Document:

<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]

                                                                   Exhibit 10.11

                    FIRST AMENDMENT TO THE AGREEMENT ENTITLED
                  "ASSIGNMENT OF PATENT RIGHTS AND TECHNOLOGY"
                       ENTERED INTO AUGUST 1, 1991 BETWEEN
         THE UNIVERSITY OF TEXAS, ADAM HELLER, AND E. HELLER AND COMPANY
                                (THE "AMENDMENT")

        WHEREAS, under the August 1, 1991, agreement entitled "Assignment of
Patent Rights and Technology" (hereafter "Assignment"), and Exhibit A hereto,
the Board of Regents of the University of Texas System on behalf of The
University of Texas at Austin (hereafter collectively referred to as "Assignor")
assigned to E. Heller and Company ("Assignee") its right, title, and interest
in, to, and under the Patent Rights and the Technology (as such terms are
defined in the Assignment); and

        WHEREAS, under Paragraph 3.1 of the Assignment the parties agreed that
in return for its assignment of rights, Assignor would be compensated as noted
in the event Patent Rights, the Technology, and the Know-How are sold, licensed,
or otherwise disposed of for value to a third party or parties; and under
Paragraph 3.2 of the Assignment the parties also agreed that Assignor would be
compensated for a to-be-negotiated amount should Assignee elect to itself
manufacture, sell, or otherwise dispose of for value Licensed Products and
Licensed Processes (as such terms are defined in the Assignment) and which are
derived from the Patent Rights, the Technology, and the Know-How; and

        WHEREAS, since the effective date of the Assignment, Assignee has
invested approximately *** in research and development of biosensors
within the scope of the Technology, Patent Rights, and Know-How, and estimates
that an additional investment of approximately *** will be necessary to
complete product development and enter into clinical trials, and Assignee, on
behalf of itself and its Affiliates (as defined below), has now elected to
manufacture, sell, or otherwise dispose of for value, including sublicensing,
the Patent Rights, Technology, Know-How, Licensed Products, and Licensed
Processes; and

        WHEREAS, Assignor and Assignee now desire to amend Paragraphs 3.1 and
3.2 and certain other paragraphs of the Assignment and specifically set out
herein the mutually agreed compensation due Assignor for Assignee's disposition
for value of the Patent Rights, the Technology, the Know-How, Licensed Products
and Licensed Processes.

        NOW, THEREFORE, in consideration of the covenants and agreements
herein contained the parties agree as follows:

1.      All capitalized terms not defined in this Amendment shall have the
        meaning given to them in the Assignment.

2.      Section 1.2 is amended to read in its entirety as follows:

        1.2  Patent Rights. The term "Patent Rights" as used herein shall mean
             -------------
        Assignor's rights in all inventions and intellectual property disclosed
        in the patent applications patents and other invention disclosures
        listed on Exhibit B and Exhibit C hereto, including all U.S. and

*** Confidential treatment requested
<PAGE>

         foreign patent applications including provisional applications, and all
         divisions, continuations, continuations in-part, and substitutions
         thereof; all foreign patent applications corresponding to the preceding
         applications; and all U.S. and foreign patents issuing on any of the
         preceding applications, including extensions, reissues, and re-
         examinations.

3.       Section 1.3 is amended to read in its entirety as follows:

         1.3   Know-How. The term "Know How" as used herein shall mean
               --------
         Assignor's rights in all ideas, inventions, data, trade secrets,
         instructions, processes, formulas, chemical, pharmacological,
         toxicological, pharmaceutical, physical and analytical, manufacturing
         (including but not limited to processes, yields, reagants and
         conditions relating to compound manufacture) data and information,
         owned or controlled by Assignor existing as of the last signature date
         of this Assignment which are generally not known, and which are
         necessary or useful for the manufacture of Licensed Products. Excluded
         from Know-How are any inventions included with Patent Rights.

4.       Section 1.4 is amended to read in its entirety as follows:

         1.4   Licensed Products. The term "Licensed Products" as used herein
               -----------------
         shall mean any product which (i) is covered by a Valid Claim in the
         country such product is made or sold, or (ii) incorporates in material
         part or is made using the Technology, Know-How, Licensed Processes or
         Other Intellectual Property. For the avoidance of doubt, subject to the
         foregoing, a Licensed Product unit shall mean any instrument or
         associated disposable.

5.       Article 1 is amended to add new Section 1.7 as follows:

         1.7   Affiliate. The term "Affiliate" as used herein shall mean any
               ---------
         corporation or other entity which is directly or indirectly
         controlling, controlled by or under the common control with a party
         hereto. For the purposes of this definition, "control" shall mean the
         direct or indirect ownership of at least fifty percent (50%) of the
         outstanding shares or other voting rights of the subject entity to
         elect directors, or if not meeting the preceding, any entity owned or
         controlled by or owning or controlling at the maximum control or
         ownership right permitted in the country where such entity exists.

6.       Article 1 is amended to add new Section 1.8 as follows:

         1.8   Net Sales. The term "Net Sales" as used herein shall mean the
               ---------
         gross revenues received by Assignee, its Affiliates or sublicensees
         from sales of Licensed Products, less (i) normal and customary rebates,
         and cash and trade discounts, actually taken, (ii) sales, value-added,
         use and/or other excise taxes or duties actually paid, (iii) outbound
         transportation charges prepaid or allowed, (iv) import and/or export
         duties actually paid, and (v) amounts allowed or credited due to
         returns.

7.       Article 1 is amended to add new Section 1.9 as follows:

         1.9   Valid Claim. The term "Valid Claim" as used herein shall mean (i)
               -----------
         a claim of an issued and unexpired patent included within the Patent
         Rights which has not been disclaimed

                                      -2-
<PAGE>

         or admitted to be invalid or unenforceable through reissue or
         otherwise, or (ii) a claim of a pending application within the Patent
         Rights provided that not more than five (5) years have elapsed from the
         date the claim takes priority for filing purposes.

8.       Article 1 is amended to add new Section 1.10 as follows:

         1.10  Dominating Patent. The term "Dominating Patent" as used herein
               -----------------
         shall mean an unexpired patent which is owned by a third party covering
         Licensed Products made and sold by Assignee or its sublicensees under
         circumstances such that Assignee or its sublicensee has no commercially
         reasonable alternative but to obtain a license under such patent in
         order to make, use or commercialize a Licensed Product.

9.       Article 1 is amended to add new Section 1.11 as follows:

         1.11  Other Intellectual Property. The term "Other Intellectual
               ---------------------------
         Property" as used herein shall mean Board's rights in any biosensor
         related inventions (whether or not patentable), improvements,
         discoveries, developments, original works of authorship, software,
         trade secrets, Know-How made, conceived, reduced to practice or
         otherwise developed, by an employee of Assignor pursuant to either (i)
         a consulting agreement entered into by such employee and EHC or its
         sublicensee; or (ii) any similar agreement between an employee of the
         University of Texas at Austin and Assignee, and all intellectual
         property rights therein and thereto, shall be subject to the Assignment
         in Section 2.1 below.

10.      Section 2.1 is amended to read in its entirety as follows:

         2.1   Assignment by Assignor. Assignor hereby transfers, assigns,
               ----------------------
         sells, and conveys to Assignee, its successors and assigns, the entire
         right, title and interest throughout the world in and to the Patent
         Rights, Technology, Know-How, and Other Intellectual Property subject
         only to: (a) any rights of the United States Government which may exist
         now or in the future due to a research funding agreement to which the
         United States Government may be a party; and (b) the terms and
         conditions of this Agreement.

11.      Article 3 is amended to read in its entirety as follows:

         3.1   Royalties. In consideration for the Assignment herein, Assignee
               ---------
         shall pay to Assignor the greater of (i) an annual minimum royalty of
         twenty thousand dollars or (ii) royalties on Net Sales of Licensed
         Products sold by Assignee, an Affiliate or its sublicensees which are
         within the scope of a Valid Claim as follows:

                                      Numbers of Licensed
         Royalty Rate                 Products Sold Worldwide During the Term
         ------------                 ---------------------------------------

         ***  of Net Sales            1-100,000

         ***  of Net Sales            100,001-200,000

         ***  of Net Sales            200,001-and above

*** Confidential treatment requested

                                      -3-
<PAGE>

         Any minimum annual royalty payable hereunder shall be fully creditable
         against any running royalty payable to Assignor during such year.

         3.2   Sublicense Payment. In addition to the royalties subject to
               ------------------
         Section 3.1 above, Assignee shall pay to Assignor *** received by
         Assignee and its Affiliates from licensees and sublicensees of the
         Patent Rights, Know-How, Technology or Other Intellectual Property.
         Notwithstanding the foregoing, it is understood and agreed that
         Assignor shall not be entitled to any portion of amounts received from
         licensees or sublicensees for equity in Assignee less than *** of
         fair market value, debt financing, research and development funding,
         the license or sublicense of any intellectual property other than the
         Patent Rights, Know-how, Technology or Other Intellectual Property, or
         reimbursement for patent or other expenses, and to be determined in a
         manner consistent with generally accepted accounting principles (GAAP).

         3.3   Royalties on Combination Products. In the event that a Licensed
               ---------------------------------
         Product is sold by Assignee, an Affiliate or its sublicensee in
         combination as a single product with another product whose sale and use
         are not within the scope of a Valid Claim in the country for which the
         combination product is sold, Net Sales from such sales for purposes of
         calculating the amounts due under Section 3.1 above shall be calculated
         by multiplying the Net Sales of that combination by the fraction A/(A +
         B), where A is the gross selling price of the Licensed Product sold
         separately and B is the gross selling price of the other product sold
         separately. In the event that no such separate sales are made by
         Assignee, an Affiliate or its sublicensee, Net Sales for royalty
         determination shall be as reasonably allocated by Assignee, an
         Affiliate or its sublicensee between such Licensed Product and such
         other product, based upon their relative importance and proprietary
         protection. Notwithstanding the above, in no event shall Assignor
         receive a royalty of less *** of the running royalty amount per unit of
         Licensed Product due under Section 3.1 above.

         3.4   Third Party Royalty Offset. In the event Assignee, an Affiliate
               --------------------------
         or its sublicensee enters into a license agreement with any third party
         with respect to a Dominating Patent or to settle a claim of
         infringement or misappropriation of any intellectual property of a
         third party relating to the practice or use of the Technology and or
         Know-How, Assignee, an Affiliate or its sublicensee may offset any
         payments made in accordance with such license agreements against any
         amounts of running royalties owned by Assignee pursuant to Article 3
         herein up to a maximum of *** of the amount otherwise due to such third
         party; provided, however that in no event will the running royalties
         due to Assignor be lower than the following:

         Royalty Rate                Number of Licensed Products Sold Worldwide
         ------------                ------------------------------------------
                                     During the Term
                                     ---------------

         ***  of Net Sales           1-100,000

         ***  of Net Sales           100,001-200,000

         ***  of Net Sales           200,001 - and above

                                      -4-

***  Confidential treatment requested
<PAGE>

         In addition, in such event, the amounts due to Assignor under Section
         3.2 above shall be reduced by an amount equal to *** the amount paid
         to such third party.

         3.5   One Royalty. No more than one royalty payment shall be due with
               -----------
         respect to a sale of a particular Licensed Product. No multiple
         royalties shall be payable because any Licensed Product, or its
         manufacture, use or sale is covered by more than one Valid Claim. No
         royalty shall be payable under this Article 3 with respect to Licensed
         Products distributed for use in research and/or development, in
         clinical trials or as promotional samples.

         3.6   Royalty Term. Royalties due under this Article 3 shall be payable
               ------------
         on a country-by-country and Licensed Product-by-Licensed Product basis
         until the expiration of the last-to-expire issued Valid Claim covering
         such Licensed Product in such country, or if no such Valid Claim issued
         in a country, until the fifth anniversary of the first commercial sale
         of a Licensed Product in such country.

         3.7   In the event Assignee engages in litigation and/or settlement
         negotiations to advance a claim it makes that a third party is
         infringing on Licensed Products and/or Licensed Processes, ***
         on any litigation or settlement recovery by Assignee will be paid to
         Assignor; provided, however, that Assignee shall be entitled to first
         deduct reasonable and documented attorney's and other professional
         fees, expert fees, court costs, and other reasonable expenses incurred
         by Assignee in such litigation and/or settlement activities.

12.      Section 4.2 is amended to read in its entirety as follows:

         4.2   Payments and Reports. The first annual minimum royalty payment of
               --------------------
         twenty thousand dollars ($20,000) shall be due and payable to Assignor
         within 30 days of the date of the last signature on this Amendment.
         Thereafter, minimum annual royalty payments, when due, shall be due and
         payable within thirty (30) days after the end of the applicable year.
         All running royalties payable hereunder by Assignee shall be due within
         thirty (30) days following the end of each respective semi-annual
         reporting period, which ending dates shall be June 30 and December 31
         for each successive year. Each report will accurately identify income
         and expenses in sufficient form and detail so as to enable Assignor to
         determine the royalties due for such semi-annual period, and shall be
         mailed to the following: Office of the Executive Vice President and
         Provost, The University of Texas at Austin, Main Building 201, Austin,
         Texas 78712-1111, ATTN: Patricia C. Ohlendorf, with a copy to the
         Office of Technology Licensing and Intellectual Property at the address
         listed in 16.3 herein. Checks shall be made payable to The University
         of Texas at Austin. Except as expressly provided herein, all amounts
         payable hereunder shall be payable in United States dollars without
         deductions for taxes, assessments, fees, or charges of any kind.

13.      Article 15 is amended to read in its entirety as follows:

         15.1  Assignment. Neither party may assign this Assignment without the
               ----------
         prior consent of the other, which consent shall not be unreasonably
         withheld; provided, however, Assignee may assign this Assignment in
         connection with a transfer of all or substantially all of its

***  Confidential treatment requested

                                      -5-

<PAGE>

     assets relating to this Assignment, whether by sale, merger, operation of
     law or otherwise. This Assignment shall be binding upon and inure to the
     benefit of the parties and their successors and assigns.

14.  New Article 16 is added as follows:

     MISCELLANEOUS
     -------------

     16.1  Affiliate Rights/Obligations. Assignee shall have the right to extend
           ----------------------------
     the provisions of the Assignment regarding the right to manufacture, sell,
     or otherwise dispose of for value, including licensing and sublicensing,
     the Patent Rights, Technology, Know-How, Other Intellectual Property,
     Licensed Products, and Licensed Processes, to any Affiliate, provided such
     Affiliate consents to be bound by the Assignment to the same extent as
     Assignee. Further, Assignee shall have the right to extend the provisions
     of this Amendment in their entirety to any Affiliate, provided such
     Affiliate consents to be bound by the applicable provisions of this
     Amendment to the same extent as Assignee.

     16.2  Entire Agreement. The Assignment and this Amendment constitute the
           ----------------
     entire and only agreement between the parties with respect to the Patent
     Rights, Technology, Know-How, Other Intellectual Property, Licensed
     Products, and Licensed Processes, and all other prior negotiations,
     representations, agreements, and understandings are superseded hereby. No
     agreement altering or supplementing the terms of the Assignment may be made
     except by means of a written document signed by a duly authorized
     representative of each party.

     16.3. Notices. Any notices under this Assignment or shall be given by
           -------
     prepaid, first class, certified mail, return receipt requested, addressed
     as follows (or such other address as may be given from time to time under
     the terms of this provision):

<TABLE>
     <S>                                            <C>
     in the case of Assignor -                       with a copy to -
     BOARD OF REGENTS                                OFFICE OF THE EXECUTIVE
     The University of Texas System                  VICE PRESIDENT & PROVOST
     201 West 7th Street                             The University of Texas at Austin
     Austin, Texas  78701                            Austin, Texas 78712-1111
     ATTN: System Intellectual Property Office       ATTN:  Patricia C. Ohlendorf

                                                     with a copy to -
                                                     OFFICE OF TECHNOLOGY LICENSING AND
                                                     INTELLECTUAL PROPERTY
                                                     The University of Texas at Austin
                                                     MCC Building
                                                     Suite 1.9A
                                                     3925 West Braker Lane
                                                     Austin, Texas  78759
                                                     ATTN:  Director
</TABLE>

                                      -6-
<PAGE>

         or in the case of Assignee -

         E. HELLER AND COMPANY
         1311 Harbor Bay Parkway, Suite 1000
         Alameda, California  94502
         ATTN:  Ephraim Heller

         16.4  LIMITATION OF LIABILITY. SUBJECT TO ARTICLE XIV OF THE
               -----------------------
         ASSIGNMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
         CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THIS
         ASSIGNMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY

         16.5  Right to Independently Develop. Nothing in this Assignment will
               ------------------------------
         impair Assignee's right to independently acquire, license, develop for
         itself, or have others develop for it, technology or intellectual
         property performing the same or similar functions as the Know-How or
         the Patent Rights, or the Other Intellectual Property, or to market and
         distribute licensed products based on such other intellectual property
         and technology.

         16.6  Further Assurances. At any time or from time to time on and after
               ------------------
         the date of this Assignment, Assignor shall at the request and sole
         expense of Assignee (i) deliver to Assignee such records, data or other
         documents consistent with the provisions of this Assignment, (ii)
         execute, and deliver or cause to be delivered, all such consents,
         documents or further instruments of transfer or license, and (iii) take
         or cause to be taken all such actions, as Assignee may reasonably deem
         necessary or desirable in order for Assignee to obtain the full
         benefits of the Assignment and Amendment and the transactions
         contemplated hereby.

         16.7  Severability. In the event that any provisions of this Assignment
               ------------
         are determined to be invalid or unenforceable by a court of competent
         jurisdiction, the remainder of the Assignment shall remain in full
         force and effect without said provision. The parties shall in good
         faith negotiate a substitute clause for any provision declared invalid
         or unenforceable which shall most nearly approximate the intent of the
         parties in entering this Assignment.

         16.8  Modification; Waiver. This Assignment may not be altered, amended
               --------------------
         or modified in any way except by a writing signed by both parties. The
         failure of a party to enforce any provision of the Assignment shall not
         be construed to be a waiver of the right of such party to thereafter
         enforce that provision or any other provision or right.

15.      Except as specifically modified or amended hereby, the Assignment shall
         remain in full force and effect and, as so modified or amended, is
         hereby ratified, confirmed and approved. No provision of this Amendment
         may be modified or amended except expressly in a writing signed by both
         parties nor shall any terms be waived except expressly in a writing
         signed by the party charged therewith. This Amendment shall be governed
         in accordance with the laws of the State of Texas, without regard to
         principles of conflicts of laws.

                                      -7-
<PAGE>

         IN WITNESS WHEREOF, this Amendment effective as of March 19, 1998, is
hereby executed by the duly authorized representatives of the parties on the
date indicated below in duplicate, each of which shall be deemed an original and
together shall form one and the same instrument.

BOARD OF REGENTS OF THE
UNIVERSITY OF TEXAS SYSTEM                       E. HELLER AND COMPANY

/s/ Ray Farabee                                  /s/ Ephraim Heller
---------------------------------------          -------------------------------
Ray Farabee                                      Ephraim Heller
Vice Chancellor and General Counsel              President
Date:   4/7/98                                   Date:   3/19/98
     ----------------------------------               --------------------------

APPROVED AS TO CONTENT                           ADAM HELLER

/s/ Patricia C. Ohlendorf                        /s/ Adam Heller
---------------------------------------          -------------------------------
Patricia C. Ohlendorf                            Adam Heller
Counsel to the President                         Date:   3/19/98
                                                      --------------------------
Vice Provost
Date:   3/27/98
     ----------------------------------

APPROVED AS TO FORM

/s/ Georgia Harper
---------------------------------------

Name: Georgia Harper
     ----------------------------------
Office of General Counsel
Date: 4/7/98
     ----------------------------------

                                      -8-
<PAGE>

                                   EXHIBIT A

                              [See Exhibit 10.10]
<PAGE>

                                   EXHIBIT B

                                 (See attached)
<PAGE>

COLLEGE OF ENGINEERING

THE UNIVERSITY OF TEXAS AT AUSTIN

Department of Chemical Engineering, Austin, Texas 78712-1062

Adam Heller                                                     January 6, 1997
Ernest Cockrell, Sr. Chair
Telephone:      (512) 471-8874
FAX:            (512) 471-8799
e-mail:         heller@che.utexas.edu

To:             Dr. Paulette Braeutigam, Technology
                    Licensing Coordinator

From:           Adam Heller

Dear Paulette:

This letter follows your discussion with Ephraim wherein you agreed to cover in
the current agreement between The University of Texas at Austin and E. Heller &
Company all presently existing intellectual property relating to biosensors that
originated in my group. These include the following:

US Patents Issued:
-----------------

The already issued patents are:

US 5,543,326 - Biosensor including chemically modified enzymes.

US 5,356,786 - Interferant eliminating biosensor

US 5,320,725 - Electrode and Method for the detection of hydrogen peroxide.

US 5,264,105 - Enzyme electrodes.

US 5,264,104 - Enzyme electrodes.

US 5,262,305 - Interferant eliminating biosensor.

US 5,262,035 - Enzyme electrodes.

<PAGE>

U.S. Patents Currently Prosecuted:
---------------------------------

(1)  Thermostable Biosensors
     -----------------------

The pending patent application discloses biosensors (methods and compositions)
transducing biochemical concentrations into electrical signals at temperatures
exceeding 37 (degree) C. The claims to be allowed are now negotiated with the
Patent Examiner. Part of the material, where we report operation of a
thermostable biosensor based on electrical connection of reaction centers of
soybean peroxidase, was published [A Thermostable Biosensor of Hydrogen
Peroxide, Vreeke, M.S., Yong, K.T., and Heller, A., Anal.Chem 67, 4247-4249
(1995)]. The hydrogen peroxide sensing biosensor operated continuously for weeks
with no loss at 45 (degree) C and for hours at 75 (degree) C.

The peroxide sensing layer of this biosensor was combined with enzymes that
generated hydrogen peroxide in glucose and lactate sensors. The sensor of
glucose operated for 10 days with only about 10% loss in activity and of lactate
for about a week. A paper submitted is likely to appear in Analytical Chemistry
in March, 1997. (Electrochemical Glucose and Lactate Sensors Based on "Wired"
Thermostable Soybean Peroxidase Operating Continuously and Stably at 37 (degree)
C, Kenausis, G., Chen., Q., and Heller, A. Submitted to Analytical Chemistry,
1996].

In the most stable group of sensors to date, we have immobilized the enzyme that
catalyzes the reaction of oxygen with the analyte in a matrix containing silica,
which we prefer to form by a sol-gel process from a molecular precursor of
silica, such as a polyalkoxysilane. The immobilization of enzymes in sol-gel
silica has been known from the work of others. We have, however, made two
discoveries. First, that glycoprotein enzymes, such as glucose oxidase, can be
made particularly thermostable by sol-gel immobilization in silica. Glucose
oxidase, an example of a glycoprotein enzyme, withstands heating to 98 (degree)
C for 10 min when immobilized. We have also discovered that while non-
glycoprotein enzymes are much less stable in these matrices, they can be
drastically stabilized in the sol-gel matrix by incorporating also a polymer. An
example of such stabilization is that of lactate oxidase by poly(N-vinyl
imidazole). When the two are co-incorporated in sol-gel silica, the lactate
oxidase remains active after heating to 90 (degree) C for 10 min. We now know
that different enzymes require different polymers for their stabilization in
silica.

The sol-gel silicas loaded with enzymes, that are hard solids, have been made
into membranes and tested in glucose and lactate sensors. In these the oxidase
enzymes generated the hydrogen peroxide, while electrically "wired" thermostable
peroxidase transduced the hydrogen peroxide flux into a current by catalyzing
the electroreduction of hydrogen peroxide to water. These exceptionally stable
sensors have now also been miniaturized. They were incorporated in
(galvanostatically etched) recesses in 0.3mm O.D. polymer insulated gold and
palladium wires to form glucose sensors that, with mass transport controlling
(e.g. dimethyl siloxane elastomer) layers that are permeable to oxygen and with
a biocompatible layer of crosslinked (derivatized) poly(ethylene oxide)
constitute our most stable in vitro and in vivo glucose sensors to date. From
the in vitro data we project already that these systems will yield
subcutaneously worn glucose sensors with useful lives exceeding one month.

The above material will be subject to a continuation-in-part filing.
<PAGE>

Amperometric DNA and Oligonucleotide Sensors:
---------------------------------------------

We have published a first paper on the sensing of hybridization of a model 30-
base oligonucleotide as an electrical current [Direct Enzyme-Amplified
Electrical Recognition of a 30-Base Model Oligonucleoutide, de Lumley-Woodyear,
T., Campbell, C.N., Heller, A., J.Am.Chem.Soc. 118, 5504-5505 (1996)]. More
recently we succeeded also in sensing of a natural 800-base oligonucleotide. We
are currently considering whether to invest in a separate filing on the
amperometric detection of oligonucleotide and DNA hybridization.

A different application of the thermostable hydrogen peroxide sensors is in
their use in selective sensing of oligonucleotides and DNA. For the first time
we have in hand an electrically connected thermostable enzyme that can be used
as a label of DNA strand. When its hybrid denatures or melts, the electrical
connection of the thermostable peroxidase to the electrode surface is lost.
Thus, the denaturing of an oligonucleotide or DNA hybrid (double helix) might be
tracked with the thermostable enzyme. This would signal, through decline of the
electrical current upon heating, the denaturing of the double strand and reveal
the temperatures where denaturing starts and where it is complete. This
temperature is known to be sensitive to the number of defects, i.e. the number
of mismatched nucleotide pairs.

In vivo Sensors:
---------------

A patent application, some claims of which have been allowed, has been filed;
continuations-in-part are planned.

Innovations include:

     Components, physical structure and dimensions. The sensing layer is
     shielded and the sensors have at least two layer. One is a transducing
     layer, converting a biochemical flux into an electrical signal, that
     functions also in the absence of oxygen and has no leachable components.
     The second is a biocompatible layer that swells in an aqueous solution,
     increasing its volume by at least 20%. The preferred embodiment has three
     layers, the central layer limiting the mass transport of the analyte and
     thereby expanding the range of concentrations measured.

     The preferred sensors have diameters smaller than 0.5 mm, preferable
     smaller than 0.3 mm and are subcutaneously implanted.

Papers published including part of the material on these sensors are: Design and
optimization of a selective subcutaneously implantable glucose electrode based
on "wired" glucose oxidase, Csoregi, E., Schmidtke, D.W. and Heller, A.
Analytical Chemistry, 67, 1240-1244 (1995). Design, Characterization, and One-
Point In Vivo Calibration of a Subcutaneously Implanted Glucose Electrode,
Csoregi, E., Quinn, C.P., Schmidtke, D.W., Lindquist, S.-E., Pishko, M.V., Ye,
L., Katakis, I., Hubbell, J.A. and Heller, A., Analytical Chemistry, 66, 3131-
3138 (1994).

In vivo sensors of this type, containing a thermostable transduction layer were
discussed above.

                                      -2-
<PAGE>

Another type of novel sensor was made by placing a non-corroding wire, coated in
part with a transducing layer, and having no leachable component in a
microdialysis or microfiltration fiber, made of a biocompatible material.
Preferably, the transducing layer is overcoated with a mass transport limiting
membrane. The overall diameter is about 0.5 mm or less. Polysulfone
microfiltration fibers and cellulose acetate/polysulfone mass transport limiting
layers were used.

The sensing systems may have a skin electrode, i.e. a counter-reference
electrode, such as a silver/silver chloride electrode, on the skin. The use of
skin electrodes was described in our papers, Statistics for Critical Clinical
Decision Making Based on Readings of Pairs of Implanted Sensors, Schmidtke, D.,
Pishko, M.V., Quinn, C.P., and Heller, A., Analytical Chemistry, 68, 2845-2849
(1996), and also in Kinetics of Glucose Delivery to Subcutaneous Tissue in Rats
Measured with 0.3mm Amperometric Microsensors, Quinn, C.P., Pishko, M.V.,
Schmidtke, D.W., Ishikawa, M., Wagner, J.G., Raskin, P., Hubell, J.A. and
Heller, A., Am.J.Physiol. 269 (Endocrinol.Metab. 32) E155-E161 (1995).

On the basis of the information contained in our paper Statistics for Critical
Clinical Decision Making Based on Readings of Pairs of Implanted Sensors,
Schmidtke, D., Pishko, M.V., Quinn, C.P., and Heller, A., Analytical Chemistry,
68, 2485-2489 (1996), we are seeking patent protection on using in vivo
redundant sensors; on the method of selecting pairs of sensor readings that are
valid for one-point calibration in vivo, discriminating these from those that
are not; and for defining pairs of sensor readings that will trigger an alarm
signaling hypoglycemia, hyperglycemia, excessively fast rise, or excessively
fast decline of glucose levels, or of sensor malfunction and statistical
algorithms for the selection of valid readings.

We are also seeking to patent the method of calibrating a sensor in vivo by
withdrawal of one sample of blood and its independent analysis described in the
papers of Csoregi, E., Schmidtke, D.W., and Heller, A. Analytical Chemistry, 67,
1240-1244 (1995); and of Csoregi, E., Quinn, C.P., Schmidtke, D.W., Lindquist,
S.-E., Pishko, M.V., Ye, L., Katakis, I., Hubbell, J.A. and Heller, A.,
Analytical Chemistry, 66, 3131-3138 (1994).

We have shown that after perturbing the venous glucose concentration by
injection of glucose or insulin, the change in the subcutaneous glucose
concentration lags behind the blood concentration. For glucose injection the lag
is glucose dose dependent (Kinetics of Glucose Delivery to Subcutaneous Tissue
in Rats Measured with 0.3mm Amperometric Microsensors, Quinn, C.P., Pishko,
M.V., Schmidtke, D.W., Ishikawa, M., Wagner, J.G., Raskin, P., Hubbell, J.A. and
Heller, A., Am.J.Physiol. 269 (Endocinol.Metab. 32) E155-E161 (1995)) and is in
the 9-13 min range; for insulin injection the lag is much longer (15-40 min)
(David W. Schmidtke, Ph.D. Thesis, The University of Texas at Austin, December,
1996). We shall seek to protect the algorithms relating blood with subcutaneous
glucose concentrations. We have observed that after insulin injection the
dynamic difference between subcutaneous and blood glucose concentration is high.
Our method will exclude a period of about 30-90 min., preferably of about 40
min. following an insulin injection from the periods in which the sensor is
calibrated in vivo.

We have published work on miniature electronics, including a biopotentiostat,
for glucose sensing in vivo [Battery Powered Miniature Bioporentiostats for
Amperometric Biosensors, Quinn, C.P., Wagner, J.G., Heller, A., and Yarnitzky,
C.M., Instrumentation Science & Technology, 24, 263-275

                                      -3-
<PAGE>

(1996)] and are currently building a system with a miniature transmitter. The
electronics have been miniaturized to be wrist-worn. We have shown that there
are preferred sites for implanting glucose sensors in humans. One of the
preferred sites is the back of the hand above the knuckles and below the wrist.
The sensors' output when in the hand or another extremity is (outside)
temperature dependent, wherefore an algorithm correcting for the sensor
temperature is useful.

We have recently demonstrated that a useful biocompatible layer for our in vivo
sensors can be made by crosslinking a polyamine, such as an amineterminated
dendrimer, wherein the crosslinkers may be polyethylene oxide chains, the
polyethylene oxide having amine-reactive and functions such as active esters of
N-hydroxy succinimide. This adds to our claims of biosensors that are made with
a biocompatible gel that swells in water, to include gels made by reacting two
materials, at least one of which has poly(ethylene oxide) chains.

Sensors for Bioreactors:
-----------------------

We have built and tested sensors for bioreactors. The glucose sensor built does
not require oxygen for its operation. It is placed in a sterilizable sleeve
having a non-fouling membrane. The sensor was designed to minimize the volume of
the fluid contained in the sleeve's compartment behind the sterilizable membrane
in which the periodically replaced sensor is sited. Sensors were replaced
without risking infection of the broth with a foreign organism.

Air Oxidizable Redox Polymers and Redox Couples:
------------------------------------------------

We have observed that on some redox polymers used to connect enzymes to
electrodes molecular oxygen can be catalytically electroreduced. The importance
of such electroreduction is in that it provides another method for sensing
oxygen amperometrically, but, more importantly, in allowing maintenance of the
redox centers of the polymer predominantly in their oxidized state simply by
storing the biosensors in air or in any other oxygen containing atmosphere. We
have found that electrodes modified with poly(N-vinyl imidazole), and preferably
with the [Os(bpy)2 CL] +/2+ complex (where bpy is bipydrine, phenantholine or a
derivative of these) of poly(N-vinyl imidazole) are oxygen reduction catalysts.
As a result of the Os redox centers in these are maintained dominantly as in the
Os(III) oxidation state. In general, the more reducing the Os complexes bound to
poly(N-vinyl imidazole), the better they catalyze O2 reduction. Thus
(Os(dmo'bpy)2 Cl] +/2+ complexed poly(N-vinyl imidazole), where dmo-bpy is 4,4'-
dimethoxy-2,2'-bipyridine is an excellent O2 reduction catalyst. Less effective
catalysis of O2 reduction was observed also with poly(4-vinyl pyridine)
complexes of osmium and with osmium ligands like 4,4'-dimethyl-2,2'-bipyridine.
It is possible that non-polymeric imidazole complexes, such as [Os(Im)(dmo-bpy)2
Cl] are also maintained by oxygen in the oxidized state, [Os(Im)(dmo-bpy) 2 Cl]
+.

The ability to maintain Os centers in the oxidized state is an advantage in
biosensors where charge passed is measured or where the current after a defined
elapsed time is measured. The signal from such sensors is less dependent on
storage (residual enzyme activity) or temperature.

                                      -4-
<PAGE>

Redox Polymers and Synthesis of Polymers:
----------------------------------------

New enzyme wiring redox polymers were described in four articles [(a) 'Wiring'
of glucose oxidase and lactate oxidase within a hydrogel made with poly(vinyl
pyridine) complexed with [Os(4,4'dimethoxy-2,2'-bipyridine)2 Cl]+/2+ Kenausis,
G., Taylor, C. and Heller, A., J. Chem. Soc., Faraday Transactions, 92, 4131-
4136 (1996); (b) "Wiring" of Glucose Oxidase within a Hydrogel made with
Polyvinyl Imidazole Complexed with [(Os-4,4'-dimethoxy 2,2'-bypyridine)Cl]+/2+
Chris Taylor, Gregg Kenausis, Ioanis Katakis, and Adam Heller,
J.Electroanalytical Chemistry 396, 511-515 (1995); (c) Polyacrylamide Based
Redox Polymer for Connecting Redox Centers of Enzymes to Electrodes, De Lumley-
Woodyear, T., Rocca, P., Lindsay, J., Dror, Y., Freeman, A., and Heller, A.,
Analytical Chemistry 67, 1332-1338 (1995); (d) Glucose Electrodes Based on
Crosslinked [OS(bpy)2Cl]+/2+ Complexed Poly(1-Vinylimidazole) Films, Ohara,
T.J., Heller, A., Anal.Chem. 65, 3512-3517 (1993)]. Some of the new polymers
were designed to have redox potentials shifted in the negative direction, so as
to reduce the unwanted electrooxidation of easy to oxidize constituents of
biological fluids, like ascorbate and acetaminophen. Others were designed to
reduce the positive charge on the chains, so as to lessen the permeation of
interfering anions (ascorbate, urate) and the non-specific binding of
biologically important polyanions (oligonucleotides, DNA, some enzymes).

It was found that the quality of the electrical connection of redox enzymes to
electrodes critically depends on the extent of branching and crosslinking of the
enzyme-wiring redox polymers. Such branching and crosslinking takes place when
in polymer-nitrogen bound [Os(bpy)2 Cl]2+/+ centers, denoted as poly-[N -
OS(bpy)2 Cl]+/2+ the chloride in the inner coordination sphere is exchanged by a
second nitrogen of polymer chain. Branching and crosslinking occur by formation
of poly [N - Os(bpy)2- N]2+/1+ embranes poly links. By introducing rigorously
anhydrous synthetic and storage conditions and by monitoring the progress of the
desired complex formation in its preparation, dominantly linear polymers that
"wire" the enzymes more effectively were prepared.

New Crosslinkers:
----------------

Novel crosslinkers have been used. These have usually a poly(ethylene oxide)
sequence, terminated by functions reacting with amines such as N-
hydroxysuccinimide esters, suberimidates, dichlorotriazine etc. Others are
similar, but have polymethylene chains. Through using these crosslinkers we are
making hydrogels that swell less, adhere better to electrodes, and are less
subject to loss from the electrode surface by shear.

Novel Enzymes and their "wires":
-------------------------------

In collaboration with colleagues at the University of Glasgow, Scotland, we have
started work on glutamine electrodes based on wiring of glutamine oxidase. At
Austin and also in collaboration with colleagues at the University of Lund in
Sweden on wiring oligosaccharide dehydrogenase we used polymeric "wires" that do
not have a net positive charge and on polymers having anionic and cationic
zones.

Membranes:
---------

                                      -5-
<PAGE>

The formation of membranes to (a) extend the sensing range of electrodes; (b)
reduce the electrooxidation of interferants; (c) control the ratio of the fluxes
of O2 and the analyte (e.g. glucose) to the electrode surface has been studied.
Methods of casting miniature membranes (e.g. of cellulose acetate from
cyclohexanone, of polysulfone from tetrahydrofuran) and of their mixtures, and
also of crosslinking polydimethyl siloxanes to form oxygen "breathing"
elastomeric micromembranes were developed.

Immunosensors:
-------------

We have built immunosensors based on wiring of immunolabeling enzymes. In one
group of these, no separation or washings are required; in others the substrate
of the immunolabeling peroxidase, hydrogen peroxide, is generated in situ by air
oxidation of a substrate such as choline with an immobilized enzyme such as
choline oxidase. Choline oxidase, as well as a small number of other oxidases is
not "wired" in our hydrogels, thus performing its usual catalysis without
interfering with the amperometric assay. An example of the immunosensors
developed is an electrode modified with a film consisting of a redox hydrogel
capable of "wiring" a peroxidase, an antibody and choline oxidase. The electrode
is exposed to the solution tested for antigen, then to a peroxidase labeled
antibody solution also containing choline. When the antigen is present,
"sandwich" formation causes electrical connection of the labeling peroxidase and
electroreduction of the H2 O2 generated in the air oxidation of choline to
betaine. Antibodies are detected through incorporation of antigens in the redox
polymer and choline oxidase containing gel, exposure to the solution tested for
the antibody, to which choline and the peroxidase-labeled antigen were added.

With my regards and best wishes for 1997,

/s/ Adam Heller
Adam Heller

AH:n

                                      -6-<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                                                                   Exhibit 10.12

                               LICENSE AGREEMENT
                               -----------------

           This License Agreement (the "Agreement"), effective as of
                   February 23, 2000 (the "Effective Date"),
                           is entered by and between

ASULAB SA., organized under the laws of Switzerland, with offices at Rue des
Sors 3, CH-2074 Marin, Switzerland ("Asulab"),

                                      AND

THERASENSE, Inc., a California corporation with principal place of business at
1360 South Loop Road, Alameda, CA 94502, USA ("TheraSense").

BACKGROUND
----------

A.   Asulab owns certain Patent Rights (as defined below) relating to sensors
     for measuring analyte levels in body fluids; and

B.   TheraSense desires to obtain a license under the Patent Rights, and Asulab
     desires to grant such a license to TheraSense, on the terms and conditions
     herein.

NOW THEREFORE, Asulab and TheraSense agree as follows:
<PAGE>

                                                                               2

1.   DEFINITIONS
     -----------

1.1  "Affiliate" means any corporation or other entity, which is directly or
      ---------
     indirectly controlling, controlled by or under the common control with
     Asulab or TheraSense. For the purpose of this Section 1.1, "control" shall
     mean the direct or indirect ownership of at least fifty percent (50%) of
     the outstanding shares or other voting rights of the subject entity to
     elect the majority of the directors, or the maximum percentage control or
     ownership rights permitted under the law of the relevant country.

1.2  "Confidential Information" shall mean
     ------------------------

     a)   any proprietary or confidential information or material in tangible
          form disclosed hereunder that is marked as "Confidential" at the time
          it is delivered to the receiving party, or

     b)   proprietary or confidential information disclosed orally hereunder
          which is identified as confidential or proprietary when disclosed and
          such disclosure of confidential information is confirmed in writing
          within thirty (30) days by the disclosing party.

1.3  "Patent Rights" shall mean the patents and patent applications listed on
     --------------
     Exhibit A and all directly related patents and patent applications filed in
     any country worldwide necessary for development and commercialization of
     the Products (including all reissues, extensions, substitutions,
     reexaminations, supplementary protection certificates and the like, patents
     of addition, provisionals, continuations, continuations-in-part,
     divisionals, reissues, and foreign counterparts thereof).

1.4  "Field" means analytical and diagnostic instruments for diabetes
      -----
     monitoring.

1.5  "FreeStyle" means a system for the in vitro monitoring of glucose using a
      ---------
     test strip manufactured by TheraSense which coulometrically measures less
     than 0.4 microliters of body fluid. For the avoidance of doubt FreeStyle
     does not include the electronic meter for TheraSense's in vivo glucose
     sensor.
<PAGE>

                                                                               3

1.6  "Licensed Product" means any current or future product, which is within the
      ----------------
     scope of an issued Valid Claim or was within the scope of an issued Valid
     Claim. Each individual disposable test strip shall be counted as one
     Licensed Product.

1.7  "Net Sales" means the gross revenues actually received by TheraSense or its
      ---------
     Affiliates form a third party from sales of Licensed Products, less

     a) normal and customary rebates, and cash and trade discounts, actually
        taken;

     b) sales, use and/or other excise taxes or duties actually paid;

     c) amounts allowed or credited due to returns.

     For purposes of clarification in the event that sales are made through
     distributors, Net Sales shall be based on gross revenues actually received
     by TheraSense from the Distributors less the discounts listed above.

1.8  "Territory" means the entire world.
      ---------

1.9  "Valid Claim" means
      -----------

      a)     a claim of an issued and unexpired patent included within the
             Patent Rights which has not been held unenforceable or invalid by a
             court or other governmental agency of competent jurisdiction, and
             which has not been disclaimed or admitted to be invalid or
             unenforceable through reissue or otherwise; or

      b)     a claim of a pending patent application within the Patent Rights.

2.    LICENSE
      -------

2.1   Grant to TheraSense
      -------------------

      Asulab hereby grants to TheraSense and its Affiliates a non-exclusive
      license under Patent Rights to make, import, have imported, use, sell,
      have sold and offer for sale the Licensed Products in the Territory for
      use in the Field.

<PAGE>

                                                                               4

2.2      Limitation of Rights
         --------------------

2.2.1    Notwithstanding the rights granted in Section 2.1, TheraSense agrees
         that:

          a)   the deposition of electron transfer mediators onto a Licensed
               Product shall only be performed by TheraSense or TheraSense
               Affiliates; and

          b)   the package for Licensed Product shall be marked with a
               trademark, trade name or brand name owned by TheraSense or a
               TheraSense Affiliate. Sales of Licensed Product marked with a
               trademark, trade name or brand name of a company other than
               TheraSense or a TheraSense Affiliate shall require Asulab's prior
               written approval. Such an approval may be withheld without
               reasons. Notwithstanding the foregoing, TheraSense and its
               distributors shall mark all Licensed Product in accord with local
               laws and regulations.

2.2.2    Notwithstanding the rights granted in Section 2.1, Asulab agrees that
         TheraSense may contract with third parties to manufacture and supply
         one or more components, including the synthesis of chemicals, necessary
         or useful in the manufacture of the Licensed Products for use in the
         Field.

2.2.3    TheraSense does not have the right to sublicense the Patent Rights.

3.       CONSIDERATION
         -------------

3.1      Commercialization of Asulab System
         ----------------------------------

         TheraSense shall conduct in-house clinical testing, clinical trials,
         market research, and preparation and submission of FDA 510k application
         for the Asulab system. Upon execution of a mutually agreeable
         distribution agreement between Asulab and TheraSense, TheraSense shall
         market the Asulab System to major US retailers. TheraSense shall use
         its best reasonable efforts to commercialize the Asulab System with one
         or more major retailers in North America. For a period of two (2) years
         from the Effective Date, Asulab shall work exclusively with TheraSense
         on the marketing of the Asulab System in North America. For a period of
         two (2) years from the Effective Date, Asulab shall not directly or
         indirectly engage in
<PAGE>

                                                                               5

         discussions with North American retailers or marketing partners (other
         than TheraSense) regarding the sale of the Asulab system in North
         America.

3.2      Royalties
         ---------

         In consideration of the license granted herein, for each calendar year
         beginning in 2000 TheraSense shall pay to Asulab the greater of:

3.2.1    a minimum royalty of *** for the year 2000, *** for the year 2001,
         and *** for each calendar year thereafter (such minimum royalties to
         be paid at the end of each calendar year); or

3.2.2    a running royalty based on Net Sales of all Licensed Products. The
         royalty rate on Net Sales of Licensed Products shall be as follows:

         a)    *** until TheraSense files 510k application with the US FDA for
               clearance to market the in vitro glucose monitoring system
               provided by Asulab to TheraSense on November 24, 1999 (the
               "Asulab System"); then

         b)    *** until the US FDA approves TheraSense's 510k application to
               market the Asulab System; then

         c)    *** until a total of      Licensed Products are sold in the
               Territory in any calendar year; then

         d)    *** for the remainder of that calendar year and in all years
               thereafter.

          In the event that:

         i)    TheraSense reasonably cannot submit a 510k application to the US
               FDA on the Asulab System within nine (9) months of the Effective
               Date,

         ii)   the US FDA rejects TheraSense's application to market the Asulab
               System; or

*** Confidential treatment requested
<PAGE>

                                                                               6

     iii) the Asulab System cannot reasonably be expected to be commercialized,
          in spite of ThereSense having used its best efforts to obtain FDA
          approval,

     and the responsibility for event i), ii) or iii) belongs primarily to
     Asulab (for example, due to product performance, product availability,
     patent encumbrances, etc.), then the royalty rate shall begin at *** and
     drop to *** as soon as *** Licensed Products are sold and follow from there
     on what is specified in Section 3.2.2 c) and d).

     For sales in countries where there are no issued Valid Claims, the royalty
     rate shall be equal to *** of the royalty rates specified herein above in
     this Section 3.2.2 for sales in countries in which a Valid Claim exists if
     the Licensed Product originates also from a country without Valid Claim. If
     however the Valid Claim exists either in the country of origin or in the
     country of destination of the Licensed Product, the royalty rate shall be
     *** of the rates specified herein above in Section 3.2.2. If the Valid
     Claim exists in both the country of origin and the country of destination,
     the royalty rate shall be the *** according to Section 3.2.2 herein
     above.

3.3. Combination Products
     --------------------

     In the event that a test strip that is a Licensed Product is sold in
     combination as a single product with another component or other product
     whose manufacture, sale and use are not covered by a claim within the
     Patent Rights for which the combination product is sold, Net Sales from
     such sales for purposes of calculating the amounts due under Sections 3.2
     above shall be as reasonably allocated between such Licensed Product and
     such component or other product, based upon their relative importance and
     proprietary protection. Combination Products currently contemplated by
     TheraSense and the corresponding royalty rates are listed in Exhibit B.

3.4  One Royalty
     -----------

     No more than one royalty payment shall be due with respect to a sale of a
     particular Licensed Product. No multiple royalties shall be payable because
     any Licensed Product, or its manufacture, sale or use is covered by more

*** Confidential treatment requested
<PAGE>

                                                                               7

         than one Valid Claim. No royalty shall be payable under Section 3.2
         above with respect to Licensed Products distributed for use in research
         and/or development, in clinical trials or as promotional samples,
         unless they are sold or distributed against a counter-benefit.

3.5      Royalty Term
         ------------

         Royalties due under this Article 3 shall be payable on a Licensed
         Product-by-Licensed Product basis until the expiration of the last-to-
         expire issued Valid Claim covering such Licensed Product.

3.6      Payments, Reports and Records
         -----------------------------

3.6.1    Payments; Currency
         ------------------

         TheraSense agrees to pay all running royalties due to Asulab within
         sixty (60) days after the last day of each half-calendar year in which
         they accrue. If the running royalty accrued in a given calendar year is
         less than the minimum royalty for that calendar year, the difference
         shall be paid within sixty (60) days after the last day of the calendar
         year. All payments due hereunder shall be paid in United States
         dollars.

3.6.2    Taxes
         -----

         The royalty payments to Asulab shall be net of taxes. In case taxes are
         due, TheraSense shall guarantee that it will correctly declare and pay
         such taxes that are to be withheld for the sale of Licensed Products in
         the country of the sales.

3.6.3    Royalty Reports
         ---------------

         TheraSense shall deliver to Asulab within sixty (60) days after the end
         of each half-calendar year in which Licensed Products are sold a report
         setting forth in reasonable detail the calculation of the royalties
         payable Asulab for such half-calendar year, including the Licensed
         Products sold per country and the net Sales thereof. Such reports shall
         be Confidential Information of TheraSense subject to Article 5 herein.

<PAGE>

                                                                               8

3.7      Books and Records
         -----------------

         TheraSense and its Affiliates shall maintain accurate books and records
         which enable the calculation of royalties payable hereunder to be
         verified. TheraSense shall retain the books and record for each
         half-calendar year period for three (3) years after the submission of
         the corresponding report under Section 3.6.3 hereof. Upon thirty (30)
         days prior notice to TheraSense, independent accountants selected by
         Asulab reasonably acceptable to TheraSense, after entering into a
         confidentiality agreement with TheraSense, may have access to
         TheraSense's books and records during TheraSense's normal business
         hours at mutually agreed times to conduct a review or audit once per
         calendar year, for the sole purpose of verifying the accuracy of
         TheraSense's payments and compliance with this Agreement. The audit
         will be limited to TheraSense's books and records documenting Net Sales
         and royalty calculations.

3.8      FreeStyle Meter Manufacturing
         -----------------------------

         During the term of the Agreement, in the event that TheraSense
         determines that it would like to sell an electronic meter utilizing a
         *** for use with FreeStyle test strip Licensed Product, then TheraSense
         shall solicit bids for the design and manufacture of the ***
         and the meter. In the event that TheraSense wishes to perform the
         design or manufacture of the *** and the meter then TheraSense may
         submit an internal bid for some or all of the project. Asulab shall
         have a right of first bid and last call for the design and manufacture
         of the *** and meter to be sold in Europe. In order for Asulab's bid
         not to be accepted by TheraSense, the bid of TheraSense or a third
         party must be equivalent or superior to the specifications, quality,
         delivery, price and other terms that are proposed in Asulab's bid.
         Asulab's bid shall be due on the same date as the third parties' bids.

4.       DILIGENCE
         ---------

Commercially Reasonable Efforts
-------------------------------

TheraSense agrees to use best efforts to develop and commercialize the Licensed
Products and obtain such approvals as may be necessary for the sale of the

*** Confidential treatment requested

<PAGE>

                                                                               9

Licensed Products in the Territory. TheraSense may conduct such activities
itself or through third parties.

5.       CONFIDENTIALITY
         ---------------

5.1      Confidential Information
         ------------------------

         Each party agrees not to use the Confidential Information disclosed to
         it by the other party for its own use or for any purpose except to
         carry out discussions concerning, and the undertaking of, any business
         relationship between the two; except to the extent that such
         Confidential Information:

         a)   was already known to the receiving party, other than under
              obligation of confidentiality, at the time of such disclosure;

         b)   was generally available to the public or otherwise part of the
              public domain at the time of its disclosure to the receiving
              party;

         c)   became generally available to the public or otherwise part of the
              public domain after its disclosure and other than through any act
              or omission of the receiving party in breach of this agreement;

         d)   was independently developed by the receiving party as demonstrated
              by documented evidence prepared contemporaneously with such
              independent development;

         e)   was subsequently lawfully disclosed to the receiving party by a
              person other than a party hereto.

         Neither party will disclose any Confidential Information of the other
         party to third parties except those directors, officers, employees,
         consultants and agents who are required to have the information in
         order to carry out the business relationship. Each party has had or
         will have those directors, officers, employees, consultants and agents
         to whom Confidential Information of the other party is disclosed or who
         have access to Confidential Information of the other party sign a
         Non-Disclosure Agreement in content substantially similar to the terms
         of this Article 5. Each party agrees that it will take all reasonable
         measures to protect the secrecy of and avoid disclosure
<PAGE>

                                                                              10

         or use of Confidential Information of the other party in order to
         prevent it from falling into the public domain or the possession of
         persons other than those persons authorized hereunder to have any such
         information, which, measures shall include the highest degree of care
         that either party utilizes to protect its own Confidential Information
         of a similar nature. Each party agrees to notify the other party in
         writing of any misuse or misappropriation of such Confidential
         Information of the other party which may come to its attention.

5.2      Mandatory Disclosure
         --------------------

         In the event that either party or their respective directors, officers,
         employees, consultants or agents are requested or required by legal
         process to disclose any of the confidential Information of the other
         party, the party required to make such disclosure shall give prompt
         notice so that the other party may seek a protective order or other
         appropriate relief. In the event that such protective order is not
         obtained, the party required to make such disclosure shall disclose
         only that portion of the Confidential Information which its counsel
         advises that it is legally required to disclose.

5.3      Return of Materials
         -------------------

         Upon termination of this Agreement for any reason, any materials or
         documents which have been furnished by one party to the other will be
         promptly returned, accompanied by all copies of such documentation,
         except for one copy which may be retained by each party's legal
         department to monitor its compliance with this Agreement.

5.4      Term
         ----

         The commitments of either party under this Article 5 shall survive
         termination of this Agreement, and shall continue for a period of five
         (5) years following the termination date of this Agreement.

5.5      Confidential Terms
         ------------------

         Each party agrees not to disclose any terms of this Agreement to any
         third party without the consent of the other party; provided
         disclosures may be made as required by securities or other applicable
         laws, or to a party's
<PAGE>

                                                                              11

     accountants, attorneys and other professional advisors, or by TheraSense to
     actual or prospective investors or corporate partners.

6.   REPRESENTATIONS AND WARRANTIES
     ------------------------------

6.1  Asulab
     ------

     Asulab represents and warrants that

     a)   it is a corporation duly organized, validly existing and in good
          standing under the laws of Switzerland; and

     b)   the execution, delivery and performance of this Agreement have been
          duly authorized by all necessary corporate action on the part of
          Asulab; and

     c)   as of the Effective Date, it has the right to grant the rights and
          licenses granted herein, and the Patent Rights are free and clear of
          any lien, encumbrance or security interest;

     d)   it has not previously granted, and will not grant during the term of
          this Agreement, any exclusive license on the Patent Rights, or any
          portion thereof; and

     e)   as of the Effective Date, there are no threatened or pending actions,
          lawsuits, claims or arbitration proceedings in any way relating to the
          Patent Rights.

6.2  TheraSense
     ----------

     TheraSense represent and warrants that

     a)   it is a corporation duly organized, validly existing and in good
          standing under the laws of the State of California; and

     b)   the execution, delivery and performance of this Agreement have been
          duly authorized by all necessary corporate action on the part of
          TheraSense.
<PAGE>

                                                                              12

7.   PROSECUTION AND ENFORCEMENT
     ---------------------------

7.1  Asulab's Responsibilities
     -------------------------

     Asulab shall have the sole right to control the preparation, filing,
     prosecution and maintenance of the Patent Rights, and any interference or
     opposition proceeding relating thereto, using patent counsel of its choice
     and at its sole expense; provided Asulab shall keep .TheraSense informed of
     the preparation, filing, prosecution, and/or maintenance of the Patent
     Rights, and TheraSense may provide to Asulab substantive comment and input
     thereon.

7.2  Enforcement
     -----------

     If either party hereto becomes aware that any Patent Rights are being or
     have been infringed by any third party, such party shall promptly notify
     the other party hereto in writing describing the facts relating thereto in
     reasonable detail. Asulab shall decide what actions will be taken to
     enforce the Patent Rights, it being understood that TheraSense shall assist
     Asulab upon request and at Asulab's expense.

7.3  Infringement Claims
     -------------------

     If the practice by TheraSense of the license granted herein results in any
     allegation or claim of infringement of an intellectual property right of
     third party against TheraSense, TheraSense shall have the right to defend
     any such claim, suit or proceeding, at its own expense, by counsel of its
     own choice and shall have the right and authority to settle any such suit;
     provided, however, Asulab shall cooperate with TheraSense, at TheraSense's
     reasonable request and expense, in connection with the defense of such
     claim. If the Patent Rights are concerned Asulab shall have the right to
     decide on the actions to be taken and shall bear the related expenses.

8.   DISPUTE RESOLUTION
     ------------------

8.1  Mediation
     ---------

     If a dispute arises out of or relates to this contract, or the breach
     thereof, and if said dispute cannot be settled through negotiation, the
     parties agree first to
<PAGE>

                                                                              13

     try in good faith to settle the dispute by mediation under the mediation
     rules of the International Chamber of Commerce before resorting to
     arbitration, litigation, or some other dispute resolution procedures.

8.2  Arbitration
     -----------

     If the parties are unable to resolve any dispute, controversy or claim
     between them arising out of or relating to the validity, construction,
     enforceability or performance of this Agreement, including disputes
     relating to alleged breach or to termination of this Agreement (each, a
     "Dispute"), the Dispute shall be settled by binding arbitration conducted
     in Frankfurt, Germany, pursuant to the Arbitration Rules of the
     International Chamber of Commerce then in effect by one (1) arbitrator
     appointed in accordance with such rules. The arbitrator shall, in rendering
     its decision, apply the substantive law of Switzerland, without regard to
     its conflict of laws provisions. All proceedings and documents will be in
     the English language.

9.   INDEMNIFICATION
     ---------------

9.1  Indemnification of Asulab
     -------------------------

     TheraSense shall indemnify, defend and hold harmless Asulab, its Affiliates
     and its directors, officers and employees (each an "Asulab Indemnitee")
     from and against any and all liabilities, damages, losses, costs or
     expenses (including reasonable attorneys' and professional fees and other
     expenses of litigation and/or arbitration) (a "Liability") resulting from a
     claim, suit or proceeding (any of the foregoing, a "Claim") brought by a
     third party against an Asulab Indemnitee or one its Affiliate's Indemnitee,
     arising from or occurring as a result of activities performed by TheraSense
     in connection with the development, manufacture, sale or use of any
     Licensed Product, except to the extent caused by the negligence or willful
     misconduct of Asulab.

9.2  Indemnification Procedures
     --------------------------

     In the event that an Indemnitee intends to claim indemnification under this
     Article 9 it shall promptly notify the other party (the "Indemnitor") in
     writing of such alleged Liability. The Indemnitor shall have the sole right
     to control the
<PAGE>

                                                                              14

     defense and/or settlement thereof, provided that the indemnified party may
     participate in any such proceeding with counsel of its choice and at its
     own expense. The indemnity agreement in this Article 9 shall not apply to
     amounts paid in settlement of any Claim if such settlement is effected
     without the consent of the Indemnitor, which consent shall not be withheld
     unreasonably. The Indemnitee under this Article 9, its employees and
     agents, shall cooperate fully with the Indemnitor and its legal
     representatives and provide full information in the investigation of any
     Claim covered by this indemnification. Neither party shall be liable for
     any costs or expenses incurred by the other party without its prior written
     authorization.

10.  TERM AND TERMINATION
     --------------------

10.1 Term
     ----

     The term of this Agreement shall commence on the Effective Date, and unless
     earlier terminated as provided in this Article 10, shall continue in full
     force and effect on a Licensed Product-by-Licensed Product basis until the
     life of the last to expire patents under the Patent Rights.

10.2 Permissive Terminations
     -----------------------

     Beginning two (2) years from the Effective Date, TheraSense may terminate
     this Agreement with one hundred and twenty (120) days prior written notice
     to Asulab. In the event that TheraSense terminates this Agreement under
     this Section 10.2, TheraSense shall refrain from using the Patent Rights in
     whatever form.

10.3 Termination for Cause
     ---------------------

     In the event one party has materially breached or defaulted in the
     performance of any of its obligations hereunder, and such breach or default
     has continued for sixty (60) days after written notice thereof was provided
     to the breaching or defaulting party by the non-breaching or non-defaulting
     party, the other party may terminate this Agreement. Any termination shall
     become effective at the end of such sixty (60) days period unless the
<PAGE>

                                                                              15

       breaching or defaulting party has cured any such breach or default prior
       to the expiration of the sixty (60) day period; provided, however, if
       TheraSense receives notification from Asulab of a material breach and if
       TheraSense notifies Asulab in writing within thirty (30) days of receipt
       of such default notice that it disputes the asserted default, the matter
       will be submitted to arbitration as provided in Article 8 of this
       Agreement. In such event, Asulab shall not have the right to terminate
       this Agreement until it has been determined in such arbitration
       proceeding that TheraSense materially breached this Agreement, and
       TheraSense fails to cure such breach within sixty (60) days after the
       conclusion of such arbitration proceeding.

10.4   Termination for Insolvency
       --------------------------

       If voluntary or involuntary proceedings by or against TheraSense are
       instituted in bankruptcy under any insolvency law, or a receiver or
       custodian is appointed for TheraSense, or proceedings are instituted by
       or against TheraSense for corporate reorganization or the dissolution of
       TheraSense, which proceedings if involuntary, shall not have been
       dismissed within one hundred and eighty (180) days after the date of
       filing, or if TheraSense makes an assignment for the benefit of
       creditors, or substantially all of the assets of TheraSense are seized or
       attached and not released within one hundred and eighty (180) days
       thereafter, Asulab may immediately terminate this Agreement effective
       upon notice of such termination.

10.5   Effect of Termination
       ---------------------

10.5.1 Accrued rights and Obligations
       ------------------------------

       Termination of this Agreement for any reason shall not release any party
       hereto from any liability which, at the time of such termination, has
       already accrued to the other party or which is attributable to a period
       prior to such termination, nor preclude either party from pursuing any
       rights and remedies it may have hereunder or at law or in equity which
       accrued or are based upon any event occurring prior to such termination.
<PAGE>

                                                                              16

10.5.2  Stock on Hand
        -------------

        In the event this Agreement is terminated for any reason, TheraSense
        shall have the right to sell or otherwise dispose of the Stock of any
        licensed Product then on hand, within a period of 6 months, subject to
        Article 3.

10.6    Survival
        --------

        Section 7.2, 7.3, 10.5 and 10.6 and Articles 5,6,8,9 and 11 of this
        Agreement shall survive termination of this Agreement for any reason.

11.     MISCELLANEOUS
        -------------

11.1    Governing Law
        -------------

        This Agreement, and any proceeding subject to Article 8, shall be
        governed by and construed in accordance with the laws of Switzerland.

11.2    Independent Contractors
        -----------------------

        The relationship of the parties hereto is that of independent
        contractors. The parties hereto are not deemed to be agents, partners or
        joint ventures of the other for any purpose as a result of this
        Agreement or the transactions contemplated thereby.

11.3    Assignment
        ----------

        The parties agree that their rights and obligations under this Agreement
        shall not be delegated, transferred or assigned to a third party without
        prior written consent of the other party hereto; provided TheraSense may
        assign this Agreement, without Asulab's consent (a) to its Affiliates,
        and (b) to an entity that acquires all or substantially all of the
        business of assets of TheraSense to which this Agreement pertains,
        whether by merger, reorganization, acquisition, sale or otherwise. This
        Agreement shall be binding upon and inure to the benefit of the parties
        and their successors and assigns.
<PAGE>

                                                                              17

11.4   Rights to Develop Independently
       -------------------------------

       Nothing in this Agreement will impair TheraSense's right to independently
       acquire, license, develop for itself, or have develop for it,
       intellectual property and technology performing similar functions as the
       Patent Rights or to market and distribute Licensed Products or other
       products based on such other intellectual property and technology.

11.5   Notices
       -------

       Any required notices hereunder shall be given in writing by certified
       mail or international express delivery service (e.g. DHL) at the address
       of each party below, or to such other address as either party may
       substitute by written notice. Notice shall be deemed served when
       delivered or, if delivery is not accomplished by reason or some fault of
       the addressee, when tendered.

       If to Asulab SA:       Asulab SA
                              Rue des Sors 3
                              CH-2074 Marin
                              Switzerland
                              Attn. Dr. Rudolf Dinger, Director
                              Copy to Dr. Hanspeter Rentsch, General Counsel of
                              Swatch Group, Seevorstadt 6, CH-2501 Biel,
                              Switzerland

       If to TheraSense:      TheraSense Inc.
                              1360 South Loop Road
                              Alameda, CA 94502, USA
                              Attn. Ephraim Heller, Vice President of Business
                              Development

11.6   Force Majeure
       -------------

       Neither party shall lose any rights hereunder or be liable to the other
       party for damages or losses (except for payment obligations) on account
       of failure of performance by the defaulting party if the failure is
       occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
       embargo, governmental acts or orders or restrictions, failure of
       suppliers, or any other reason where failure to perform is beyond the
       reasonable control and not caused by the negligence,
<PAGE>

                                                                              18

       intentional conduct or misconduct of the nonperforming party and such
       party has exerted all reasonable efforts to avoid or remedy such force
       majeure; provided, however, that in no event shall a party be required to
       settle any labor dispute or disturbance.

11.7   Compliance with Laws
       --------------------

       Each party shall furnish to the other party any information requested or
       required by that party during the term of this Agreement or any
       extensions hereof to enable that party to comply with the requirements of
       any U.S. or foreign, state and/or government agency.

11.8   Severability, Waiver
       --------------------

       In the event that any provisions of this Agreement are determined to be
       invalid or unenforceable by a court of competent jurisdiction, the
       remainder of the Agreement shall remain in full force and effect without
       said provision. The parties shall in good faith negotiate a substitute
       clause for any provision declared invalid or unenforceable, which shall
       most nearly approximate the intent of the parties in entering this
       Agreement. The failure of a party to enforce any provision of the
       Agreement shall not be construed to be a waiver of the right of such
       party to thereafter enforce that provision or any other provision or
       right.

11.9   Entire Agreement, Modification
       ------------------------------

       This Agreement sets forth the entire Agreement and understanding of the
       parties with respect to the subject matter hereof, and supersedes all
       prior discussions, agreements and writings in relating thereto. This
       Agreement may not be altered, amended or modified in any way except by a
       writing signed by both parties.

11.10  Counterparts
       ------------

       This Agreement may be executed in two counterparts, each of which shall
       be deemed an original and which together shall constitute one instrument.
<PAGE>

IN WITNESS WHEREOF, Asulab and TheraSense have executed this Agreement by their
respective duly authorized representatives.

<TABLE>
<S>                                             <C>
Marin, 21, February 2000                        Alameda, 23 Feb 2000
       -----------------                                 -----------

Asulab SA __________________                    TheraSense Inc. ____________

     /s/ Signature Illegible                         /s/ Signature Illegible
By: ------------------------                    By: ------------------------

Print Name: W. SALATHE   R. DINGER              Print Name: Ephraim Heller
            ----------------------                          --------------

Title   DIRECTOR      MANG. DIRECTOR           Title: Vice President, Business Development
      ------------------------------                  ------------------------------------
</TABLE>
<PAGE>

                                   EXHIBIT A

                Asulab Mediator Patents and Patent Applications

Title:  Mono, bis or tris(substituted 2,2'-bipyridine) iron, ruthemium, osmium
-----   or vanadium complexes and their methods of preparation

--------------------------------------------------------------------------------
     Country      Application       Application       Patent        Date of
    or region        number             date          number         grant
--------------------------------------------------------------------------------
     Europe*       92903806.5        19.02.1992       0 526 603     04.12.1996
--------------------------------------------------------------------------------
    Australia        12441/92        19.02.1992         657 307     09.03.1995
--------------------------------------------------------------------------------
     Canada       2,080,834.9        19.02.1992       2,080,834     21.12.1999
--------------------------------------------------------------------------------
     Japan          503783/92        19.02.1992        2855481      27.11.1998
--------------------------------------------------------------------------------
      USA          07/949,485        19.02.1992       5,393,903     28.02.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, FR, GB, IT and NL
French priority patent application No 91 02199 of February 21, 1991 now
abandoned in favor of European patent designating France.

Title:  Sensor for measuring the amount of a component in solution
-----

--------------------------------------------------------------------------------
     Country      Application       Application         Patent        Date of
    or region        number             date            number         grant
--------------------------------------------------------------------------------
     Europe*       92903775.2        19.02.1992       0 526 602     02.01.1997
--------------------------------------------------------------------------------
    Australia        12219/92        19.02.1992         656 360     02.02.1995
--------------------------------------------------------------------------------
     Canada       2,808,840-3        19.02.1992       2,080,840     06.04.1999
--------------------------------------------------------------------------------
     Japan          503902/92        19.02.1992        2770250      17.04.1998
--------------------------------------------------------------------------------
      USA          07/938,219        19.02.1992       5,378,628     03.01.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, FR, GB, IT and NL
French priority patent application No 91 02200 of February 21, 1991 now
abandoned in favor of European patent designating France.

Title:  Sensor for measuring the amount of a component in solution
-----

--------------------------------------------------------------------------------
     Country      Application       Application        Patent        Date of
    or region        number             date           number         grant
--------------------------------------------------------------------------------
     France         91 07404         14.06.1991       91 07404      10.11.1994
--------------------------------------------------------------------------------

Title:  Transition metal complexes having 2,2'-bipyridine ligands substituted by
-----   at least one ammonium alkyl radical

--------------------------------------------------------------------------------
     Country      Application       Application       Patent         Date of
    or region        number             date          number          grant
--------------------------------------------------------------------------------
     France         92 15214        15.12.1992       92 15214      28.07.1995
--------------------------------------------------------------------------------
     Europe*       93119597.8       06.12.1993       0 602 488     31.03.1999
--------------------------------------------------------------------------------
    Australia        52404/93       14.12.1993        665 327      21.12.1995
--------------------------------------------------------------------------------
      ***
--------------------------------------------------------------------------------
      ***
--------------------------------------------------------------------------------
      USA          08/166,977       14.12.1993      5,410,059      25.04.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, GB, IT and NL
***
***

***     Confidential treatment requested

<PAGE>

                                   EXHIBIT B
                                   ---------

                             COMBINATION PRODUCTS

Combination Products shall include a starter kit that includes at least a
glucose meter and Licensed Products. The royalty due on sales of Licensed
Products included in such a starter kit shall be calculated based on a price of
$0.25 per Licensed Product.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]