Document:

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

                                                                    EXHIBIT 10.9

                           MASTER PURCHASE AGREEMENT

                FOR Electronic Assembly & System Kit Packaging

     This Master Purchase Agreement is effective as of November 3, 1999 (the
"Effective Date"), by and between TheraSense, Inc., a California corporation
having its principal place of business at 1360 South Loop Road Alameda,
California 94502, ("TheraSense") and Flextronics International USA Inc.,
corporation, having a place of business at 2090 Fortune Drive San Jose, CA
95131.

                                   RECITALS

     WHEREAS, Flextronics is a leader in the field of contract manufacturing for
electrical devices and provider of engineering services related to device
manufacturing design, and has the manufacturing system capability to provide
warehousing and distribution services;

     WHEREAS, TheraSense develops and manufactures advanced blood glucose
monitoring devices for diabetics;

     WHEREAS, TheraSense wishes to contract with Flextronics for certain
engineering design and manufacturing services for TheraSense's new Messenger and
Freestyle blood glucose monitoring devices, as defined and described in the
Specifications provided as Exhibit C hereto, and to purchase the resulting
products from Flextronics; and

     WHEREAS, Flextronics desires to provide such services and products for
TheraSense;

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree to the terms and conditions specified below as follows:

                                   AGREEMENT

     The terms and conditions of this agreement and Exhibits A through C hereof,
(collectively the "Agreement") and any Purchase Order(s) issued hereunder, shall
govern all sale and purchase transactions, pertaining to the subject matter
hereof, that may be entered into by TheraSense and Flextronics, from time to
time hereafter, unless expressly otherwise agreed in writing.

     1.   Definitions.
          -----------

          1.1 "Acceptance" shall mean the successful completion of a mutually
agreed upon inspection and test procedure for Products (as defined hereinafter)
which confirms that the tested Product meets the Specifications (as defined
hereinafter). Acceptance testing shall be performed by TheraSense at Flextronics
facilities in Fremont California.

          1.2  "Affiliate" shall mean any entity that directly or indirectly
controls, is under common control with, or is controlled by, one of the parties
to this Agreement. An entity shall be deemed to be in control of another entity
only if, and for so long as, it owns or controls more than fifty-one percent
(51%) of the shares of the subject entity entitled to vote in the election of
the
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directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority).

          1.3  "Engineering Change" shall mean any mechanical, radio frequency
design, electrical software, electromechanical or process change to any
Product(s), including printed circuit boards, or the manufacturing, kiting, or
assembly process for any Product. An Engineering Change includes changes
originating from TheraSense or Flextronics which would affect the safety,
performance, reliability, serviceability, appearance, dimensions, tolerances,
materials, and composition of any bill of material of the Product (as
hereinafter defined).

          1.4  "FDA" shall mean the United States Department of Health and Human
Services Food and Drug Administration.

          1.5  "Flextronics' Proprietary Rights" shall mean all of Flextronics'
trade secrets, know-how and the like which are for or are used in the
manufacture of the Product or any Product Improvements or Engineering Changes,
including any technology or know-how property incidental thereto, such as
technical information, data, specifications, drawings, manuals and the like and
shall include any patents or patent rights Flextronics may acquire with respect
to the foregoing. However, the foregoing specifically excludes technical
information, data, specifications, drawings, manuals and the like, as well as
any patents, patent rights, or other intellectual property owned or provided by
TheraSense.

          1.6  "Force Majeure" shall mean any act of God, earthquake, fire,
natural disaster, accident, act of government, or an act that is beyond the
reasonable control of either party.

          1.7  "Manufacturing Services" shall mean the assembly, packaging, and
kitting of the electronic components manufactured by Flextronics.

          1.8  "Product" shall mean the electronic assemblies for the Messenger
or Freestyle systems as described in Exhibit C.

          1.9  "Product Improvements" shall mean any modifications to the
Product or manufacturing assembly process including system kiting to enhance
performance and/or provide comparable performance at lower cost. All Product
Improvements must be approved in writing by TheraSense prior to implementation.

          1.10 "Purchase Order" shall mean written order(s) from TheraSense to
Flextronics for the Product, specifically referencing this Agreement and
including the description, quantity, shipping destination, and requited delivery
date at the destination.

          1.11 "Specifications" shall mean the mutually agreed upon
specifications (including storage requirements) for the electronic assemblies
for the Messenger and Freestyle systems, as set forth in Exhibit C.

          1.12 "Quality Plan" shall mean the mutually agreed upon in-process and
final product test and inspection plans as set forth in Exhibit D.

                                      -2-
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          1.13 "Territory" shall mean North America.

     2.   Supply Requirements.
          -------------------

          2.1  During the term of this Agreement, Flextronics shall supply
TheraSense with those quantities of the Product ordered by TheraSense in a
Purchase Order submitted to Flextronics pursuant to this Agreement. The Product
shall comply with the Specifications and all jointly developed Quality Plans

          2.2  In consideration for the services and support provided by
Flextronics during the development of the Messenger and Freestyle product lines,
the projected business volume offered to Flextronics hereunder, and competitive
pricing offered to TheraSense hereunder. TheraSense agrees, to purchase all its
Manufacturing Services for the Messenger and Freestyle product lines exclusively
from Flextronics for a period of five (5) years from the Effective Date.
TheraSense shall not be obligated hereunder if the Products fail to conform in
all respects to the Specifications, this Agreement is terminated pursuant to
Section 15, or, in market based benchmarking, Flextronics fails to maintain
competitive pricing to warrant such exclusivity. Flextronics and TheraSense
shall work jointly to develop a Quality Plan for Flextronics' manufacturing line
with the ultimate goal to achieve within reasonable economic limits a process
capability index (Cpk) of 1.67 or higher on all key parameters of the Product
Specifications.

     Flextronics agrees to implement process improvements and process
validations using the TheraSense process control methodology as outlined below.
          ***
          2.3  Flextronics shall share process data with TheraSense by
submitting Certificates of Analysis that include process control charts, for
every Product shipment.

     3.   Forecasts and Orders.  Starting on the Effective Date, and every three
          --------------------
(3) months thereafter, TheraSense shall provide Flextronics with a non-binding
written forecast of TheraSense's expected needs for the Product for no less than
a six (6) month period from the date thereof (the "Forecast"). At least
semiannually, TheraSense shall place a binding six (6) month Purchase Order with
Flextronics for the Product.

     4.   Material Procurement.
          --------------------

          4.1  Purchase Orders.  TheraSense's accepted Purchase Orders will
               ---------------
constitute authorization for Flextronics to procure, using standard purchasing
practices the components, materials and supplies necessary for the manufacture
of Products ("Inventory") covered by such Purchase Orders.

          4.2  Special Inventory.  Subject to the conditions below, Flextronics
               -----------------
may purchase, in amounts beyond the amount necessary to fill accepted purchase
---
orders, the components, materials, and supplies: (i) which require greater than
ninety (90) days from the time they are ordered to the time they are delivered
to Flextronics ("Long Lead Time Components") plus 30 days to account for the
order, shipment, receipt and manufacturing and, (ii) purchased in quantities
above the currently required amount in order to achieve price targets ("Economic
Order Inventory"), and (iii) purchased in excess of current requirements because
of minimum lot sizes available from manufacturers

*** Confidential treatment requested

                                      -3-
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("Minimum Order Inventory"). Collectively, these components, materials, and
supplies are termed "Special Inventory".

               (1)  Flextronics may purchase Long Lead-Time Components
sufficient to meet requirements for the Purchase Orders and Forecast in effect
at the time Flextronics places an order with its supplier.

               (2)  Flextronics may reasonably purchase Minimum Order Inventory
as required by its suppliers' minimum order requirements.

               (3)  Flextronics may purchase Economic Order Inventory only upon
the prior approval of TheraSense.

               (4)  Flextronics will, from time to time, hold Long Lead-Time
Components and finished goods in inventory to increase TheraSense's production
flexibility. The components and quantities of all such inventory will be
mutually agreed to in writing by the parties prior to Flextronics placing such
items into inventory.

               (5)  TheraSense will be responsible for all non-cancelable/non-
returnable materials as procured on TheraSense's behalf to support Purchase
Orders and Forecasts subject to Section 4.2.

               (6)  TheraSense will be responsible for all Inventory and Special
Inventory purchased by Flextronics under this Section but subject to the
conditions provided elsewhere in this Agreement.

          4.3  Delivery.  All Products delivered pursuant to the terms of this
               --------
Agreement shall be suitably packed for shipment in accordance with TheraSense's
Specifications, marked for shipment to TheraSense's destination specified in the
applicable purchase order and delivered to a carrier or forwarding agent.

          4.4  Quantity Increases and Shipment Schedule Changes.  For any
               ------------------------------------------------
accepted Purchase Order, TheraSense may (i) increase the quantity of Products or
(ii) reschedule the quantity of Products and their delivery date as provided in
the table below:

     Maximum Allowable Variance From Purchase Order Quantities/Delivery Dates
     ------------------------------------------------------------------------
          # of days before    Allowable          Maximum           Maximum
          Delivery Date       Quantity           Reschedule        Reschedule
          on Purchase         Increases          Quantity          Period
                              -----------------  ----------------  -------------
          Order               ***                ***               ***
          ------------------
          ***

*** Confidential treatment requested

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     Any purchase order quantities increased or rescheduled pursuant to this
Section may not be subsequently increased or rescheduled without the prior
written approval of Flextronics.  Quantity increases of a greater percentage may
be provided if agreed to by both parties.  All other changes in quantity or
shipment date require Flextronics' prior written consent. Inventory excess to
original schedule shall be subject to an inventory carrying charge of *** for
the price of finished Product. Although Flextronics will use reasonable
commercial efforts to satisfy TheraSense's requested quantity increases,
Flextronics' ability to do so is subject to material availability. Should
TheraSense require increases beyond the above, a TheraSense owned buffer stock
of Long Lead-Time Components may be required. The components and quantities of
all such inventory will be agreed to separately in writing by both Flextronics
and TheraSense If there are extra costs required to meet a schedule increase in
excess of the above limits, Flextronics will seek approval from TheraSense in
advance of incurring such costs. If the forecast for any period is significantly
less than the previous forecast supplied over the same period, so that
Flextronics has inventory for TheraSense with no requirements, that amount will
be considered canceled and TheraSense will be responsible for any Special
Inventory purchased or ordered by Flextronics to support the forecast.

     4.5  Cancellation.  TheraSense may not cancel any portion of the quantity
          ------------
of an accepted purchase order without Flextronics' prior written approval, which
shall not be unreasonably withheld. If the parties agree upon a cancellation,
TheraSense will pay Flextronics for Products, Inventory, and Special Inventory
affected by the cancellation as follows: (i) *** of the contract price for all
finished Products in Flextronics' possession; (ii) *** of the cost of all
Inventory and Special Inventory in Flextronics' possession and not returnable to
the supplier or usable for other Flextronics products, whether in raw form or
work in process, *** (iii) *** of the cost of all Inventory and Special
Inventory on order and not cancelable and not otherwise usable for other
Flextronics products, ***; (iv)***; and (v) ***. Flextronics will use reasonable
commercial efforts to return unused Inventory and Special Inventory and to
cancel pending orders for such inventory, and to otherwise mitigate the amounts
payable by TheraSense in case of cancellation.

     5.   Engineering Changes.
          -------------------

          5.1  TheraSense Requests.  TheraSense may request, in writing, that
               -------------------
Flextronics incorporate an Engineering Change into the Product. Such request
will include a description of the proposed Engineering Change sufficient to
permit Flextronics to evaluate its feasibility, impacts, and cost. Flextronics'
evaluation shall be in writing and shall state the costs and time of
implementation and the impact on the manufacturing, delivery, schedule, and
pricing of the Product and shall be delivered to TheraSense within ten (10) days
of receiving the request. TheraSense shall have thirty (30) days after receipt
of Flextronics' evaluation to decide whether or not to implement the requested
Engineering Change. Flextronics will not be obligated to proceed with the
engineering change until the parties have agreed upon the changes to the
Product's Specifications, delivery, schedule and Product pricing and upon the
implementation costs to be borne by the TheraSense including, without
limitation, the cost of Inventory and Special Inventory on-hand and on-order
that becomes obsolete.

*** Confidential treatment requested

                                      -5-
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Flextronics will use best efforts to implement all TheraSense required changes
per TheraSense requests.

          5.2  Flextronics Requests.  If Flextronics desires to make any
               --------------------
Engineering Change (including manufacturing processes, raw materials and
suppliers thereof), it will notify TheraSense not less than six (6) months prior
to such change to enable TheraSense to determine conformity of the changed
Product with TheraSense's manufacturing requirements and obligations with
respect to regulatory authorities. If Flextronics changes the Product or process
to create non-conforming Product or Product which falls to conform to
TheraSense's regulatory constraints, further processing needs, or performance
standards for finished goods, then Flextronics agrees to continue to supply
unchanged Product for the duration of the Agreement or until TheraSense can
alter its process, standards for finished goods or take seek appropriate
regulatory approval to accommodate the changed Product or process. ECO
implementation shall otherwise follow the standard Flextronics procedure.

     6.   Purchase Price
          --------------

     TheraSense's target purchase price with respect to the Product shall be as
specified in Exhibit B.  The price for Products to be manufactured will be set
quarterly for the first year and semi-annually thereafter by reviewing actual
component and assembly costs at Flextronics and making adjustments based upon
the changes.  All prices quoted are exclusive of federal, state and local
excise, sales, use and similar taxes, and any duties, and TheraSense shall be
responsible for all such items.  Payment for any Products, Manufacturing
Services or other costs to be paid by TheraSense hereunder is due thirty (30)
days net form the date of the shipment therefor and shall be made in lawful U.S.
currency. TheraSense agrees to pay *** on all late payments. Furthermore, if
TheraSense is in arrears more than thirty (30) days for two (2) consecutive
months with respect to payments, Flextronics may require prepayment from
TheraSense or may delay shipments or suspend work until assurances of payment
satisfactory to Flextronics are received.

     7.   Delivery
          --------

          7.1  Purchases of Product made hereunder by Purchase Orders shall
initially be F.O.B. Seller's factory in Fremont, CA. During this initial period,
TheraSense will specify the carrier and shipments will be made freight collect.
TheraSense and Flextronics agree to establish a Kanban system whereby
Flextronics will keep an amount to be determined of finished product at it's
facility awaiting shipment to TheraSense customers. Upon completion of this,
payment terms will become five (5) days net from the date product is completed
and transferred into the Kanban. Such change will include a separate price to
cover freight charges paid by Seller and any other justifiable costs incurred by
Seller. Title and risk of loss of Product shall pass to TheraSense at the F.O.B.
point. Partial shipments, with TheraSense prior approval, will be accepted. A
certificate of conformance shall accompany each shipment made hereunder.

          7.2  Late Delivery.  Time is of the essence with regard to deliveries
               -------------
of Product purchased hereunder. Flextronics shall use its best efforts to
maintain 100% on-time delivery of Products. Flextronics shall notify TheraSense
as soon as practicable if for any reason Flextronics fails to comply, or
anticipates that it may fail to comply with the terms of this Agreement or of a

*** Confidential treatment requested

                                      -6-
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Purchase Order (including but not limited to failure to meet a delivery date
required in the Purchase Order or delivery of less than the required quantity of
Products). If Flextronics fails to deliver any Product (other than as a result
of a Force Majeure event as set forth in Section 20.1 herein), then, TheraSense
may request and Flextronics shall agree to work any necessary overtime at no
additional cost to TheraSense to minimize such delay, or TheraSense may request
Flextronics to ship the Product by premium transportation at no additional cost
to TheraSense and Flextronics will comply with such request.

          7.3  Delivery Documentation.  Flextronics shall include an invoice for
               ----------------------
every delivery of Products which includes the following information for every
unit of Product delivered; a complete noun description in the English language,
a statement as to the country of origin of the goods; TheraSense's Purchase
Order number, the value of the Products therein; Flextronics' identification
number, or in the absence of such number, the full address of Flextronics; and
the terms of sale.

     8.   Payments
          --------

          8.1  Invoice payment terms applicable to Purchase Orders issued
hereunder shall be net thirty (30) days FOB Flextronics. In addition to the
invoice documentation to accompany each delivery of Product, for payment
purposes, Flextronics shall issue an invoice directly to TheraSense upon Product
shipment. The parties will use reasonable commercial efforts to incorporate an
electronic data interchange process to allow for wire transfer of funds at that
time.

          8.2  Upon Flextronics' request at any time during the term of this
Agreement, Customer agrees to *** to minimize the financial risk to Flextronics
for its performance of Work under this Agreement. ***. The calculation shall be
based upon the purchase order. ***shall be determined mutually by Flextronics
and Customer. Flextronics will, in good faith, review Customer's ***. Customer
agrees to provide all necessary financial information required ***.

     9.   Warranty
          --------

          9.1  Flextronics warrants that the Product will be new, merchantable,
free from material defects in materials and workmanship and will conform to the
Specifications under normal and intended use for a period of (6) six months
after acceptance by TheraSense. Materials used in the Product are warranted to
the same extent that the original manufacturer warrants the materials. This
express limited warranty does not apply to (a) materials consigned or supplied
by TheraSense to Flextronics; (b) defects resulting from TheraSense's
Specifications or the design of the Products; or (c) Product that has been
abused, damaged, altered or misused by any person or entity after the title
passes to TheraSense. With respect to first articles, prototypes, pre-production
units, test units or other similar Products, Flextronics makes no
representations or warranties whatsoever.

*** Confidential treatment requested

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Notwithstanding anything else in this Agreement, Flextronics assumes no
liability for, or obligation related to, the performance, accuracy,
specifications, failure to meet specifications or defects of or due to tooling,
designs, or instructions produced or supplied by TheraSense and TheraSense shall
be liable for costs or expenses incurred by Flextronics related thereto. Upon
any failure of a Product to comply with the above warranty, Flextronics' sole
obligation, and TheraSense's sole remedy, is for Flextronics, at its option, to
promptly repair or replace such unit and return it to TheraSense freight pre-
pad. TheraSense shall return Products covered by the warranty freight pre-paid
after completing a failure report and obtaining a return material authorization
number from Flextronics to be displayed on the shipping container.

          9.2  Flextronics further represents and warrants that its supplying of
Product to TheraSense under this Agreement does not conflict with any other
agreement to which Flextronics is a party and, further, that the Product
supplied hereunder does not, to the best off Flextronics' knowledge, infringe
the proprietary rights of any third party.

          9.3  Flextronics further represents and warrants that it has, and
shall maintain during the term of this Agreement, adequate equipment and
facilities to guarantee sufficient manufacturing capacity to meet TheraSense's
demand for Product as represented in TheraSense's Forecast as described in
Section 3 of this Agreement.

          9.4  Flextronics has stated that its manufacturing facilities are ISO
9002 registered and Flextronics will use all commercially reasonable efforts to
assure that such facilities and any new Flextronics facilities used for the
production of Product will continue to be registered under ISO 9002 during the
term of this Agreement. "Registered" as used herein shall mean certified and
approved.

          9.5  Flextronics further warrants that title to all Products shipped
to TheraSense or drop shipped directly to TheraSense's customers pursuant to
this Agreement shall pass to TheraSense or a TheraSense customer, as the case
may be, free and clear of any liens, charges, encumbrances, restrictions or
rights created in, by or against the Products or against Flextronics, except any
Proprietary Rights of Flextronics identified in writing to TheraSense in the
Products, if any. Provided that TheraSense has paid all associated fees for the
Products, TheraSense and TheraSense's customers shall have quiet enjoyment of
the Products.

          9.6  Flextronics further warrants that: (a) it shall comply In all
material respects with all legal requirements in fulfilling its obligations
under this Agreement, including, but not limited to, lawful manufacturing
practices and its treatment of its personnel and compliance; (b) there are no
lawsuits, claims, suits, proceedings or investigations pending or, to
Flextronics' knowledge, threatened against or affecting Flextronics in respect
of its operations or processes used therein, nor to Flextronics' knowledge, is
there any basis for the same; and (c) there is no action, suit or proceeding
pending or, to Flextronics' knowledge, threatened which questions the legality
of the transactions contemplated by this Agreement. Flextronics warrants that it
owns, holds or possesses and shall maintain all material licenses, franchises,
permits, privileges, immunities, approvals and other authorizations from a
governmental body which are necessary to entitle it to carry on and conduct its
operations as contemplated herein.

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          9.7  Flextronics warrants that all equipment used in the manufacturing
and planning of TheraSense Products is Year 2000 compliant.

          9.8  OTHER THAN THE WARRANTEES IN THIS SECTION 9, FLEXTRONICS MAKES NO
OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR
IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION WITH CUSTOMER, AND
FLEXTRONICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR CONDITIONS OF OR
FITNESS FOR A PARTICULAR PURPOSE.

     10.  Regulatory Requirements
          -----------------------

     During the term of this Agreement Flextronics will:

          A.   Comply with the pertinent Quality System Regulations ("QSR") as
               such may be determined by the United States Department of Health
               and Human Services Food and Drug Administration and all
               applicable United States government regulatory requirements.

          B.   Submit to periodic quality audits; TheraSense's Quality Assurance
               department may, at its sole option, perform audits of
               Flextronics' compliance with Quality System Regulations, with the
               quality control requirements specified herein and attached hereto
               as Exhibit D, together with any other quality systems and
               specifications mutually agreed upon.  Flextronics acknowledges
               that the preceding sentence granting TheraSense certain audit
               rights in no way relieves Flextronics of any of its obligations
               under this Agreement, nor shall such provision require TheraSense
               to conduct any such audits.

               (1)  Any audits shall be conducted during normal business hours
                    after reasonable notice (a minimum of two weeks) to
                    Flextronics and not more frequently than once in any one
                    hundred twenty (120) day period.  Except that TheraSense may
                    conduct a limited audit in less than one hundred twenty
                    (120) days of a previous audit for the limited purpose of
                    reviewing any deficiencies discovered in a previous audit.

               (2)  Any out of compliance observations noted during these audits
                    must be corrected expeditiously.  Flextronics shall, within
                    thirty (30) days following receipt of an audit report that
                    recommends corrective actions, provide TheraSense with a
                    corrective action plan and schedule for carrying it out.

               (3)  Following a TheraSense quality audit, Flextronics will be
                    assigned an overall rating of acceptable, marginal or
                    unacceptable.  In the event Flextronics receives an
                    unacceptable rating TheraSense will re-audit Flextronics
                    within six (6) months.  ***

*** Confidential treatment requested

                                      -9-
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               (4)  Flextronics agrees to provide to TheraSense any observations
                    and corrective actions implemented as the result of any
                    audits conducted by the FDA.

               (5)  Flextronics shall have the right to refuse access to areas
                    where Flextronics customer confidentiality issues may arise.

     11.  Acceptance
          ----------

          11.1 Acceptance testing shall be performed by TheraSense in accordance
with the procedures agreed upon in writing by the parties and incorporated in
the Specifications. TheraSense shall notify Flextronics of any defects or non-
conformance as soon as reasonably possible after same are discovered by
TheraSense, and Flextronics shall have an opportunity to inspect and test the
Product claimed to be defective or non-conforming. Flextronics agrees to
promptly replace (at no additional charge to TheraSense) any Product supplied to
TheraSense hereunder which does not fully comply with the Specifications. Upon
the successful completion of Acceptance testing the Product will be considered
accepted. If within ten (10) business days after receipt TheraSense does not
reject the Product or notify Flextronics that it will reject them, then such
Product will be deemed accepted.

          11.2 Except as set forth in Section 11.1, TheraSense shall not be
obligated to accept or pay for any Product that does not comply with the
Specifications or any rules or regulations referred to above. TheraSense's
failure to inspect, test, or reject any particular shipment shall not constitute
a waiver by TheraSense of any of its rights to inspect and reject any subsequent
shipment, or of Flextronics' responsibilities to provide subsequent shipments,
of Product in accordance with the Specifications. With the exception of
TheraSense's manufacturing processes required to use the Product, Flextronics
shall not be liable for Product altered outside of its factory by someone other
than Flextronics or for Product subjected, by an entity other than Flextronics,
to misuse, abuse, improper alteration, accident or negligence in use, storage,
transportation or handling. Notwithstanding the above, Flextronics shall not be
responsible in any way for modifications to the Product made by TheraSense
during TheraSense's subsequent manufacturing process.

     12.  Limitation of Liability
          -----------------------

     EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT AND FOR INTENTIONAL ACTS OR
GROSS NEGLIGENCE, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE DESIGN, MANUFACTURE,
PACKAGING, DELIVERY, STORAGE OR USE OF THE PRODUCT.

                                      -10-
<PAGE>

     13.  Intellectual Property Indemnification
          -------------------------------------

          13.1   Indemnification by TheraSense.  Flextronics agrees to notify
                 -----------------------------
TheraSense promptly of all claims actions, whether actual or potential, alleging
that the Product infringes on the intellectual property rights of any third
party (a "Claim"). TheraSense shall defend and indemnify Flextronics against any
Claim and will have the sole expense and control of the defense of any Claim.
Flextronics shall give TheraSense, at TheraSense's expense, all assistance
reasonably requested in defending or settling a Claim. Notwithstanding the
foregoing, TheraSense shall not be required to defend any Claim based upon, (i)
the use of the Product by Flextronics as part of any procedure or in testing or
experimenting other than with the prior written agreement of TheraSense.

          13.2   THIS SECTION 13 STATES THE PARTIES' TOTAL RESPONSIBILITIES,
LIABILITIES, AND REMEDIES TO ONE ANOTHER FOR ANY ACTUAL OR ALLEGED INFRINGEMENT
OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD
PARTIES.

     14.  General Indemnity
          -----------------

          14.1   Indemnification by Flextronics. Flextronics shall hold harmless
                 ------------------------------
and indemnify TheraSense, its directors, officers, agents, and employees, from
any and all third party claims, suits, losses and expenses, including attorneys
fees, provided that any such claim, suit, loss or expense is attributable to
bodily injury, sickness, disease, or death, or injury to property which is
caused by Flextronics' failure to comply with federal, state or local law
including but not limited to the Civil Rights Act of 1964, 42 U.S.C. (S)2000e
et. seq. ("Title VII"), the Age Discrimination in Employment Act, 29 U.S.C.
(S)621 et. seq., the American with Disabilities Act, the Civil Rights Act of
1966, the Civil Rights Act of 1991, Executive order 11246, as amended, and any
other statute, regulation or ordinance prohibiting illegal discrimination or
retaliation. Except as otherwise provided in this Agreement, Flextronics shall
defend, indemnify and hold TheraSense, its, directors, officers, employees, and
agents harmless from and against any and all claims, injuries, liabilities,
judgments, and damages, including but not limited to property damage, personal
injury and death, including all reasonable costs and expenses (including
attorneys fees), as a result, whether direct or indirect, of any injury or
damage to a third party caused or alleged to be caused on account of
Flextronics' failure to meet manufacturing workmanship Specifications.

          14.2   Indemnification by TheraSense.  Except as otherwise provided in
                 -----------------------------
this Agreement, TheraSense shall defend, idemnify and hold harmless Flextronics
from and against any and all claims, injuries, liabilities, judgments, and
damages, including but not limited to property damage, personal injury and
death, including all reasonable costs and expenses (including attorney fees), as
a result, whether direct or indirect, of any injury or damage to a third party
caused or alleged to be caused on account of any alleged defect of the Product,
other than a defect related to workmanship.

          14.3   Limits to Indemnification.  These obligations to defend and
                 -------------------------
indemnify (in 14.1, 14.2 & 14.3) do not extend to claims, injuries or damages to
the extent resulting from the negligent or intentional conduct, act, omission or
obligation of the party seeking indemnification.

                                      -11-
<PAGE>

          14.4  Cooperation. The indemnified party agrees to cooperate with the
                -----------
indemnifying party in the defense of any such claim, lawsuit or action and to
make available to each other at the indemnifying party's expense such of the
documents, employees and expertise as are necessary in defense of such action.
Each party agrees to notify the other of such a claim or suit promptly upon
learning that same is within the scope of the indemnification set forth herein.
The Indemnifying party shall control the management of any such claim or suit.

     15.  Term and Termination
          --------------------

          15.1  Term. The term of this Agreement shall commence on the
                ----
Effective Date and shall continue for five (5) years thereafter (the "Initial
Term") unless earlier terminated as provided in Section 15.2 or 20.1. After the
expiration of the Initial Term hereunder (unless this Agreement has been earlier
terminated) this Agreement shall be automatically renewed for separate but
successive one-year terms (each a "Renewal Term").

          15.2  Termination. This Agreement may be terminated by either party:
                -----------
(a) for any reason upon a one (1) year written notice to the other, or (b) if
the other party defaults in any payment to the terminating party and such
default continues for a period of fifteen (15) days after the delivery of
written notice thereof by the non-defaulting party to the other party, (c) if
the other party defaults in the performance of any other material term or
condition of this Agreement and such default continues for a period of sixty
(60) days after the delivery of written notice thereof by the terminating party
to the other party, or (d) commences a voluntary or has involuntary proceeding
commenced under any federal or state, law or similar law and if involuntary,
such is not set aside within sixty (60) days of its being commenced; (ii)
appoints or is appointed a receiver, trustee or similar official or a general
assignment for the benefit of such party's creditors; (iii) proceeds to
dissolve, wind up or liquidate; or (iv) becomes unable to pay its debts either
because it is subject to a suspension of payments order, bankruptcy, or other
insolvency proceeding, Pursuant to Section 20.1 termination of this Agreement
for any reason shall not affect the obligations of either party that exist as of
the date of termination. Upon termination under Section 15.2, TheraSense shall
be responsible for the finished Products, Inventory, and Special Inventory in
existence at the date of termination or expiration in the same mariner as for
cancellations as set forth in Section 4.5. Notwithstanding termination or
expiration of this Agreement, Sections 9, 12, 15, and 20 shall survive said
termination or expiration.

          15.3  After following the dispute resolution procedure set forth in
Section 19, TheraSense may following the initial twelve (12) months of this
Agreement and upon six (6) months notice, terminate this Agreement for
convenience without liability except for the raw materials inventory, work in
process, unamortized Flextronics Development Funding and production special
tooling charges and Product on order, in transit or received, but not paid for
as of the date of termination.

     16.  Raw Materials Inventory
          -----------------------

          In recognition of TheraSense's desire to have a ready supply of
Products, Flextronics agrees to maintain a raw materials inventory at its
facility (excluding solvents, water and certain other processing aids that are
commonly available) in an amount equivalent to ***. Such inventory will be
modified from time to time based upon TheraSense's actual usage ***. All
materials for TheraSense shall be cycled through this inventory on an FIFO
basis. TheraSense's obligation and sole liability for this service shall be to
purchase any such inventory at Flextronics' cost plus associated overhead
expense upon termination or expiration of this Agreement or cancellation of any
purchase order per 4.3, and provided Flextronics is not able to otherwise use
such inventory. Flextronics shall use reasonable commercial efforts to eliminate
or reduce this inventory at the approaching expiration of this Agreement.

*** Confidential treatment requested

                                      -12-
<PAGE>

     17.  Confidentiality
          ---------------

          17.1  Flextronics and TheraSense both agree that in the performance of
this contract there may be the need for one or the other party to disclose its
confidential information to the other.

          17.2  "Confidential Information" shall include information supplied to
the receiving party in written form and clearly marked "Confidential" and
information disclosed orally, provided that the disclosing party provides within
thirty (30) days of the first disclosure a document that identifies the topic of
the information considered confidential and states that it is "Confidential."

          17.3  Each party agrees to keep Confidential Information transferred
to it in strict confidence and not to disclose or otherwise use such Information
for any purpose other than determining conformance to Specifications, processing
Products into TheraSense's products or otherwise fulfilling its obligations
under this Agreement without the prior written consent of the other party. All
such documents provided by the disclosing party containing Confidential
Information shall at either party's request be returned to it except that one
(1) copy shall be retained by counsel for that party to ensure compliance
hereunder.

          17.4  The above notwithstanding, each party's obligation of the
confidence with respect to the Confidential Information disclosed hereunder,
shall not include:

                (1)  Information which, at the time of disclosure to the
receiving party is published, known publicly or is otherwise in the public
domain;

                (2)  Information which, after disclosure to the receiving party
is published or becomes known publicly or otherwise becomes part of the public
domain, through no fault of the receiving party;

                (3)  Information, which, prior to the time of disclosure to the
receiving party, was known to the receiving party, as evidenced by its written
records;

                (4)  Information which has been or is disclosed to the receiving
party in good faith by a third party who was not, or is not, under any
obligation of confidence or secrecy to the receiving party at the time said
third party discloses to the receiving party; and

                (5)  Information which is independently developed by or on
behalf of the receiving party, without reliance on the Information received
hereunder.

                                      -13-
<PAGE>

          17.5  The above provisions notwithstanding, each party agrees to keep
in strict confidence and not to disclose the identity, interest and
participation of the other party in the work or evaluation and the relationship
of the parties hereunder except to the extent as required by law.

          17.6  Each party represents that it is under no obligation to any
third party that would interfere with its disclosing the above-described
Information to the other party and further, that any Information which it
transmits or otherwise discloses to the other party is not Information with
respect to which that party is under any obligation to keep confidential or
which that party knows to be the proprietary property of any third party.

          17.7  Except as specifically provided in this Agreement, no right to
use any Information disclosed hereunder, either express or implied, is granted
by either party.

          17.9  The obligations of confidentiality and nonuse set forth herein
shall remain in effect for a period of five (5) years after the expiration of
this Agreement or any extension of it.

          17.10 Flextronics shall not issue any publicity, news release,
technical article or other public announcement relating to this Agreement and
the products or services of TheraSense without, in any case, obtaining the prior
written consent of TheraSense.

     18.  Patents and Trademarks
          ----------------------

          18.1  It is agreed that all patentable inventions made, conceived or
acquired by TheraSense relating to the Product will be the exclusive property of
TheraSense. TheraSense will pay all expenses relating to the securing and
maintaining of appropriate patent protection with respect to such patentable
inventions. It shall be in the sole discretion of TheraSense to determine what
patent protection, if any, on such invention should be sought and/or maintained.
TheraSense shall grant to Flextronics a non-exclusive, royalty-free license,
without the right to sublicense, under such patents, to make, use and sell
products not used in the medical industry, using relevant technology, which
license shall expire upon termination or expiration of this Agreement.

     19.  Disputes
          --------

     The Director of Purchasing and Flextronics' Business Development
representative shall initially review any and all disputes between the parties
relating to this Agreement. The two individuals shall meet and conduct good
faith discussions to attempt to resolve the dispute. If they are unsuccessful,
review shall be escalated to the TheraSense Director of Purchasing and
Flextronics' Vice President of Marketing, who shall conduct a similar good faith
meeting. If still unsuccessful after a reasonable time, the matter will be
escalated to the TheraSense Vice President of Operations and the President of
Flextronics for a good faith meeting to attempt to resolve the dispute. If
settlement has not been reached thereafter, then the dispute shall be settled by
binding arbitration. Such arbitration shall be conducted in San Francisco,
California in accordance with the then current rules of the American Arbitration
Association with a panel of three arbitrators. Each party shall choose one
member of the panel, and both shall agree on the third member of the panel. The
arbitrators shall be selected from the National Panel of Arbitrators of the
American Arbitration Association. Reasonable discovery as determined by the
arbitrators shall apply to the arbitration proceeding. The laws of the State of
California shall apply to the arbitration proceedings. Judgment

                                      -14-
<PAGE>

upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The prevailing party, as determined by the arbitration
panel, shall have its arbitration costs and reasonable attorney fees paid by the
other party.

     20.  General
          -------

          20.1  Force Majeure. Neither party will be deemed in default of this
                -------------
Agreement to the extent that performance of its obligations or attempts to cure
any breach are delayed or prevented by reason of a Force Majeure, provided that
such party gives the other party written notice thereof promptly and, in any
event, within ten (10) days of discovery thereof and uses its commercially
reasonable efforts to continue to so perform or cure. In the event of such a
Force Majeure, the time for performance or cure will be extended for a period
equal to the duration of the Force Majeure, but in no event more than sixty (60)
calendar days.

          20.2  Assignment. The rights and liabilities of the parties hereto
                ----------
will bind and inure to the benefit to their respective successors, executors and
administrators, as the case may be; provided that, as TheraSense has
specifically contracted for Flextronics' services, Flextronics may not assign or
delegate its obligations, other than as specified herein, under this Agreement
either in whole or in part, without the prior written consent of TheraSense. Any
attempted assignment in violation of the provisions of this Section 20.2 will be
void.

          20.3  Severability. If for any reason a court of competent
                ------------
jurisdiction finds any provision of this Agreement, or portion thereof, to be
unenforceable, that provision of this Agreement shall be enforced to the maximum
extent permissible so as to effect the intent of the parties, and the remainder
of this Agreement shall continue if full force and effect.

          20.4  No Waiver. All rights and remedies conferred under this
                ---------
Agreement or by any other instrument or law shall be cumulative, and may be
exercised singularly or concurrently. Failure by either party to enforce any
provision of this Agreement shall not be deemed a waiver of future enforcement
of that or any other provision.

          20.5  Notices. All notices required or permitted under this Agreement
                -------
will be in writing, will reference this Agreement and will be deemed given when:
(i) delivered personally (ii) when sent by confirmed telex or facsimile; (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) one (1) day after deposit with a
commercial overnight carrier, with written verification of receipt. All
communications will be sent to the addresses set forth below to or such other
address as may be designated by a party by giving written notice to the other
party pursuant to this Section 20.5:

                TheraSense, Inc.                  Flextronics, International
                1360 South Loop Road              2090 Fortune Drive
                Alameda CA 94502                  San Jose CA 95131
                Attn.: John Purlee                Attn-: Greg Keese
                Director of Purchasing            Director Business Development

                                      -15-
<PAGE>

          20.6  Compliance with Laws and Regulations. Flextronics and TheraSense
                ------------------------------------
agree to comply with all Federal, State and local laws and regulations that are
applicable to the Products in the Territory in which the Products are intended
for use.

          20.7  Governing Law. This Agreement shall be governed by and construed
                -------------
in accordance with the laws of the United States and the State of California, as
applied to agreements entered into and to be performed entirely within
California between California residents excluding its choice of law principals.
Any and all disputes between the parties relating in any way to the entering
into of this Agreement and/or the validity, construction, meaning,
enforceability, or performing of this Agreement or any of its provisions, or the
intent of its provisions or any dispute relating to patent validity or
infringement arising under this Agreement shall be settled by arbitration as
provided in Section 17 hereof.

          20.8  Interpretation. This Agreement will be fairly interpreted in
                --------------
accordance with its terms and without any strict construction in favor of or
against either party. The headings and captions are included for reference
purposes only and do not affect the interpretation of the provisions hereof.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original but all of which shall be deemed to constitute only
one Agreement. When used herein, the word "including" will not be construed as
limiting. When the application warrants, the term "TheraSense" shall mean
"TheraSense and/or its authorized subcontractors" and the term "Flextronics"
shall mean "Flextronics or its authorized subcontractors".

          20.9  Status. The relationship between Flextronics and TheraSense is
                ------
that of independent contractors. Neither is the legal representative, agent,
partner, joint venturer or employee of the other for any purpose whatsoever, and
has no right or authority to create any obligations of any kind or to make any
representations or warranties, whether express or implied, in respect of the
other or to bind the other in any respect whatsoever. This agreement shall be
deemed to have been drafted by both parties.

          20.10 Reports. Each month during the term of this Agreement,
                -------
Flextronics shall provide the TheraSense buyer with a report of the deliveries
made that month, cumulative deliveries to date, and amount of raw materials
available in inventory.

          20.11 Complete Agreement. This Agreement, including all Exhibits and
                ------------------
any Purchase Order(s) issued hereunder, constitute the entire Agreement between
the parties in connection with the subject matter hereof, and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, between the parties. In the event of a conflict, this Agreement shall
take precedence over the preprinted terms and conditions on the reverse side of
TheraSense's Purchase Order or any acknowledgment of Flextronics. No amendment
to or modification of this Agreement will be binding unless in writing and
signed by a duly authorized representative of both parties.

                                      -16-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first written above.

TheraSense, Inc.                        Flextronics International USA, Inc.

By: /s/ W. Mark Lortz                   By: /s/ illegible signature
    ----------------------------            ----------------------------

Name: W. Mark Lortz                     Name: __________________________
     ---------------------------

Title: President & CEO                  Title: _________________________
       -------------------------

Date: Dec. 7, 1999                      Date: __________________________
      --------------------------

                                      -17-
<PAGE>

                                   EXHIBIT A

                     PRODUCT AND MANUFACTURING DEVELOPMENT

     In support of TheraSense's development of the Freestyle and Messenger
System Flextronics will provide the following services in accordance with the
terms outlined below:

                                                          Projected
Service                      Terms                        Expenses
--------------------------   ---------------------------  ----------------------
PCB Layout                   Net thirty (30) days from   ***
                             invoice

RF Design Services (*)       *** of total expenses Net    ***
                             30 *** (as described below)

Digital Design
(Including Test Engineering
And other engineering
Services)
        Digital Design       *** of total expenses Net    ***
                             30 *** (as described below)

        Test Engineering     *** of total expenses Net    ***
                             30 *** (as described below)

Mechanical Design            *** of total expenses Net    ***
                             30 *** (as described below)

Test Equipment Development
& Procurement
 . Std. Material O/H &
  Markup                                                  ***
 . Equipment Capital Cost
  100% amortized. (Cost to
  be preapproved by
  TheraSense)                                             ***
 . Total Amortized amount
  not to exceed                                           ***

Prototype Assembly (*)
        Freestyle            1000 units @ *** unit
        Messenger            1000 units @ *** unit

(*) Flextronics to provide prototype labor and overhead *** as long as
TheraSense utilizes Flextronics' RF design services in the development of these
products. Flextronics will provide ***.

Flextronics will provide TheraSense a quarterly summary of the total expenses
incurred for the project and the balance in the deferred expenses. Flextronics
will add a *** cost of money factor *** on the deferred expense balance and
recover *** deferred expense balance over the first two years of production and
sale by TheraSense of first *** systems manufactured which ever occurs first. In
the event TheraSense sales volume does not reach

*** Confidential treatment requested

<PAGE>

*** units in the first two years of manufacturing the un-amortized balance
of deferred expenses will be converted to a loan, and repaid over a period not
to exceed 15 months for the date the loan is originated.

In addition to the services and manufacturing support Flextronics will provide
in the development of the colossus and messenger products, Flextronics will also
work with TheraSense to Co-develop the information management interfaces to
process manufacturing production releases and sales order/TheraSense
distribution processing.

*** Confidential treatment requested

                                      -2-
<PAGE>

                                   EXHIBIT B

                                PRODUCT PRICING

     Meter Assembly target price based upon the following cost data supplied by
Flextronics.  This cost does not include any ancillary products or packaging of
any type.  The cost will be revised as these items are identified and added to
the cost of the product.

     Meter Only              ***               ***           ***
--------------------------------------------------------------------------------
 Product Costs               ***               ***           ***

 Material Cost               ***               ***           ***
 Attrition/Other
 Subtotal Material

 Material Overhead           ***               ***           ***
 Freight
 Total Material O/H,
 Other

 Direct Labor (PCBA)         ***               ***           ***
 Direct Labor Overhead
 Subtotal Labor/Overhead

 Test Labor                  ***               ***           ***
 Test Labor Overhead
 Subtotal Test/Overhead

 Sales, G&A                  ***               ***           ***
 Profit

 Final Selling Price         ***               ***           ***
--------------------------------------------------------------------------------

*** Confidential treatment requested
<PAGE>

                                   EXHIBIT C

                     PRODUCT DEFINITION AND SPECIFICATIONS

                          (METER ASSEMBLY, FREESTYLE)

                     Exploded View of FreeStyle Meter

<PAGE>

                    Graphic of a cardboard box containing
                       pre-packaged FreeStyle System Kits

<PAGE>

Exploded View of various components of the FreeStyle system kit<PAGE>

                                                                   EXHIBIT 10.10

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

                   ASSIGNMENT OF PATENT RIGHTS AND TECHNOLOGY

          This Assignment is entered into this 1st day of August, 1991, by and
between the Board of Regents of The University of Texas System, an agency of the
State of Texas (hereinafter "Assignor" which term includes successors and
assigns), Dr. Adam Heller, an individual residing at 5317 Valburn Circle,
Austin, Texas 78731 (hereinafter "Heller"), and E. Heller and Company, a Texas
Corporation, having its principal place of business at 5317 Valburn Circle,
Austin, Texas 78731 (hereinafter "Assignee," which term includes successors and
assigns).

                              W I T N E S S E T H:

          WHEREAS, by virtue of two assignments one of which was executed by
Heller and Brian A. Gregg (coinventor) on August 28, 1989, and the second of
which was executed by Heller and Ruben Maidan (coinventor) on March 22, 1991,
which are attached hereto as Exhibit "A", Assignor is the owner of all right,
title, and interest in and to certain Patent Rights (as hereinafter defined)
"Enzyme Electrodes" and "Interferant Eliminating Biosensors"; and

          WHEREAS, Assignor is the owner of all right, title, and interest in
and to certain Technology (as hereinafter defined) and Know-How (as hereinafter
defined) relating to "Enzyme Electrodes", "Interferant Eliminating Biosensors",
and "Preactivated Interferant Eliminating Biosensors"; and

          WHEREAS, under the Rules and Regulations promulgated by the Assignor,
Heller has a partial interest in fifty percent (50%) of the royalties received
by Assignor from licensing or other disposition of the Patent Rights, the
Technology, and the Know-How, after costs of licensing and obtaining a patent or
other protection have first been recaptured by Assignor (hereinafter the "Heller
Interest") and Heller has assigned such interest to Assignee; and,

          WHEREAS, Heller desires to confirm the assignment of the Heller
Interest to Assignee; and,

          WHEREAS, Assignor and Heller entered into a letter agreement dated
August 1, 1991, attached hereto as Exhibit "B", and desire to confirm that
agreement; and,

          WHEREAS, Assignee desires to acquire all of Assignor's right, title,
and interest in, to, and under the Patent Rights, the Technology, and the
Know-How, and desires to confirm the assignment of the Heller Interest to
Assignee; and,

          WHEREAS, Assignor desires to assign, sell, and convey the entire
right, title, and interest of Assignor in the Patent Rights, the Technology, and
the Know-How to Assignee, its successors and assigns, in exchange for the
consideration hereinafter set forth; and,

          NOW, THEREFORE, in consideration of the covenants and agreements
herein contained and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

     1.1  Technology. The term "Technology" as used herein shall mean all
          ----------
inventions, patents, patent applications, and rights listed on Exhibits "C" and
"D".

     1.2  Patent Rights. The term "Patent Rights" as used herein shall mean all
          -------------
patent applications listed on Exhibit "C" or patents that issue thereon, and any
subject matter that may in the future be included in a continuation,
continuation-in-part, or divisional, to these patent applications, which is
disclosed in writing to Assignor and which names Heller as either sole or joint
inventor including an invention disclosure entitled "Preactivated Interferant
Eliminating Biosensors" attached hereto as Exhibit "D".

     1.3  Know-How. The term "Know-How" as used herein shall mean existing
          --------
technology not claimed in the Patent Rights, but nevertheless proprietary,
valuable trade secrets, inventions, processes, procedures, methods, product
codes, formulas, techniques, designs, drawings, technical and clinical data, and
other valuable and technical information relating to "Enzyme Electrodes",
"Interferant Eliminating Biosensors", and "Preactivated Interferant Eliminating
Biosensors".

     1.4  Licensed Products. The term "Licensed Products" as used herein shall
          -----------------
mean products covered by one or more claims of the Patent Rights or produced by
methods covered by one or more claims of such Patent Rights or utilizing or
incorporating Technology or Know-How.

     1.5  Licensed Processes. The term "Licensed Processes" as used herein shall
          ------------------
mean all methods and procedures covered by one or more claims of the Patent
Rights or utilizing or incorporating Technology or Know-How for the manufacture
or use of Licensed Products.

     1.6  Income. The term "Income" as used herein shall mean all income
          ------
received by Assignee from the sale, licensing, or other transfer of the Patent
Rights, the Technology, or the Know-How to third parties (excluding any
reimbursement to Assignee by a third party of the actual out-of-pocket legal
expenses and costs Assignee has incurred for filing, prosecution and maintenance
of any issued patent and/or patent application covered under Patent Rights,
documentation of which shall be provided in Assignee's semi-annual written
reports).

                                  ARTICLE II

                                  ASSIGNMENT

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

                                      -2-
<PAGE>

     2.2  Assignment by Heller. Heller hereby confirms the assignment, sale, and
          --------------------
conveyance to Assignee, its successors and assigns, of the entire right, title,
and interest throughout the world in and to the Heller Interest.

                                  ARTICLE III

                                 CONSIDERATION

     3.1  License to Third Party. Assignor, Heller, and Assignee agree that, in
          ----------------------
the event the Patent Rights, the Technology, and/or the Know-How are sold,
licensed, or otherwise disposed of for value to a third party or parties,
Assignor shall receive twenty percent (20%) of all consideration derived from
such sale, license, or other disposition, subject to retention by Assignee of
its first thirty thousand dollars ($30,000) in gross income or other
consideration. Accordingly, Assignee agrees to pay to Assignor twenty percent
(20%) of all consideration received from a third party or third parties beyond
the first thirty thousand dollars ($30,000) in gross income or other
consideration. In the event that Assignee engages in litigation and/or
settlement negotiations to protect Patent Rights, twenty percent (20%) of any
recovery by Assignee shall be paid to Assignor, provided, however, that Assignee
shall be entitled to deduct reasonable attorneys' fees and court costs incurred
in such litigation and/or settlement negotiations. Such payment to Assignor
shall be made within thirty (30) days following the expiration of the calendar
quarter in which Assignee receives a payment. All payments shall be made to The
University of Texas at Austin at: The University of Texas at Austin, Office of
the Executive Vice President and Provost, Main Building 201, Austin, Texas
78712-1111, Attention: Patricia C. Ohlendorf.

     3.2  Manufacture and Sale of Licensed Products by Assignee. Should Assignee
          -----------------------------------------------------
elect to itself manufacture, sell, or otherwise dispose of for value Licensed
Products or Licensed Processes, Assignor and Assignee agree to negotiate the
compensation Assignee shall pay to Assignor. Assignee further agrees that the
compensation due Assignor shall be an amount representing the equivalent of what
Assignor reasonably believes it would have received as royalty, licensing fees,
and other compensation ("Compensation") had Assignor licensed or otherwise
disposed of for value the Technology, Patent Rights and Know How (hereafter
"Technology", for the purposes of this Paragraph 3.2) to a party other than
Assignee ("Third Party"). This equivalent amount shall be negotiated in good
faith by the parties, taking into account, but not limited to, the following:
(a) Compensation Assignee must pay to a Third Party for the use of comparable
Technology; (b) Compensation Assignee receives for its own license or other
disposal for value of the Technology to a Third Party; (c) The nature and scope
of the license or other disposal for value of the Technology by Assignor to a
Third Party, as exclusive or nonexclusive, restricted or nonrestricted in terms
of territory or with respect to whom the Licensed Products and/or Licensed
Processes may be sold; (d) Assignor's policies and procedures regarding the
licensing or other disposal for value of its intellectual property; (e) The
effect of the Technology in promoting the sales of other products of the Third
Party; (f) The duration of Technology related patents and term of any license;
(g) The established or projected profitability of the Licensed Products and
Licensed Processes; (h) The utility and advantages of the Licensed Products and
Licensed Processes over old modes or existing products or processes, if any,
that can be used for achieving similar results; (i) The portion of the profit or
the selling price of Licensed Products and Licensed Processes that may be
customary in the particular business or in comparable businesses which market
the Technology, if any, or similar Technology; (j) The portion of the profit
from the sale or other disposal for value of Licensed Products and Licensed
Processes that should be credited to the Technology as

                                      -3-
<PAGE>

distinguished from non-Technology related elements, such as business risks by
the Third Party and/or significant features or improvements to the Technology
added by the Third Party; and (k) The Compensation due Assignor had the
Technology been licensed pursuant to Paragraph 3.1. Any negotiating dispute
shall be subject to mediation as described in Article XI hereto. Payment by
Assignee to Assignor shall be made as described in Paragraph 3.1 above.

     3.3  Assignment Fee. Assignee shall pay to Assignor a fee of thirty
          --------------
thousand dollars ($30,000) by September 1, 1991.

                                   ARTICLE IV

                           BOOKS, RECORDS, AND REPORTS

     4.1  Books. Assignee shall maintain true and complete books of account
          -----
containing an accurate record of all data necessary for the proper computation
of income, royalty and other payments, and the calculation thereof, as well as
attorneys' fees and court costs. Assignor or its authorized representative shall
have the right to examine such books, under appropriate terms of confidentiality
with Assignee, at all reasonable times, upon ten (10) days prior written notice
for the sole purpose of verifying the accuracy of reports rendered by Assignee.
Such examination shall be made during normal business hours at Assignee's
principal place of business or such other location as Assignor and Assignee may
agree.

     4.2  Payments and Reports. Assignee shall submit to Assignor semi-annual
          --------------------
written reports covering that fiscal period of Assignee and accurately
identifying income and expenses in sufficient form and detail as to enable
Assignor to determine the income, royalties, or other payments due. Such reports
shall be due thirty (30) days following each semi-annual period. A report shall
be submitted, even if no income has been received or no royalties or other
payments are due during the fiscal quarters of that period, in accord with the
terms of Paragraph 3.1 herein. Reports shall be mailed to The University of
Texas at Austin at the address in Paragraph 3.1 herein.

     4.3  Commercialization Report. Assignee shall submit to Assignor, at the
          ------------------------
address listed in paragraph 3.1 herein, a written report by September 1 of each
year which details Assignee's commercialization efforts during the preceding
year with regard to Patent Rights, Technology, and Know-How.

                                   ARTICLE V

                                CONFIDENTIALITY

     5.1  Duty of Confidence. Assignor and Assignee each agree that all
          ------------------
information contained in documents marked "confidential" which are forwarded to
one by the other shall be received in strict confidence, used only for the
purposes of this Agreement, and not disclosed by the recipient party (except as
required by law or court order), its agents or employees without the prior
written consent of the other party, unless such information (a) was in the
public domain at the time of disclosure, (b) later became part of the public
domain through no act or omission of the recipient party, its employees, agents,
successors or assigns, (c) was lawfully disclosed to the recipient party

                                      -4-
<PAGE>

by a third party having the right to disclose it, (d) was already known by the
recipient party at the time of disclosure, (e) was independently developed, (f)
is required to be submitted to a government agency pursuant to any preexisting
obligation, or (g) must be disclosed under the Texas Open Records Act.

     5.2  Degree of Care. Each party's obligation of confidentiality hereunder
          --------------
shall be fulfilled by using at least the same degree of care with the other
party's confidential information as it uses to protect its own confidential
information. This obligation shall exist while this Agreement is in force.

                                  ARTICLE VI

                       CONSIDERATION RECEIVED BY HELLER

     6.1  Sufficiency of Consideration. Heller acknowledges that he has received
          ----------------------------
sufficient consideration for assigning his rights in the Patent Rights, the
Technology, and the Know-How hereunder from Assignee and no further
consideration shall be received by Heller from either Assignor or Assignee in
connection with this Assignment. Heller expressly waives his right to receive
any royalties or other benefits under the Rules and Regulations of the Board of
Regents of The University of Texas System relating to intellectual property
rights in the Patent Rights, the Technology, and the Know-How and acknowledges
that any such royalties or other benefits that would be due to Heller but for
this Agreement shall be and remain the property of The University of Texas at
Austin. Specifically: (a) as stated in Exhibit B hereto, Subsection (1), the
fifty percent of the investors' share of the $30,000 paid to The University of
Texas at Austin remaining after the deduction of an amount covering patent
expenses thus far paid by The University in regards to Patent Rights, shall be
shared with Heller's coinventors in the proportion each would receive were
Heller still included among the inventors who share in The University's income;
and (b) as stated in Exhibit B hereto, Subsection (7), the fifty percent of the
investors' share of any income paid to The University of Texas at Austin under
this Assignment shall be shared with Heller's coinventors in the proportion each
would receive were Heller still included among the inventors who share in The
University's income.

                                  ARTICLE VII

                             RESERVATION BY ASSIGNOR

     7.1  Reservation. Assignee and Heller acknowledge and agree to the
          -----------
reservation by Assignor for all components of The University of Texas System of
a *** nonexclusive license to use Patent Rights, Technology, and Know-How in
educational and research activities.

                                 ARTICLE VIII

                                REPRESENTATIONS

     8.1  Representation. The parties hereto represent and warrant that they
          --------------
have the right and authority to enter into this Assignment and that they have
not executed or entered into any other agreements inconsistent with the terms
and provisions hereof.

*** Confidential treatment requested

                                      -5-
<PAGE>

     8.2  Documents. Heller and Assignor covenant that Heller, Assignor, and
          ---------
their heirs, legal representatives, assigns, administrators, and executors,
will, at the expense of Assignee, its successors and assigns, execute all papers
and perform such other acts as may be reasonably necessary to give Assignee, its
successors and assigns, the full benefit of this Assignment.

                                  ARTICLE IX

                            USE OF NAME OR FACILITIES

     9.1  Name. Assignee shall not use the name of Assignor or The University of
          ----
Texas at Austin in any promotional material.

     9.2  Facilities. Heller acknowledges and agrees that any direct
          ----------
commercialization efforts with respect to Patent Rights, Technology, or Know-How
are his or Assignee's private endeavor and shall not be carried out using
facilities or other resources of Assignor or The University of Texas at Austin.
Assignee shall not use the facilities or other resources of Assignor or The
University of Texas at Austin.

                                   ARTICLE X

                                    BREACH

     10.1 Default. In the event that Assignee shall default in any of its
          -------
material obligations under this Assignment (including but not limited to the
payment of compensation to Assignor), Assignor may require the reconveyance of
the assigned intellectual property should Assignor give Assignee written notice
of default, and such default is not cured within ninety (90) days of Assignee's
receipt of such notice. Assignee further agrees to notify Assignor of any such
cure in writing sent to the address listed in Paragraph 3.1 herein, and shall
describe such cure to Assignor's satisfaction. Assignor's right to require
reconveyance hereunder shall not preclude Assignor from seeking or obtaining any
other remedy to which it may be entitled, at any time.

                                  ARTICLE XI

                                   MEDIATION

     11.1 Dispute Resolution. Any dispute arising under or related to this
          ------------------
Assignment which involves a question of fact may be submitted by either party
for mediation, if the parties are unable to resolve the dispute within a
reasonable time after written notice is sent by one party to the other of the
existence of such dispute. The institution of any mediation proceeding shall not
relieve Assignee of its compensation obligations described in Article III
herein, during the pendency of such proceeding.

                                      -6-
<PAGE>

                                  ARTICLE XII

                                 GOVERNING LAW

     12.1 Construction and Enforcement. This Assignment shall be construed and
          ----------------------------
enforced in accordance with the laws of the United States of America and of the
State of Texas.

                                 ARTICLE XIII

                            DISCLAIMER OF WARRANTY

     13.1 Specific Disclaimer. Assignor makes no representations other than
          -------------------
those expressly stated in this Assignment, and specifically, Assignor MAKES NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT THE TECHNOLOGY OR PATENT RIGHTS OR KNOW HOW WILL NOT INFRINGE
ANY PATENT OR OTHER PROPRIETARY RIGHT.

                                  ARTICLE XIV

                                INDEMNIFICATION

     14.1 Hold Harmless. Assignee shall hold harmless and indemnify Assignor,
          -------------
the University of Texas System, and The University of Texas at Austin, its
officers, employees and agents from and against any claims, demands, or causes
of action whatsoever, including without limitation those arising on account of
any injury or death of persons or damage to property caused by, or arising out
of, or resulting from, the exercise or practice of the Assignment granted
hereunder by Assignee or its officers, employees, agents or representatives.

                                  ARTICLE XV

                                  DISPOSITION

     15.1 Assignee may not assign or otherwise dispose of (except by license)
the Patent Rights and Technology without the prior written consent of Assignor.

                                      -7-
<PAGE>

         EXECUTED by the duly authorized representatives of the parties on the
date indicated below the signatures of the parties hereto.

ASSIGNOR:                                          HELLER
--------                                           ------
BOARD OF REGENTS OF THE
UNIVERSITY OF TEXAS SYSTEM

By: /s/ Hans Mark                              By: /s/ Adam Heller
    ------------------------------------           -----------------------------
Hans Mark                                           Adam Heller
Chancellor

Date:  May 15, 1992                            Date: ILLEGIBLE
      ----------------------------------             ---------------------------

APPROVED AS TO CONTENT:                        ASSIGNEE:
                                               --------
                                               E. HELLER AND COMPANY

By: /s/ G. J. Fonken                           By: /s/ Ephraim Heller
    ------------------------------------           -----------------------------
G. J. Fonken                                   (Print) Ephraim Heller
                                                       -------------------------
Executive Vice President and Provost           Title Illegible
                                               ---------------------------------
The University of Texas at Austin

Date:                                          Date:  ILLEGIBLE
      ----------------------------------             ---------------------------

APPROVED AS TO FORM:

By: /s/ Dudley R. Dobie, Jr.
    ------------------------------------
Dudley R. Dobie, Jr.
Office of General Counsel

Date: 5/11/92
      ----------------------------------
<PAGE>

THE STATE OF TEXAS

COUNTY OF TRAVIS

          BEFORE ME, the undersigned Notary Public, on this day personally
appeared Hans Mark, Chancellor for The University of Texas System, an agency of
the State of Texas, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this 15th day of May.

                                 /s/ Becky F. Boyer
                                 -----------------------------------------------
                                 Notary Public, State of Texas

(SEAL)                           My Commission Expires: 9/19/92
                                                        ------------------------

                                 /s/ Becky F. Boyer
                                     -------------------------------------------
                                 Typed or Printed Name of Notary
<PAGE>

THE STATE OF TEXAS

COUNTY OF TRAVIS

          BEFORE ME, the undersigned Notary Public, on this day personally
appeared Adam Heller of 5317 Valburn Circle, Austin, Texas, known to me to be
the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed.

          GIVEN UNDER MY HAND AND SEAL OF OFFICE this 17th day of April, 1992.

                                    /s/ Norma R. Horn
                                    --------------------------------------------
                                    Notary Public, State of Texas

(SEAL)                              My Commission Expires: 4/5/95
                                                           ---------------------

                                    /s/ Norma R. Horn
                                        ----------------------------------------
                                    Typed or Printed Name of Notary
<PAGE>

THE STATE OF TEXAS

COUNTY OF TRAVIS

         BEFORE ME, the undersigned Notary Public, on this day personally
appeared Ephraim Heller of E. Heller and Company, 5317 Valburn Circle, Austin,
Texas 78731, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this 17th day of April, 1992.

                                      /s/ Norma R. Horn
                                      ------------------------------------------
                                      Notary Public, State of Texas

(SEAL)                                My Commission Expires: 4/5/95
                                                             -------------------

                                      /s/ Norma R. Horn
                                      ------------------------------------------
                                      Typed or Printed Name of Notary
<PAGE>

                                    EXHIBIT A

                                                              FILE NO. UTSB: 413
                                                                          PATENT

                               A S S I G N M E N T
                               -------------------

         FOR GOOD AND VALUABLE CONSIDERATION, the receipt, sufficiency and
adequacy of which are hereby acknowledged, the undersigned, does hereby:

         SELL, ASSIGN AND TRANSFER to Board of Regents, The University of Texas
System (the "Assignee"), having a place of business at 201 West 7th Street,
Austin, Texas, 78701, the entire right, title and interest for the United States
and all foreign countries in and to any and all improvements which are disclosed
in the application for United States Letters Patent, Serial No. 389,226, which
                                                     ------------------
has been filed on August 2, 1989 and is entitled ENZYME ELECTRODES, such
                                                 ------ ----------
application and all divisional, continuing, substitute, renewal, reissue and all
other applications for patent which have been or shall be filed in the United
States and all foreign countries on any of such improvements; all original and
reissued patents which have been or shall be issued in the United States and all
foreign countries on such improvements; and specifically including the right to
file foreign applications under the provisions of any convention or treaty and
claim priority based on such application in the United States;

         AUTHORIZE AND REQUEST the issuing authority to issue any and all United
States and foreign patents granted on such improvements to the Assignee;

         WARRANT AND COVENANT that no assignment, grant, mortgage, license or
other agreement affecting the rights and property herein conveyed has been or
will be made to others by the undersigned, and that the full right to convey the
same as herein expressed is possessed by the undersigned;

         COVENANT, when requested and at the expense of the Assignee, to carry
out in good faith the intent and purpose of this assignment, the undersigned
will execute all divisional, continuing, substitute, renewal, reissue, and all
other patent applications on any and all such improvements; execute all rightful
oaths, declarations, assignments, powers of attorney and other papers;
communicate to the Assignee all facts known to the undersigned relating to such
improvements and the history thereof; and generally do everything possible which
the Assignee shall consider desirable for vesting title to such improvements in
the Assignee, and for securing, maintaining and enforcing proper patent
protection for such improvements;
<PAGE>

         TO BE BINDING on the heirs, assigns, representatives and successors of
the undersigned and extend to the successors, assigns and nominees of the
Assignee.

(Signature) /s/ Brian A. Gregg                Date August 28, 1989
            ---------------------------            -----------------------------
      Name: Brian A. Gregg

(Signature) /s/ Adam Heller                   Date August 28, 89
            ---------------------------            -----------------------------
      Name: Adam Heller

(Signature)                                   Date  Recorded Patent & Transfer
                                                    Office 9/28/89
            ___________________________            -----------------------------
      Name:

(Signature)                                   Date  /s/ ILLEGIBLE, Commissioner
                                                    of Patents
            ___________________________            -----------------------------
      Name:

STATE OF TEXAS                              )
                                            )     ss.
COUNTY OF TRAVIS                            )

         BEFORE ME, the undersigned authority, on this 28th day of August,
1989, personally appeared Brian A. Gregg and Adam Heller known to me to be the
persons whose names subscribed to the foregoing instrument and acknowledged to
me that they executed the same of their own free will for the purposes and
consideration therein expressed.

                                             /s/ Norma R. Horn
                                             -----------------------------------
                                             Notary or Consular Officer

[SEAL]

                             ARNOLD, WHITE & DURKEE

P. O. Box 4433                           2001 Jefferson Davis Highway, Suite 40,
Houston, Texas  77210                    Arlington, Virginia 22202

                                      -2-
<PAGE>

                               EXHIBIT A

                                                                       UTSB: 465
                                                                          PATENT

                              A S S I G N M E N T
                              - - - - - - - - - -

    FOR GOOD AND VALUABLE CONSIDERATION, the receipt, efficiency and adequacy
of which are hereby acknowledged, the undersigned, do hereby:
    SELL, ASSIGN AND TRANSFER to Board of Regents, The University of Texas
System (the "Assignee"), having a place of business at 201 West 7th Street,
Austin, Texas, 78701, the entire right, title and interest for the United States
and all foreign countries in and to any and all improvements which are disclosed
in the application for United States Letters Patent, Serial No. 07/664,054,
which has been filed on March 4, 1991, and is entitled INTERFERANT ELIMINATING
BIOSENSORS, such application and all divisional, continuing, substitute,
renewal, reissue and all other applications for patent which have been or shall
be filed in the United States and all foreign countries on any of such
improvements; all original and reissued patents which have been or shall be
issued in the United States and all foreign countries on such improvements; and
specifically including the right to file foreign applications under the
provisions of any convention or treaty and claim priority based on such
application in the United States;
    AUTHORIZE AND REQUEST the issuing authority to issue any and all United
States and foreign patents granted on such improvements to the Assignee;
    WARRANT AND COVENANT that no assignment, grant, mortgage, license or other
agreement affecting the rights and property herein conveyed has been or will be
made to others by the undersigned, and that the full right to convey the same as
herein expressed is possessed by the undersigned;
    COVENANT, when requested and at the expense of the Assignee, to carry out in
good faith the intent and purpose of this assignment, the undersigned will
execute all divisional, continuing, substitute, renewal, reissue, and all other
patent applications on any and all such improvements; execute all rightful
oaths, declarations, assignments, powers of attorney and other papers;
communicate to the Assignee all facts known to the undersigned relating to such
improvements and the history thereof; and generally do everything possible which
the Assignee shall consider desirable for vesting title to such improvements in
the Assignee, and for securing, maintaining an enforcing proper patent
protection for such improvements;
    TO BE BINDING on the heirs, assigns, representatives and successors of the
undersigned and extend to the successors, assigns and nominees of the Assignee.

(Signature)  /s/ Adam Heller                 Date  March 22, 1991
           ________________________________       ____________________________
      Name:      Adam Heller

(Signature)  /s/ Ruben Maidan                Date  March 22, 1991
           ________________________________       ____________________________
      Name:      Ruben Maidan

STATE OF TEXAS     )
                   ) ss.
COUNTY OF TRAVIS   )
          _________

    BEFORE ME, the undersigned authority, on this 22nd day of March, 1991,
personally appeared ADAM HELLER and RUBEN MAIDAN, known to me to be the persons
whose names are subscribed to the foregoing instrument and acknowledged to me
that they executed the same of their own free will for the purposes and
consideration therein expressed.

                                              /s/ Constance J. Hannan
                                              ________________________________
                                              Notary of Consular Officer
                                              Constance J. Hannan
                                              My commission expires 4/11/93

[SEAL]

                            ARNOLD, WHITE & DURKEE

  P.O. Box 4433                         2001 Jefferson Davis Hwy., Ste. 401
  Houston, Texas  77210                 Arlington, Virginia  22202
<PAGE>

                                   EXHIBIT B

August 1, 1991

Dr. Adam Heller
Department of Chemical Engineering
CPE 4.450

Re:      UTSB:413 - "Enzyme Electrodes"
         UTSB:465 - "Interferant Eliminating Biosensors"

Dear Dr. Heller:

         I write to followup our previous communications regarding your request
that The University exclusively license or release to you the inventions
entitled UTSB:413 and UTSB:465, which you co-invented. I am setting out below
conditions under which The University will release and/or assign to you, as
appropriate, its intellectual property rights in the subject matter presently
described in patent applications UTSB:413 and UTSB:465, and any subject matter
that may in the future be included in a continuation, continuation-in-part, or
divisional, to these patent applications. These conditions are consistent with
similar arrangements into which The University has entered:

         (1)      You (or your company) will pay The University a nonrefundable
                  fee of Thirty Thousand Dollars ($30,000) by September 1, 1991.
                  These funds shall be used by The University to pay patent
                  expenses that we have thus far incurred on these cases. In the
                  unlikely event that funds remain after deduction of those
                  expenses, we shall share with your coinventors the proportion
                  of the fifty percent (50%) inventors' share that each would
                  receive were you still included among the inventors who share
                  in The University's income;

         (2)      Effective August 1, 1991, you (or your company) shall assume
                  all financial and decision making responsibility for
                  maintenance and prosecution of these patent applications and
                  any patents that issue, including foreign counterparts. The
                  University shall inform Arnold, White & Durkee of this shift
                  in responsibility. Should you wish to have the cases
                  transferred from Arnold, White & Durkee to your own attorney,
                  The University will cooperate in this transfer subject to
                  reimbursement of any associated expenses above $300.00;

         (3)      You (and your company) agree to, and acknowledge, reservation
                  by The University of Texas System for itself and its component
                  institutions of a royalty-free, nonexclusive license to use
                  the inventions in educational and research activities;

         (4)      Any direct commercialization efforts regarding these
                  inventions will be your (or your company's) private endeavor
                  and cannot be carried out using University facilities or other
                  resources;

         (5)      In the event the inventions are commercialized, twenty percent
                  (20%) of any royalties or other income that you (or your
                  company) receive from such commercialization shall be paid to
                  The University as royalty after the total gross income
                  received by you (or your company) reaches Thirty Thousand
                  Dollars ($30,000);

<PAGE>

Dr. Adam Heller
August 1, 1991
Page 2

         (6)      You will inform this office in writing by September 1st of
                  each year of any commercialization efforts made regarding the
                  inventions during the previous year. At the time any royalty
                  payments shall become due to The University, they shall be
                  paid on a quarterly basis; and

         (7)      You acknowledge that you shall not receive any portion of the
                  inventors' share of income which The University may receive
                  from commercialization of these inventions. Your coinventors
                  will receive from The University the proportion of the
                  inventors' share that they would have received were you still
                  going to receive a portion of such funds.

         It is our intent to include in this release/assignment the disclosure
that you recently made of an invention entitled "Preactivated Interferant
Eliminating Biosensors." However, any future inventions, other than those that
can be filed as continuations or continuations-in-part on the existing
applications, cannot be included in this release/assignment. All such future
inventions are subject to individual disclosure and review in accordance with
our usual procedures. At such time we will give fair consideration to any
request by you that an invention be released to you.

         After careful consideration, I have decided that these terms are
considered final by The University. If you agree to them, please sign in the
space indicated below on both copies and return one to me. We shall then
consider the terms effective and operational although formal assignment
documents for the two pending patent applications will need to be prepared and
executed. We will ask The University of Texas System to prepare these documents
upon receipt of an executed copy of this letter.

                                                Sincerely yours,

                                                /s/ G.J. Fonken
                                                G.J. Fonken
GJF:cm

cc:      Associate Vice President Patricia C. Ohlendorf
         Dean Herbert H. Woodson
         Associate Dean Dale E. Klein
         Professor Thomas Edgar
         Mr. Dudley R. Dobie, Jr.
         Ms. Paulette Braeutigam
         Dr. Brian A. Gregg
         Dr. Ruben Maiden

/s/ Adam Heller
----------------------------------------------
Dr. Adam Heller

Date August 4, 1991
     -----------------------------------------

                                      -2-

<PAGE>

                                   EXHIBIT C

                 U.S. Serial
                 Filing No.
UT File No.        (Date)           Title                     Inventor(s)
-----------      -----------        -----                     -----------

UTSB:413           389,226          Enzyme Electrodes         Brian A. Gregg
                   (3-2-89)                                   Adam Heller

UTSB:465           664,054          Interferant Eliminating
                                       Biosensors             Adam Heller
                   (3-4-91)                                   Ruben Maidan

<PAGE>

                                    EXHIBIT D

                              INVENTION DISCLOSURE
                        The University of Texas at Austin

                                 I. Descriptive

1. Title of invention ***.
                      ---
2. Brief description. Is the Invention a new process, composition of matter, a
   device, or one or more products? A new use for or an improvement to an
   existing product or process?

***
---

Use additional sheets to elaborate or attach descriptive materials.

3. From the description, pick out and expand on novel and unusual features. How
   does the invention differ from present technology? What problems does it
   solve or what advantages does it possess?

***
---

*** Confidential treatment requested
<PAGE>

                                      ***

                                      -2-

*** Confidential treatment requested
<PAGE>

4.   If not indicated previously, what are possible uses for the invention? In
     addition to immediate applications, are there other uses that might be
     realized in the future?

***
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

5.   Does the invention possess disadvantages or limitations? Can they be
     overcome? How?

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

6.   Enclose sketches, drawings, photographs, and other materials that help
     illustrate the description. (Rough artwork, flow sheets, Polaroid
     photographs, and penciled graphs are satisfactory as long as they tell a
     clear and understandable story. Enclosed.

                           II.  Other Pertinent Data

1.   Are there publications--theses, reports, preprints, reprints, etc.--
     pertaining to the invention? Please list with publication dates, and attach
     copies insofar as possible. Include manuscripts for publication (submitted
     or not), news releases, feature articles, and items from internal
     publications.

     a.   ***
          ----------------------------------------------------------------------
     b.
          ______________________________________________________________________
     c.
          ______________________________________________________________________
     d.
          ______________________________________________________________________

2.   Are laboratory records and data available? Give reference numbers and
     physical location, but do not enclose.
                               ---

***
--------------------------------------------------------------------------------
________________________________________________________________________________

3.   Are related patents or other publications known to the inventor? Please
     list.

***
-------------------------------------------------------------------------------
_______________________________________________________________________________
_______________________________________________________________________________

                                      -3-

*** Confidential treatment requested
<PAGE>

4.   Date, place, and circumstances of first public disclosure.

***
-------------------------------------------------------------------------------
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

5.   Was the work that led to the invention sponsored? If yes, attach copy of
     contact or agreement if possible, and fill in the appropriate blanks below.

     a.   Title of government agency         ***             Conract No.
                                    ---------------------                   ____
     b.   Name of industrial company
                                    ____________________________________________
     c.   Name of university sponsor
                                    ____________________________________________
     d.   Other sponsor(s) ***
                           ------------------------------------------

6.   Any commercial interest shown at this stage?  Name companies and specific
     persons if possible.

***
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________

     a.   Do you know of other qualified firms?  Please list.
                                                             -------------------

***
--------------------------------------------------------------------------------
________________________________________________________________________________

7.   Name(s) and title(s) of inventor(s)

     a.   ***
          ----------------------------------------------------------------------

     b.   ***
          ----------------------------------------------------------------------

     c.
          ______________________________________________________________________

(Contract for more data       ***                  Telephone        ***
                        -------------------------               --------------
                              (name)

                                      -4-

*** Confidential treatement requested
<PAGE>

8.   Mailing address for inventor(s) ***
                                     ----------------------------------

***
--------------------------------------------------------------------------------
(street and number)               (city and state)               (zip code)

9.   Signature(s) of inventor(s) and date

     a.   /s/ ***                      ***                     (date) ***
          ----------------------------------------------------        ---------

     b.   /s/ ***                      ***                     (date) ***
          ----------------------------------------------------        ---------

     c.                                                        (date)
          ____________________________________________________        ---------

     Use the space below and additional sheets to elaborate on answers to
questions and to provide any other helpful data.

*** Confidential treatment requested

                                      -5-

<PAGE>

6.   ***

***

***

*** Confidential treatment requested

                                      -6-

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