Rule 24b-2 Confidential Treatment
                                                     Brackets Indicate Omissions
                                                                   EXHIBIT 10.10

                             O.E.M. SUPPLY CONTRACT

         THIS AGREEMENT, effective as of September 24, 1990, by and between
CARBOMEDICS, INC., a corporation organized and existing under the laws of the
State of Texas, with its principal office located at 1300-B East Anderson Lane,
Austin, Texas 78752 ("CMI") and HELIX BIOCORE, INC., a corporation organized and
existing under the laws of the State of Minnesota, with its principal office
located at 3905 Annapolis Lane, Minneapolis, Minnesota 55447 (hereafter
"Manufacturer").

         1. Recitals and Definitions.

                  (a) Manufacturer's Business. Manufacturer desires to be
         engaged in the business of designing, manufacturing and selling medical
         devices, including a proprietary cardiac valve prosthesis (the "Valve"
         as that term is defined in the development agreement of even date
         herewith between CMI and Manufacturer hereinafter called the
         "Development Agreement").

                  (b) CMI's Business. CMI is engaged in the business of
         manufacturing mechanical components for cardiac valve prostheses,
         particularly such components coated with its proprietary Pyrolite and
         Biolite pyrocarbon.

                  (c) Mechanical Heart Valve Components. The term "Mechanical
         Heart Valve Components", (hereafter "Components"), means and includes
         mechanical Components for use in cardiac valve prostheses manufactured
         by CMI according to the written specifications and drawings of the
         Manufacturer furnished to CMI which Components are coated with Pyrolite
         and Biolite. The specifications are being developed pursuant to the
         Development Agreement and will be attached to and made part of this
         Agreement as Exhibit A.

                  (d) Component Set. The term "Component Set" means an orifice,
         two leaflets, a stiffening ring, two lock rings, and a lock wire.

                  (e) Sewing Cuffs. Pursuant to one or more purchase orders from
         Manufacturer, CMI will manufacture up to [*] sewing cuffs for aortic or
         mitral applications.

----------------------
[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information.

                  (f) License and Option Agreements. The parties have entered
         into a license agreement of even date herewith (the "License
         Agreement") and an option agreement (the "Option Agreement) also of
         even date herewith.

                  (g) Consideration. Under the terms of the Development
         Agreement, CMI has agreed to perform certain services for Manufacturer
         related to the development of manufacturing processes and the testing
         of Components for the Valve. The parties acknowledge and agree that the
         research and development required to develop the Valve and bring it to
         commercial market is expensive. The consideration agreed to in the
         Development Agreement is not, in itself, sufficient to induce CMI to
         participate in the project outlined in the Development Agreement. CMI
         is unwilling to incur the expense of such a research and development
         project without the additional consideration of a long-term supply
         contract to manufacture Components for the valve in commercial
         quantities. Therefore, Manufacturer and CMI acknowledge and agree that
         a long-term supply contract is partial consideration for completion of
         the research and development project outlined in the Development
         Agreement.

         2. Purchase of Goods.

                  (a) Manufacturer agrees to purchase, during the first five
         Contract Years of this Agreement, at least the minimum quantity of the
         Components per year specified in Exhibit B attached to and made part of
         this Agreement. Thereafter the minimum purchase requirement each year
         will be at least the lower of either the minimum number of Component
         Sets set forth on Exhibit B or the number of valve sets actually sold
         and/or disposed of by any means by Manufacturer.

                  (b) Manufacturer further agrees to purchase its requirements
         for Components exclusively from CMI during the first five Contract
         Years of this Agreement. Thereafter, Manufacturer may, at its option,
         obtain Component Sets in excess of the minimum purchase requirements
         set forth in the second column on Exhibit B from a source other than
         CMI.

         3. Price.

                  (a) CMI agrees to supply such Components and Biolite(R)
         coating of sewing cuffs at the prices set forth in Exhibit B.

                  (b) CMI agrees to supply sewing cuffs at the following prices:

                  First  [*]   @    [*] each

                  Second [*]   @    [*] each

                  [*] to [*]   @    [*] each

                  (c) Prices for both Components and sewing cuffs will be
         adjusted for inflation, effective the first day of each Contract Year
         (as that term is defined in Section 14 below). The prices for the first
         Contract Year will be determined in accordance with the price
         adjustment mechanism set forth in Exhibit B. The adjusted price for
         each subsequent Contract Year will be the price for the prior Contract
         Year plus such prior price times an inflation factor equal to the
         12-month average percentage increase in employment costs for private
         industry workers (excluding farmers) as reported on the last day of the
         last full calendar quarter of the prior Contract year as indicated on
         Table 1 of the EMPLOYMENT COST INDEX published by the Bureau of Labor
         Statistics of the United States Department of Labor or, if the
         EMPLOYMENT COST INDEX should cease to be published, any comparable
         category in a comparable index agreeable to both parties.

                  (d) If the EMPLOYMENT COST INDEX is not available when the
         first purchase order(s) in any Contract Year is issued, the price for
         purchases under such purchase order(s) will be retroactively adjusted.

                  (e) If the specifications and drawings for the Valve require
         significantly more precision to manufacture than is reflected in the
         drawings and specifications for the Valve as of the date hereof or if
         CMI determines that the Components of the Valve are significantly more
         difficult to manufacture than those Components CMI manufactures for its
         other customers, the parties will, in good faith, negotiate an
         increased price to reflect the increased precision and/or difficulties.

         4. Schedule. Manufacturer will purchase Component Sets in approximate
equal weekly increments.

         5. Ordering Procedure.

                  (a) Purchase Orders. Sales of Components will be made pursuant
         to purchase orders issued by Manufacturer to CMI, specifying weekly
         delivery schedules by size and quantity, price extension (based on
         Exhibit B pricing) and method of shipment. Manufacturer will use its
         best efforts to maintain a uniform weekly delivery schedule in terms of
         size and quantity of Components ordered. Contemporaneously with the
         completion of activity 18 on Exhibit B in the Development Agreement, or
         earlier at Manufacturer's option, Manufacturer will issue purchase
         orders for the first 26 weeks of the term of this Agreement.
         Thereafter, beginning 13 weeks after the commencement of the term of
         this Agreement, subsequent purchase orders will be issued by
         Manufacturer to CMI at thirteen-week intervals, thirteen weeks in
         advance. Issuance of purchase orders before the completion of activity
         18 on Exhibit B of the Development Agreement will not accelerate the
         commencement of the first Contract Year.

----------------------
[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information. 

                  (b) Limitations on Quantities Ordered. In order to enable CMI
         to plan production and in order to assure Manufacturer a steady and
         predictable supply of Components, Manufacturer agrees that each new
         thirteen-week order for Components will not decrease by more than 10
         percent from the immediately preceding thirteen-week order. The 10
         percent variation will be calculated by comparing each new order(s) for
         Components to the immediately preceding order(s) for Components. Any
         new thirteen-week order which increases the immediately preceding
         thirteen-week order by more than 10 percent is subject to acceptance by
         CMI, and CMI may reject that portion of the order which exceeds 110% of
         the preceding order. Manufacturer may, however, increase or decrease an
         order by up to 40% (or 2000 Valves, if higher than 40%) over the prior
         thirteen-week order if Manufacturer has notified CMI of this change and
         issued a purchase order to reflect the increase, at least 26 weeks in
         advance. Notwithstanding the foregoing, CMI will use its best efforts
         to manufacture Components sufficient to fill Manufacturer's orders
         which exceed the 10 percent maximum variation limitation.

                  (c) Raw Materials. Manufacturer acknowledges that certain raw
         materials ("Raw Materials") which are identified on Exhibit C, attached
         to and made part of this Agreement, are unique to the Component and are
         sold in minimum quantities which may exceed a 13-week supply.
         Manufacturer hereby authorizes CMI to maintain a sufficient supply of
         Raw Materials to insure a steady production schedule.

         6. Change in Specifications. Manufacturer will have the right, from
time to time, to make such changes in the specifications as it deems necessary
or desirable. All such changes, however, will be made by written notice. If any
change increases CMI's costs, CMI's price to Manufacturer will be increased
proportionately. The effective date for all such changes will be negotiated in
good faith between Manufacturer and CMI. If any inventory of Raw Materials, work
in process or finished goods should become obsolete as a result of such a
change, Manufacturer will reimburse CMI for the cost of such obsolete inventory
on a percentage-of-completion basis.

         7. Transportation Costs. CMI will ship Components to Manufacturer
f.o.b. CMI's facility (point of origin). CMI will invoice Manufacturer for each
shipment the total purchase price and the cost of shipping or will charge the
cost of shipment to Manufacturer's account with the carrier, at Manufacturer's
option.

         8. Payment. CMI will invoice Manufacturer on shipment or completion of
services, as applicable, for all amounts due under this Agreement, including
without limitation amounts due under Sections 10(b) and 14. Each invoice dated
within the first six months of this Agreement is due and payable at CMI's
offices, within 90 days after the date of invoice. Each invoice dated within the
second six months of this Agreement will be due and payable to CMI's offices
within 60 days after the date of invoice. Each invoice dated after the second
six months of this Agreement will be due and payable at CMI's offices within 30
days after the date of invoice. If Manufacturer is delinquent in payment of any
invoices, CMI may refuse to ship, require cash in advance, letters of credit or
other terms, without limiting CMI's remedies. Manufacturer will pay service
charge of 1.5 percent per month or the maximum rate allowed by law, whichever is
lower, on all invoiced amounts due but not paid from and after the date due.

         9. Excusable Delay or Failure to Perform. Neither party will be liable
for a delay in performance of or failure to perform an obligation under this
Agreement (except an obligation to make payment promptly when due), if and to
the extent such delay or failure is attributable to any cause beyond the
reasonable control of such party (the "affected party"). Such causes may include
but are not limited to act of God, act of government, war or related actions,
civil insurrection, riot, sabotage, strike or other labor difficulties,
epidemic, fire, flood, windstorm, failure of suppliers, subcontractors or
carriers, inability to obtain required materials or qualified labor. The
affected party will give prompt notice of the cause to the other party, and will
resume performance with reasonable diligence upon cessation of the cause of the
delay or failure. If the affected party's performance is suspended or delayed
because of the operation of this paragraph, the term of this agreement will be
correspondingly extended. Six months after suspension or delay begins, whether
excused or not, Manufacturer will pay CMI for all unused Raw Materials, work in
process and finished goods on a percentage-of-completion basis. Upon receipt of
payment, CMI will ship the finished goods and Raw Materials to Manufacturer. CMI
may, however, hold all work in process in trust for Manufacturer for a period of
time not to exceed 12 months after the beginning of suspension or delay. CMI and
Manufacturer will each have the right to count the work in process. At the end
of the 12-month period and provided Manufacturer has paid for it, CMI will
destroy the work in process under the observation of representatives of
Manufacturer.

         10. Inspection of Shipment and Approval by Manufacturer.

                  (a) Manufacturer's Inspection Procedures. Upon receipt by
         Manufacturer of any particular shipment of Components, Manufacturer
         will have the right to inspect each Component shipped and to submit
         such Components to Manufacturer's reasonable quality control procedures
         to determine that the Components conform to the agreed specifications.
         Manufacturer has the responsibility prior to commencement of
         manufacture of Components by CMI to describe to CMI the reasonable
         quality control procedures which will be adopted by Manufacturer in
         order that CMI, at its option, may integrate these quality control
         procedures of Manufacturer with those adopted by CMI to insure that the
         Components supplied by CMI conform to the specifications of the
         Manufacturer. Manufacturer reserves the right to make any reasonable
         change or modification in Manufacturer's quality control procedure,
         provided that the precision must remain within the limits of the CMI's
         capability to produce the Components at the agreed upon contract price
         and terms. If any such change or modification increases CMI's cost,
         CMI's price to Manufacturer will be increased. Manufacturer will notify
         CMI, in writing, of any such change or modification in the quality
         control procedure, and CMI will be allowed a reasonable time subsequent
         to receipt by manufacturer of such notice within which to modify CMI's
         quality control procedures.

                  (b) Manufacturer's Right to Reject. Manufacturer will have the
         right to reject Components which fail to conform to the agreed
         specifications and return same to CMI at Manufacturer's expense.
         However, in conjunction with the rejection of such Components,
         Manufacturer has the affirmative responsibility of providing CMI with a
         written, comprehensive description of the basis of the rejection by
         Manufacturer of the Components being returned and/or a description of
         the mode in which the Components being returned fail to meet
         Manufacturer's specification. If CMI, in its reasonable opinion and
         confirmed by actual test, finds that the parts rejected by the
         Manufacturer do not meet specifications, CMI will at its option repair
         or replace the rejected Component or issue a credit memo to
         Manufacturer for the cost of the Components returned as well as all
         shipment costs to and from Manufacturer. For purposes of this
         Agreement, Manufacturer is deemed to have accepted all Components
         shipped which are not affirmatively rejected by Manufacturer within the
         rejection period after receipt. The rejection period will be 90 days
         for Components received during the first 12 months, of this Agreement,
         and 60 days for Components received after the first 12 months of this
         Agreement. If, during any 3-month period, the total number of
         Pyrolite-coated Components returned by Manufacturer as non-conforming
         and subsequently determined to be in fact conforming to specifications
         exceeds 5 percent of the total number of Pyrolite-coated Components
         delivered to Manufacturer during the same period, Manufacturer will pay
         CMI an additional handling charge of $75.00 per Pyrolite-coated
         Component for each in-specification Pyrolite-coated Component in excess
         of that 5 percent level (subject to increase by a percentage equal to
         the average percent of increase in prices for the Components shown on
         Exhibit B as amended from time to time).

         11. Warranties. Although CMI agrees to carry out this Agreement in
accordance with its standard operating practices, CMI makes no warranties of any
kind, express or implied, concerning the performance of the Components or of the
accuracy or completeness of any information CMI furnishes pursuant to this
Agreement. Specifically, CMI MAKES NO WARRANTY OF FITNESS FOR THE PURPOSE
INTENDED AND NO WARRANTY OF MERCHANTABILITY. CMI's sole responsibility will be,
at CMI's option, to repair, replace or issue credit respecting any Components
having defects in material and workmanship at the time of shipment by CMI,
provided any such Component is returned by Manufacturer to CMI f.o.b.
destination within 90 days after receipt of such Component(s), for Components
received during the first 12 months of this Agreement, and within 60 days after
receipt of such Components received after the first 12 months of this Agreement.
This paragraph concerning warranties states CMI's entire obligation and the sole
and exclusive remedy of Manufacturer and any third party claiming under
Manufacturer respecting the components or any defects therein.

         12. Limitation of Liability and Indemnity.

                  (a) Limitation on CMI's Responsibility. Under no circumstances
         will CMI be liable or responsible for direct, incidental, consequential
         and/or special damages arising out of use or implantation of prostheses
         employing Components supplied hereunder including, but not limited to,
         damage to property of Manufacturer or of other persons, or for injury
         to or death of any person.

                  (b) Manufacturer's Responsibility. CMI will have no control
         over the uses to which the Components will be devoted, or over the
         circumstances of their use, storage, handling, distribution or
         application. Manufacturer will assume full responsibility with respect
         to the use of any Component or information furnished by CMI hereunder,
         and it is mutually agreed that CMI assumes no liabilities of any kind
         with respect to the use by Manufacturer or any third party of such
         Components or information.

                  (c) Hold Harmless. If Manufacturer undertakes to supply the
         Components to others, it does so in its own discretion and upon its own
         judgment as to risk. Manufacturer agrees, at its own expense, to
         defend, indemnify, and hold harmless CMI, its officers, agents, and
         employees from and against any and all claims, losses, damages, causes
         of action, suits and liability of every kind, including all expenses of
         litigation, court costs, and attorney's fees, for injury to or death of
         any person, or for damage to any property, arising from or out of or in
         connection with the design, manufacture, marketing, sale, implantation,
         or use of any Component supplied under this Agreement or the failure by
         CMI to warn Manufacturer or any person of any defect in or risk
         associated with a Component supplied under this Agreement, regardless
         of whether such injury, death, or damages are caused in whole or in
         part by the negligence of CMI, its officers, agents, or employees or
         whether CMI is determined to be strictly liable for such injury, death,
         or damage. It is the express intention of the parties hereto, both CMI
         and Manufacturer, that the indemnity obligations and liabilities
         assumed by Manufacturer in this paragraph be without monetary limit and
         without regard to causes thereof including but not limited to any
         failure to warn, strict liability, or the negligence of CMI, its
         officers, agents or employees, whether the negligence be sole, joint,
         or concurrent, active or passive.

                  Manufacturer further agrees, at its own expense, to defend,
         indemnify, and hold harmless CMI from and against any and all claims,
         losses, damages, causes of action, suits, and liability of every kind,
         including all expenses of litigation, court costs, and attorney's fees,
         based on a claim alleging that the Components or any of the Components
         infringe a patent of any third party.

                  CMI agrees, at its own expense, to defend, indemnify, and hold
         harmless Manufacturer from and against any and all claims, losses,
         damages, causes of action, suits, and liability of every kind,
         including all expenses of litigation, court costs, and attorney's fees,
         based on a claim that CMI's manufacturing processes or the materials
         used in the fabrication or coating of the Components infringe the
         patent or valid (as against CMI) trade secret of any third party.

                  (d) Product Liability Insurance. Manufacturer and any
         successor or assigns will maintain general liability insurance, written
         on an occurrence basis, during the term of this Agreement in the
         minimum amount of $5 million. The product liability insurance so
         maintained will be written by an insurance carrier acceptable to CMI,
         include CMI as an additional insured, and contain an endorsement to
         provide CMI with at least 30 days prior written notice of any
         cancellation, non-renewal, or coverage reduction. CMI may demand
         evidence of coverage at any time during the term of this Agreement. In
         the event Manufacturer fails to provide CMI with evidence of the
         product liability insurance required to be maintained pursuant to the
         provisions of this paragraph and the failure continues for 10 days
         following Manufacturer's receipt of a notice advising Manufacturer of
         its failure to provide such evidence, then at any time thereafter
         during the pendency of such failure, CMI will have the option in its
         sole discretion to terminate this Agreement or to purchase the
         insurance at Manufacturer's expense.

         13. Confidentiality. Any information to be disclosed by either party to
the other pursuant to this Agreement, and which is deemed by the disclosing
party to constitute confidential or proprietary information must be disclosed in
writing and conspicuously labeled as confidential information of the disclosing
party, or with words of similar impact. Subject to Paragraph 14(d) below, any
such confidential information which is initially disclosed orally must be noted
at the outset by the disclosing party as confidential information, and must be
reduced to writing and submitted by the disclosing party to the receiving party
within 15 business days after the original oral disclosure.

                  All information, inventions and improvements relating to
pyrocarbon or coatings developed by the CMI will be the property of CMI.

                  The receiving party will hold all such information in strict
confidence and will use it solely for the purposes for which it is supplied
under this Agreement. The receiving party will not disclose such information to
any third party or use same for the benefit of any third party. The foregoing
restrictions will not apply to any information which

         (i) is not disclosed and labeled as provided in the first paragraph of
         this Section (except orally disclosed information for the first 15
         business days thereafter, pending the submission of same in writing) or

         (ii) known to the receiving party prior to receipt thereof from the
         disclosing party or

         (iii) of public knowledge without breach by the receiving party of its
         obligations hereunder or

         (iv) rightfully received by the receiving party from a third party
         without restriction on disclosure or use or

         (v) disclosed by the disclosing party to a third party without
         restriction on disclosure or use or

         (vi) independently developed by personnel of the receiving party who
         have not had access to or knowledge of the contents of the disclosing
         party's disclosure or

         (vii) disclosed after receiving the written consent therefor of an
         authorized officer of the disclosing party;

provided that in the events (ii), (iii), (iv), (v), (vi) and (vii), the
receiving party can demonstrate same to the reasonable satisfaction of the
disclosing party.

         The restrictions on use and disclosure of information under this
Section will survive the expiration or termination of this Agreement.

         14. Termination. This Agreement will become effective upon the date
first written above, but the obligation to purchase the minimum quantities will
not begin until the beginning of the first Contract Year. The first Contract
Year will be in on the day on which CMI ships the last component set of the [*]
component sets provided for in the Development Agreement. The twelve-month
period beginning on such day and month each year will be called a Contract Year.
Unless extended or earlier terminated as provided in this Agreement, this
Agreement will continue in effect for fifteen full Contract Years.

                  (a) CMI may terminate this Agreement on five days notice if
         Manufacturer fails to make any payment promptly when due, or on 30 days
         notice if Manufacturer infringes any patent of CMI (except to the
         extent permitted by written license agreement) by making or having made
         any product or using any method covered by such patent in or in
         preparation for commercial sale of cardiac valve prostheses, or if
         Manufacturer is in default of any of its material obligations under
         this Agreement. CMI's remedies will not be deemed exclusive, but are in
         addition to any and all other remedies available at law or under this
         Agreement.

                  (b) Manufacturer may terminate this Agreement upon 90 days
         written notice to CMI if CMI defaults on any of its material
         obligations hereunder and such default is not cured within 30 days
         after CMI receives notice.

                  (c) If Manufacturer terminates this Agreement for any reason
         other than the default of CMI, or decides not to renew or extend this
         Agreement, Manufacturer will pay for all completed Components
         conforming to Manufacturer's specifications and pay the cost of all
         work in process on a percentage-of-completion basis, the cost of all
         expendable tooling, and the cost of any unused Raw Materials.
         Inventories will be disposed of as provided in Section 9.

                  (d) Sections 8, 10, 11, 12, and 13 will survive termination or
         expiration of this Agreement and remain in effect for the respective
         periods specified therein, or, if no period is specified, for a period
         which is reasonable in the circumstances.

                  (e) If, in any Contract Year, Manufacturer fails to meet the
         minimum purchase requirements set forth on Exhibit B and CMI elects not
         to terminate this Agreement for default, then the term of this
         Agreement may, at CMI's election, be extended up to two years to permit
         Manufacturer to make up the deficiencies. Purchase of such deficiencies
         will not be credited against minimum purchase requirements for any
         prior or subsequent year. If, because of the effects of this section,
         the term of this Agreement is extended beyond 15 Contract Years, the
         minimum purchase requirements after the fifteenth Contract Year will be
         determined by mutual agreement, or if no mutual agreement can be
         reached, will be the same as that in effect in the fifteenth Contract
         Year. The price for Components purchased to satisfy such deficiencies
         will be those in effect when the deficiency is made up.

----------------------
[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information. 

                  If such failure to meet minimum purchase requirements occurs
         during the first five Contract Years, CMI has, at its option, the right
         to do any one, all, or a combination of the following as well as any
         other remedies that may be or become available:

                  1.       terminate the License Agreement in its entirety,

                  2.       terminate the exclusive right of Helix under the
                           License Agreement and make the Licensed Product
                           available to others and/or itself for any purpose,

                  3.       terminate the Option Agreement for the manufacturing
                           process technology for the Licensed Product,

                  4.       delay the start of the Option Period under the Option
                           Agreement to Manufacturer by two years and/or

                  5.       extend the term of the License Agreement by two years
                           so that Manufacturer's paid up license does not
                           become effective until the deficiency is made up.

                           CMI's waiver of any or all defaults for failure to
                  purchase the minimum requirements in one Contract Year will
                  not limit or restrict CMI's remedies for failure of
                  Manufacturer to meet the minimum purchase requirements in
                  effect for a subsequent Contract Year.

         15. Quality Assurance.

         CMI's Quality Assurance Manual establishes the quality control system
to be employed throughout the performance of this Agreement. A copy of this
manual--with CMI's proprietary information, if any, deleted--will be made
available to Manufacturer.

         16. Assignment. Neither party will have the right to assign this
Agreement, in whole or in part, to any third party without the prior written
consent of a duly authorized officer of the other party, which consent will not
be unreasonably withheld. An attempted assignment without consent will be
grounds for termination of this Agreement by such other party, without thereby
affecting any rights or remedies it may have under this Agreement or at law.
Notwithstanding the foregoing, either party may freely assign this Agreement to
any company controlling, controlled by or under common control with that party
or succeeding to the entire business of that party. This Agreement will be
binding upon and inure to the benefit of the parties and their successors and
assigns to which such consent, if necessary, is given.

         17. General.

                  (a) Waivers. No waiver of any right or remedy hereunder will
         be effective unless based upon a writing signed by the party against
         whom it is sought to be enforced.

                  (b) Notices. All notices required or permitted under this
         Agreement must be made in writing and delivered in person or by
         certified or registered mail, postage prepaid, addressed to the
         attention of the President of the other party at the respective address
         first written above, or such other address as may be given by notice.

                  (c) Severability. If any provision of this Agreement is
         declared invalid or unenforceable by a court of competent jurisdiction,
         such provision will be severed from this Agreement and the remaining
         provisions will be unaffected thereby. The parties will promptly meet
         and negotiate a substitute provision meeting as closely as possible the
         intent of the invalid or unenforceable provision and, with reasonable
         precision, avoiding the defects of the original provision.

                  (d) Entire Agreement. This Agreement, together with the
         License, Development and Option Agreements, constitutes the entire
         agreement and understanding between the parties in respect of the
         subject matter of this Agreement and supersedes all prior agreements,
         understanding, discussions and communications between the parties
         respecting such subject matter. No modification of this Agreement will
         be effective unless made in writing signed by a duly authorized officer
         of each party, except as otherwise expressly permitted herein. Nothing
         in this Agreement will limit the scope of subsequent, written
         agreements, signed by both parties, related to nondisclosure of
         confidential information. In the event of a conflict between this
         Agreement and the terms and conditions contained in Manufacturer's
         purchase orders, the terms of this Agreement will control.

                  (e) Governing Law. This Agreement has been entered into under
         the laws of the State of Texas and will be governed by and construed in
         accordance with those laws.

                  Executed by the parties as of the day and year first written
above.

MANUFACTURER:                            CARBOMEDICS, INC.
                                        
By /S/ M.A. Villafana                       By /S/ Terry Marlatt           
                                            Terry Marlatt, President
                                        
                                        
Typed Name  M.A. Villafana
                                        
Title CEO




                                 SPECIFICATIONS

To be mutually agreed upon upon completion of the Program as defined in the
Development Agreement.




                                    EXHIBIT A


                          PRICE AND QUANTITY SCHEDULES

                 MINIMUM PURCHASE REQUIREMENTS PER COMPONENT SET

                           Contract Year            # Sets Per Year(1)
                           -------------            ---------------

                  First Contract Year                      [*]
                  Second Contract Year                     [*]
                  Third Contract Year                      [*]
                  Fourth Contract Year                     [*]
                  Fifth Contract Year                      [*]

                  Sixth(2)Contract Year                    [*]
                  Seventh Contract Year                    [*]
                  Eighth Contract Year                     [*]
                  Ninth Contract Year                      [*]
                  Tenth Contract Year                      [*]
                  Eleventh Contract Year                   [*]
                  Twelfth Contract Year                    [*]
                  Thirteenth Contract Year                 [*]
                  Fourteenth Contract Year                 [*]
                  Fifteenth Contract Year,                 [*]




                                    EXHIBIT B
---------------
(1)      Purchase requirements and/or actual purchases for each Contract Year
         are independent of those for prior or succeeding years.

(2)      The minimum purchase requirements for the first through the fifth years
         determine Licensee's right to receive a paid-up exclusive license to
         Licensed Product and an option to license the Licensed Process.
         Beginning in the sixth year and continuing through the fifteenth year,
         the minimum purchase requirement each year will be the lower of either
         the minimum number of per year set forth in the second column above or
         the number valves sold and/or disposed of by any means by manufacturer.
         Amounts in excess of the minimum purchase requirements set forth in the
         second column above are not required to be purchased CMI in the sixth
         year and thereafter.

[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information. 






                                   BASE PRICES



[*]


                                PRICE ADJUSTMENTS

The prices set forth on this Exhibit B are based upon the cost of manufacture of
Components for the Valve as of the date of this Agreement. The base price for a
Component Set as of the date of this Agreement is [*] adjusted to reflect volume
discount. The actual sales price to Manufacturer will be adjusted for each
12-month period prior to the first Contract Year so that the first Contract Year
reflects the impact of inflation, if any, between the date of this Agreement and
the date of first sales under this Agreement with a pro rata adjustment of any
period less than twelve months. To make such adjustment, CMI will use an
inflation factor equal to the 12-month average percentage increase in employment
costs for private industry workers (excluding farmers) as reported on Table 1 of
the EMPLOYMENT COST INDEX published by the Bureau of Labor Statistics of the
United States Department of Labor or, if the EMPLOYMENT COST INDEX should cease
to be published, any comparable category in a comparable index agreeable to both
parties. Such inflation factor will be that reported on the last day of the
calendar quarter in which this Agreement is dated and on the anniversary of each
such last day ("Adjustment Period(s)"). If the first Contract Year begins before
the completion of an Adjustment Period, the inflation factor will be that
reported on the last day of the last full calendar quarter before the start of
the first Contract Year, adjusted pro rata.






                                    EXHIBIT B
------------------
[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information. 




                                  L.D.C. CLAUSE

On purchasing a minimum of [*] non-L.D.C. valve sets per Contract Year,
Manufacturer is eligible to purchase valve sets, sold for sale and implantation
in less developed countries ("L.D.C.") at the price in effect at the time of
purchase for purchases of [*] Component Sets or more. To permit verification of
purchases eligible for L.D.C. pricing, Manufacturer will provide CMI with copies
of valid purchase orders from hospitals or distributors, as applicable, together
with written certifications by Manufacturer's Chief Executive Officer that such
valve sets were sold to hospitals or distributors in and for the less developed
country identified on the respective purchase order.

For purposes of this clause, less developed countries will be countries other
than Canada, United States and Territories, Japan, South Korea, Australia, New
Zealand, South Africa, United Kingdom, Ireland, Norway, Sweden, Finland,
Denmark, Netherlands, Belgium, Germany, France, Switzerland, Austria, Italy,
Turkey, Spain, Portugal, and Luxemburg.

Transferring of valves purchased under the L.D.C. Clause into non-L.D.C.
countries will be deemed a breach of this clause and allow for CMI's immediate
cancellation of this clause from the Agreement. On cancellation, all pricing on
orders in process for Manufacturer at CMI for L.D.C. valve sets will immediately
revert to the standard price in effect for non-L.D.C. valve sets.

L.D.C. valve sets will apply against minimum purchase requirements, but will not
apply toward quantity discount pricing in a Contract Year.





                                    EXHIBIT B
-----------------
[*]      Denotes confidential information omitted pursuant to Rule 24b-2 of the
         Securities and Exchange Act of 1934, as amended. The Securities and
         Exchange Commission granted the company's confidential treatment
         request in connection with this information. 




                                  RAW MATERIALS

                  AXF5Q-20W Graphite
                  AXFQ Graphite
                  Ti-6Al-4V ELI





                                    EXHIBIT C