provided in Article

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                  2. Hollister-Stier shall negotiate with Client a mutually
                  acceptable date of completion for the respective stage of the
                  Product Development Program, and Hollister-Stier shall use its
                  commercially reasonable best efforts to complete the Product
                  Development Program within such newly agreed upon time.


         9.2      Adherence to Specifications: Hollister-Stier shall, subject to
                  Section 9.1 hereof, produce the Intermediate(s) and Product(s)
                  in accordance with the Specifications for the Intermediates(s)
                  and Product(s).

         9.3      Qualified Personnel: Hollister-Stier shall engage and employ,
                  train and supervise professionally qualified personnel to
                  safely and lawfully perform the services contemplated
                  hereunder.

         9.4      Access: Client at its discretion may have its representatives
                  observe the performance of the Product Development Programs
                  under this Agreement, including any equipment, facility or
                  analytical qualification; manufacturing, inspection and bulk
                  packaging activities to provide appropriate technical support
                  and to ensure compliance with All Applicable Laws and
                  Regulations. Hollister-Stier, at its cost, will provide
                  Client's representatives carrying out such observations with
                  reasonable office space and telephone access. This access
                  shall not be used to conduct general GMP compliance audits
                  which are subject to the restrictions of Section 9.5.

         9.5      Audit and Inspection by Client: Hollister-Stier shall allow
                  Client or its authorized representatives access, during normal
                  business hours, to Hollister-Stier facilities for the purpose
                  of performing quality audits. Hollister-Stier shall provide
                  Client with all necessary assistance, including access to
                  relevant documents and reports, during such audits. Client may
                  audit Hollister-Stier's facilities and quality programs for
                  the Intermediate(s) and Product(s) one time per year. Client
                  shall limit the number of auditors to a maximum of three (3)
                  individuals and the duration of the audit to three (3) days.

         9.6      General: Hollister-Stier shall exercise all due and reasonable
                  care with regard to all raw materials, components, equipment,
                  Intermediate(s) and Product(s) in its custody relating to the
                  Product Development Program(s). Hollister-Stier warrants that
                  it has the capacity, cGMP facilities, equipment, personnel,
                  skill, know-how, permits, approvals, and licenses to perform
                  the Product Development Program(s).

         9.7      Debarment: Hollister-Stier represents and warrants to Client
                  that it has neither been debarred nor subject to debarment and
                  that it does not and will not use in any capacity in
                  connection with any Product Development Program any person who
                  has been debarred pursuant to Section 306 of the Act or who is
                  the subject of a conviction (or an investigation or
                  prosecution for an offense) described in this section.
                  Hollister-Stier agrees to inform Client immediately in writing
                  if it or any person who is performing a Product Development
                  Program hereunder on behalf of Hollister-Stier is debarred or
                  is the subject of a conviction described in Section 306 of the
                  Act or if any action, suit, claim, investigation or proceeding
                  is pending or, to the knowledge of Hollister-Stier, threatened
                  relating to debarment of Hollister-Stier or any person
                  performing the Product Development Program on behalf of
                  Hollister-Stier hereunder.

         9.8      Disclaimer: THE FOREGOING EXPRESS WARRANTIES, TOGETHER WITH
                  THOSE SETFORTH IN ARTICLE 10, ARE IN LIEU OF ALL OTHER
                  WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,
                  ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
                  PURPOSE, OR AGAINST INFRINGEMENTS, AND ALL OTHER WARRANTIES
                  ARE HEREBY DISCLAIMED AND EXCLUDED BY HOLLISTER-STIER.



                                           ARTICLE 10


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                     GENERAL REPRESENTATIONS AND WARRANTIES

10.      Each Party represents, warrants and covenants to the other as follows:

         10.1.    Power and Authorization: It has all requisite power and
                  authority (corporate and otherwise) to enter into this
                  Agreement and has duly authorized by all necessary action the
                  execution and delivery hereof by the officer or individual
                  whose name is signed on its behalf below.

         10.2.    No Conflict: Its execution and delivery of this Agreement and
                  the performance of its obligations hereunder do not and will
                  not conflict with or result in a breach of or a default under
                  its organizational instruments or any other agreement,
                  instrument, order, law or regulation applicable to it or by
                  which it may be bound.

         10.3.    Enforceability: This Agreement has been duly and validly
                  executed and delivered by it and constitutes its valid and
                  legally binding obligation, enforceable in accordance with its
                  terms, except as enforcement may be limited by bankruptcy,
                  insolvency or other laws of general application relating to or
                  affecting the enforcement of creditor's rights and except as
                  enforcement is subject to general equitable principles.

         10.4.    Compliance with Applicable Laws: Each Party shall comply with
                  All Applicable Laws and Regulations in connection with the
                  performance of this Agreement. Hollister-Stier acknowledges
                  and agrees that, upon the written request of Client, it shall
                  comply with the laws and regulations of any foreign
                  governmental authorities as set forth in the written request.

         10.5.    Financial Condition: It has delivered to the other Party
                  financial statements containing a balance sheet as of June 30,
                  2001 and related statements of operation and cash flows for
                  the six-month period then ended. Such financial statements
                  have been prepared in accordance with generally accepted
                  accounting principals (except that such statements do not
                  contain footnotes and are subject to year end adjustments on
                  audit which shall not in the aggregate be material) and fairly
                  present the financial condition of such Party as of such date.
                  In addition, it has disclosed to the other Party all facts
                  relating to its financial conditions and prospects that are
                  material to an understanding of its financial condition and
                  prospects.

         10.6.    Notice of Potential Liability: Each Party shall notify the
                  other in writing as soon as reasonably possible following any
                  event, including the receipt of any notice, warning, citation,
                  finding, report or service of process or the occurrence of any
                  release, spill, upset or discharge of hazardous wastes or
                  substances, related to a Product Development Program that
                  could reasonably be expected to give rise to liability on the
                  part of the other Party under any law, rule or regulation
                  prescribed by a public authority or otherwise which could
                  reasonably be expected to have a material adverse effect on
                  the Party's business or financial condition.

         10.7.    Intellectual Property: Each Party represents and warrants to
                  the other that it owns/or has full legal rights to use its
                  respective intellectual property as described herein in
                  conjunction with and to the extent required to perform all
                  work required under this Agreement.



                                   ARTICLE 11

                                 INDEMNIFICATION

11.      The Parties agree to the following Indemnification clauses:


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         11.1.    Indemnification by Client: Client shall indemnify, defend and
                  hold Hollister-Stier, its Affiliates and their respective
                  directors, officers, employees, agents, successors and assigns
                  harmless from and against any damages, judgements, claims,
                  suits, actions, liabilities, costs and expenses (including but
                  not limited to, reasonable attorneys' fees) resulting from any
                  Third Party claims or suits arising solely out of (1) the use,
                  handling, distribution, marketing or sale of the Product(s)
                  (except to the extent caused by Hollister-Stier's negligent
                  acts or omissions or willful misconduct in its performance of
                  the Product Development Program(s) or the manufacture or bulk
                  packaging of the Intermediate(s) and Product(s), (2) Client's
                  uncured material breach of any of its warranties or
                  representations hereunder, or (3) Client's grossly negligent
                  acts or omissions or willful misconduct.

         11.2.    Indemnification by Hollister-Stier: Except as otherwise
                  provided in Section 11.1 above, Hollister-Stier shall
                  indemnify, defend and hold Client, its Affiliates and their
                  respective directors, officers, employees, agents, successors
                  and assigns harmless from and against any damages, judgements,
                  claims, suits, actions, liabilities, costs and expenses
                  (including but not limited to, reasonable attorneys' fees)
                  resulting from any Third Party claims arising solely out of
                  (1) Hollister-Stier's material breach of any of its warranties
                  or representations hereunder or (2) Hollister-Stier's grossly
                  negligent acts or omissions or willful misconduct in its
                  performance of the Product Development Program(s) or the
                  manufacture or bulk packaging of the Intermediate(s) and
                  Product(s).




         11.3.    Indemnification Procedures:

                  11.3.1.  Any Party hereto seeking indemnification hereunder
                           (in this context the "Indemnified Party") shall
                           notify the other Party (in this context the
                           "Indemnifying Party") in writing reasonably promptly
                           after the assertion against the Indemnified Party any
                           Claim by a Third Party (a "Third Party Claim") in
                           respect of which the Indemnified Party intends to
                           base a Claim for indemnification hereunder.

                  11.3.2.  (1) The Indemnifying Party shall have the right, upon
                           written notice given to the Indemnified Party within
                           thirty (30) days after receipt of the notice from the
                           Indemnified Party of any Third Party Claim, to assume
                           the defense and handling of such Third Party Claim,
                           at the Indemnifying Party's sole expense, in which
                           case the provisions of Section 11.3.2 (2) below shall
                           govern. (2) The Indemnifying Party shall select
                           counsel reasonably acceptable to the Indemnified
                           Party in connection with conducting the defense and
                           handling of such Third Party Claim, and the
                           Indemnifying Party shall defend or handle the same in
                           consultation with the Indemnified Party, and shall
                           keep the Indemnified Party appraised of the status of
                           the Third Party Claim. The Indemnifying Party shall
                           not, without the prior written consent of the
                           Indemnified Party, which consent will not be
                           unreasonably withheld, agree to a settlement of any
                           Third Party Claim that could directly or indirectly
                           lead to liability or create any financial or other
                           obligation on the part of the Indemnified Party for
                           which the Indemnified Party is not entitled to
                           indemnification hereunder. The Indemnified Party
                           shall cooperate with the Indemnifying Party and shall
                           be entitled to participate in the defense or handling
                           of such Third Party Claim with its own counsel at its
                           own expense.

                  11.3.3.  (1) If the Indemnifying Party does not give written
                           notice to the Indemnified Party, within thirty (30)
                           days after receipt of the notice from the Indemnified
                           Party of any Third Party Claim, of the Indemnifying
                           Party's election to assume the defense or handling of
                           such Third Party Claim, the provisions of Section
                           11.3.3 (2) below shall govern. (2) The Indemnified
                           Party may, at the Indemnifying Party's expense,
                           select counsel in connection with conducting the
                           defense or handling of such Third Party Claim and
                           defend or handle such Third Party Claim in such
                           manner as it may deem appropriate, provided, however,
                           that the Indemnified Party shall keep the
                           Indemnifying Party timely appraised of the status of


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                           such Third Party Claim and shall not settle such
                           Third Party Claim without the prior written consent
                           of the Indemnifying Party, which consent shall not be
                           unreasonably withheld. If the Indemnified Party
                           defends or handles such Third Party Claim, the
                           Indemnifying Party shall cooperate with the
                           Indemnified Party and shall be entitled to
                           participate in the defense or handling of such Third
                           Party Claim with its own counsel and at its own
                           expense.

                  11.3.4.  If the Indemnified Party intends to seek
                           indemnification hereunder, other than for a Third
                           Party Claim, then it shall notify the Indemnifying
                           Party in writing within three months after its
                           discovery of facts upon which it intends to base its
                           Claim for indemnification hereunder; provided,
                           however, the failure to timely give such notice shall
                           limit the Indemnifying Party's liability for
                           indemnification only to the extent the Indemnifying
                           Party's defense of such matter has been prejudiced.

                  11.3.5.  Except with regard to fraud, the indemnification
                           remedies in this Article 11, enforced in accordance
                           with Section 13.3, shall constitute the sole and
                           exclusive remedies of the Parties with respect to any
                           matters arising under or relating to this Agreement.

         11.4.    Survival of Indemnification Obligations: The provisions of
                  this Article 11 shall survive the expiration or termination of
                  this Agreement for a period of five (5) years.

         11.5.    Limitation of Liability and Claims: Hollister-Stier shall not
                  be liable to Client for indirect, special, punitive, or
                  consequential damages of any kind, including without
                  limitation lost profits or loss of good will or otherwise.
                  Neither Party's liability to the other under this Agreement
                  shall exceed five million dollars ($5,000,000.00).

         11.6.    Insurance: Both Client and Hollister-Stier shall obtain and
                  maintain, either itself or through one or more of its
                  affiliates, with reputable carriers, product liability
                  insurance with limits of not less than $10,000,000 per
                  claim/annual aggregate by no later than the scheduled
                  manufacturing date for the first CTM Batch of Product(s)
                  delivered as part of the first Product Development Program(s)
                  conducted under this Agreement. Each Party hereto shall have
                  its insurance carrier(s) furnish the other Party hereto with a
                  certificate that such insurance is in force. In the event of
                  any proposed cancellation, non-renewal, or material adverse
                  change in such coverage, the other Party hereto shall be given
                  at least thirty (30) days advance written notice thereof.



                                   ARTICLE 12

                              TERM AND TERMINATION

12.      The Parties agree to the following Term and Termination clauses:

         12.1.    Term: This Agreement shall remain in full force and effect to
                  and including November 30, 2005 unless and until terminated in
                  accordance with the provisions of this Article or both Parties
                  to this Agreement agree in writing to extend the Term.

         12.2.    Termination by Mutual Agreement: This Agreement may be
                  terminated, on a Product Development Program by Product
                  Development Program basis or in its entirety, at any time upon
                  mutual written agreement between the Parties.

         12.3.    Termination for Default: This Agreement may be terminated by
                  either Party in the event of material breach or default by the
                  other Party of the terms and conditions hereof; provided,
                  however, the other Party shall first give to the defaulting
                  Party written notice of the proposed termination or
                  cancellation of this Agreement, specifying the grounds
                  therefor. Upon receipt of such notice, with respect to such
                  defaults as are capable of being cured, the defaulting Party
                  shall

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                  have sixty (60) days to respond by curing such default (or ten
                  (10) days with respect to a failure by Client to pay any
                  amounts hereunder when due, with the exception of contested
                  amounts for which the Client has provided notice to
                  Hollister-Stier as provided in Article 4 hereof. If the
                  breaching Party does not respond or fails to work diligently
                  and to cure such breach within the additional time set forth
                  above, then the other Party may either suspend the Agreement
                  indefinitely or terminate the Agreement. Termination of this
                  Agreement pursuant to this Section 12.3 shall not affect any
                  other rights or remedies which may be available to the
                  nondefaulting Party.

         12.4.    Bankruptcy; Insolvency:

                  12.4.1.  Either Party may terminate this Agreement upon the
                           occurrence of any of the following with respect to
                           the other Party:

                           12.4.1.1. The entry of a decree or order for relief
                                    by a court having jurisdiction in the
                                    premises in respect of such other Party in
                                    an Involuntary case under the Federal
                                    Bankruptcy Code, as now constituted or
                                    hereafter amended, or any other applicable
                                    federal or state insolvency or other similar
                                    law and the continuance of any such decree
                                    or order unstayed and in effect for a period
                                    of sixty (60) consecutive days;

                           12.4.1.2. The filing by such other Party of a
                                    petition for relief under the Federal
                                    Bankruptcy Code, as now constituted or
                                    hereafter amended, or by any other
                                    applicable federal or state insolvency or
                                    other similar law, or;

                           12.4.1.3. The failure of such other Party to pay its
                                    debts when due.

                  12.4.2.  Hollister-Stier shall notify Client of its intent to
                           file for protection under the Federal Bankruptcy Code
                           as soon as such a determination is made.
                           Hollister-Stier will segregate all Client-related
                           documents, including, but not limited to,
                           manufacturing and analytical equipment protocols,
                           qualifications, procedures, methods, calibrations
                           reports and/or certificates, Specifications,
                           Manufacturing Procedures, Intermediate and Product
                           analytical data, Hollister-Stier facility
                           documentation in support of Product Development
                           Programs; all Client provided manufacturing and
                           analytical testing equipment, including any equipment
                           purchased by Client for Hollister-Stier in
                           conjunction with Product Development Programs; all
                           unconsumed raw materials provided by Client to
                           Hollister-Stier in conjunction with Product
                           Development Programs; and all Intermediate and
                           Product Batches, including stability samples, that
                           were produced in accordance with Product Development
                           Programs. Hollister-Stier will provide Client
                           complete and total access to these materials at
                           Client's request.

         12.5.    Termination Without Cause: Client may terminate this Agreement
                  without cause on ninety (90) days prior written notice to
                  Hollister-Stier.

         12.6.    Rights and Duties Upon Termination

                  12.6.1.  Upon termination of this Agreement Hollister-Stier
                           shall, promptly as practicable, cease work on Product
                           Development Programs and turn over to Client all
                           results, documentation and information obtained
                           during Product Development Programs (whether in
                           written or electronic form) which are then in
                           Hollister-Stier's possession and which are the
                           property of Client in accordance with this Agreement.

                  12.6.2.  Upon termination of this Agreement Client shall
                           remain liable for all fees, expenses and
                           uncancellable obligations incurred hereunder through
                           the date of such termination, less any cost or
                           expenses incurred by the termination to move the
                           Product Development Programs to another facility.


                                       17
<PAGE>

Confidential


                  12.6.3.  If this Agreement is terminated during the
                           construction phase of the facility renovations,
                           Client will be responsible for costs associated with
                           completing the facility renovations (i.e. Capital
                           equipment and facility renovation costs) in
                           accordance with Product Development Program Documents
                           annexed to this Agreement.

                  12.6.4.  Upon expiration or termination of this Agreement,
                           which ever is sooner, the Parties shall promptly
                           agree on a procedure which allows Client to possess
                           any equipment located at Hollister-Stier's facility
                           that is owned by Client (with Client paying all
                           reasonable costs to access and remove such equipment,
                           including the cost of removing special plumbing or
                           electrical connections added in connection with the
                           installation of such equipment).

                  12.6.5.  Upon termination, all ownership and rights to
                           inventions, and technology shall be as set forth in
                           Section 2.11 hereto. The provisions of Article1,
                           Article 2 (Sections 2.7, 2.8, 2.9 and 2.10 only)
                           Article 3 (Section 3.2.2 only), Article 8, Article 9
                           (Section 9.5 only) and Articles 11-15 hereof shall
                           survive any expiration or terminations of this
                           Agreement for any reason.



                                   ARTICLE 13

                        FORCE MAJEURE/DISPUTE RESOLUTION

13.      The Parties agree to the following Force Majeure/Dispute resolution
         clauses:

         13.1.    Effect of Force Majeure: Neither Party shall be held liable or
                  responsible for any loss or damages resulting from any failure
                  or delay in its performance due hereunder (other than payment
                  of money) caused by force majeure. As used herein, force
                  majeure shall be deemed to include any condition beyond the
                  reasonable control of the affected Party including, without
                  limitation, Acts of God, strikes or other labor disputes, war,
                  riot, earthquake, tornado, hurricane, fire, civil disorder,
                  explosion, accident, flood, sabotage, lack of or inability to
                  obtain adequate fuel, power, materials, labor, containers,
                  transportation, supplies or equipment, compliance with
                  governmental requests, laws, rules, regulations, orders or
                  actions; inability despite good faith efforts to renew
                  operating permits or licenses from local, state or federal
                  governmental authorities; breakage or failure of machinery or
                  apparatus; national defense requirements; or supplier strike,
                  lockout or injunction. Hollister-Stier shall notify Client of
                  any foreseeable force majeure events, including, but not
                  limited to foreseeable strikes and other labor disputes,
                  shipping interruptions or problems, and inability to procure
                  supplies necessary for Hollister-Stier to perform any of its
                  obligations under this Agreement.

         13.2.    Notice of Force Majeure: In the event either Party is delayed
                  or rendered unable to perform due to force majeure, the
                  affected Party shall give notice of the same and its expected
                  duration to the other Party promptly after the occurrence of
                  the cause relied upon, and upon the giving of such notice the
                  obligations of the Party giving the notice will be suspended
                  during the continuance of the force majeure; provided,
                  however, such Party shall take commercially reasonable steps
                  to remedy or mitigate the force majeure with all reasonable
                  dispatch. The requirement that force majeure be remedied with
                  all reasonable dispatch shall not require the settlement of
                  strikes or labor controversies by acceding to the demands of
                  the opposing party.

         13.3.    Dispute Resolution: The Parties hereto agree to perform the
                  terms of this Agreement in good faith, and to attempt to
                  resolve any controversy, dispute or claim arising hereunder in
                  good faith. Any dispute regarding the validity, construction,
                  interpretation, or performance of this Agreement (other than
                  provisions, hereof relating to any intellectual property,
                  rights, or the confidentiality obligations contained in
                  Article 8 hereof) shall be (1) first attempted to be resolved
                  between the CEO/President of each Party and failing that (2)
                  submitted to binding arbitration in Boston, Massachusetts,
                  U.S.A. to be conducted in accordance with the Arbitration
                  Rules of the American

                                       18
<PAGE>

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                  Arbitration Association ("AAA"); provided, however, that
                  nothing in this Section 13.3 shall be construed to preclude
                  either Party from seeking provisional remedies, including, but
                  not limited to, temporary restraining orders and preliminary
                  injunctions, from any court of competent jurisdiction, in
                  order to protect its rights pending arbitration, but such
                  preliminary relief shall not be sought as a means of avoiding
                  arbitration. Any arbitration hereunder shall be submitted to
                  an arbitration tribunal made up of three (3) members, one of
                  whom shall be selected by Client, one of whom shall be
                  selected by Hollister-Stier, and one of whom shall be selected
                  by the other two arbitrators. All arbitration proceedings
                  shall be conducted in English. The order or award of the
                  arbitrators shall be final and may be enforced in any court of
                  competent jurisdiction. The prevailing Party in any legal or
                  arbitration action brought by one Party against the other
                  shall be entitled, in addition to any other rights and
                  remedies it may have, to reimbursement for its expenses
                  incurred thereby, including court cost and reasonable
                  attorney's fees. The Parties shall have the right of limited
                  prehearing discovery, including:

                  13.3.1.  exchange of witness lists,
                  13.3.2.  exchange of documentary evidence and reasonably
                           related documents,
                  13.3.3.  written interrogations, and
                  13.3.4.  subject to reasonable discretion of the arbitrators
                           and upon good cause shown depositions under oath of
                           any witnesses who are to be called to testify at the
                           arbitration hearing.

         13.4.    As soon as the discovery is concluded, the arbitrators shall
                  hold a hearing in accordance with the aforesaid AAA rules.



                                       19
<PAGE>

Confidential


                                   ARTICLE 14

                                     NOTICES

14.  All notices provided herein shall be in writing and shall be deemed to be
     delivered when deposited in the United States mail, postage prepaid, or
     hand-delivered to an authorized representative of the Party to whom notice
     is directed, or sent by telex, facsimile, telegram or cable, charges
     prepaid, to the address of the other Party designated below:


<TABLE>
<CAPTION>
                    Client                             Hollister-Stier
                    ------                             ---------------
<S>                                             <C>
                Acusphere, Inc.                 Hollister-Stier Laboratories LLC
               31 Sidney Street                     3525 North Regal Street
              Cambridge, MA 02139                     Spokane, WA 99207
         Attention: Thomas M. Hanlon III        Attention: Anthony D. Bonanzino
              FAX: (617) 577-0233                     FAX: (509) 482-3543

</TABLE>


         The addresses and person provided above may be changed by either Party
         by providing the other Party with written notice of such change.




                                   ARTICLE 15

                                  MISCELLANEOUS

15.      The Parties agree to the following miscellaneous clauses:

         15.1.    Entire Agreement: This Agreement and attachments contain the
                  entire understanding between the Parties with respect to the
                  subject matter hereof, and may be modified, only by a written
                  instrument duly executed by each Party's authorized
                  representative.

         15.2.    Independent Contractor: Client will not have the right to
                  direct or control the activities of Hollister-Stier performing
                  the service provided herein, and Hollister-Stier shall perform
                  services hereunder only as an independent contractor, and
                  nothing herein shall be construed to be inconsistent with
                  relationship or status. Under no circumstances shall
                  Hollister-Stier be considered to be an employee or agent of
                  Client, nor shall Client be liable in any way for employment
                  activities or employees of Hollister-Stier.

         15.3.    Publicity: Except as explicitly set forth below in Section
                  15.4, any press release, publicity or other form of public
                  written disclosure related to this Agreement prepared by one
                  Party shall be submitted to the other party prior to release
                  for written approval, which approval shall not be unreasonably
                  withheld or delayed by such other Party.

         15.4.    Use of Party's Name: Except as expressly provided or
                  contemplated hereunder and except as otherwise required by
                  applicable law, no right is granted pursuant to this Agreement
                  to either Party to use in any manner the trademarks or name of
                  the other Party, or any other trade name, service mark, or
                  trademark owned by or licensed to the other Party in
                  connection with the performance of the Agreement.
                  Notwithstanding the above, the Parties shall be permitted to
                  use the other Party's name and marks in connection with
                  general advertising and promotional activities and, to the
                  extent required by applicable law, the Parties shall be
                  permitted to use the other Party's name and disclose the
                  existence and terms of this Agreement in connection with


                                       20
<PAGE>

Confidential


                  required public regulatory filings, public securities filings
                  and private placement memoranda and documentation, using
                  reasonable commercial efforts to protect the confidentiality
                  of the terms of this Agreement.

         15.5.    Severability: Each Party hereby expressly agrees that it has
                  no intention to violate any public policy, statutory or common
                  laws, rules, regulations, treaty or decision of any government
                  agency or executive body of any country or community or
                  association of countries; that if any word, sentence,
                  paragraph, clause or combination thereof in this Agreement is
                  found by a court or executive body with judicial powers having
                  jurisdiction other this Agreement or either Party hereto, in a
                  final unappealed order, to be in violation of any such
                  provisions in any country or community or association of
                  countries, such words, sentences, paragraphs, clauses or
                  combination shall be inoperative in such country or community
                  or association of countries and the remainder of this
                  Agreement shall remain binding upon the Parties, so long as
                  enforcement of the remainder does not violate the Parties'
                  overall intentions in this transaction.

         15.6.    Assignment; Subcontractors: This Agreement may not be assigned
                  or otherwise transferred by either Party without the prior
                  written consent of the other Party; provided, however, either
                  Party may, without such consent, assign this Agreement

                  15.6.1.  in connection with the transfer or sale of all or
                           substantially all of the assets of such Party or the
                           line of business of which this Agreement forms a
                           part,

                  15.6.2.  in the event of a merger or consolidation of a Party
                           hereto with another company or to any Affiliate of
                           the assigning Party fully capable of performing
                           hereunder.

                  Any purported assignment in violation of the preceding shall
                  be void. Any permitted assignee shall assume all obligations
                  of its assignor under this Agreement. No assignment shall
                  relieve either Party of responsibility for the performance of
                  any obligation which accrued prior to the effective date of
                  such assignment.

         15.7.    Governing Law: This Agreement shall be governed by and
                  construed in accordance with the laws of the state of
                  Washington, irrespective of any conflicts of law rule which
                  may direct or refer such determination of applicable law to
                  any other state; and if this Agreement were performed wholly
                  within the state of Washington.

         15.8.    Headings: Paragraph headings and captions used herein are for
                  convenience of reference only and shall not be used in the
                  construction or interpretation of this Agreement.

         15.9.    Continuing Obligations: Termination, assignment or expiration
                  of this Agreement shall not relieve either Party from full
                  performance of any obligations incurred prior thereto.

         15.10.   Waiver: Neither Party's waiver of any breach or failure to
                  enforce any of the terms and conditions of this Agreement, at
                  any time, shall in any way affect, limit or wave such Party's
                  right thereafter to enforce and compel strict compliance with
                  every term and condition of this Agreement.

         15.11.   Construction: This Agreement has been jointly prepared on the
                  basis of the mutual understanding of the Parties and shall not
                  be construed against either Party by reason of such Party's
                  being the drafter hereof or thereof.

         15.12.   Exhibits, Schedules and Attachments: Any and all exhibits,
                  schedules and attachments referred to herein form an integral
                  part of this Agreement and are incorporated into this
                  Agreement by such reference.

         15.13.   Non-Competition: During the term of this Agreement and for two
                  (2) years thereafter, Hollister-Stier agrees that it shall not
                  manufacture or agree to manufacture any material using


                                       21
<PAGE>

Confidential


                  microparticle technology for use as or in connection with any
                  products that competes with the Product(s) that are the
                  subject of the Product Development Programs under this
                  Agreement. Further, Hollister-Stier shall not use any
                  inventions, processes, know-how, trade secrets, improvements,
                  other intellectual properties and other assets, including but
                  not limited to procedures and techniques, computer technical
                  expertise, software, and certain technical expertise and
                  conceptual expertise relating to the Intermediate(s) and
                  Product(s) which have been independently developed by Client
                  or its Affiliates to assist any Third Party in connection with
                  products that competes with the Product(s) that are the
                  subject of the Product Development Programs under this
                  Agreement.







                  IN WITNESS WHEREOF, this Agreement has been executed by the
                  Parties as of the day and year first written above.


                  ACUSPHERE, INC.               HOLLISTER-STIER LABORATORIES LLC

                  /s/ Howard Bernstein                 /s/ A. Bonanzino
                  -------------------------            -------------------------
                  Signature                            Signature


                  Howard Bernstein                     A. Bonanzino
                  -------------------------            -------------------------
                  Name                                 Name


                  Sr. VP                               President and CEO
                  -------------------------            -------------------------
                  Title                                Title



                                       22
<PAGE>

Confidential


                                    EXHIBIT A
                AI-850 PRODUCT DEVELOPMENT PROGRAM - PHASE 1 CTM


The initial Product Development Program for AI-850 is based on the assumptions
noted in Hollister-Stier's AI-850 quotation dated November 9, 2001 and appended
hereto as Exhibit A(1).

Hollister-Stier and Client have identified in this Exhibit A certain
manufacturing activities to be provided by Hollister-Stier in support of this
initial Product Development Program for AI-850 and various assumptions
associated with this initial program.


                               PROGRAM ACTIVITIES

1.       Analytical

         o        Draft release Specifications for API, raw materials, and bulk
                  packaging components for Client approval.

         o        Conduct API, raw material, and bulk packaging component
                  release testing; execute API ID test method (HPLC) transfer
                  protocol from Client.

         o        Draft equipment procedure documents using Client supplied
                  analytical method and equipment protocols and procedures for
                  Client approval.

         o        Conduct Sterility and Endotoxin (LAL) testing of the Product.

         o        Supply Certificate of Testing for Sterility and Endotoxin
                  testing of Product to Client.

         o        Qualify Endotoxin (LAL) method on one (1) batch of AI-850.

2.       Batch Precursor Work

         o        Conduct evaluation/verification of Client's vial and stopper.

         o        Calibrate Client supplied equipment.

         o        Draft equipment procedure documents using Client supplied
                  protocols and procedures for Client approval.

         o        Execute appropriate qualification or validation protocols on
                  Hollister-Stier production equipment (i.e., autoclave load
                  patterns) for use with Client supplied equipment and
                  components.

         o        Draft Steam-In-Place (SIP) protocols for Client supplied
                  equipment for Client approval.

         o        Execute Steam-In-Place (SIP) protocols for Client supplied
                  equipment.

         o        Draft Steam-In-Place (SIP) reports for Client approval.

         o        Review Client supplied equipment cleaning procedures.

         o        Execute minimum number of development batches prior to aseptic
                  process validation batches.

         o        Execute Process Simulation (Intermediate) and Media Fill
                  (Product) batches (aseptic process validation).




                                      A-1
<PAGE>

Confidential


         o        Create/Update environmental monitoring procedures for
                  Intermediate and Product manufacturing.

         o        Bulk ship Product samples to Client for Product release
                  testing and Product to Client designated locations, using
                  Hollister-Stier or Client's bulk shipping container(s) as
                  mutually agreed upon by the Parties using Client approved
                  temperature monitoring devices.

3.       Batch Activities

         Draft Master Manufacturing Procedures including Aseptic Process
         Validation Manufacturing Procedures using Client supplied manufacturing
         and aseptic process validation manufacturing batch records for Client
         approval. (Labor associated with the manufacturing, inspection, and
         packing of the (Intermediate) and Product is included in the per batch
         cost.)

4.       Post-Manufacturing Activities

         Preparation of Product Development Program Summary Report following
         completion of each manufacturing campaign. The content of the Product
         Development Program Summary Report will be mutually agreed upon in
         writing by the Parties before execution.

5.       The anticipated number of batches and batch costs are stated below:


<TABLE>
<CAPTION>
        NUMBER            BATCH TYPE                   BATCH DESCRIPTION PURPOSE          PRICE/BATCH     TOTAL PRICE
    -------------- ----------------------------------- ---------------------------------- --------------- ------------
<S>                <C>                                 <C>                                <C>             <C>
          1*       Development                         Simulation                          $[***]          $[***]
    -------------- ----------------------------------- ---------------------------------- --------------- ------------
          3*       Process Simulation/Media Fills      Aseptic Process Validation          $[***]           [***]
    -------------- ----------------------------------- ---------------------------------- --------------- ------------
         6**       CTM                                 Clinical Trial Material Batches     $[***]           [***]
    -------------- ----------------------------------- ---------------------------------- --------------- ------------
                TOTAL BATCH COST                                                                           $500,000
    -------------- ----------------------------------- ---------------------------------- --------------- ------------
     </TABLE>


          *       Includes costs for all raw materials and components.

          **      Includes costs for all raw materials and components, with the
                  exception of the API which will be supplied by Client. The
                  batch cost also includes inspection and bulk packaging.

          All Development (Simulation), Process Simulation/Media Fill and CTM
          batches are comprised of one (1) Intermediate batch and one (1)
          Product batch.


                           PROGRAM AND FACILITY COSTS

          Hollister-Stier anticipates that the following program and capital
          costs will be incurred in connection with this program:

<TABLE>
<CAPTION>
          DESCRIPTION                                                                 PRICE
          -----------                                                                 ------
         <S>                                                                          <C>

          Various Validation and Documentation Cost                                   $  [***]
          Project Management One-Time Cost                                            $  [***]
          Utility Installation/Facility Modification Cost                             $  [***]
          -----------------------------------------------                             --------
          TOTAL ONE-TIME PROGRAM COST                                                 $462,500

</TABLE>



                                      A-2
<PAGE>

Confidential


      Hollister-Stier will invoice Client for such program and facility costs in
      accordance with Section 2 of the Hollister-Stier quotation dated November
      9, 2001 and Section 4.1 of this Agreement. Client will review and approve
      the layout and installation of its equipment within Hollister-Stier's
      facilities.



                         TECHNOLOGY TRANSFER ACTIVITIES

                                      [***]


                                   A-3 - A-7