Document:

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                                                                 Exhibit 10.39

                              AMENDED AND RESTATED
               IMPLANTABLE PUMP LICENSE AND DISTRIBUTION AGREEMENT

     This AMENDED AND RESTATED IMPLANTABLE PUMP LICENSE AND DISTRIBUTION
AGREEMENT ("Agreement") is made as of the 1st day of February, 2001 by and
between MINIMED INC. ("MiniMed"), a Delaware corporation, and MEDICAL RESEARCH
GROUP, INC. ("MRG"), a Delaware corporation, with respect to the following
facts:

                                    RECITALS

     MiniMed and MRG are parties to an Implantable Pump License and Distribution
Agreement dated as of September 1, 1998, as amended June 8, 1999 (the "Prior
Agreement"). The parties now desire to amend and restate the Prior Agreement in
full on the terms set forth in this Agreement. Concurrently with the execution
and delivery of this Agreement, the parties are also entering into an Amendment
to Glucose Sensor Agreement and a Stock Purchase Agreement, both dated as of the
same date as this Agreement.

     1. DEFINITIONS

          1.1 AFFILIATE. A Person, including Subsidiaries, that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, the designated Party, but only for as long as such
control relationship exists. For purposes of this definition, "control" shall
include (a) in the case of a corporation, ownership of more than fifty percent
(50%) of the shares of stock entitled to vote for the election of directors, and
(b) in the case of any other business entity, ownership of more than fifty
percent (50%) of the beneficial interest in capital or profits.

          1.2 CONFIDENTIAL INFORMATION. All information of MRG or MiniMed that
(a) is generally not available from public sources, although information shall
not cease to be Confidential Information if it becomes publicly available as a
result of a breach of this Agreement, and (b) is either designated as
Confidential Information or, is of such nature or is disclosed in such manner
that the fact that it is not publicly available would be obvious to a reasonable
person under the circumstances.

          1.3 COVERED APPLICATIONS. Applications of Licensed Products for which
MRG appoints MiniMed as a distributor. These applications may specify the use of
a particular drug, the treatment of a particular condition and/or the use of
drugs manufactured by a particular company. As provided in this Agreement
Covered Applications may be modified from time to time and may be exclusive or
non-exclusive.

          1.4 EFFECTIVE DATE. The Effective Date is September 1, 1998.

          1.5 ENHANCED PUMP. An apparatus or system which utilizes Pump
Technology for diabetes or non-diabetes applications or both in conjunction with
Enhancement Technology.

          1.6 ENHANCEMENT TECHNOLOGY. Electronic enhancements for Pump
Technology that MRG has developed as set forth in Section 4 and any subsequent
Improvements thereto.

          1.7 EXCLUDED APPLICATIONS. Applications of Licensed Products expressly
excluded from the Covered Applications pursuant to Section 5.1 and applications
which become Excluded Applications in accordance with the terms of this
Agreement. These applications may specify the use of a particular drug, the
treatment of a particular condition and/or the use of drugs manufactured by a
particular company.

          1.8 FDA. The United States Food and Drug Administration or any
successor agency having substantially the same authority.

          1.9 GLUCOSE CONTROLLER. An apparatus or system which utilizes Glucose
Sensing Technology to control an insulin infusion device in a human or in an
animal.

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          1.10 GLUCOSE MONITOR. Any monitor product utilizing Glucose Sensing
Technology to provide indications of glucose concentration or changes in glucose
concentration in a human or in an animal.

          1.11 GLUCOSE SENSING TECHNOLOGY. Technology relating to implantable
glucose sensors intended to be used in vivo in humans or in animals for a period
of at least forty-five days before replacement, including Improvements thereto.

          1.12 GLUCOSE SENSOR OPTION AGREEMENT. The Glucose Sensor Option
Agreement dated as of September 1, 1998, by and between MiniMed and MRG, as
amended by an Amendment thereto dated as of the same date as this Agreement.

          1.13 IDE. Approval from the FDA to conduct a clinical trial of a
medical device in humans under the Investigational Device Exemption regulations
adopted by the FDA.

          1.14 IMPROVEMENT. Any change, addition or deletion in the design,
configuration, formulation, ingredients, components, or software of an apparatus
or system, or in the formulas, processes, procedures, methods or techniques used
in its manufacture, production or assembly that enhances the performance of an
apparatus or system or that makes it quicker, easier or less expensive to
manufacture, assemble, distribute, store, use or dispose of.

          1.15 JOHNS HOPKINS RIGHTS. All rights which MiniMed now has to
Technical Information as a result of or relating to any contract or agreement
with The Johns Hopkins University, including but not limited to a License
Agreement which The Johns Hopkins University and Pacesetter Systems, Inc.
entered into on February 13, 1980, the Addenda thereto executed December 1, 1981
and December 8, 1982, the Agreement Constituting Consent to Assignment dated
February 28, 1995, the Amendment to the 1980 License Agreement dated March 8,
1990 and the Novation Agreement made April 29, 1992, by and between The Applied
Physics Laboratories of The Johns Hopkins University and Pacesetter Systems,
Inc. and its successors, Pacesetter Infusion, Ltd. and MiniMed Technologies,
Ltd.

          1.16 LICENSED PRODUCTS. Implantable microinfusion pump systems
intended for in vivo use in humans or in animals, including all accessories,
utilizing in whole or in part MiniMed's Pump Technology and/or Improvements
thereof and any Enhancement Technology and/or other technology developed by MRG
and/or Improvements of either of the foregoing that is incorporated into such
Products. Glucose Controllers, Glucose Monitors, Long-Term Glucose Sensors and
the abdominal lead that connects the implantable pump to a Long-Term Glucose
Sensor are not Licensed Products.

          1.17 LICENSED PUMP RIGHTS. MiniMed's rights to any patent or
Technology included within MiniMed's Pump Technology.

          1.18 LICENSED PUMP SALES. The U.S. dollar amount of gross revenues
from sales of the Licensed Products to Third Parties who are not Affiliates of
MiniMed by MRG or any of its Affiliates, excluding any amount paid to MRG or its
Affiliates by the Third Party for transportation; shipping and mailing costs;
sales, use or excise taxes; custom duties; tariffs or insurance and reduced by
all amounts refunded, allowed, credited or discounted with respect to such
sales, whether or not the sale occurred in the same accounting period.

          1.19 LIST PRICE The price generally published from time to time for a
product offered for sale in a particular market and in particular quantities to
Third Parties unrelated to either Party who are not sales agents, sales
representatives, dealers or distributors, but instead utilize the product for
themselves or in providing medical care to unrelated persons.

          1.20 LONG-TERM GLUCOSE SENSOR. Any sensor, the principal purpose of
which is to detect the presence of, or to measure the quantity of, or any change
in the quantity of, glucose in the body of a human or animal subject that is
intended to be used in vivo with a Licensed Product for at least 45 days before
replacement, including Improvements thereto.

          1.21 MANN FOUNDATION RIGHTS. All rights which MRG now has to Technical
Information as a result of or relating to any contract or agreement involving
the Mann Foundation, including but not limited to all rights under a License
Agreement dated February 6, 1996 between MRG and the Mann Foundation, as amended
April 17, 1998 and August 30, 2000.

          1.22 MRG'S GLUCOSE SENSING TECHNOLOGY. All rights which MRG now has
and hereafter develops or acquires to Glucose Sensing Technology, including but
not limited to, Mann Foundation Rights and UC Rights as such rights relate to
Glucose

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Sensing Technology. MRG's Glucose Sensing Technology shall not include any
glucose sensing technology under development, developed or licensed by MiniMed.

          1.23 MINIMED'S PUMP TECHNOLOGY. All rights which MiniMed has to Pump
Technology, including but not limited to, the Johns Hopkins Rights, as such
rights relate to Pump Technology.

          1.24 OPTION. The option granted by MRG to MiniMed to purchase
marketing rights to the Long-Term Glucose Sensor granted pursuant to Section 5.1
of the Glucose Sensor Option Agreement.

          1.25 OTHER APPLICATIONS. Applications of Licensed Products which are
not Covered Applications or Excluded Applications. As provided in this Agreement
Other Applications may be modified from time to time.

          1.26 PARTY. Either entity that is a signatory to this Agreement.

          1.27 PMA. Approval from the FDA to commercially distribute a medical
device under the Pre Market Approval regulations.

          1.28 PERSON. Any individual, partnership, association, joint stock
company, joint venture, limited liability company, corporation, trust,
unincorporated organization, other entity or government, or agency or political
subdivision, economic unit or entity thereof, including without limitation, each
of the Parties to this Agreement and their respective Affiliates.

          1.29 PUMP TECHNOLOGY. Technology relating to implantable infusion
pumps developed or sold by MiniMed, as of September 1, 1998, including (i)
MiniMed's MIP 2001 pump and successor products, and any subsequent Improvements
thereto (including the MIP 2007 and the NewMIP model), including accessories
thereto, and (ii) a constant flow pump under development by MiniMed.

          1.30 REGULATORY APPROVAL. Approval by appropriate authorities to allow
commercial sale of any Licensed Products in a certain country or countries, for
example the FDA PMA or 510(k) approval in the United States.

          1.31 [This Section Intentionally Omitted.]

          1.32 SUBSIDIARIES. Means entities of which a designated Party owns the
equity interests specified in 1.1(a) or (b), either directly or indirectly
through other entities so owned.

          1.33 TECHNICAL INFORMATION. Any information reasonably relevant to the
Licensed Products or otherwise pertaining to the design, manufacture, assembly,
production, operation, performance or use of the Licensed Products or any
component of Licensed Products, including but not limited to invention
disclosures, patent applications, issued patents, feasibility study information,
testing and reliability information, specifications, documentation, drawings,
computer programs, software, prototypes, and the like.

          1.34 TECHNOLOGY. Any invention, development or Improvement, and any
trade secret, "know-how", manufacturing formula, process, procedure, method or
technique, whether or not patentable, copyrightable or otherwise protectable by
law.

          1.35 NEWMIP. The model of MRG's implantable pumps to be developed
pursuant to Section 16.1.

          1.36 THIRD PARTY. Any Person other than the legal entities that are
Parties to this Agreement.

          1.37 TRANSFER PRICE. The price charged for any product by MRG to
MiniMed.

          1.38 UC RIGHTS. All rights which MRG now has to Technical Information
as a result of or relating to any contract or agreement involving the Regents of
the University of California, including the Exclusive License Agreement for
Glucose Sensors and Systems, effective February 28, 1990, U.C. Agreement Control
No. 90-04-0104.

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          1.39 WILSON-GREATBATCH RIGHTS. All rights which MiniMed has or had to
Technical Information as a result of or relating to any contract or agreement
involving Wilson-Greatbatch Ltd., including but not limited to a License
Agreement and Supply Agreement, each made as of the 1st day of October, 1993 and
any amendments thereto.

     2. CONFIDENTIAL INFORMATION

          2.1 TREATMENT OF CONFIDENTIAL INFORMATION. MiniMed and MRG shall
maintain all Confidential Information disclosed by the other Party pursuant to
or during the performance of this Agreement in strict secrecy and confidence,
and not disclose such Confidential Information to any Third Party, nor make any
use of such Information for its own benefit or gain except as is mutually agreed
between the Parties or is otherwise provided for and permitted under this
Agreement and the Glucose Sensor Option Agreement. No Confidential Information
or materials pertaining to Licensed Products or MiniMed's Pump Technology will
be disclosed to any other Person other than those approved in writing by MiniMed
with respect to Confidential Information disclosed by it to MRG and by MRG with
respect to Confidential Information disclosed by it to MiniMed, except
disclosure to sublicensees, potential distributors and contractors with a need
to know and bound by confidentiality agreements and to the FDA and similar
regulatory agencies of information relative to obtaining regulatory approval.
Nothing in this Section 2.1 shall apply, however, to any disclosure of
Confidential Information that may be required by applicable law, including
without limitation disclosures (to the extent they may be legally required) in
documents filed with the Securities and Exchange Commission and private
placement memoranda used in connection with the sale of securities. MRG
acknowledges its understanding and agreement that as a public company MiniMed
has responsibilities to disclose certain information about its affairs and will
be required to publicly disclose the existence of this Agreement and its
material terms as well as future developments in the portion of its business to
which this Agreement relates. MiniMed likewise acknowledges its understanding
and agreement that MRG may be required to make similar disclosure in connection
with its capital raising efforts.

          2.2 REQUESTED DISCLOSURE OF CONFIDENTIAL INFORMATION. In the event
either Party is requested pursuant to, or required by, applicable law or
regulation or by legal process to make any disclosure otherwise prohibited
hereunder, the Party that is required to make disclosure (the "Disclosing
Party") shall, to the extent reasonably practicable, provide the other Party
with prompt notice of such requests or requirements prior to disclosure so that
(a) the other Party may seek an appropriate protective order or other remedy
and/or (b) the Disclosing Party and the other Party can seek in good faith to
consult with the Disclosing Party on the appropriate scope and approach to
disclosure. In the event that such protective order or other remedy is not
obtained, the Disclosing Party shall furnish only that portion of the
Confidential Information which the Disclosing Party reasonably believes may be
legally required and, to the extent reasonably practicable, use reasonable
efforts to obtain confidential treatment for the Confidential Information
disclosed.

          2.3 LIMITED RELEASE. MiniMed and MRG shall be released from the
obligations of Sections 2.1 and 2.2 to the extent that any of the disclosed
information: (a) was already part of the public domain at the time of the
disclosure by the other Party or (b) becomes publicly available through no fault
of the receiving Party (but only after and only to the extent that it becomes
publicly available.

          2.4 TERM OF CONFIDENTIALITY. The obligation of MiniMed and MRG to
receive and hold information disclosed by the other Party in confidence, as
required by Section 2.1, shall terminate three (3) years after termination of
this Agreement or ten years after the Effective Date, whichever is later, except
that such obligations shall not terminate as to Technical Information which
constitutes a trade secret until such time as that information has become
publicly available.

     3. LICENSE OF PATENT RIGHTS AND MINIMED'S PUMP TECHNOLOGY

          3.1 GRANT OF LICENSE. Subject to Section 3.2, MiniMed hereby grants to
MRG and MRG hereby accepts from MiniMed, the worldwide right to manufacture,
cause to be manufactured, promote, sell, market, distribute and use the Pump
Technology, whether or not in conjunction with the Long-Term Glucose Sensor. The
rights granted MRG shall be exclusive except (a) to the extent MiniMed's rights
to the Pump Technology depend upon licenses which do not give MiniMed exclusive
rights, (b) nothing herein shall limit the rights of MiniMed with respect to any
Technology or to license others with respect to Technology insofar as such
rights relate to external infusion pumps or any other application not
constituting an implantable infusion pump and (c) nothing herein is intended to
limit the rights of MiniMed under Section 5 or 8.

          3.2 MINIMED'S DISTRIBUTION AND MANUFACTURING RIGHTS. Notwithstanding
anything to the contrary set forth in Section 3.1, MRG agrees not to engage in
any commercial distribution or commercial exploitation of the Pump Technology or
to manufacture any Licensed Product that would violate this Agreement or
MiniMed's rights under Section 5 of this Agreement.

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          3.3 PROVIDING OF INFORMATION. MiniMed shall provide to MRG access to
all documentation relating to the design, manufacture, testing and regulatory
approval of its implantable pumps.

          3.4 ROYALTIES. The license granted pursuant to Section 3.1 shall be a
fully paid-up license with no obligation on the part of MRG to pay royalties to
MiniMed except as follows:

               3.4.1 ROYALTIES FOR INSULIN APPLICATIONS. If MRG converts
MiniMed's rights under Section 5.1 to Covered Applications to a non-exclusive
basis pursuant to Section 7, then thereafter MRG will pay to MiniMed a royalty
of ten percent (10%) of Licensed Pump Sales from the sale, lease, sublicensing
or other commercial exploitation of Licensed Products that are for the delivery
of insulin during the term of this Agreement (excluding the NewMIP referred to
in Section 16.1) until aggregate royalties in the amount of $5 million have been
paid and thereafter a royalty equal to three percent (3%) of such Licensed Pump
Sales. For purposes of this Section 3.4.1 Licensed Products do not include the
abdominal lead connecting MRG's Long-Term Glucose Sensor to an implantable pump.
Notwithstanding the foregoing, in the event the Licensed Products include the
Enhancement Technology, the applicable royalty rates pursuant to the preceding
sentence will be reduced to five percent (5%) of Licensed Pump Sales instead of
ten percent (10%) and two percent (2%) of Licensed Pump Sales instead of three
percent (3%). Whether or not MRG establishes separate prices for the Licensed
Products and the Long-Term Glucose Sensor, for purposes of this Section 3.4.1
the portion of total revenues from Licensed Products distributed together with
MRG's Long-Term Glucose Sensor shall be equal to:

               (a) if MiniMed then has List Prices for the Licensed Product,
     then MiniMed's applicable List Price;

               (b) if (a) does not apply and MRG is then regularly publishing
     List Prices for the Licensed Product, then MRG's applicable List Price but
     not less than manufacturing cost plus 30% thereof;

               (c) whether or not (a) or (b) applies, if MRG sells any Licensed
     Product directly to those who utilize the Licensed Products themselves or
     in providing medical care to an unrelated person, then the actual sale
     prices of such Licensed Products but in no event less than the
     manufacturing cost plus 50% thereof.

In no event, however, shall more than 70% of the aggregate revenues received for
the Licensed Product and the Long-Term Glucose Sensor be allocated to the
Licensed Product for purposes of this Section 3.4.1.

               3.4.2. ROYALTIES ON EXCLUDED APPLICATIONS. If MRG pursues
commercial development of Licensed Products for any application that is not a
Covered Application, then MRG will pay to MiniMed a royalty of three percent
(3%) of Licensed Pump Sales during the term of this Agreement from such
applications if the Licensed Products are programmable implantable pump systems
that do not use the Enhancement Technology, two percent (2%) if the Licensed
Products are programmable implantable pump systems that use the Enhancement
Technology and one and one-half percent (1.5%) of such Licensed Pump Sales from
Licensed Products that are constant flow implantable pump systems.

               3.4.3 ROYALTIES TO JOHNS HOPKINS AND WILSON GREATBATCH. In
addition to the royalties provided for in Section 3.4.1 MRG shall pay to MiniMed
all royalties relating to all applications payable by MiniMed pursuant to the
agreements relating to the Johns Hopkins Rights. Payment under the invoice shall
not be due before MiniMed is obligated to pay such payments to the licensor
under the agreements evidencing the Johns Hopkins Rights. In addition, MRG will
perform on behalf of MiniMed all of MiniMed's obligations under the agreements,
addenda and amendment evidencing the Johns Hopkins Rights and, if any such
obligations remain unperformed, the Wilson Greatbatch Rights, in each case
arising after the Effective Date except as otherwise agreed to in writing and
will not take any action or omit to take any action which would constitute a
default under any such agreement, addendum or amendment.

          3.5 EXCLUSIONS. In the event any tax is imposed on MRG with respect to
the payment of any royalty set forth in Section 3.4, MRG shall, at its sole
expense, have the right to withhold from such royalty the amount of such tax
actually paid by it; provided, however, that MRG shall execute and deliver such
documents and take such other actions as MiniMed reasonably may request in
connection with disputing such tax or obtaining a credit or refund thereof.

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         3.6 PAYMENT

               3.6.1 DATES OF PAYMENT. The royalties payable by MRG to MiniMed
pursuant to Section 3.4 shall be paid on or before the forty-fifth (45th) day
following the end of each calendar quarter and shall be computed with respect to
all Licensed Pump Sales during such quarterly period.

               3.6.2 DOCUMENTATION. MRG shall deliver to MiniMed, together with
each payment of royalties payable by MRG to MiniMed under Section 3.4, a written
statement, verified as to correctness by the Manager or the Chief Financial
Officer of MRG, setting forth for each Licensed Product a detailed calculation
of the amount of royalties then due to MiniMed and such information as MiniMed
reasonably shall require to verify the accuracy of such computation.

               3.6.3 CURRENCY OF PAYMENT. All amounts payable by MRG under
Section 3.4 shall be paid in United States dollars; provided, however, that any
such amounts payable with respect to Licensed Products invoiced by MRG in a
currency other than United States dollars shall be converted into United States
dollars at the selling price for such foreign currency published by Citibank
N.A. as the Selling Price for Bank Transfers in the United States for Payment
Abroad at the close of business on the last business day of the calendar quarter
with respect to which such royalty relates.

          3.7 LATE FEE. In the event any payment payable by MRG to MiniMed
pursuant to Section 3.4 shall not be paid promptly when due, the unpaid balance
thereof shall bear interest at the lesser of (a) the prime rate of Citibank N.A.
from time to time in effect plus 1% or (b) the maximum rate permitted by
applicable law.

          3.8 BOOKS AND RECORDS. MRG shall establish and maintain at its
principal places of business in the United States, or at such other place as to
which MiniMed may consent in writing, true and complete books of account,
records and other data, containing all particulars necessary for an exact
determination of the royalties payable by MRG to MiniMed pursuant to Section
3.4. During the term of this Agreement, and for three (3) years thereafter, MRG
and its employees and agents, including but not limited to, accountants and
attorneys, shall have the right, during normal business hours, on forty-eight
(48) hours prior written notice, to inspect, copy and make extracts from all
such books of account, records and other data to verify the accuracy of any
royalties paid pursuant to Section 3.4, or any statements furnished in
accordance with Section 3.6.2. In the event any examination by MiniMed of MRG's
books and records discloses underpayments to MiniMed of the royalties
theretofore actually paid by MRG with respect to such quarter, MRG shall pay to
MiniMed such deficiency plus interest pursuant to Section 3.7, and, if the
deficiency exceeds five percent (5%) for the relevant calendar quarter, MRG
shall further reimburse MiniMed on demand for all of MiniMed's reasonable and
documented out-of-pocket costs and expenses, including, but not limited to, all
professional fees, incurred in connection with any such examination.

          3.9 ADDITIONAL LICENSE RIGHTS. Effective if and when MiniMed's
distribution rights under Section 5.1 become nonexclusive or MRG repurchases
rights pursuant to Section 7.6.1(a), MiniMed hereby grants to MRG:

               (a) a fully paid-up, royalty-free license limited to the field of
     use of implantable infusion pumps on all Technology that is developed by
     MiniMed through the date such distribution rights become non-exclusive or
     the date MRG repurchases such rights, but only if and to the extent such
     Technology is then utilized in a Licensed Product; and

               (b) a license to any software that has been developed by MiniMed
     through January 31, 2003 which is then being utilized in a Licensed Product
     which provides insulin dosage based upon a glucose sensor and is patented,
     constitutes a trade secret or is the subject of a pending patent
     application, but only if and to the extent such Technology is then utilized
     in a Licensed Product.

MRG shall pay MiniMed a royalty equal to 3.5% of Net Sales from the software.
"Net Sales" is defined as the U.S. dollar amount of gross revenues from sales of
the software to Third Parties who are not Affiliates of MiniMed by MRG or any of
its Affiliates, excluding any amount paid to MRG or its Affiliates by the Third
Party for transportation, shipping and mailing costs; sales, use or excise
taxes; custom duties; tariffs or insurance, and reduced by amounts refunded,
allowed, credited or discounted with respect to such sales, whether or not the
sale occurred in the same accounting. If the software is incorporated into
another product or is sold with other products, the royalty will be based upon a
reasonable allocation of the total price payable for the software and the other
product or products so that the royalty is based upon the portion of the total
price that is reasonably allocable to the software, whether or not a separate
price is specified for the software.

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     4. DEVELOPMENT OF ENHANCEMENT TECHNOLOGY

     4.1 Scope of Development

               4.1.1 MRG has developed the Enhancement Technology contemplated
by Section 4 of the Prior Agreement.

          4.2 [This Section Intentionally Omitted.]

          4.3 REGULATORY APPROVAL. MRG shall make commercially reasonable
efforts to deliver to MiniMed any additional information necessary to comply
with FDA regulatory requirements, and the regulatory requirements of any foreign
jurisdiction designated by MiniMed. MiniMed shall use commercially reasonable
efforts to obtain Regulatory Approval of an implantable pump for insulin
delivery incorporating the Enhancement Technology. MRG shall reasonably
cooperate with MiniMed in obtaining such approvals, including cooperation in
connection with clinical trials.

     4.4 [THIS SECTION INTENTIONALLY OMITTED.]

     4.5 Ownership of Developed Technology.

               4.5.1 IMPROVEMENTS BY MRG. The Enhancement Technology and any
other Improvements to the Technology, Technical Information or Confidential
Information developed by MRG relating to the Licensed Products during the term
of this Agreement are, as between MRG and MiniMed, owned by MRG. MiniMed may
make use and sell these Improvements without additional royalty to the extent
that they are incorporated into a Licensed Product MiniMed has the right to
make, use or sell under this Agreement.

               4.5.2 IMPROVEMENTS BY MINIMED. Any Improvements developed by
MiniMed to the Enhancement Technology or any other Improvements to the
Technology, Technical Information or Confidential Information relating to the
Licensed Products shall be owned by MiniMed; however, MRG will have the right to
make, use and sell the Improvements, and sublicense others to do so, subject to
payment by MRG to MiniMed of a reasonable royalty to be agreed upon by the
parties or, if the Parties cannot agree within a reasonable time, by arbitration
pursuant to Section 29. No such royalty shall be payable, however, with respect
to any Licensed Products including such Improvements sold by MRG to MiniMed.

               4.5.3 JOINT IMPROVEMENTS. Any patented Improvement jointly owned
by the Parties shall not be licensed to any Third Party without the written
consent of both Parties.

               4.5.4 TERM OF LICENSES. Any licenses granted under Sections 4.5.1
through 4.5.3 will survive until the last of the patents on the Improvements, if
any, which are the subject of the license, which may be a date after the
termination of this Agreement. If there are not such patents or when the last of
such patents expires, any such license will continue for as long as is legally
permissible. MiniMed agrees to assist MRG in filing any patent applications and
obtaining any patents (including execution of assignments and other documents
and instruments necessary or proper) to carry out the provisions of these
Sections.

               4.5.5 UNITED STATES PATENT PROTECTION. Should any Enhancement
Technology or the Improvements referred to in Section 4.5.1 through 4.5.3 of
this Agreement be reasonably deemed to be suitable for protection under the
patent laws of the United States, then the Party developing the Improvements
shall prepare and file patent application(s) on the invention(s) in the United
States, and shall bear all of the costs and expenses associated with obtaining
and maintaining such patents. The Party developing the Improvement shall be
identified as the owner in any such patent applications. In the event the
developing Party elects not to seek patent protection on any invention, the
other Party shall have the right to prepare and file patent application(s) for
which all the costs and expenses associated with obtaining and maintaining such
patents shall be borne by such Party and such patents shall be jointly owned by
both Parties.

               4.5.6 FOREIGN COUNTRY PATENT PROTECTION. Neither Party developing
Improvements shall be obligated to file for or to obtain patent protection for
any Enhancement Technology or any Improvements referred to in Section 4.5.1
through 4.5.3 in any foreign country, but if the developing party does file for
or obtain any such patent protection, the developing Party shall bear all of the
costs and expenses associated with obtaining and maintaining such patent
protection. If the developing Party elects not to file for or to obtain patent
protection for any Enhancement Technology or any such Improvements in any
foreign country, then the

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other Party may elect to file for or to obtain patent protection for such
Enhancement Technology or Improvement, at its sole expense, and any such patent
application or patent obtained therefrom shall be jointly owned by both parties.

               4.5.7 USE OF ENHANCEMENT TECHNOLOGY. Subject to Section 7 and
notwithstanding any other provision of this Section 4, MRG has not and will not
license any Enhancement Technology for use in implantable pumps to any Third
Party during the term of this Agreement for Covered Applications, unless
MiniMed's rights to Covered Applications cease to be exclusive as provided
herein.

     5. APPOINTMENT OF MINIMED AS DISTRIBUTOR.

          5.1 APPLICATIONS. As of the date of this Amended and Restated
Agreement, Covered Applications will include the use of Licensed Products for
delivery of insulin or any other compound for the treatment of diabetes. As of
the Effective Date, Excluded Applications will include the use of Licensed
Products for the treatment of pain, spasticity, cardiovascular or otological
conditions. Nothing in this Agreement shall limit the right of MiniMed to
distribute the Licensed Products with Long-Term Glucose Sensors or any other
products offered by parties other than MRG for the treatment of diabetes or any
other Covered Application.

          5.2 APPOINTMENT. MRG hereby appoints MiniMed as its exclusive
distributor throughout the world of all Licensed Products now or hereafter
owned, acquired or developed by MRG to be used for a Covered Application.
Nothing in this Agreement shall give MiniMed the right to distribute implantable
pump systems for any other application.

          5.3 EXCLUSIVITY. During the term set forth in Section 5.5 MRG will not
(a) appoint any other distributor for the Licensed Products to be used for the
Covered Applications, (b) sell, lease or otherwise transfer for consideration
the Licensed Products to any Third Party for distribution for Covered
Applications or (c) itself sell, lease or otherwise commercially exploit the
Licensed Products for Covered Applications (other than pursuant to this
Agreement). During the term of this Agreement MRG will forward to MiniMed all
inquiries received from potential purchasers of the Licensed Products for the
Covered Applications. MRG shall expressly restrict by contract all of its sales
agents, distributors and other third parties from participating in the
commercial distribution of the Licensed Products for the Covered Applications.
If MRG terminates the exclusivity of MiniMed's rights to Covered Applications
pursuant to Section 7, this paragraph will no longer apply.

          5.4 SUBDISTRIBUTORS. MiniMed may appoint subdistributors, dealers or
agents for itself with respect to the sale of the Licensed Products for the
Covered Applications. Such subdistributors, dealers or agents of MiniMed shall
have no rights against MRG under this Agreement, and MiniMed shall continue to
be in all respects responsible for compliance with the terms and conditions of
this Agreement with respect to all activities and sales made by any
subdistributors and dealers.

          5.5 TERM. The term of MiniMed's rights as distributor of the Licensed
Products (the "Term of the Distribution Rights") will be deemed to have
commenced on September 1, 1998 and will continue until December 31, 2003 and
shall be deemed to be extended automatically thereafter on a year-to-year basis
unless MiniMed terminates the Term of the Distribution Rights effective at the
end of the initial term or any time thereafter by giving not less than six (6)
months' prior written notice to MRG. This Agreement is also subject to premature
termination as provided in Section 11.

     6. PRICE AND TERMS OF SALE TO MINIMED.

          6.1 PRICES UNTIL DECEMBER 31, 2002. From time to time during the Term
of the Distribution Rights, MiniMed will purchase Licensed Products from MRG by
placing written orders therefor using a customary purchase order. For the period
from the date of this Amended and Restated Agreement through December 31, 2002,
the Transfer Price payable by MiniMed for the Licensed Products ordered will be
$9,000 for a complete implantable pump system (including a program communicator
unit and catheter). The price for accessory items (including without limitation
refill kits, needles and software products) will be 70% of MiniMed's List Price,
whether purchased before or after December 31, 2002.

          6.2. PRICES AFTER DECEMBER 31, 2002. For Licensed Products ordered
after December 31, 2002, the Transfer Price will be equal to the average of
MRG's manufacturing cost (determined in accordance with generally accepted
accounting principles consistently applied) and MiniMed's List Price (as
established by MiniMed) at the time the Licensed Products are ordered. In no
event, however, will the Transfer Price exceed MiniMed's List Price less 15%
thereof or be less than MRG's manufacturing cost plus 30%. If no Transfer Price
satisfies the foregoing requirements, the price shall be determined by
arbitration in accordance with Section 6.3. Each of the Parties will afford the
other the right to examine its books and records and cause an audit thereof (at
the cost of the examining party) in order to verify List Price and cost figures.
Although no assurance can be given that its efforts will be

                                       8

<PAGE>   9

successful, MRG will use commercially reasonable efforts to reduce manufacturing
costs as sales volume increases and the economies of scale are realized and
engineering changes become cost effective to implement.

          6.3 ADJUSTMENT IN PRICES. If at anytime after December 31, 2002 either
Party believes that the Transfer Price arrangement is materially unfair to it,
the Parties will meet and seek in good faith to agree on revised prices that are
agreeable to both Parties and approximate pricing structures that are customary
for other comparable distribution arrangements involving high technology
products. If the Parties are unable to agree on price, the matter shall be
resolved by arbitration in accordance with Section 29.

          6.4 DELIVERY AND PAYMENT. The prices payable by MiniMed shall be
F.O.B. MRG's place of manufacture with export packing to be furnished at MRG's
expense. Payment will be made by MiniMed in United States dollars within thirty
(30) days after shipment. If any invoice is not paid by MiniMed in accordance
with its terms and within thirty (30) days of notice of late payment, MRG may
cancel or delay further shipments until such payment is made. In the event any
payment payable by MiniMed to MRG shall not be paid promptly when due, the
unpaid balance thereof shall bear interest at the lesser of (a) the prime rate
of Citibank N.A. from time to time in effect plus 1% or (b) the maximum rate
permitted by applicable law. All sales will be final, and no returns will be
allowed except as set forth below in Section 12 for products not complying with
MRG's warranty or the inspection specifications. MiniMed shall be responsible
for clearing all Licensed Products through customs and shall pay any and all
taxes or duties imposed by any governmental authority on importation or sale of
the Licensed Products.

          6.5 TIME FOR DELIVERY. MiniMed and MRG will cooperate to ensure that
MiniMed receives the quantities of pumps that it requires throughout the term
referred to in Section 11.1. MiniMed will continue to provide supplemental
purchase orders periodically, but at least every two months, specifying the
quantity of pumps MiniMed will require over the next six month period. MRG will
have the right to refuse any purchase order that would exceed MRG's
manufacturing capacity; however MRG may not refuse a purchase order for a
monthly requirement of 10% or less of MiniMed's minimum annual purchases
required to maintain exclusivity as provided in section 7. If MiniMed's
requirements for pumps increase or decrease such that MiniMed would like to
amend these purchase orders MRG will attempt to accommodate those changes, but
MRG may request additional payment from MiniMed beyond the agreed Transfer
Prices if changes to purchase orders increase MRG's costs. Such additional
payment will equal MRG's reasonably estimated additional cost and will be
requested, if at all, within thirty (30) days of MRG's receipt of any such
change. In the event of any disagreement as to whether the additional charges
reflect MRG's costs, the matter shall be settled by arbitration pursuant to
Section 29. Nothing in this Section 6.5 affects the Mandatory Purchase
Commitment in Section 7.1 or the Minimum Sales Quotas in Section 7.2.

          6.6 ADDITIONAL OBLIGATIONS OF MRG. Throughout the term of this
Agreement, MRG will do each of the following:

               (a) provide such technical training for MiniMed's personnel as
     MiniMed may reasonably request together with copies of all manuals, product
     specifications and performance data and other materials as MiniMed may
     reasonably request, at MRG's cost and expense (except for travel cost);

               (b) provide all current packaging material for the Licensed
     Products;

               (c) provide necessary documentation to assist MiniMed in meeting
     requirements to register Licensed Products in various jurisdictions where
     they are to be sold and to comply with all laws and regulations applicable
     to the Licensed Products; and

               (d) provide MiniMed with copies of all correspondence with the
     FDA and other regulatory authorities after the Effective Date pertaining to
     the Licensed Products.

          6.7 ADDITIONAL OBLIGATIONS OF MINIMED. MiniMed will do each of the
following:

               (a) throughout the term of this Agreement provide MRG with copies
     of all correspondence with the FDA and other regulatory authorities after
     the Effective Date pertaining to the Licensed Products, and

               (b) produce, at MiniMed's expense, the English language version
     of all required labeling of implantable pumps using the Enhancement
     Technology, including patient and clinician instruction manuals.

                                       9

<PAGE>   10

     7. MINIMUM PURCHASE REQUIREMENTS.

          7.1 REQUIRED MINIMUM PURCHASES. MiniMed agrees to purchase the
following minimum quantities of programmable implantable pump systems (the
"Mandatory Purchase Commitment") in each of the respective periods:

               (a) from the date of this Amended and Restated Agreement through
     December 31, 2001, 20 pump systems per month;

               (b) from January 1, 2002 to December 31, 2002, 30 pump systems
     per month;

               (c) from January 1, 2003 through December 31, 2003, 45 pump
     systems per calendar month; and

               (d) from January 1, 2004 through December 31, 2004, 65 pump
     systems per calendar month.

          7.2 MINIMUM PURCHASES NECESSARY TO KEEP EXCLUSIVE RIGHTS. In
furtherance of the sales and distribution, the Parties agree that if MiniMed
purchases the following minimum quantities of programmable implantable insulin
pump systems in each of the respective calendar years (the "Minimum Sales
Quotas"), its exclusive distribution rights will not be subject to termination
as provided below:

<TABLE>
<CAPTION>

              Year                                    Minimum Sales Quotas
              ----                                    --------------------
<S>                                  <C>
              2005                   10% of external insulin pumps actually sold by MiniMed
                                                          during 2004

              2006                   15% of external insulin pumps actually sold by MiniMed
                                                          during 2005

    2007 and following years         20% of external insulin pumps actually sold by MiniMed
                                                   during the preceding year

</TABLE>

          7.3 DATES WHEN PUMP SYSTEMS DEEMED PURCHASED. For purposes of this
Section 7, programmable implantable pump systems will be deemed to have been
purchased when they are delivered by MRG to MiniMed or its designee, except that
Licensed Products delivered by MRG at a date later than the delivery date
specified in MiniMed's order will be deemed, solely for purposes of this Section
7, to have been purchased when they should have been delivered. If MiniMed does
not accept any Licensed Products delivered to it in accordance with its right to
do so under this Agreement, such products shall be deemed to have been purchased
for purposes of this Section 7 but MiniMed shall be obligated to accept delivery
of substitute Licensed Products if the Licensed Products not accepted were
necessary to meet the minimum purchase requirements set forth above, provided
that MiniMed's obligation to accept such substitute Licensed Products is subject
to the condition that MRG deliver such Licensed Products meeting the
requirements of this Agreement within 90 days after the date MiniMed has
declined acceptance of the Licensed Products previously delivered.

          7.4 TERMINATION OF EXCLUSIVE DISTRIBUTION RIGHTS. If MiniMed fails to
purchase the applicable Minimum Sales Quota during the period after December 31,
2004, MRG's sole and exclusive remedy shall be to terminate the exclusivity
feature of MiniMed's distribution rights under Section 5.1 of this Agreement
(subject to MiniMed's right to pursue arbitration set forth below) by delivering
written notice of its election to do so to MiniMed within one hundred eighty
(180) days after the end of any calendar year in which MiniMed has failed to
purchase the required number of pump systems.

               7.4.1 Notwithstanding the preceding paragraph, MiniMed's
exclusive distribution rights shall not be terminated for any calendar year or
longer period referred to below prior to the date (the "One-Year Expiration
Date") of expiration of one year after the first Regulatory Approval in the U.S.
or the EU (by obtaining the CE Mark) of a system in which an MRG fully implanted
Long-Term Glucose Sensor provides a significant portion of the control of
insulin delivery by the Licensed Products if:

               (i) MiniMed has purchased one-half of the applicable Minimum
     Sales Quota during the year in question or longer period referred to below,
     and

                                       10

<PAGE>   11

               (ii) MiniMed has used commercially reasonable efforts during the
     year in question to promote and sell the Licensed Products.

               7.4.2 For the calendar year in which the One-Year Expiration Date
occurs, the Minimum Sales Quota shall be divided by 365 (rounded to the nearest
one-thousandth) to establish a daily average, and the Minimum Sales Quota for
the fractional calendar year prior to the One-Year Expiration Date ( the daily
average multiplied by the number of days in the year prior to the One Year
Expiration Date) shall be added to the Minimum Sales Quota for the prior
calendar year. MRG shall have the right to terminate MiniMed's exclusive
distribution rights for the failure to purchase the Minimum Sales Quota for such
fractional year only if MiniMed has failed to purchase one-half of the combined
Minimum Sales Quota for the combined period as contemplated by 7.4.1(i) above
and it has not used commercially reasonable efforts during the combined period
to promote and sell the Licensed Products as contemplated by 7.4.1(ii) above.

               7.4.3 The determination of whether or not MiniMed used such
efforts as required by 7.4.1(ii) above shall be made by arbitration commenced by
MiniMed in accordance with Section 29 except that discovery shall be limited to
60 days. MiniMed may only commence such an arbitration if it does so, within
thirty (30) days after receipt of MRG's written notice of termination of
exclusivity. In the arbitration the arbitrators will determine whether or not
the requirement of 7.4.1(ii) has been met. Pending a final determination,
MiniMed's distribution rights shall continue to be exclusive.

               7.4.4 If MiniMed does not commence such an arbitration or if the
arbitrators determine that the requirement of 7.4.1(ii) above has not been met,
(A) MRG will have the right to distribute pumps through its own sales
organization or to designate other parties as distributors of the Licensed
Products for the Covered Applications on a non-exclusive basis, (B) MiniMed will
have the right to continue to purchase Licensed Products for any Covered
Applications on the terms set forth above and to distribute them throughout the
world on a non-exclusive basis during the balance of the Term of the
Distribution Rights, including any extension thereof, with no minimum purchase
obligations and (C) MiniMed will have right to manufacture the Licensed Products
for the Covered Applications or contract with others to do so provided that it
gives MRG written notice of its intention to do so at least two years before it
commences manufacturing Licensed Products for commercial distribution. If
MiniMed commences manufacturing Licensed Products as provided above, it will be
obligated to pay the royalties as provided in Section 8.1.2 and it will have the
right to use the Technology relating to the Licensed Products as provided in
Section 8.1.2.

          7.5 ADJUSTMENTS IN MINIMUM SALES QUOTAS.

               7.5.1 [This Section Intentionally Omitted.]

               7.5.2 From the date of this Agreement until December 31, 2002, if
MRG fails in any calendar quarter to deliver at least 80% of the Licensed
Products ordered by MiniMed, in accordance with MiniMed's quality
specifications, meeting the inspection requirements and warranty set forth in
Section 12 and in quantities so ordered, or if MRG fails to deliver, or MiniMed
is unable to manufacture or distribute Licensed Products as a result of an
injunction obtained by a Third Party asserting any right to the Technology
associated with the Licensed Products, then the obligation to meet the Mandatory
Purchase Commitment and the Minimum Sales Quotas shall be suspended until such
time as either MRG or MiniMed or a Third Party with whom either of them
contracts begins manufacturing or, in the case of the assertion of Third Party
rights to the Technology, the inability of MRG to deliver or MiniMed to
manufacture or distribute Licensed Products is eliminated (as a result of legal
proceedings or otherwise) and such delivery, manufacturing or distribution, as
the case may be, begins. Commencing January 1, 2003, if MRG fails in any
calendar month to deliver at least 80% of the Licensed Products ordered by
MiniMed, in accordance with MiniMed's quality specifications meeting the
inspection requirements and warranty set forth in Section 12 and in quantities
so ordered, or if MRG fails to deliver, or MiniMed is unable to manufacture or
distribute Licensed Products as a result of an injunction obtained by a Third
Party asserting any right to the Technology associated with the Licensed
Products, then the obligation to meet the Mandatory Purchase Commitment and the
Minimum Sales Quotas shall be suspended until such time as either MRG or MiniMed
or a Third Party with whom either of them contracts begins manufacturing or, in
the case of the assertion of Third Party rights to the Technology, the inability
of MRG to deliver or MiniMed to manufacture or distribute Licensed Products is
eliminated (as a result of legal proceedings or otherwise) and such delivery,
manufacturing or distribution, as the case may be, begins. The Mandatory
Purchase Commitment or Minimum Sales Quota for the first period commencing
thereafter shall be the same as the Mandatory Purchase Commitment or Minimum
Sales Quota for the period in Section 7.1 or 7.2 in which the suspension
occurred. The Mandatory Purchase Commitment and Minimum Sales Quota for each
subsequent period shall be equal to those Quotas for the periods in Section 7.1
or 7.2 subsequent to the periods in which the suspension occurred.

                                       11

<PAGE>   12

               7.5.3 If during any calendar year (a) MRG fails to deliver to
MiniMed within the times required by this Agreement, all of the Licensed
Products (determined without regard to the doctrine of substantial performance
and without regard to the 10% requirement set forth in Section 6.5) ordered by
MiniMed for delivery during that year in accordance with the terms of this
Agreement, or not ordered in accordance with the terms of this Agreement but as
to which MRG accepts the order (the "Number of Units Ordered") or (b) any such
Licensed Products delivered during the calendar year fail to meet all of the
requirements of this Agreement (including without limitation those set forth in
Sections 12.1, 12.2 and 14.2), then the Mandatory Purchase Commitment or the
Minimum Sales Quota for that calendar year will be reduced by the number of
Licensed Products which are not so delivered plus those that do not meet such
requirements (the "Shortfall"). In addition, the Mandatory Purchase Commitment
or the Minimum Sales Quota for each subsequent calendar year will be reduced by
the percentage that the Shortfall represents of the Number of Units Ordered.
Such reduction shall be made whether or not the Number of Units Ordered exceeds
the 10% limitation set forth in Section 6.5.

               7.5.4 In no event shall MiniMed's marketing rights be converted
to non-exclusive rights pursuant to Section 7.4, if the failure of MiniMed to
meet the Minimum Sales Quota for any calendar year is caused by (a) the failure
of MRG to deliver, in accordance with the terms of this Agreement (and without
regard to the doctrine of substantial performance and to the 10% limitations set
forth in Section 6.5), the Number of Units Ordered or (b) the failure of MRG to
establish or maintain the capability to manufacture Licensed Products or
continuously maintain that capability or (c) MiniMed's inability to manufacture
or distribute as a result of an injunction obtained by a Third Party asserting
rights in the Technology associated with the Licensed Products. The parties
acknowledge that in the case of (b) or (c) MiniMed will not be obligated to
place orders for Licensed Products and therefore (b) and (c) will apply even if
(a) does not.

          7.6 MRG'S REPURCHASE RIGHTS

               7.6.1 In the event that MiniMed fails to satisfy the Mandatory
Purchase Commitment in 2003 or 2004 for any period as set forth in Section 7.1
or fails to pay the Additional Fees referred to in Section 16.3 which have
become due, then the sole and exclusive remedy shall be, at MRG's option, to
either:

               (a) repurchase from MiniMed all rights to distribute the Licensed
     Products pursuant to Section 5 of this Agreement and all rights to
     distribute the Long Term Glucose Sensor and related products pursuant to
     the Glucose Sensor Option Agreement for a payment in cash of $60 million;
     or

               (b) repurchase from MiniMed its rights to distribute the NewMIP
     pursuant to Section 16.1 of this Agreement (as a stand-alone product or for
     use in combination with the Long Term Glucose Sensor) for the payment of
     $7.5 million, in which case MRG shall have nonexclusive rights to
     distribute the Long Term Glucose Sensor solely with the NewMIP.

If MRG exercises its rights pursuant to (a) above, no royalties shall be payable
pursuant to Section 3.4.1 or 3.4.2.

               7.6.2 Such rights shall be exercisable by MRG by only after
delivery of written notice to MiniMed of its failure to satisfy the Mandatory
Purchase Commitment or the failure to pay the Additional Fees (or both). MiniMed
will have 30 days thereafter to cure any such default. After the expiration of
the cure period, MRG will have 60 days to exercise its rights by delivery of
written notice to MiniMed (the "Exercise Notice") stating which of the two
options MRG has elected to exercise. The closing of the transaction shall occur
at the principal executive office of MiniMed at 9:00 a.m. local time 30 days
after delivery of the Exercise Notice or on such other day, at such other time
or at such other place as the parties may mutually agree to in writing. At the
closing MiniMed will deliver to MRG appropriate documents of transfer of the
rights being acquired by MRG against delivery by MRG, by cashier's or certified
check or by wire transfer to an account designated in advance by MiniMed, the
amount of the payment so required. MRG will have the right, however, to elect to
pay $10 million of the $60 million payable pursuant to Section 7.6.1(a) at the
closing and to pay the balance six months after the closing. Likewise, MRG will
have the right to pay $1.875 million of the $7.5 million payable pursuant to
Section 7.6.1(b) and to pay the balance 60 days after the closing. Any such
deferred payment of any such amount due under Section 7.6.1(a) or (b) shall bear
interest from the day of the closing until the amount is paid in full at the
rate which is 2% in excess of the prime rate of Citibank N.A. on the date of the
closing. Any such deferred portion of the purchase price shall be evidenced by a
promissory note in customary form setting forth the foregoing terms, providing
for the payment of costs of collection, including reasonable attorney's fees,
and the acceleration of all amounts due thereunder in the event of any default
in payment.

               7.6.3 If MRG elects to exercise its rights in Section 7.6.1(b)
with respect to the NewMIP, MiniMed shall retain the right under this Agreement
to distribute generations of implantable pumps prior to NewMIP (being the MIP
2007

                                       12

<PAGE>   13

model) and the distribution rights to the Long-Term Glucose Sensor and related
products pursuant to the Glucose Sensor Option Agreement as follows:

               (i) exclusive rights to distribute the Long-Term Glucose Sensor
     and related products as stand-alone products,

               (ii) exclusive rights to distribute the Long-Term Glucose Sensor
     and related products as part of a system combined with an external infusion
     pump and

               (iii) non-exclusive rights to distribute the Long-Term Glucose
     Sensor and related products as part of a closed-loop system in combination
     with the MIP 2007 model.

In any event, however, MiniMed will have no right to the NewMIP either alone or
in combination with the Long Term Glucose Sensor and related products. In order
to preserve MiniMed's exclusive rights in (i) and (ii), MiniMed will use
commercially reasonable efforts in marketing such products. MRG's sole remedy
for MiniMed's failure to use such commercially reasonable efforts shall be to
convert the rights to non-exclusive rights.

          7.7 MRG'S REGULATORY ACCESS AND INSULIN RIGHTS. In the event MRG has
the right to sell implantable pump systems for insulin, MiniMed shall make
commercially reasonable efforts to allow MRG to make, sell and use Licensed
Products under any PMA or similar authority that MiniMed may have, including
access to appropriate clinical data, and shall provide MRG with reference rights
to any PMA or similar approval. MiniMed will also use commercially reasonable
efforts to allow MRG the ability to purchase insulin from MiniMed for
implantable pump use for resale to the extent MiniMed itself has such rights,
either directly from Third Parties or from MiniMed. If MiniMed sells insulin to
MRG the price will be set to be the average of MiniMed's manufacturing or
acquisition cost plus 35%. If MiniMed is unable to provide insulin to MRG, or
elects to no longer be involved in selling insulin for implantable pumps,
MiniMed will make such efforts as MRG reasonably requests to assist MRG in
securing its own source for insulin for implantable pump systems. MRG will
reimburse MiniMed for all direct out-of-pocket costs and expenses incurred
pursuant to this Section 7.7. If MiniMed is unable to provide insulin to MRG or
elects to no longer be involved in selling insulin for implantable pumps and MRG
has not been able to secure its own source of insulin, MiniMed will make
available to MRG all of its Technical Information with respect to insulin for
implantable pumps and a non-exclusive license to use any Technology reflected
therein. The foregoing rights shall be used by MRG solely in connection with its
business, will constitute MiniMed's Confidential Information and will not be
transferable (including granting any security interest therein) except in
connection with a sale by MRG of its business substantially as a whole.

     8. MANUFACTURING AND RIGHTS TO OTHER APPLICATIONS.

     8.1 Manufacture of Licensed Products.

               8.1.1 From the date of execution of this Agreement, MRG shall
have the capability to manufacture Licensed Products in accordance with
MiniMed's quality specifications meeting the inspection, requirements and
warranty set forth in Section 12, in the quantities and within the delivery
times contemplated by Section 6.5. If MRG fails to establish the capability to
manufacture Licensed Products in accordance with the requirements of the
preceding sentence or thereafter loses that capability or fails to manufacture
the Licensed Products to be sold to MiniMed as contemplated by this Agreement,
MiniMed will have the right, in addition to all other rights and remedies
MiniMed may have under applicable law, to itself undertake the manufacture of
the Licensed Products for the Covered Applications or contract with others to do
so. Such right may only be exercised by giving written notice to MRG of
MiniMed's intention to do so, and thereafter MRG will have 360 days in which to
cure its failure to perform. Such cure shall be deemed effective only if MRG
manufactures and delivers to MiniMed 80% of the number of units of Licensed
Products which MiniMed had ordered and MRG had failed to deliver and at least
that number of units meets the inspection requirements and warranty referred to
in Section 12. If, however, MRG fails to deliver in any three-year period (based
on the number of days elapsed, not calendar years) 80% or more of the number of
units ordered by MiniMed which meet the inspection requirements and warranty
referred to in Section 12, then there shall be no right to cure and MiniMed may
exercise its right to undertake manufacturing the Licensed Products or contract
with others to do so as provided above.

               8.1.2 If MiniMed undertakes to manufacture the Licensed Products
as provided in Section 8.1.1 or Section 7 as a result of its distribution rights
becoming nonexclusive, it will have the right to do so thereafter throughout the
balance of the Term of the Distribution Rights. MiniMed will, however, pay a
royalty to MRG equal to 6% of MiniMed Licensed Pump Sales from the sale, lease
or other commercial exploitation of the Licensed Products manufactured by it. If
MiniMed incorporates any

                                       13

<PAGE>   14

Technology developed by MRG which is not commercially available when MiniMed
begins manufacturing, MiniMed will pay MRG a reasonable royalty but in no event
to exceed 6% of MiniMed Licensed Pump Sales for all such Technology in the
aggregate. "MiniMed Licensed Pump Sales" for this purpose shall have the same
meaning as Licensed Pump Sales except that it will apply to sales by MiniMed and
its Affiliates. If MiniMed elects to exercise the right to manufacture the
Licensed Products pursuant to this Agreement, MiniMed will have the right to use
all Technology owned by or licensed to MRG relating to the Licensed Products for
the purpose of manufacturing, distributing and selling Licensed Products
(provided that MiniMed complies with any requisite obligations owed by MRG under
any license to a Third Party), and MRG will cooperate with MiniMed in providing
such technical information and assistance as MiniMed may reasonably require.

               8.1.3 Nothing in this Section 8.1 shall limit or otherwise affect
the rights of MiniMed to recover damages or seek any other right or remedy
MiniMed has against MRG for its failure to manufacture and sell Licensed
Products to MiniMed as provided in this Agreement. In no event shall any failure
or delay in the development or FDA approval of a solution to the existing
compliant catheter problem be considered to be a failure of MRG to establish
manufacturing capability for purposes of this Agreement.

          8.2 [This Section Intentionally Omitted.]

          8.2.1 OTHER RIGHTS OF MINIMED TO OTHER APPLICATIONS. MiniMed may, at
any time, request that MRG enter into an exclusive or non-exclusive agreement to
distribute pumps for any Other Application that MiniMed does not have rights to,
and the Parties shall agrees to negotiate in good faith to establish an
equitable agreement in regard to such Other Application under which MRG would be
an OEM manufacturer for MiniMed.

          8.2.2 OTHER RIGHTS OF MINIMED TO EXCLUDED APPLICATIONS. MiniMed may,
at any time, request that MRG enter into an exclusive or non-exclusive agreement
to distribute pumps for any Excluded Application, and MRG may, at its sole
discretion, negotiate to establish an equitable agreement in regard to such
Excluded Application under which MRG would be an OEM manufacturer for MiniMed.

     9. TRADEMARKS, TRADENAMES AND COPYRIGHTS.

          9.1 LIMITED RIGHT TO USE TRADEMARKS AND TRADENAMES. All trademarks and
tradenames developed during the term of this Agreement shall remain the sole
property of the developing Party. MiniMed will have the right to use its own
trademarks and tradenames in connection with the advertising, promotion,
distribution and sale of the Licensed Products and MRG will incorporate such
trademarks and tradenames into the Licensed Products and the packaging therefor
as reasonably requested by MiniMed. During the term of this Agreement, MiniMed
may, in its sole and absolute discretion, use the trademarks and tradenames of
MRG applicable to the Licensed Products, but only in connection with the
advertising, promotion, distribution and sale of the Licensed Products for the
Covered Applications that it purchases from MRG and provided that it properly
uses such trademarks and tradenames. Such use of MRG's trademarks and tradenames
will not give rise to any rights of MiniMed therein. The design and printing of
the packaging will be determined by MiniMed, and MiniMed will have the
responsibility to be sure that all legal requirements with respect thereto are
satisfied. The right to use the MiniMed trademarks and tradenames by MRG will be
only with the written consent of MiniMed and for Licensed Products for Covered
Applications. Upon termination of the exclusivity of MiniMed's distribution
rights, the limited right of MRG to use MiniMed trademarks and tradenames shall
be limited to use in connection with Licensed Products sold to MiniMed.

          9.2 COPYRIGHTS. Any technical manuals relating to the Licensed
Products translated into a language other than English and printed by MiniMed
shall be copyrighted in the name and ownership of MiniMed, with the cost of such
translation and printing to be paid by MiniMed.

     10. REPORTS AND RECORDS.

          10.1 MONTHLY REPORTS. On or before the 15th day of each calendar month
during the term of this Agreement, commencing with the first full calendar month
after the month in which this Agreement is executed and delivered, MiniMed will
deliver to MRG a written report setting forth the following:

               (a) net sales of Licensed Products in units and MiniMed's
     Licensed Pump Sales for the preceding calendar month, and the fiscal year
     through end of such preceding months;

                                       14

<PAGE>   15

               (b) the amount of remaining inventory of the Licensed Products,
     if any;

               (c) any material changes in government regulations known to
     MiniMed affecting the importation, sale or use of the Licensed Products in
     any jurisdiction where MiniMed is selling the Licensed Products which has
     not previously been reported to MRG or is not known to MRG; and

               (d) a brief description of any litigation against MiniMed
     relating to the Licensed Products and not previously disclosed to MRG as
     well as any material developments in litigation previously disclosed.

          For purposes of this Section 10.1, all references to "fiscal year"
refer to the then fiscal year of MiniMed. Net sales and units shall be those
sales invoiced by MiniMed net of returns credited by MiniMed during the period.

          10.2 RECORDS. MiniMed will retain a copy of each invoice
substantiating a sale as well as complete and accurate books of account and
records relating to purchases and sales of the Licensed Products. MiniMed will
provide MRG with such summaries and reports of such information as MRG may
reasonably request that MiniMed prepares for its own purposes. MiniMed shall
retain all invoices, books of account and records relating to purchases, sales
and inventories of the Licensed Products for a period of at least three years or
such longer periods as may be required by law. If MRG so requests, MiniMed shall
offer the records to MRG at no cost prior to disposing of them, except that MRG
will pay the actual costs necessary to retrieve and transport such records.

     11. TERM AND TERMINATION

          11.1 TERM. Unless otherwise terminated in accordance with Section
11.2, the term of the rights granted by MiniMed to MRG under Section 3.1 shall
continue until the expiration of the last of the patents on the MiniMed Pump
Technology. Thereafter MRG will have a fully paid-up, perpetual license and the
right to sublicense the MiniMed Pump Technology in the expired patents to the
extent MiniMed owns or has the right to license such Technology. In addition MRG
will have the right to continue to have the right to use the MiniMed Pump
Technology and make, use and sell Licensed Products to the extent such
Technology is patented under other unexpired patents or constitutes a trade
secret, know how or other proprietary Technology and to the extent MiniMed owns
or has the right to license such Technology, provided that MRG pays to MiniMed a
reasonable royalty agreed to by the Parties (which shall not exceed the royalty
rate applicable pursuant to Section 3.4), or, failing such an agreement within a
reasonable time, by arbitration pursuant to Section 29. In determining the
amount of the reasonable royalty the parties acknowledge that the following
facts should be considered: (a) most of the value of the MiniMed Pump Technology
consists of Technology that is not patented, (b) MiniMed and its predecessors
have made very substantial investments in the development of the Technology over
many years and (c) significant value arises from the research and clinical data
relating to the MiniMed Pump Technology which either cannot be re-produced at
all or cannot be re-produced without significant expense and the passage of a
number of years. Nothing in this Section 11.1 shall limit or otherwise affect
the rights of MRG under Section 4.5.2 or 4.5.3.

          11.2 TERMINATION FOR CAUSE. Either Party will have the right to
terminate this Agreement upon the occurrence of any of the events specified in
Sections 11.2.1 or 11.2.2. Any such termination may only be made by delivering
notice of intention to terminate to the other party specifying the effective
date of the termination, which shall be not less than thirty (30) days after the
delivery of the notice. Said thirty (30) day period shall be in addition to any
of the cure periods specified in Section 11.2.1.

               11.2.1 MATERIAL DEFAULT. The other Party (the "defaulting party")
has failed to perform any material term, condition or obligation to be performed
by it under any of Sections 3 through 17 of this Agreement and such failure
remains uncured after written notice of default, specifying the nature thereof
in reasonable detail, has been given to the defaulting party unless, in the case
of default that does not involve the payment of money, prior to the expiration
of the applicable cure period, the defaulting party has commenced and thereafter
pursues and completes with due diligence those actions necessary to cure such
default within the applicable cure period. The applicable period for the failure
to make any payment due under this Agreement shall be thirty (30) days, and the
applicable cure period for any other default shall be sixty (60) days but said
60 day cure period shall be subject to extension for a reasonable period of time
if the default is of such nature that it cannot reasonably be cured with due
diligence within sixty (60) days. A default in the payment of money shall not be
deemed material unless the amount thereof exceeds $100,000 and the
non-performing Party believes in good faith that it is not legally obligated to
make the payment.

               11.2.2 BANKRUPTCY OR INSOLVENCY. The other Party (an "insolvent
party") becomes bankrupt or insolvent or a receiver is appointed for the
business and/or assets of such other Party or an assignment is made by such
other Party for

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the benefit of its creditors, in each case whether by the voluntary act or
otherwise and, in the case of any such proceeding that is involuntary, if such
proceeding is not terminated within sixty (60) days thereafter.

          11.3 RIGHTS AND DUTIES UPON TERMINATION. The termination of this
Agreement for any reason shall be without prejudice to the right of either Party
to receive any payments accrued under any provision of this Agreement prior to
the effective date of termination.

               11.3.1 SALE OF INVENTORY. In the event of termination of this
Agreement, MRG shall nonetheless have the right for one year after the effective
date of termination to sell the inventory of Licensed Products in its possession
at the time of termination, except, however, that MiniMed shall have the right
but not the obligation to repurchase the Licensed Products in MRG's inventory,
if any, at the Transfer Price then in effect pursuant to Section 6.

               11.3.2 EFFECT OF TERMINATION. The termination of this Agreement
for cause shall be without prejudice to (a) the rights of either Party under
Sections 2, 12.2, 14.5 through 14.9, 17, 22, 27, 28 and 33, all of which shall
survive such termination, or (b) any rights or remedies with respect to defaults
arising before such termination.

          11.4 RIGHT TO RECOVER DAMAGES. Nothing in this Section 11 is intended
to limit the right of a Party to recover damages for any default of the other
Party, whether or not the nature of the default permits termination of this
Agreement pursuant to this Section 11.

          11.5 SEPARATE AGREEMENTS. The Glucose Sensor Option Agreement, the
Agreement Re Implantable Pump Business between the Parties dated as of September
1, 1998, the Secured Promissory Note and Security Agreement referred to in
Section 2.4, the Line of Credit Note referred to in Section 4.2, the Lease
referred to in Section 5 of the Agreement Re Implantable Pump Business and the
Stock Purchase Agreement dated as of the same date as this Agreement shall be
considered completely separate from this Agreement and not a part hereof. Except
as provided in the Stock Purchase Agreement, a default under such other
documents shall not affect the rights and obligations of the Parties under this
Agreement, and no default under this Agreement shall affect the rights and
obligations of the Parties under those other documents.

     12. INSPECTION, WARRANTY, REMEDIES

          12.1 INSPECTION OF LICENSED PRODUCT. MiniMed shall have the right but
not the obligation to conduct inspection tests of Licensed Products to be
shipped to MiniMed at MRG's facility. Licensed Products reasonably rejected by
MiniMed as a result of such inspection shall not be shipped. In the event of any
shortage, damage or discrepancy in or to a shipment of Licensed Products or in
the event any Licensed Product fails to comply with the then current
specification for the Licensed Product, MiniMed will make a written claim within
two months from the date of delivery of the Licensed Products for problems that
are patent (i.e. readily discoverable from a customary physical inspection of
the shipment or MRG's manufacturing records maintained in accordance with
applicable regulatory requirements) and as promptly as practicable after
discovery for latent defects. MiniMed's claim will detail such shortage, damage
or discrepancy or failure and furnish such written evidence or other
documentation as MRG reasonably may deem appropriate. If such shortage, damage
or discrepancy or non-conformity with specifications existed at the time of
delivery of Licensed Product at the F.O.B. point, MiniMed may return the
Licensed Product to MRG at MRG's expense except that in no event shall MiniMed
be entitled to return any Licensed Product beyond the expiration date for its
use if MRG could have corrected the problem had it been discovered within two
months after delivery. Upon such return of a Licensed Product and, except as
otherwise provided in Section 7, MRG shall at MiniMed's option, either (a)
promptly deliver a substitute Licensed Product of the same or another acceptable
design to MiniMed in accordance with the delivery procedures set forth herein or
(b) refund to MiniMed MiniMed's cost of the Licensed Product including all costs
of shipping, handling, insurance, import and export taxes and other similar
expenses incurred by MiniMed. In no event shall the provisions of this Section
12.1 limit or otherwise affect MRG's liability for any breach of the warranty
set forth in Section 12.2 or for indemnification pursuant to Section 14.7 with
respect to any Licensed Product sold or otherwise distributed by MiniMed without
knowledge of any defect, failure to meet specifications, damage or other similar
problem. MRG shall have no liability for incidental or consequential damages,
but in no event shall bodily injury, death or property damage caused by a
Licensed Product be deemed to be incidental or consequential damages.

     12.2 LIMITED WARRANTY. MRG warrants to MiniMed that Licensed Products sold
by MRG to MiniMed under this Agreement shall be in conformance with applicable
specifications and shall be free from defects at the time of delivery of said
Licensed Products at the F.O.B. point except that no such warranty is made with
respect to any defect in design of MiniMed's current model of its implantable
pump systems.

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<PAGE>   17

     13. DEFENSE OF TECHNOLOGY

          13.1 NOTICE. In the event either Party hereto discovers or becomes
aware of any infringement or possible infringement of, or attack or threatened
attack on, any of the Licensed Pump Rights or rights to the MRG Enhancement
Technology, such Party immediately shall notify the other Party in reasonable
detail of such infringement, possible infringement, attack or threatened attack.
Promptly after such notification, the Parties will consult with each other as to
the course of action to be taken.

          13.2 DEFENSE. MiniMed, in its sole discretion and at its sole cost and
expense and with counsel reasonably satisfactory to MRG, shall take any and all
appropriate legal action to defend the Licensed Pump Rights against any
suspected infringement or from any attack or threatened attack; provided,
however, that MRG at all times shall have the right to participate fully in any
such action at its own expense. In the event MiniMed fails within a reasonable
time to initiate appropriate action in connection with any such suspected
infringement, attack or threatened attack which in the reasonable judgment of
MRG adversely affects or might adversely affect MRG's rights in, to or under the
Licensed Pump Rights, or fails to pursue such action vigorously once commenced,
MRG upon notice to MiniMed shall have the right, but not the obligation, to
initiate or pursue any such appropriate action in MiniMed's name but at MRG's
risk and expense, and MiniMed shall cooperate fully in any such action. Any
judgment, damages, settlement or award which results from any such action shall
be allocated (a) first, to MiniMed and MRG in proportion and to the extent of
the actual costs incurred by each in connection therewith and (b) thereafter to
MiniMed and MRG in proportion to their actual damages.

          13.3 LICENSES OF CONFLICTING TECHNOLOGY. In the event of the
occurrence of any claim that any of the rights granted pursuant to Section 3.1
by MiniMed to MRG conflict with any patent, copyright or other proprietary right
of any Third Party, the Parties hereto shall consult with each other regarding
such claim and the avoidance of the same. In the event the Parties mutually
determine that it is necessary or appropriate that MRG obtain a license from
such Third Party in order for MRG to exercise the rights granted to it
hereunder, the Parties shall use commercially reasonable efforts to obtain such
license on the most favorable terms practicable to MRG. In the event MRG is
required by the terms of such license to pay royalties to such Third Party, MRG
shall have the right to a refund of a portion of the royalties paid hereunder by
MRG in an amount equal to half the royalties paid to such Third Party not
exceeding half the royalties paid to MiniMed under Section 3.

          13.4 MRG ENHANCED TECHNOLOGY. MiniMed and MRG shall have rights with
respect to each other that are reciprocal to those specified in Sections 13.2
and 13.3 in the event of any attack or threatened attack of the kind referred to
in those sections against any MRG Enhancement Technology incorporated into a
Licensed Product.

     14. MISCELLANEOUS

          14.1 QUALITY CONTROL. MiniMed shall follow reasonable quality control
standards with respect to the storage, preservation and use of Licensed Products
purchased under this Agreement.

          14.2 GOOD MANUFACTURING PROCEDURES. Licensed Products shall be
manufactured and tested by MRG in accordance with (a) all applicable U.S. laws
and FDA regulations, including but not limited to the FDA's Good Manufacturing
Practice and Quality System regulations in effect at the time of such
manufacture or testing and (b) MiniMed's quality standards and systems from time
to time in effect and applied by MiniMed to all of MiniMed's products which are
of a comparable nature. MiniMed shall have the right, at its expense, to conduct
quality audits of MRG and of the Licensed Products and MRG shall fully cooperate
in all such audits. Each Party shall notify the other Party of any FDA
inspection of its production facilities used to manufacture any Licensed
Products and shall furnish the other Party with copies of any FDA Form 483 or
similar report to the extent that they apply to any Licensed Products or
Long-Term Glucose Sensors.

          14.3 RECORDS AND TRACEABILITY. Each of the Parties hereby covenants
and agrees that during the Term of the Distribution Rights, including any
extensions thereof, and for a minimum period of seven (7) years thereafter, it
shall maintain complete and accurate traceability records for all Licensed
Products that are manufactured and sold under this Agreement, including
pertinent data, research reports, test results, and know-how data, as required
under all applicable FDA regulations and other U.S. or other applicable laws or
regulations then in effect. Each of the Parties hereby covenants, during the
term of this Agreement and for a minimum period of three (3) years thereafter or
such longer period as any regulatory authority may require, to maintain adequate
business and sales records regarding the distribution of all Licensed Products
that are manufactured and sold under this Agreement, including pertinent data,
research reports, test results, and know-how data to meet or exceed all
applicable FDA and other U.S. or other applicable laws or regulations then in
effect. MRG and MiniMed shall give each other access to these records in the
event of an

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FDA recall or other remedial actions with respect to any product subject to this
Agreement, or for other purposes of the Parties in complying with applicable
regulatory requirements.

          14.4 COMPLIANCE WITH LAW. MiniMed and MRG shall each comply with all
federal, state and local laws (and the laws of any foreign jurisdictions in
which the Licensed Products are manufactured or sold) applicable to the
manufacture, sale and/or distribution of the Licensed Products.

          14.5 PATENT IDENTIFICATION. MRG will, and will cause its Affiliates,
its sublicensees and their Affiliates to, apply to all Licensed Products proper
patent notice in accordance with U.S. and any foreign statutes relating to the
marking of patented articles.

          14.6 MRG'S LIABILITY INSURANCE. Beginning on the earlier of the date
on which the first sale of a Licensed Product manufactured by MRG or an
Affiliate or distributor of MRG is made by MiniMed or an Affiliate or
distributor of MiniMed or the date that any clinical trial sponsored by MiniMed
and using a Licensed Product begins and continuing until the expiration of ten
(10) years from the date on which the last sale by MiniMed of a Licensed Product
occurs, MiniMed shall maintain product liability insurance for the benefit of
MiniMed and MRG as named insureds (containing a Products Contractual Liability
Endorsement covering MRG's obligations under Sections 14.7) on such Licensed
Product in amounts that are consistent with the amount of products liability
insurance that are maintained by MiniMed on similar products sold by MiniMed for
similar or related purposes, but in no event less than Fifteen Million Dollars
($15,000,000). In the event the cost of the products liability insurance
(including the Products Contractual Liability Endorsement) exceeds a reasonable
amount as a result of claims made for bodily injury, death, or property damage
actually or allegedly caused by a Licensed Product, MRG will pay the incremental
cost of the insurance in excess of said reasonable amount (notwithstanding the
first sentence of this Section 14.6). If MiniMed ceases to be the exclusive
distributor of Licensed Products for the Covered Applications for any reason,
the amount of insurance required to be maintained by MiniMed shall be
appropriately reduced to reflect the risk for Licensed Products sold and to be
sold by MiniMed. In the event MiniMed cannot obtain the insurance required by
this Section 14.6 because MiniMed is not the manufacturer of the Licensed
Products or for any other reason, MRG shall obtain and maintain such insurance
for the benefit of MRG and MiniMed at the cost of MRG.

          14.7 INDEMNITY. MRG shall indemnify, defend and hold harmless MiniMed
and its directors, officers, and employees from, and shall pay any and all
damages, costs, attorneys' fees or fines in excess of the amounts MiniMed
actually recovers under the insurance policy referred to in Section 14.6 or any
other policy maintained by MiniMed or MRG resulting from all claims or liability
for bodily injury, death and/or property damage arising out of any actually or
allegedly defective products sold to MiniMed pursuant to this Agreement or any
actual or alleged negligence or willful misconduct of MRG in carrying out the
terms of this Agreement and shall bear all costs and expenses of defending such
claims (including attorney's fees incurred by MiniMed or the allocable cost of
MiniMed's in-house counsel) in excess of such insurance proceeds. As used in
this Section 14.7 a "defective product" means a product that, at the time of
delivery to MiniMed at the F.O.B. point, does not conform to applicable
specifications or is damaged or has a defect in materials or workmanship or has
a defect in design that does not exist on the Effective Date. This indemnity
does not extend to any claim or loss which results from a Licensed Product
causing any other component, device or thing to fail (other than a Glucose
Controller or Glucose Monitor incorporated into an implantable pump and other
than the abdominal lead or the Long-Term Glucose Sensor) or a Licensed Product
failing as a result of use with any such other component, device, thing, or
technology; nor does this indemnity extend to failure of any such other
component, device, thing, or technology to work caused by a Licensed Product
which is properly manufactured.

          14.8 INDEMNITY. MiniMed shall indemnify, defend and hold harmless MRG
and its directors, officers and employees from, and shall pay any and all
damages, costs and attorneys fees or fines in excess of the amounts MRG actually
receives under the liability insurance referred to in Section 14.6 or any policy
maintained by MiniMed or MRG resulting from any claims or liability for bodily
injury, death and/or property damage arising out of the activities, services or
other involvement of MiniMed with respect to any sale or delivery of products
sold or otherwise provided by MiniMed and resulting from or caused by the actual
or alleged negligent or willful misconduct of MiniMed and shall bear all costs
of defending such claims (including attorneys' fees incurred by MRG) as
contemplated by Section 14.9.

          14.9 THIRD PARTY CLAIMS. The Party indemnified hereunder (the
"Indemnitee") shall promptly notify the indemnifying Party (the "Indemnitor") of
the existence of any claim, demand or other matter involving liabilities to a
Third Party to which the Indemnitor's indemnification obligations would apply
and shall give the Indemnitor a reasonable opportunity to defend the same at its
own expense and with counsel of its own selection (who shall be approved by the
Indemnitee, which approval shall not be unreasonably withheld); provided,
however, that the Indemnitee at all times shall have the right to fully
participate in the defense at its own expense. If the Indemnitor shall fail to
defend within a reasonable time after such notice, the Indemnitee shall have the
right, but

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not the obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment), the claim or other matter on behalf,
for the account and at the risk and expense of the Indemnitor. Except as
provided in the preceding sentence, the Indemnitee shall not compromise or
settle the claim or other matter without the prior written consent of the
Indemnitor in each instance. If the claim is one that cannot by its nature be
defended solely by the Indemnitor, the Indemnitee shall make available all
information and assistance that the Indemnitor reasonably may request; provided,
however, that any associated expenses shall be paid by the Indemnitor.

          14.10 DEVELOPMENT OF INSULIN. MiniMed will use commercially reasonable
efforts to develop the U-1000 insulin on a schedule consistent with the NewMIP
development schedule provided to it by MRG pursuant to Section 16.1. MiniMed
will prepare a development plan (including milestones) with respect to
development of the U-1000, and MRG will be entitled to participate in the
preparation of that plan. In addition MiniMed will continue with commercially
reasonable efforts to develop and obtain approval from the FDA for U-400 Aventis
and Lispro Insulins. All of these insulin development programs will be funded by
MRG up to an aggregate amount of $2 million of which up to $500,000 may be
in-kind contributions pursuant to the development plan. All reasonable
expenditures required for these programs in excess of $2 million will be paid by
MiniMed. MRG will make the payments of the funding costs to MiniMed from time to
time within thirty days after receipt from MiniMed of a request for payment
setting forth in reasonable detail, and/or accompanied by appropriate
documentation with respect to, the costs incurred by MiniMed in connection with
the programs. Such statements shall not be submitted by MiniMed to MRG more
frequently than monthly and not less frequently than quarterly. The expenses
incurred by MiniMed which are payable by MRG pursuant to this Section 14.10
shall include and be limited to all direct out-of-pocket costs and expenses
incurred in connection with the insulin development programs together with all
direct employee expenses incurred by MiniMed for the time spent by MiniMed
employees on these programs, which amounts shall be reasonably documented. Such
expenses for MiniMed employees' time shall include a pro rata portion of
indirect employee expenses such as employee benefits and payroll taxes. In no
event shall MRG be obligated to pay any portion of MiniMed's general overhead,
facilities allocation or administrative expense.

          14.11 MARKETING STUDY. Within 90 days after the date of this Amended
and Restated Agreement MiniMed will initiate a marketing study of implantable
pump products and the Long Term Glucose Sensor (including the Stand-Alone
Long-Term Glucose Sensor) referred to in the Glucose Sensor Option Agreement.
MRG will fund the cost of the study up to the amount of $250,000 unless the
parties agree to a higher amount. The parameters and the end-points of the study
and the firm selected to perform the study shall be reasonably satisfactory to
both MRG and MiniMed.

          14.12 OVERSIGHT OF IMPLANTABLE PROGRAMS. MiniMed and MRG will each
designate a senior representative to monitor the progress of the various
programs contemplated by this Agreement and the Glucose Sensor Option Agreement
and will make a report at least quarterly upon request to MiniMed's management.

     15. FDA APPROVAL AND CLINICAL TRIALS

          15.1 PMA/NDA FOR DIABETES. MiniMed has caused or is about to cause a
combined PMA and New Drug Approval application ("PMA/NDA") to be filed with the
FDA with respect to the Licensed Products and any related special insulin and to
obtain approval of both the Licensed Products and the related insulin for
commercial distribution in the United States. MiniMed will prepare a development
plan with respect to these efforts, including clinical trials, as soon as
practicable after the date of this Amended and Restated Agreement. MRG will be
entitled to participate in the preparation of the plan, and the plan will
include milestones. In that connection, MiniMed will also use commercially
reasonable efforts to conduct any additional clinical trials reasonably required
by the FDA for such approval. Except as provided in Section 14.10, MiniMed will
pay all reasonable costs and expenses of obtaining approval of the PMA/NDA from
the FDA, including the cost of the clinical trials, except that MRG will provide
at its expense Licensed Product support activities. If MiniMed obtains
reimbursement for any such implantable pump systems provided by MRG, the amount
of such reimbursement shall be allocated equally between MiniMed and MRG. If
MiniMed believes that the scope of any required clinical trials or any other
requirements imposed by the FDA are not commercially reasonable to pursue,
MiniMed will have the right to notify MRG of such determination, and thereafter
the parties will consult in good faith as to the extent to which MRG is willing
to bear a portion of the costs. If such consultation with MRG does not result in
an amendment to this Agreement satisfactory to MiniMed, either Party will have
the right to have the matter resolved by arbitration pursuant to Section 29. The
arbitrator(s) shall determine whether the requirements of the FDA are
commercially unreasonable to pursue and the portion of the cost that is
unreasonable. Upon such determination, MRG shall pay the portion of the cost
determined to be unreasonable as each item of cost is incurred and upon the
presentation of reasonable documentation from MiniMed.

          15.2 OTHER APPLICATIONS. If MRG and MiniMed do not enter into an
agreement with respect to the distribution by MiniMed of Other Applications
(including neurological and otological applications), then MiniMed will
cooperate with MRG in

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connection with obtaining FDA approval and comparable approval from the European
Union for such Other Applications, including clinical trials, and will provide
such information as is available to MiniMed as MRG reasonably requests. MRG will
reimburse MiniMed for its direct out-of-pocket expenses incurred in providing
such cooperation and/or information. If MRG and MiniMed do enter into an
agreement with respect to Other Applications, their respective obligations with
respect to obtaining FDA and other regulatory approvals will be as set forth in
that agreement.

          15.3 ACCESS TO INFORMATION REGARDING CLINICAL TRIALS. MiniMed will
provide regularly to MRG information on the protocols and results obtained in
MiniMed's trials conducted with respect to Licensed Products and any special
insulin used with Licensed Products. Such information will constitute MiniMed's
confidential information pursuant to this Agreement.

          15.4 TERMINATION OF OBLIGATIONS. MiniMed's obligations under this
Section 15 shall terminate at such time as MiniMed's distribution rights with
respect to Licensed Products are converted to non-exclusive rights.

     16. DEVELOPMENT OF THE NEWMIP

          16.1 OBLIGATION TO DEVELOP. MRG will use commercially reasonable
efforts to develop the "NewMIP" model of its implantable pump system in
accordance with specifications set forth in Exhibit 16.1 attached hereto. The
NewMIP will be developed by MRG in accordance with MRG's Product Development
Protocol, a copy of which has been delivered to and approved by MiniMed prior to
the execution to this Agreement. MRG will prepare a development plan, including
milestones, with respect to the NewMIP program and provide a copy thereof to
MiniMed.

          16.2 DISTRIBUTION RIGHTS. Upon completion of the development and
qualification of the NewMIP in accordance with MRG's Product Development
Protocol and delivery by MRG to MiniMed of written notice that those events have
occurred, MiniMed shall become unconditionally obligated to pay to MRG $12.5
million in cash, within 30 days after receipt of the notice, for the exclusive
world-wide right to distribute the NewMIP and all improvements and modifications
thereof for Covered Applications. If MiniMed purchases the additional $16
million "Second Tranche" of MRG's common stock contemplated by Section 2.2 of
the Stock Purchase Agreement, the foregoing amount payable by MiniMed shall be
reduced to $7.5 million. The term of MiniMed's rights as distributor of the
NewMIP will commence upon payment of the fee therefor, will continue for a
period of five years thereafter and thereafter will be deemed to be extended
automatically on a year to year basis unless MiniMed voluntarily terminates its
distribution rights with respect to the NewMIP upon not less than six months
prior written notice to MRG. MiniMed's rights are also subject to premature
termination as provided in Section 11.

          16.3 ADDITIONAL FEES. MiniMed will also be obligated to pay additional
license fees (the "Additional Fees") as follows:

               (a) $6 million on or before the later of December 31, 2003 or six
     months after completion of the qualification of the NewMIP under MRG's
     Product Development Protocol; and

               (b) $6 million on or before the later of December 31, 2004 or
     twelve months following completion of the qualification of the NewMIP under
     MRG's Product Development Protocol.

MiniMed's obligations to pay the Additional Fees shall be reduced by fifty cents
($.50) for each dollar to the extent that MiniMed orders and agrees to accept
implantable pump systems beyond the Mandatory Purchase Commitments referred to
in Section 7.1 for 2003 and/or 2004. In the event MiniMed defaults in the
payment of any of the Additional Fees and fails to pay the same after the giving
of notice by MRG, MRG may exercise the repurchase rights in Section 7.6 and
MiniMed's distribution rights with respect to the NewMIP shall terminate.

     17. REPRESENTATIONS AND WARRANTIES

          17.1 REPRESENTATIONS AND WARRANTIES OF MRG. MRG hereby represents and
warrants to MiniMed that the statements set forth in Sections 17.1 through
17.1.4 hereof are true and correct.

               17.1.1 ORGANIZATION AND STANDING. MRG is duly organized, validly
existing and in good standing under the laws of the state of its organization,
with full power and authority to own its property and carry on its business as
now conducted.

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               17.1.2 AUTHORITY AND ENFORCEABILITY. MRG has the right, power and
authority required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; all authorizations and
approvals have been secured by MRG which are necessary to authorize the
execution, delivery and performance of this Agreement; and this Agreement upon
being duly executed constitutes a legal, valid and binding agreement of MRG and
is enforceable against it in accordance with its terms, excepting only to the
extent that such enforceability may be limited by bankruptcy law or other laws
of general application relating to creditor's rights and subject to the
availability of equitable remedies.

               17.1.3 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the breach of any term or
provision of, or constitute a default under, the Certificate of Incorporation or
Bylaws of MRG, as amended to the date hereof, or any statute, order, judgment,
writ, injunction, decree, license, permit, rule or regulation of any
governmental or regulatory body or court, or any indenture, mortgage, deed of
trust or other agreement or instrument to which MRG is a party or by which it is
bound.

               17.1.4 INTELLECTUAL PROPERTY RIGHTS. The Enhancement Technology
and any other Technology of MRG incorporated into Licensed Products is not and
will not be subject to any encumbrance, lien or claim of ownership by any Third
Party, except for rights that MRG has licensed or intends to license from Third
Parties, for which MRG has (or will have at the time of sale of Licensed
Products to MiniMed) rights to utilize such technology as required hereunder. To
the extent that MRG has licensed or intends to license intellectual property
from Third Parties MRG will be responsible for all costs and obligations related
to such licenses. To the best of MRG's knowledge but without having conducted a
patent infringement search, the manufacture, use or sale of products
incorporating the Enhancement Technology will not infringe any intellectual
property rights of any Third Party, except for certain patents and copyrights
that MRG has licensed or will license from third parties and which MRG has or
will have the right to use.

          17.2 REPRESENTATIONS AND WARRANTIES OF MINIMED. MiniMed hereby
represents and warrants to MRG that the statements set forth in Section 17.2.1
through 17.2.5 hereof are true and correct.

               17.2.1 ORGANIZATION AND STANDING. MiniMed is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, with full corporate power and authority to own its property
and carry on its business as now conducted.

               17.2.2 AUTHORITY AND ENFORCEABILITY. MiniMed has the right, power
and authority required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; all authorizations and
approvals have been secured by MiniMed which are necessary to authorize the
execution, delivery and performance of this Agreement; and upon being duly
executed this Agreement constitutes a legal, valid and binding agreement of
MiniMed and is enforceable against it in accordance with its terms, excepting
only to the extent that such enforceability may be limited by bankruptcy law or
other laws of general application relating to creditor's rights and subject to
the availability of equitable remedies.

               17.2.3 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the breach of any term or
provision of, or constitute a default under, the Certificate of Incorporation or
Bylaws of MiniMed, as amended to the date hereof, or any statute, order,
judgment, writ, injunction, decree, license, permit, rule or regulation of any
governmental or regulatory body or court, or any indenture, mortgage, deed of
trust or other agreement or instrument to which MiniMed is a party or by which
it is bound.

               17.2.4 INTELLECTUAL PROPERTY RIGHTS. MiniMed's Pump Technology is
not and will not be subject to any encumbrance, lien or claim of ownership of
any Third Party except for the rights of the licensor of the Johns Hopkins
Rights. To the best of MiniMed's knowledge but without having conducted a patent
infringement search, the manufacture, use or sale of MiniMed's Pump Technology
will not infringe any intellectual property rights of any Third Party. MiniMed
has not licensed MiniMed's Pump Technology to any Third Party.

               17.2.5 JOHNS HOPKINS AND WILSON GREATBATCH CONTRACTS. MiniMed's
existing agreements with The Johns Hopkins University and the Applied Physics
Laboratories of The Johns Hopkins University with respect to the Johns Hopkins
Rights were binding obligations of the parties and continued to be in effect
except as otherwise disclosed by MiniMed to MRG in writing prior to that date;
MiniMed has no actual knowledge of any default by either party to any such
agreements in the performance of its obligations thereunder; to MiniMed's actual
knowledge, the royalty rate payable with respect to the Johns Hopkins Rights is
3.5%. MRG acknowledges that it has received copies of all such agreements and
has had an opportunity to make such review and perform such inquiry as it
considers to be necessary or desirable with respect to such agreements.

                                       21

<PAGE>   22

     18. LIMITATIONS ON WARRANTIES AND REMEDIES

          18.1 LIMITATIONS ON WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN
SECTIONS 12.2 AND 17.1.4, MRG MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE LICENSED PRODUCTS OR MINIMED'S PUMP TECHNOLOGY, INCLUDING
BUT NOT LIMITED TO (a) THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE, OR (b) ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE
VALIDITY OR SCOPE OF ANY RIGHTS TO TECHNOLOGY, OR (c) ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO THE OWNERSHIP OF ANY TECHNOLOGY, THE LICENSED PRODUCTS
OR MINIMED'S PUMP TECHNOLOGY OR THE INFRINGEMENT BY THE SAME OF ANY PATENT,
COPYRIGHT OR OTHER PROPRIETARY RIGHT OF ANY THIRD PARTY, OR (d) ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ABSENCE OF ANY DEFECT IN THE
LICENSED PRODUCTS.

          18.2 LIMITATIONS ON REMEDIES. EXCEPT AS SET FORTH IN SECTION 14.7 AND
17.1.4 IN NO EVENT SHALL MRG BE LIABLE TO MINIMED FOR ANY DAMAGES FOR LOST
PROFITS, LOST SAVINGS OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH MRG'S MANUFACTURE OF THE LICENSED PRODUCTS EVEN IF MRG HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. DAMAGES FOR PHYSICAL INJURY, DEATH OR PERSONAL
INJURY SHALL NOT CONSTITUTE CONSEQUENTIAL DAMAGES. THE PROVISIONS OF THIS 18.2
SHALL NOT APPLY TO DAMAGES FOR THE INACCURACY OF ANY REPRESENTATION OR WARRANTY
SET FORTH IN SECTIONS 17.1.1 THROUGH 17.1.4.

          18.3 REMEDY FOR BREACHES COVERED BY SECTION 18.2. Notwithstanding
Section 18.2, if (a) MRG breaches any obligation under this Agreement for which
lost profits, lost savings or consequential damages would have been available
but for Section 18.2, (b) such breach is material, (c) MRG did not use
commercially reasonable efforts to perform that obligation and (d) MRG failed to
actually and fully perform the obligation in default within 30 days after
MiniMed delivers written notice of the breach to MRG, then MiniMed will have the
right to undertake to manufacture the Licensed Products for the Covered
Applications or contract with others to do so after asserting such right in a
written notice delivered to MRG. Either Party shall have the right to commence
an arbitration in accordance with Section 29 to determine whether MiniMed has
that right under this Section 18.3. The decision of the arbitrator or
arbitrators will be final and binding on the parties. Pending the arbitration,
MiniMed will not be entitled to undertake manufacturing or contract with others
to do so and MRG will continue to have all of its obligations under this
Agreement. If neither party commences an arbitration within 30 days after
MiniMed's written notice referred to above is delivered, MiniMed will be deemed
to have the right to undertake to manufacture the Licensed Products or contract
with others to do so. If MiniMed undertakes to manufacture Licensed Products or
contract with others to do so pursuant to this Section 18.3, MiniMed shall have
no further obligation to purchase Licensed Products from MRG and the provisions
of Section 8.1.2 shall apply.

     19. INDEPENDENT CONTRACTORS

          19.1 The relationship between MiniMed and MRG under this Agreement is
solely that of independent contractors.

          19.2 Neither Party shall have the right to bind the other or to incur
obligations on the other's behalf without the other's prior written consent in
each instance.

     20. CONDITION PRECEDENT

          The effectiveness of the amendments to the Prior Agreement set forth
in this Agreement is conditioned upon, on or prior to the date of execution of
this Agreement, the execution by MiniMed and MRG of the Amendment to Glucose
Sensor Option Agreement and the Stock Purchase Agreement each dated as of the
same date as this Agreement.

     21. FORCE MAJEURE

          Any Party's delay or failure in performing its obligation under this
Agreement shall be excused to the extent caused by forces beyond that Party's
reasonable control, including, without limitation, the following: war, floods,
earthquakes, other acts of God, industrial disputes, civil disobedience,
strikes, fire, mobilization, changes in governmental regulation or
interpretation, requisition, embargo, restriction and shortage of transport
facilities, fuel, energy or supplies. The unavailability of funds to any Party
to perform any obligation under this Agreement shall not excuse performance
under this Agreement regardless of the reason therefor.

                                       22

<PAGE>   23

Each Party claiming the benefit of such an excuse agrees to notify the other
promptly in writing of any such delay or failure in performance, and to resume
performance as soon as is reasonably practicable.

     22. NOTICES

          Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
(a) if personally delivered, when so delivered, (b) if mailed, seventy-two (72)
hours after having been placed in the United States mail, registered or
certified, postage prepaid, addressed to the Party to whom it is directed at the
address set forth below or (c) if given by telex or telecopier, when such notice
or other communication Is transmitted to the telex or telecopier number
specified below and the appropriate answer back or telephonic, confirmation is
received:

                  If to MiniMed:

                                    MiniMed Inc.
                                    18000 Devonshire Street
                                    Northridge, California  91325-5350
                                    Attention:  General Counsel
                                    Telephone No.:  (818) 576-5444
                                    Telecopier No:  (818) 576-6228

                  With a copy to:

                                    Gibson, Dunn & Crutcher LLP
                                    333 South Grand Avenue
                                    Los Angeles, California  90071
                                    Attention:  Roy J. Schmidt
                                    Telephone No.:  (213) 229-7000
                                    Telecopier No.: (213) 229-7520

                  If to Medical Research Group, Inc.:

                                    Medical Research Group, Inc.
                                    12744 San Fernando Road
                                    Sylmar, California  91342-5058
                                    Telephone No.:  (818) 362-8084
                                    Telecopier No:  (818) 367-5149

                  With a copy to:

                                    Resch Polster Alpert & Berger LLP
                                    10390 Santa Monica Blvd., 4th Floor
                                    Los Angeles, California  90025-5058
                                    Attention:  Aaron A. Grunfeld
                                    Telephone No.:  (310) 277-8300
                                    Telecopier No:  (310) 552-3209

     23. ASSIGNMENT

          Neither Party shall be entitled to assign its rights or to delegate
its duties under this Agreement, whether by law or otherwise, without the
express written consent of the other Party except that either Party may assign
this Agreement to (a) a wholly-owned subsidiary of such Party, or (b) a Third
Party who acquires either Party by merger or consolidation or acquisition of 80%
or more of the outstanding equity interests of said Party (although no change in
the ownership of equity interests of a Party shall be deemed to constitute an
assignment of this Agreement), or (c) a Third Party who acquires all or
substantially all of the assets of either Party relating to the Licensed
Products, so long as the assignee agrees to assume all of the obligations of
said Party under this Agreement. In the event of such an assignment, the party
making the assignment shall remain fully liable for the performance of its
obligations hereunder.

                                       23

<PAGE>   24

     24. SEVERABILITY

          The provisions of this Agreement are severable, and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

     25. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

          All representations, warranties and agreements made by MiniMed or MRG
in this Agreement shall survive the date hereof and any investigations,
inspections, examinations or audits made by or on behalf of any Party hereto.

     26. ENTIRETY

     This Amended and Restated Agreement, the Mutual Nondisclosure Agreement
between the Parties with an effective date of January 2, 1996, the Glucose
Sensor Option Agreement, the Agreement Re Implantable Pump Business dated as of
September 1, 1998, the other agreements and instruments entered into pursuant to
said Agreement Re Implantable Pump Business and the Stock Purchase Agreement
together constitute the entire agreement between the Parties hereto pertaining
to the subject matter hereof and thereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, relating
to the subject matter hereof or thereof.

     27. AMENDMENT; WAIVER

          This Agreement may be amended, modified, superseded or canceled, and
any of the terms and conditions hereof may be modified, only by a written
instrument executed by the Parties or, in the case of a waiver, by the Party
waiving compliance. No supplement, modification, waiver or termination of this
Agreement shall be valid unless it has been reduced to writing and executed by
the Party to be bound thereby. The failure of a Party at any time or from time
to time to require performance of any provision hereof shall in no manner affect
the right of such Party at a later time to enforce the same, and no waiver of
any nature, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or considered as a further or continuing waiver of any other
provision of this Agreement.

          Subject to the restrictions on modification in this Section 27, to the
extent that any provision of this Agreement purports to grant rights or create
obligations that are inconsistent with either: (1) MRG's Mann Foundation Rights
or UC Rights, or (2) MiniMed's Johns Hopkins' Rights (collectively, the
"Rights"), the Parties shall meet and confer to bring such provision in
conformity with such Rights.

     28. USE OF NAME

          Except as provided in Section 9 with respect to trademarks and
tradenames, neither MiniMed nor MRG shall use the name of the other Party or of
any staff member or employee of the other Party or any adaptation thereof in any
advertising, promotion or sales literature in a manner which would constitute an
express or implied endorsement by the other Party or of any staff member or
employee thereof for any commercial product without the prior written consent of
the other Party in each instance.

     29. SETTLEMENT OF DISPUTES

          29.1 DISPUTES AND ARBITRATION. Unless the relief sought requires the
granting of equitable relief as contemplated by Section 29.1.1, below, any
dispute or controversy (whether or not based upon the law of contracts) arising
between the Parties in connection with this Agreement, including (a) disputes
relating to the formation of this Agreement or the performance, interpretation,
enforcement, application or validity of its provisions, and (b) issues that may
be based upon or arise out of disputes that MRG or MiniMed has with Third
Parties, shall upon the demand of either Party be resolved by arbitration held
at Los Angeles, California, in accordance with the arbitration procedures
established by the Rules of Commercial Arbitration of the American Arbitration
Association, except as otherwise provided herein.

               29.1.1 If in connection with any such dispute or controversy
either Party seeks the issuance of a temporary restraining order or the granting
of preliminary injunctive relief, the court shall have the right and power to
grant the

                                       24
<PAGE>   25

requested relief on a temporary basis pending the resolution of factual issues
by arbitration in accordance with Section 29.1.2, and to thereafter enforce any
award made in such arbitration proceedings.

               29.1.2 The following principles and conditions will apply in all
arbitration proceedings conducted pursuant to this Agreement:

               A. During the thirty (30) days following the date that the
written notice is given by either Party demanding the submission of the dispute
to arbitration, MRG and MiniMed will endeavor to select three independent
arbitrators having no substantial economic or other material relationship with
either MRG or MiniMed. If the issue in dispute involves matters of patents,
licensing or technology, the arbitration panel shall include at least two
persons who are knowledgeable in such matters. If the Parties cannot mutually
agree on the three arbitrators within such thirty (30) day period, then each
Party will, within seven (7) days after the expiration of such thirty (30) day
period, select one independent arbitrator and those two arbitrators shall select
the third independent arbitrator within seven (7) days after the selections of
the later of the two to be selected. In the event either party fails to select
an arbitrator within the time period specified above or the two arbitrators fail
to select a third arbitrator within the time period specified above, either
party may request that the American Arbitration Association appoint any such
arbitrator, and any arbitrator so appointed shall be one of the arbitrators
pursuant to this Section 29.

               B. Discovery of evidence shall be conducted expeditiously by the
Parties and in accordance with the general principles embodied in the California
Civil Discovery Act. To the extent that it is necessary, either Party may apply
to a court of competent jurisdiction for assistance in obtaining discovery of
evidence for presentation to the arbitrators.

               C. Except as provided in Section 29.1.3, the arbitrators shall
issue findings of fact and conclusions of law.

               D. Except as provided in Section 29.1.3, the arbitration will be
conducted as a case would be represented to a trial court without a jury. The
arbitrators in their discretion may hear any type of evidence, including hearsay
evidence. The arbitrators shall decide the dispute in accordance with applicable
law and shall render a written decision, setting forth their findings of fact
and the conclusions of law upon which they relied in making their award. The
decision of the arbitrators shall be final and binding on the Parties.

               29.1.3 In the case of an arbitration to determine the adjustment
in prices referred to in Section 6.3, the arbitrators shall permit each of the
Parties to submit written and oral information and argument, shall decide the
matter in accordance with the standard set forth in Section 6.3 and shall issue
a written opinion explaining in reasonable detail the basis for their decision
on the adjustment in prices. The decision of the arbitrators will be final and
binding on the Parties.

          29.2 COSTS OF ENFORCEMENT. Should any action or proceeding be
necessary to construe or enforce this Agreement, including an arbitration
pursuant to Section 29.1, or any arbitration award made pursuant to Section
29.1, above, then the Party prevailing in any such action or proceeding shall be
entitled to recover all court costs and reasonable attorneys' fees, to be fixed
by the court and taxed as part of any judgment entered therein, and the costs
and fees incurred in enforcing or collecting any such judgment.

     30. GOVERNING LAW

          The validity, construction and interpretation of this Agreement shall
be governed in all respects by the laws of the State of California applicable to
contracts made by residents of that state and to be performed wholly within that
state.

     31. HEADINGS

          Section and subsection headings are not to be considered part of this
Agreement and are included solely for convenience and reference and in no way
define, limit or describe the scope of this Agreement or the intent of any
provisions hereof.

     32. THIRD PARTIES

          Nothing in this Agreement, expressed or implied, is intended to confer
upon any Person other than MiniMed or MRG any rights or remedies under or by
reason of this Agreement.

                                       25

<PAGE>   26

     33. COUNTERPARTS

          This Agreement may be executed in two or more counterparts, each one
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.

     34. JURISDICTION

          34.1 Each Party hereto irrevocably submits to the exclusive
jurisdiction of any court of the State of California or the United States of
America sitting in the City of Los Angeles over any suit, action or proceeding
arising out of or relating to this Agreement. Any arbitration proceedings
according to Section 29.1 shall be conducted in the County of Los Angeles. To
the fullest extent it may effectively do so under applicable law, each party
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any objection that it may now or hereafter have to the establishment
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.

          34.2 Each Party hereto agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to hereinabove brought in any such court shall
be conclusive and binding upon such Person and its successors and assigns and
may be enforced in the courts of the United States of America or the State of
California (or any other courts to the jurisdiction of which such Person is or
may be subject) by a suit upon such judgment.

                                       26

<PAGE>   27

          34.3 Nothing in this Section 34 shall be construed to limit the force
or effect of Section 29.

          IN WITNESS WHEREOF, the: Parties hereto have caused this Agreement to
be executed as of the date and year first set forth. above.

MINIMED INC., a Delaware corporation         MEDICAL RESEARCH GROUP, a Delaware
                                             corporation

By:   /s/ ERIC KENTOR                        By:   /s/ RONALD LEBEL
    -----------------------------                ------------------------------
      Eric S. Kentor                               Ronald Lebel,
      Senior Vice President and                    President
      General Counsel

By:   /s/ KEVIN R. SAYER
    -----------------------------
      Kevin R. Sayer
      Senior Vice President and
      Chief Financial Officer

                                       27<PAGE>   1
                                                                   Exhibit 10.40

                  AMENDMENT TO GLUCOSE SENSOR OPTION AGREEMENT

     THIS AMENDMENT TO GLUCOSE SENSOR OPTION AGREEMENT (this "Amendment") is
made as of the 1st day of February, 2001 by and between MINIMED INC.
("MiniMed"), a Delaware corporation, and MEDICAL RESEARCH GROUP, INC. ("MRG"), a
Delaware corporation with respect to the following facts:

                                    RECITALS

     MiniMed and MRG are parties to the Glucose Sensor Option Agreement dated as
of September 1, 1998 (the "Agreement") pursuant to which MRG granted an option
to MiniMed to purchase the worldwide distribution rights with respect to certain
long-term glucose sensor technology being developed by MRG. On January 25, 2001
MiniMed delivered notice of its exercise of the option. The parties now desire
to amend and supplement the Agreement on the terms set forth herein.
Concurrently with the execution and delivery of this Agreement, the parties are
also entering into an Amended and Restated Implantable Pump License and
Distribution Agreement and a Stock Purchase Agreement, both dated as of the same
date as this Agreement.

     1. DEFINITIONS:

     All capitalized terms not otherwise defined in this Amendment have the
meanings set forth in the Agreement.

     2. DEVELOPMENT OF STAND-ALONE SENSOR SYSTEM

     2.1 OBLIGATION TO DEVELOP. MRG will use commercially reasonable efforts to
develop a Stand-Alone Long-Term Glucose Sensor System which will include an
implantable glucose sensor suitable for use in vivo in humans or animals for a
period of at least 45 days, a transmitter and a receiver/monitor, but not
including an implantable pump (the "Stand-Alone Sensor System"). MRG will
prepare a development plan (which will include scheduled milestones) with
respect to its development efforts, and MiniMed will be entitled to participate
in the preparation of the plan. MRG's initial development plan will be completed
as soon as practicable after the date of this Agreement.

     2.2 PAYMENT. Upon completion of the development and qualification of the
Stand-Alone Sensor System in accordance with MRG's Product Development Protocol
attached hereto as Exhibit 2.2, and delivery by MRG to MiniMed of written notice
that those events have occurred, MiniMed shall become unconditionally obligated
to pay to MRG $13 million in cash, within 30 days after receipt of the notice,
for the exclusive world-wide distribution rights for Covered Applications with
respect to the Stand-Alone Sensor System and all improvements and modifications
thereof. If MiniMed purchases the additional $16 million "Second Tranche" of
MRG's common stock contemplated by Section 2.2 of the Stock Purchase Agreement,
the foregoing amount payable by MiniMed shall be reduced to $5 million. In order
to preserve MiniMed's exclusive rights to the Stand-Alone Sensor System, MiniMed
will use commercially reasonable efforts in marketing the Stand-Alone Sensor
System. MRG's sole remedy for MiniMed's failure to use such commercially
reasonable efforts shall be to convert MiniMed's exclusive distribution rights
to non-exclusive rights.

     2.3 TRANSFER PRICES. After development of the Stand-Alone Sensor System and
its qualification pursuant to Section 2.2, the Transfer Price of the sensor
component of the Stand-Alone Sensor System will be determined in accordance with
Section 6.4.1 of the Agreement, and the transmitter and the receiver/monitor
will be subject to Transfer Prices equal to the average of MRG's manufacturing
cost (determined in accordance with generally accepted accounting principles
consistently applied) and MiniMed's List Price. In no event, however, will the
transfer price exceed MiniMed's List Price less 15% thereof or be less than
MRG's manufacturing cost plus 30% thereof. If no transfer price satisfies the
foregoing requirements, the price shall be determined by arbitration in
accordance with Section 2.4. If the Stand-Alone Sensor System is sold with an
implantable or external pump and/or other products, the Transfer Price for the
Stand-Alone Sensor System will be based upon a reasonable allocation of the
total List Price for the Stand-Alone Sensor System and the other products (which
may include a pump) so that the List Price of the Stand-Alone Sensor System is
equal to the portion of the total List Price that is reasonably allocable to the
Stand-Alone Sensor System, whether or not a separate List Price is specified for
the Stand-Alone Sensor System. The lead connecting the Long-Term Glucose Sensor
to an implantable pump will have a Transfer Price determined as provided above
for the transmitter and the receiver/monitor.

     2.4 ADJUSTMENT IN PRICES. If, at any time after MiniMed becomes the
exclusive distributor of the Stand-Alone Sensor System, either Party believes
that the Transfer Price referred to in Section 2.3 is materially unfair to
either, the Parties will meet and

<PAGE>   2

seek in good faith to agree on revised prices that are agreeable to both Parties
and approximate pricing structures that are customary for other comparable
distribution agreements involving high technology products. If the Parties are
unable to agree on price, the matter shall be resolved by arbitration in
accordance with Section 18 of the Agreement.

     2.5 STATUS OF STAND-ALONE SENSOR SYSTEM. After its development by MRG, the
Stand-Alone Sensor System will be deemed to be a "Long-Term Glucose Sensor and
other Licensed Products," and the technology relating thereto shall be deemed to
be "MRG Glucose Sensing Technology" for all purposes of this Amendment except as
expressly set forth herein and for all purposes of the Agreement except for
purposes of Sections 5.1, 5.3, 5.4, 6.4.1 (except as referred to in Section 2.3
of this Amendment), 6.6, and 6.6.1 through 6.6.7 thereof.

     2.6 MANUFACTURING RIGHTS WITH RESPECT TO STAND-ALONE SENSOR SYSTEM. The
rights of MiniMed to itself undertake the manufacture of the Long-Term Glucose
Sensor and the other Licensed Products set forth in Section 6.4.2 and 6.4.3 of
the Agreement shall apply separately with respect to the Stand-Alone Sensor
System, which MiniMed will have the right to undertake to manufacture, or
contract with others to manufacture, without at the same time undertaking to
manufacture, or contract with others to manufacture, any other Long-Term Glucose
Sensor or Licensed Products.

     2.7 ROYALTIES PAYABLE TO THIRD PARTIES. For purposes of the last sentence
of Section 6.9.3 of the Agreement, if MiniMed is required to pay royalties to a
Third Party as provided therein and MiniMed has made the payment provided for in
Section 2.2 of this Amendment (whether the payment is made before or after the
obligation to pay royalties arises), the amount of the refund to which MiniMed
shall be entitled shall be equal to one-half of the royalties paid to such Third
Party up to a maximum of $17,500,000.

     2.8 TERMINATION OF EXCLUSIVITY. The rights of MiniMed to terminate the
Exclusive Marketing Agreement or Section 6.3 of the Agreement as provided in
Section 6.23 of the Agreement shall be exercisable by MiniMed, at its option,
separately with respect to the Long-Term Glucose Sensor and Licensed Products
without exercising such rights with respect to the Stand-Alone Sensor System,
and MiniMed's election to do so shall terminate all of its obligations under the
Agreement with respect to such other products which terminate upon the exercise
of the rights under Section 6.23 of the Agreement.

     3. CLINICAL TRIALS

     Notwithstanding the provisions of Section 6.11.1 of the Agreement, the cost
of all clinical trials with respect to the Long-Term Glucose Sensor and other
Licensed Products (including the Stand-Alone Sensor System) shall be paid by MRG
through December 31, 2002, up to a maximum aggregate amount of $4 million. MRG
shall be entitled to credit against its $4 million funding obligation expenses
it reasonably incurs in connection with the clinical trials. MiniMed and MRG
each will contribute one-half of the costs of the clinical trials in excess of
said $4 million, but neither party will be required by the provisions of this
Section 3 to make any expenditure which is not commercially reasonable. MRG will
make the payments of its share the funding costs to MiniMed from time to time
within 30 days after receipt from MiniMed of a request for payment setting forth
in reasonable detail, and/or accompanied by appropriate documentation with
respect to, the costs incurred by MiniMed in connection with the clinical
trials. Such statements shall not be submitted by MiniMed to MRG more frequently
than monthly and no less frequently than quarterly. MRG shall submit to MiniMed
statements setting forth in reasonable detail and/or accompanied by appropriate
documentation with respect to the costs incurred by MRG with respect to the
clinical trials. Expenses incurred by MiniMed and MRG which are payable by MRG
pursuant to this Section 3 and expenses incurred by MRG which are to be credited
to its obligations under this Section 3 shall include and be limited to all
direct out-of-pocket costs and expenses incurred in connection with the clinical
trials together with all direct employee expenses for the time spent by
employees on these programs, which amounts shall be reasonably documented. Such
expenses for employees' time shall include a pro rata portion of indirect
employee expenses, such as employee benefits and payroll taxes. In no event
shall either party charge any portion of its general overhead, facilities
allocation or administrative expense as an expense of the clinical trials
pursuant to this Section 3.

     4. LOSS OF EXCLUSIVE RIGHTS

     The Parties acknowledge that pursuant to Section 7.6.1 of the Implantable
Pump License and Distribution Agreement MRG has the right to repurchase from
MiniMed MiniMed's rights to distribute the NewMIP (as defined in the Implantable
Pump License Agreement and Distribution Agreement) and that, pursuant to Section
7.6.3 of the Implantable Pump License Agreement, if that right is exercised,
MiniMed's rights with respect to the Long-Term Glucose Sensor and other Licensed
Products shall include:

          (a) exclusive rights to distribute the Stand-Alone Sensor System,

                                       2

<PAGE>   3

          (b) exclusive rights to distribute the Stand-Alone Sensor System as
     part of a system combined with an external infusion pump and

          (c) non-exclusive rights to distribute the Long-Term Glucose Sensor
     (not the Stand-Alone Sensor System) as part of a Closed Loop System in
     combination with MRG's MIP 2007 model of implantable pumping systems or
     Improvements thereto.

     5. LICENSE ON MINIMED TECHNOLOGY

     Effective if and when MiniMed's distribution rights under Section 6 of the
Agreement become nonexclusive or MRG repurchases rights pursuant to Section
7.6.1(a) of the Amended and Restated License and Distribution Agreement, MiniMed
hereby grants MRG a fully paid-up, royalty-free license on all Technology that
is developed by MiniMed through said effective date but limited to the field of
use of fully implanted, oxygen-based sensors configured to the then current
Long-Term Glucose Sensor or subsequent Improvements or modifications.

     6. LEADS

     The last sentence of Section 1.15 of the Agreement is hereby amended to
read in full as follows:

          "The lead connecting the Long-Term Glucose Sensor to an implantable
          pump is a Licensed Product.

     7. SETTLEMENT OF DISPUTES

     Section 18.1.2(A) of the Agreement is hereby amended by adding a new
sentence at the end thereof reading as follows:

         "In  the event either party fails to select an arbitrator within the
         time period specified where the two arbitrators fail to select a
         third arbitrator within the time period specified above, either
         party may request that the American Arbitration Association
         appoint any such arbitrator, and any arbitrator so appointed
         shall be one of the arbitrators pursuant to this Section 18."

     8. SEPARATE AGREEMENTS

     Section 8.3 of the Agreement is hereby amended to read in full as follows:

         "The Amended and Restated Implantable Pump License and
         Distribution Agreement, the Agreement Re Implantable Pump Business
         between the Parties dated as of September 1, 1998, the Secured
         Promissory Note and Security Agreement referred to in Section 2.4, the
         Line of Credit Note referred to in Section 4.2, the Lease referred to
         in Section 5 of the Agreement Re Implantable Pump Business and the
         Stock Purchase Agreement dated as of the same date as this Amendment
         shall be considered completely separate from the Agreement as amended
         by this Amendment and not a part thereof. Except as provided in the
         Stock Purchase Agreement, a default under such other documents shall
         not affect the rights and obligations of the Parties under the
         Agreement as amended by this Amendment, and no default under the
         Agreement as so amended shall affect the rights and obligations of the
         Parties under those other documents."

     9. NOTICES

     Section 10 of the Agreement is amended to read in full as follows:

          "Any notice, request, demand or other communication
         required or permitted hereunder shall be in writing and shall be deemed
         to have been given (a) if personally delivered, when so delivered, (b)
         if mailed, seventy-two (72) hours after having been placed in the
         United States mail, registered or certified, postage prepaid, addressed
         to the Party to whom it is directed at the address set forth below or
         (c) if given by telex or telecopier, when such notice or other
         communication Is transmitted to the telex or telecopier number
         specified below and the appropriate answer back or telephonic,
         confirmation is received:

                                       3

<PAGE>   4

                  If to MiniMed:

                                    MiniMed Inc.
                                    18000 Devonshire Street
                                    Northridge, California  91325-5350
                                    Attention:  General Counsel
                                    Telephone No.:  (818) 576-5444
                                    Telecopier No:  (818) 576-6228

                  With a copy to:

                                    Gibson, Dunn & Crutcher LLP
                                    333 South Grand Avenue
                                    Los Angeles, California  90071
                                    Attention:  Roy J. Schmidt
                                    Telephone No.:  (213) 229-7000
                                    Telecopier No.: (213) 229-7520

                  If to Medical Research Group, Inc:

                                    Medical Research Group, Inc.
                                    12744 San Fernando Road
                                    Sylmar, California  91342-5058
                                    Telephone No.:  (818) 362-8084
                                    Telecopier No:  (818) 367-5149

                  With a copy to:

                                    Resch Polster Alpert & Berger LLP
                                    10390 Santa Monica Blvd., 4th Floor
                                    Los Angeles, California  90025-5058
                                    Attention:  Aaron A. Grunfeld
                                    Telephone No.:  (310) 277-8300
                                    Telecopier No:  (310) 552-3209"

     10. ENTIRE AGREEMENT

     This Amendment, the Agreement, the Mutual Nondisclosure Agreement between
the Parties with an effective date of January 2, 1996, the Amended and Restated
Implantable Pump License and Distribution Agreement, the Agreement Re
Implantable Pump Business dated as of September 1, 1998, the other agreements
and instruments entered into pursuant to said Agreement Re Implantable Pump
Business and the Stock Purchase Agreement together constitute the entire
agreement between the Parties hereto pertaining to the subject matter hereof and
thereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, relating to the subject matter hereof or
thereof.

     11. CONTINUED EFFECT OF AGREEMENT

     Except as amended and supplemented by this Amendment, the Agreement shall
remain in full force and effect.

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the date and year first set forth. above.

MINIMED INC., a Delaware corporation         MEDICAL RESEARCH GROUP, a Delaware
                                             corporation

                                       4

<PAGE>   5

By:  /s/ ERIC S. KENTOR                     By:  /s/ RONALD LEBEL
    ----------------------------------          --------------------------------
    Eric S. Kentor                              Ronald Lebel,
    Senior Vice President and                   President
    General Counsel

By:  /s/ KEVIN R. SAYER
    ----------------------------------
    Kevin R. Sayer
    Senior Vice President, Finance and
    Chief Financial Officer

                                       5

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