Document:

<PAGE>

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

                                   AGREEMENT                       EXHIBIT 10.17

This Agreement is made on 10 February 2000

between:

UNILEVER PLC,  an English company having its principal place of business at
Unilever House, Blackfriars, London EC4P 4BQ, England, and UNILEVER NV a
Netherlands company having its principal place of business at Weena 455, 3013 AL
Rotterdam, Netherlands (hereinafter collectively "Unilever")

and:

THERASENSE INC, a California corporation having its principal place of business
at 1360 South Loop Road, Alameda, California 94502, United States (hereinafter
"Licensee")

WHEREAS:
-------

A.   Unilever is in possession directly or indirectly of certain Patent Rights
     relating to biosensors.

B.   The Licensee has requested a non-exclusive licence under the Unilever
     Patent Rights, and the parties have agreed thereto on the terms hereinafter
     set forth.

NOW THEREFORE IT IS HEREBY AGREED:
---------------------------------

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

1.1  "Affiliate" shall mean any company which owns, is owned by or is commonly
     owned with the Licensee. Ownership shall mean the control of the voting
     rights attaching to over 50% of the voting shares of the company concerned.

<PAGE>

                                     - 2 -

1.2  "Patent Rights" shall mean the Unilever patent applications and patents set
     forth in the Schedule hereto, and patents based on or claiming priority
     from any of those patent applications and patents, as well as any
     substitution, division, continuation, continuation-in-part, re-examination
     or reissue thereof.

1.3  "Territory" shall mean all countries where the Patent Rights are valid and
     subsisting.

1.4  "Licensed Product" shall mean any electrochemical biosensor for analysis of
     markers for diabetes in a liquid sample, covered by or made in accordance
     with, or adapted for use as claimed in any granted patent or published
     patent application within the Patent Rights.

1.5  The "Effective Date" shall mean the date of this Agreement.

1.6  "First Commercial Sale" shall mean the first offering for sale by the
     Licensee or its Affiliates of Licensed Product for immediate delivery to an
     unrelated third party, and shall not include the building up of inventories
     at Licensee or Affiliates or pre-introduction announcements of anticipated
     products of Licensee.

2.   GRANT OF LICENCE
     ----------------

2.1  Unilever hereby grants to the Licensee and Licensee hereby accepts with
     effect from the Effective Date a non-exclusive *** licence under the
     Patent Rights in the Territory to make, have made for it, use and sell
     Licensed Products according to the terms set out in this Agreement.

2.2  There will be no right to sub-licence without prior written consent of
     Unilever.

*** Confidential Treatment Requested.
<PAGE>

                                     - 3 -

2.3  The licence to the Licensee shall not be assigned or otherwise transferred
     in whole or in part to any third party, except that the rights and
     obligations of the Licensee may be exercised by Affiliates, provided that
     the Licensee will remain wholly responsible and accountable to Unilever for
     the performance by each Affiliate of any such rights and obligations and
     the Licensee shall inform Unilever in writing before any Affiliate is
     nominated to exercise such rights and obligations.

3.   *** ROYALTY FEE
     -----------------

3.1  In consideration of the licence rights to be granted by Unilever in Clause
     2 hereof, Licensee will pay to Unilever by bank transfer to the account
     identified in Clause 4.1 hereof, non-returnable payments as follows:

        *** upon signature of this Agreement;

        *** within 10 days after the date of the First Commercial Sale, or on
        15th March 2000, whichever shall be earlier;

        ***
        ***
        ***

     The Licensee shall promptly notify Unilever in writing to the address in
     clause 6.3, the date when the second payment is to be made.

     *** Confidential Treatment Requested
<PAGE>

                                      -4-

4. ACCOUNTS
   --------

4.1  All payments due hereunder shall be made in US Dollars by bank credit
     transfer to:

     Correspondent Bank:  Citibank, New York
                          Swift address: ***
     For the account of:  CITIBANK, London
                          Swift address: ***
     In favour of:        Unilever UKCR
                          Account: ***

     or otherwise as Unilever shall direct. Unilever NV hereby confirm that
     Unilever PLC may make a valid and binding receipt on its behalf. Any
     payments which are sent to Unilever more than fifteen (15) days beyond
     their due dates as indicated in clause 3.1, shall bear interest at fifteen
     (15) percent per annum from the date on which payment was due to the date
     on which payment is received by Unilever.

4.2  All payments provided for under this Agreement shall be made to Unilever in
     full, provided however that in the event and only to the extent that any
     sum payable hereunder is subject to direct taxes levied or assessed by any
     government authority under the law of the country from which the remittance
     is made, and a treaty exists with that country and the country where the
     remittance is received or there is other provision for the avoidance of
     double taxation, the Licensee has the right to deduct from the payment any
     such taxes and the Licensee shall for each such deduction provide to
     Unilever a certificate or other documentary evidence executed by the
     appropriate official or relevant government authority to enable Unilever to
     claim relief from double taxation on such payments. All payments due under
     this Agreement are exclusive of value added tax, or equivalent taxes where
     applicable.

*** Confidential Treatment Requested
<PAGE>

                                      -5-

5.    TERMINATION
      -----------

5.1   The Licensee may terminate the licence granted in this Agreement at any
      time upon ninety (90) days written notice subject to payment of paid-up
      royalty as indicated in clause 3.1 until the actual date of termination.

5.2   Upon any default by the Licensee in the performance of any material
      obligation to be performed under the Agreement, Unilever may give written
      notice specifying the matter in default, and unless the default is cured
      within sixty (60) days following the giving of notice, Unilever may
      forthwith terminate the Agreement and the licence rights granted
      hereunder.

5.3   Unilever may terminate the licence rights of the Licensee forthwith if the
      Licensee shall be declared bankrupt or shall enter into liquidation or
      receivership or equivalent state.

5.4   In the event that Licensee challenges, directly or indirectly, any Patent
      Right outside the territory of the USA, Unilever shall have the right to
      terminate the license under this Patent Right immediately in the country
      in which the Patent Right is challenged.

5.5   In all instances, in the event that Licensee challenges any Patent Right
      in any country in the Territory, including the USA, Licensee will still be
      obliged to continue paying the royalties due under this Patent Right as
      set forth in Clause 3.

5.6   Unilever may terminate the licence rights of the Licensee forthwith if the
      Licensee manufactures, uses or sells any product which is covered by the
      Patent Rights in the country of such manufacture, use or sale, other than
      a Licensed Product. Such termination will be effective thirty (30) days
      after Unilever provides written notice to Licensee.

<PAGE>

                                    - 6 -

     specifying breach of this provision, unless during such notice period the
     default is cured by Licensee.

5.7  Termination pursuant to Clauses 5.1 to 5.6 hereof shall not relieve either
     party of any obligations accrued prior to the termination, nor rescind or
     give rise to any right to rescind anything done or any payments made
     hereinunder prior to the time of such termination.

5.8  Unless sooner terminated as provided above, the license rights granted
     hereunder shall continue until expiration of the last to expire of the
     patents within the Patent Rights.

6.   GENERAL PROVISIONS
     ------------------

6.1  This Agreement supersedes all previous oral and written agreements between
     the parties, and this Agreement constitutes complete resolution of all
     issues relating to the Patent Rights and is the only and entire
     understanding existing between the parties with respect to the subject
     matter of this Agreement. Any amendment thereto shall be in writing and
     signed by the parties.

6.2  The provisions of this Agreement shall be deemed separable, and if any part
     of this Agreement is rendered void, invalid, or unenforceable, such
     rendering shall not affect the validity or enforceability of the remainder
     of the Agreement unless the part or parts which are void, invalid or
     unenforceable shall substantially impair the value of the whole Agreement
     to either party.

6.3  All notices and reports shall be sent to the parties at the addresses shown
     below. Such notice or report shall be deemed received when sent addressed
     to the party at the address shown below by recorded delivery or registered
     mail or by express service prepaid or by facsimile or telex confirmed by
     mail within seven (7) days. The addresses for

<PAGE>

                                    - 7 -

     notices and reports may be changed by timely written notice to the other
     party.

     For the Licensee:  VP Business Development
                        THERASENSE Inc
                        1360 South Loop Road
                        Alameda
                        CA 94502
                        United States

     For Unilever:      The Senior Agreements Officer
                        UNILEVER PLC
                        Patent Division
                        Colworth House
                        Sharnbrook
                        Bedfordshire MK44 1LQ
                        England

6.4  Unilever PLC and Unilever NV represent and warrant that they own all right
     title and interest in and to the Patent Rights or are otherwise authorised
     to enter into this Agreement, and that the patent applications in the
     Patent Rights were made in good faith, and Unilever is not aware of grounds
     which invalidate the Patent Rights, but Unilever expressly do not warrant
     the validity of any of the Patent Rights.

6.5  Unilever expressly does not warrant that any Licensed Product is free from
     infringement of any third party patent or other intellectual property
     rights. The Licensee accepts full responsibility for the manufacture, use
     and sale of all Licensed Products and Unilever shall not be liable to the
     Licensee or any Affiliate or any customers thereof for the consequences of
     such manufacture, use or sale, and the Licensee shall defend, hold harmless
     and indemnify Unilever from any and all damages, costs (including
     reasonable attorney's fees) or judgements of any kind which arise from such
     manufacture, use or sale of Licensed Product.
<PAGE>

                                     -8-

6.6  The Licensee shall not make any use of the Unilever name or any trademark
     of Unilever or of any of its subsidiaries or affiliates, in connection with
     the manufacture, use, promotion or sale of Licensed Products or otherwise
     without the prior written consent of Unilever.

6.7  The parties hereto shall keep the terms of this Agreement confidential and
     shall not now or hereafter divulge these terms to any third party except:

     (a)  with the prior written consent of the other party; or

     (b)  to any governmental body having jurisdiction to call therefor;
          provided, however that the disclosing party shall consult with the
          other party prior to any disclosure and the two parties shall
          cooperate in good faith to minimise any unnecessary disclosure to such
          government body; or

     (c)  subject to (d) below, as otherwise may be required by law or legal
          process, including to legal and financial advisors in their capacity
          of advising a party in such matters; or

     (d)  during the course of litigation so long as the disclosure of such
          terms and conditions are restricted in the same manner as is the
          confidential information of other litigating parties and so long as
          (a) the restrictions are embodied in a court-entered Protective Order
          and (c) the disclosing party informs the other party in writing at
          least ten (10) days in advance of the disclosure; or

     (e)  in confidence to legal counsel, accountants, banks and financing
          sources and their advisors solely in connection with bona fide
          financial transaction, or
<PAGE>

                                     - 9 -

     (f) as required to comply with regulatory requirements of any governmental
         or quasi-governmental institution.

6.8  No licence is hereby granted to the Licensee for making any Product falling
     within the Patent Rights other than the Licensed Product.

6.9  In the performance of their obligations under this Agreement, the status of
     the parties, including its employees and agents, shall be that of
     independent contractors and not as employees or agents, or fiduciaries of
     the other party, and as such, neither party shall have the right to make
     any commitments for or on behalf of the other party. Nothing in this
     Agreement shall create any association, partnership or joint venture
     between the parties.

6.10 Failure by either party to enforce any provision of this Agreement shall
     not be construed as a waiver of such provision and shall not affect the
     validity of the Agreement or any part thereof or the right of that party to
     enforce any provision thereof.

6.11 This Agreement shall be deemed to be made in and shall be construed in
     accordance with the laws of England for all matters (other than scope and
     validity of the Patent Rights which shall be construed and governed in
     accordance with the laws of the jurisdiction in which the Patent Rights
     have been granted).

<PAGE>

                                    - 10 -

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in three originals.

UNILEVER PLC

BY:         SIGNATURE HERE
          ----------------------------------------

TITLE:
          ----------------------------------------

UNILEVER NV

BY (1):     SIGNATURE HERE
          ----------------------------------------

TITLE:
          ----------------------------------------

BY (2):     SIGNATURE HERE
          ----------------------------------------

TITLE:
          ----------------------------------------

THERASENSE, INC.

BY:         SIGNATURE HERE
          ----------------------------------------

TITLE:    Vice President, Business Development
          ----------------------------------------<PAGE>

                                                                   EXHIBIT 10.24

                   FIRST AMENDMENT TO THE AGREEMENT ENTITLED
                "SPONSORED RESEARCH AGREEMENT NO. UTA 98-0296"
                      ENTERED INTO MARCH 19, 1998 BETWEEN
          THE UNIVERSITY OF TEXAS AT AUSTIN AND E. HELLER AND COMPANY

                               (the "Amendment")

     This Amendment to the Sponsored Research Agreement No. UTA 98-0296 is made
and entered into as of October 10, 2000 ("Effective Date" of the Amendment), by
and between TheraSense Inc., with a principle place of business address at 1360
South Loop Road, Alameda, CA 94502 ("TheraSense") and the Board of Regents
("Board") of The University of Texas System ("System") on behalf of The
University of Texas at Austin ("University").

     RECITALS

     A.   On March 19,1998, under an agreement entitled "Sponsored Research
Agreement No. UTA 98-0296" (hereinafter the "Agreement"; attached hereto as
Exhibit A), the University, System and E. Heller and Company ("Sponsor")
entered into a sponsored research agreement wherein the University was to
perform certain research and Sponsor was to obtain certain rights to patents and
technology developed during the course of such research under the terms of the
agreement between those parties and Professor Adam Heller, an employee of
University, entitled "Assignment of Patent Rights and Technology" dated August
1, 1991 and the "First Amendment to the Agreement Entitled 'Assignment of Patent
Rights and Technology', dated March 19, 1998 (collectively, the "Assignments";
attached hereto as Exhibits B and C, respectively);

     B.   On October 10, 2000, pursuant to Section 15.1 of the Assignments,
Sponsor assigned to TheraSense, Inc. ("TheraSense") the Agreement and the
Assignments, with University's prior written consent; thus, the parties
acknowledge and agree that "Sponsor" as used in the Agreement and this Amendment
means "Therasense";

     C.   TheraSense has developed an in vitro biosensor based product to be
sold commercially under the name of "Freestyle", which TheraSense, Professor
Adam Heller, University, Board, and System have now agreed that such Freestyle
product will be subject to the compensation due the University under the
Assignments, and that one-half of such compensation will be used to fund
sponsored research projects under the Agreement;

     D.   Board, University and System and TheraSense agree to amend the
Assignments (the "Second Amendment"), to clarify the manner in which royalties
from the sale of Freestyle products will be paid by TheraSense to University and
shall be used to fund sponsored research projects to be performed under this
Amendment and the Agreement; and

     E.   The parties now wish to amend the terms of the Agreement as set forth
below.

     NOW, THEREFORE, it is hereby agreed by the parties as follows:
<PAGE>

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

2.   Section 2.2 is deleted and replaced with the following:

     2.2  Research Program Period.
          -----------------------

          2.2.1  Initial Period. The Research Program shall be performed during
                 --------------
          the initial period from the Effective Date through and including March
          18, 200l (the "Initial Research Period").

          2.2.2  Extended Research Period. Following the Initial Research
                 ------------------------
          Period, the Research Program shall continue in full force and effect
          on a year-to-year basis, unless otherwise agreed by mutual written
          agreement of the parties (the "Extended Research Period"); provided,
          University has received Sponsored Research Funds (as defined in
          Section 3.1.2) in the half-year period immediately preceding each such
          extension year.

3.   New Section 2.7 is added as follows:

     2.7  The Principal Investigator, at his or her sole discretion, may use
     the Sponsored Research Funds (as defined in Section 3.1.2), in part, to
     enter into clinical trials or other collaborations in the biosensor field
     with researchers at other UT System research institutions for research
     purposes; provided, such clinical trials and/or other collaborations are.
     subject to a material transfer agreement, or other form of agreement, if
     applicable, consistent with the terms of this Agreement.

4.   Section 3.1 is deleted and replaced with the following:

     3.1  Research Funding.
          ----------------

          3.1.1  As consideration for the performance by University of its
          obligations under this Agreement during the Initial Research Period,
          Sponsor shall pay the University  an amount equal to its expenditures
          and reasonable overhead in conducting the Research Program, subject to
          a maximum expenditure limitation of One-Hundred and Fifty-Thousand
          Dollars ($150,000) during the Initial Research Period, allocated in
          the amount of Fifty-Thousand Dollars per year for each of the first
          three years in the Initial Research Period. University's Office of
          Accounting will submit monthly invoices to Sponsor and Sponsor agrees
          to reimburse University within thirty (30) days of receipt of such
          invoice. Payments should be made payable to The University of Texas at
          Austin, and reference the Principle Investigator, Agreement number and
          title of the Research Program funded under this Agreement, and
          submitted to the following address: The University of Texas at Austin,
          Office of Accounting, P.O. Box 7159, Austin, Texas 78713-7159,
          phone # 512-471-6231.

          3.1.2  As consideration for the performance by University of its
          obligations under this Agreement during the Extended Research Period,
          University acknowledges and

                                      -2-
<PAGE>

          agrees that one-half (1/2) of the royalties received by University
          from TheraSense on Net Sales of Freestyle products shall be solely
          used by University to fund University's expenditures and reasonable
          overhead in conducting the Research Program (the "Sponsored Research
          Funds"). University agrees that amounts spent in excess of the
          allocated Sponsored Research Funds will be rolled forward and applied
          against Sponsored Research Funds received from Sponsor during such
          subsequent period.

          3.1.3  For so long as Professor Adam Heller serves as the Principal
          Investigator, such Sponsored Research Funds will be subject to
          University's then current overhead rate assigned to unrestricted
          research funds, which under current University policy as of the
          Effective Date of the Amendment is zero percent (0%). If someone other
          than Professor Adam Heller is the Principal Investigator, then such
          Sponsored Research Funds will be subject to an overhead rate of
          twenty-five percent (25%) of direct costs.

5.  Section 8.1 is deleted and replaced with the following:

    8.1   All patent rights, technology, know-how and other intellectual
    property developed by University alone or jointly with Sponsor in
    connection with the research performed hereunder shall be deemed Other
    Intellectual Property (as defined in the Assignments).  Board shall assign,
    and hereby assigns, to Sponsor all right, title and interest in such Other
    Intellectual Property.

6.  Section 11.2 is deleted and replaced with the following:

    11.2  In accord with Paragraph 2.2.2 herein, this Agreement shall
    automatically continue in full force and effect for subsequent one year
    periods, on a year-to-year basis (unless sooner terminated or further
    extended in accordance with the provisions of this Article 11); provided,
    University has received Sponsored Research Funds in the half-year period
    immediately preceding each such extension year.

7.  Except as specifically modified or amended hereby, the Agreement shall
remain in full force and effect and, as so modified or amended, is hereby
approved. No provision of this Amendment may be modified or amended except
expressly in a writing signed by both parties nor shall any terms be waived
except expressly in a writing signed by the party charged therewith.

                                      -3-
<PAGE>

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

ON BEHALF OF THE BOARD OF REGENTS
OF THE UNIVERSITY OF TEXAS SYSTEM

       /s/ JUAN M. SANCHEZ
---------------------------------
Juan M. Sanchez, Ph.D.
Vice President for Research,
The University of Texas at Austin

Date:        JAN 11 2001
      ---------------------------

THERASENSE, INC.

       /s/ W. MARK LORTZ
---------------------------------
Mark Lortz
President
Date:          12/13/00
      ---------------------------

APPROVED AS TO FORM                     READ AND UNDERSTOOD:

      /s/ BETH LYNN MAXWELL                        /s/ ADAM HELLER
---------------------------------       ------------------------------------
Name: Beth Lynn Maxwell, Ph.D., J.D.    Professor Adam Heller
      Office of General Counsel         Ernest Cockrell, Sr Chair in Engineering
      The University of Texas System    The University of Texas at Austin

Date:        3 Jan 01                   Date:       December 14, 2000
      ---------------------------             ------------------------------

                                      -4-
<PAGE>

                                   EXHIBIT A
                                   --------
                                                                       SRA SHORT
                                                                         1/29/98

                                 CONFIDENTIAL

                 SPONSORED RESEARCH AGREEMENT NO. UTA 98-0296

This Sponsored Research Agreement ("Agreement") is made between The University
of Texas at Austin, Austin, Texas ("University"), a state component institution
of The University of Texas System ("System") and E. Heller & Company, a Texas
                                                 -------------------    -----
corporation with its principal place of business at 1311 Harbor Bay Parkway,
                                                    ------------------------
Suite 2000, Alameda, CA 94502 ("Sponsor").
-----------------------------

                                   RECITALS

     A.  Sponsor desires that University perform certain research work
hereinafter described and is willing to advance funds to sponsor such research;

     B.  Sponsor desires to obtain certain rights to patents and technology
developed during the course of such research under the terms of the agreements
entitled "Assignment of Patent Rights and Technology" dated August 1, 1991 and
"First Amendment to the Agreement Entitled 'Assignment of Patent Rights and
Technology'" dated March 19, 1998 (hereinafter referred to as "the Assignments")
with a view to profitable commercialization of such patents and technology for
the Sponsor's benefit; and

     C.  University is willing to perform such research and to grant rights to
such patents and technology;

NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the University and Sponsor agree as follows:

                              1.  EFFECTIVE DATE
                              ------------------

This Agreement shall be effective as of March 19, 1998 (the "Effective Date").
                                        --------------

                             2.  RESEARCH PROGRAM
                             --------------------

2.1  University will use its best efforts to conduct the Research Program
described in Attachment A ("Research Program"), and will furnish the facilities
necessary to carry out said Research Program.  The Research Program will be
under the direction of Prof. Adam Heller ("Principal Investigator"), or his
                       -----------------
successor as mutually agreed to by the parties and will be conducted by the
Principal Investigator at the University.
<PAGE>

2.2  The Research Program shall be performed during the period from the
Effective Date through and including March 18, 2001.
                                     --------------

2.3  Sponsor understands that University's primary mission is education and
advancement of knowledge, and consequently the Research Program will be designed
to carry out that mission.  The manner of performance of the Research Program
shall be determined solely by the Principal Investigator.  University does not
guarantee specific results, and the Research Program will be conducted only on a
best efforts basis.

2.4  University will keep accurate financial and scientific records relating to
the Research Program and will make such records available to Sponsor or its
authorized representative throughout the Term of the Agreement during normal
business hours upon reasonable notice.

2.5  Sponsor understands that University may be involved in similar research
through other researchers on behalf of itself and others.  University shall be
free to continue such research provided that it is conducted separately and by
different investigators from the Research Program hereinafter defined, and
Sponsor shall not gain any rights via this Agreement to such other research.

2.6  University does not guarantee that any patent rights will result from the
Research Program, that the scope of any patent rights obtained will cover
Sponsor's commercial interests, or that any such patent rights will be free of
dominance by other patents, including those based upon inventions made by other
inventors in The University of Texas System independent of the Research Program.

                               3.  COMPENSATION
                               ----------------

3.1  As consideration for the performance by University of its obligations under
this Agreement, Sponsor will pay the University an amount equal to its
expenditures and reasonable overhead in conducting the Research Program subject
to a maximum expenditure limitation of $150,000.00 for the period set forth in
                                       ---------------------------------------
section 2.2, and subject to section 3.2 herein, allocated in the amount of
--------------------------------------------------------------------------
$50,000 per year for three years.  University's Office of Accounting will submit
--------------------------------
monthly invoices to Sponsor and Sponsor agrees to reimburse University within
thirty days of receipt of such invoices.

                                      -2-
<PAGE>

Payments should be made payable to The University of Texas at Austin, make
reference to the Principal Investigator, Agreement number and title of the
Research Program funded under this Agreement, and submitted to the following
address:

                       The University of Texas at Austin
                             Office of Accounting
                                 P.O. Box 7159
                           Austin, Texas 78713-7159
                                (512) 471-6231

3.2  University shall maintain all Research Program funds in a separate account
and shall expend such funds for wages, supplies, equipment, travel, and other
operational expenses in connection with the Research Program. It is understood
that funds of the Research Program which are not used in a particular quarter
(or year) may be used in subsequent quarters (or carried forward to a subsequent
year), and that the Principal Investigator may transfer funds within the budget
as needed without Sponsor's approval, as long as such transfers do not effect a
change in the scope of work of the Research Program. It is also understood that
subject to Section 11.4, uncommitted and unexpended funds remaining at the
termination of the Agreement shall be returned to Sponsor.

3.3  University shall retain title to all equipment purchased and/or fabricated
by it with funds provided by Sponsor under this Agreement.

                         4.  CONSULTATION AND REPORTS
                         ----------------------------

4.1  Sponsor's designated representative ("Designated Representative") for
consultation and communications with the Principal Investigator shall be Ephraim
                                                                         -------
Heller or such other person as Sponsor may from time to time designate in
------
writing to University and the Principal Investigator.

4.2  During the term of the Agreement, Sponsor's representatives may consult
informally with University's representatives regarding the project, both
personally and by telephone. Access to work carried on in University
laboratories in the course of these investigations shall be entirely under the
control of University personnel but shall be made available on a reasonable
basis.

4.3  The Principal Investigator will make up to two oral report(s) each year as
                                                ---
requested by Sponsor's Designated Representative.  At the conclusion of each
year, the Principal Investigator shall submit to Sponsor a written report
summarizing the work and, as soon as possible thereafter, the University's
Office of

                                      -3-
<PAGE>

Accounting will submit a financial report of expenses relating to the Research
Program. The Principal Investigator and the University's Office of Accounting
shall also submit a comprehensive final report within one hundred twenty (120)
days of termination of the Agreement which shall contain, but which need not be
limited to, the following information:

     a.  A final invoice, if not previously submitted, for expenses of the
Research Program for the prior year, which reflects cumulative expenses incurred
during the term of the Agreement (Office of Accounting).

     b.  A report of all activities undertaken and accomplishments achieved
through the Research Program during the prior year (Principal Investigator).

                                 5.  PUBLICITY
                                 -------------

Neither party shall make reference to the other in a press release or any other
written statement in connection with work performed under this Agreement, if it
is intended for use in the public media, except as required by the Texas Public
Information Act or other law or regulation. University, however, shall have the
right to acknowledge Sponsor's support of the investigations under this
Agreement in scientific or academic publications and other scientific or
academic communications, without Sponsor's prior approval. In any such
statements, the parties shall describe the scope and nature of their
participation accurately and appropriately.

                      6.  PUBLICATION AND ACADEMIC RIGHTS
                      -----------------------------------

6.1  University and the Principal Investigator have the right to publish or
otherwise publicly disclose information gained in the course of this Agreement,
except for Sponsor's confidential information ("Confidential Information")
furnished to University pursuant to the provisions of Article 7. In order to
avoid loss of patent rights as a result of premature public disclosure of
patentable information, University will submit any prepublication materials to
Sponsor for review and comment at least sixty (60) days prior to planned
submission for publication. If Sponsor chooses to file patent applications on
any inventions contained in the materials then Sponsor will proceed to file the
patent application(s) in due course under the terms of the Assignments.
University shall have final authority to determine the scope and content of any
publications.

6.2  It is understood that the University investigators may discuss the research
being performed under this Agreement with other investigators but shall not
reveal information which is Sponsor's Confidential Information under Article 7.
In the event any joint inventions result, University shall grant to Sponsor the

                                      -4-
<PAGE>

rights outlined in Article 8 to this Agreement, to the extent these are not in
conflict with obligations to another party as a result of the involvement of the
other investigator(s). In this latter case, University shall, in good faith,
exercise reasonable efforts to enable Sponsor to obtain rights to the joint
invention.

                         7.  CONFIDENTIAL INFORMATION
                         ----------------------------

7.1  The Parties may wish, from time to time, in connection with work
contemplated under this Agreement, to disclose Confidential Information to each
other.  Each party will use reasonable efforts to prevent the disclosure of any
of the other party's Confidential Information to third parties for a period of
three (3) years from receipt thereof, provided that the recipient party's
obligation hereunder shall not apply to Information that:

     (1) is not disclosed in writing or reduced to writing and so marked with an
     appropriate confidentiality legend within thirty (30) days of disclosure;

     (2) is already in the recipient party's possession at the time of
     disclosure thereof;

     (3) is or later becomes part of the public domain through no fault of the
     recipient party;

     (4) is received from a third party having no obligations of confidentiality
     to the disclosing party;

     (5) is independently developed by the recipient party; or

     (6) is required by law or regulation to be disclosed.

Notwithstanding the terms of this paragraph 7.1, Sponsor shall be free to
disclose University's Confidential Information in the course of
commercialization of its products as deemed necessary by Sponsor, including
disclosures for patent applications, licensing agreements and financings,
subject to prior notice to University and provided that Sponsor and any third
party receiving such University Confidential Information have entered into an
appropriate nondisclosure agreement that protects such University Confidential
Information from unauthorized disclosure.

7.2  In the event that information is required to be disclosed pursuant to
subsection (6), the party required to make disclosure shall notify the other to
allow that party to assert whatever exclusions or exemptions may be available to
it under such law or regulation.

                                      -5-
<PAGE>

                 8.  PATENTS, COPYRIGHTS AND TECHNOLOGY RIGHTS
                 ---------------------------------------------

8.1  All Patent Rights, Technology, Know-How and Other Intellectual Property (as
defined in the Assignments) developed by University alone or jointly with
Sponsor in connection with the research performed hereunder shall be assigned to
Sponsor and incorporated into Exhibit C of the "First Amendment to the Agreement
Entitled 'Assignment of Patent Rights and Technology'" dated March 19, 1998
between University and Sponsor.

                                 9.  LIABILITY
                                 -------------

9.1  Sponsor agrees to indemnify and hold harmless System, University, their
Regents, officers, agents and employees from any liability, loss or damage they
may suffer as a result of claims, demands, costs or judgments against them
arising out of the activities to be carried out pursuant to the obligations of
this Agreement, including but not limited to the use by Sponsor of the results
obtained from the activities performed by University under this Agreement;
provided, however, that the following is excluded from Sponsor's obligation to
indemnify and hold harmless:

     (a)  the negligent failure of University to substantially comply with any
     applicable FDA or other governmental requirements; or

     (b)  the negligence or willful malfeasance of any Regent, officer, agent or
     employee of University or System.

9.2  Both parties agree that upon receipt of a notice of claim or action arising
out of the activities to be carried out pursuant to the project described in
Attachment A, the party receiving such notice will notify the other party
promptly. Sponsor agrees, at its own expense, to provide attorneys to defend
against any actions brought or filed against University, System, their Regents,
officers, agents and/or employees with respect to the subject of the indemnity
contained herein, whether such claims or actions are rightfully brought or
filed; and subject to the statutory duty of the Texas Attorney General,
University agrees to cooperate with Sponsor in the defense of such claim or
action.

9.3  University and System agree not to settle any such claims without the prior
written consent of Sponsor.

                                      -6-
<PAGE>

                          10.  INDEPENDENT CONTRACTOR
                          ---------------------------

For the purposes of this Agreement and all services to be provided hereunder,
the parties shall be, and shall be deemed to be, independent contractors and not
agents or employees of the other party.  Neither party shall have authority to
make any statements, representations or commitments of any kind, or to take any
action which shall be binding on the other party, except as may be expressly
provided for herein or authorized in writing.

                           11.  TERM AND TERMINATION
                           -------------------------

11.1  This Agreement shall commence on the Effective Date and extend until March
                                                                     -----------
18, 2001, unless sooner terminated or further extended in accordance with the
--------
provisions of this Article 11.

11.2  The Agreement shall continue in effect for each subsequent one year period
beginning March 19, 2001 upon execution of an appropriate amendment by
authorized officials of each party.

11.3  This Agreement may be terminated at any time by the written agreement of
both parties.

11.4  In the event that either party shall be in default of its material
obligations under this Agreement and shall fail to remedy such default within
sixty (60) days after receipt of written notice thereof, this Agreement may be
terminated at the option of the party not in default upon expiration of the
sixty (60) day period.

11.5  Termination or cancellation of this Agreement shall not affect the rights
and obligations of the parties accrued prior to termination.  Upon termination,
Sponsor shall pay University for all reasonable expenses incurred or committed
to be expended as of the effective termination date, including salaries for
appointees for the remainder of their appointment.

11.6  Any provisions of this Agreement which by their nature extend beyond
termination shall survive such termination.

                               12.  ATTACHMENTS
                               ----------------

Attachment A is incorporated and made a part of this Agreement for all purposes.

                                 13.  GENERAL
                                 ------------

13.1  This Agreement may not be assigned by either party without the prior
written consent of the other party; provided, however, that subject to the
approval of University, which may not be unreasonably

                                      -7-
<PAGE>

withheld, Sponsor may assign this Agreement to any purchaser or transferee of
all or substantially all of Sponsor's assets or stock upon prior written notice
to University; provided, however, that such assignee shall have expressly
assumed all of the obligations and liabilities of Sponsor under this Agreement,
and provided, further that, University may assign its right to receive payments
hereunder.

13.2  This Agreement constitutes the entire and only agreement between the
parties relating to the Research Program, and all prior negotiations,
representations, agreements and understandings are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except by
means of a written document signed by the duly authorized representatives of the
parties. Terms and conditions which may be set forth (front, reverse, attached
or incorporated) in any purchase order issued by Sponsor in connection with this
Agreement shall not apply, except for informational billing purposes; i.e.,
reference to purchase order number, address for submission of invoices, or other
invoicing items of a similar informational nature.

13.3  Any notice required by this Agreement by Articles 8, 9 or 11 shall be
given prepaid, first class, certified mail, return receipt requested, addressed
in the case of University to:

                    The University of Texas System, O.G.C.
                              201 West 7th Street
                              Austin, Texas 78701
                   Attention: Intellectual Property Section
                             Phone: (512) 499-4462
                              FAX: (512) 499-4523

                       The University of Texas at Austin
                     Executive Vice President and Provost
                               Main Building 201
                           Austin, Texas 78712-1111
                       Attention: Patricia C. Ohlendorf
                             Phone: (512) 471-5336
                              FAX: (512) 471-0577

                                      -8-
<PAGE>

or in the case of the Sponsor to:

                              E. Heller & Company
                      1311 Harbor Bay Parkway, Suite 2000
                               Alameda, CA 94502
                             Attn: Ephraim Heller
                             Phone: (510)749-5411
                              FAX: (510) 749-5401

or at such other addresses as may be given from time to time in accordance with
the terms of this notice provision.

Notices and other communications regarding the day-to-day administration and
operations of this Agreement shall be mailed (or otherwise delivered), addressed
in the case of University to:

                       The University of Texas at Austin
                         Office of Sponsored Projects
                            Main Building, Room 303
                             Post Office Box 7726
                           Austin, Texas 78713-7726
                        Attention: Mr. Wayne Kuenstler
                             Phone: (512) 471-6424
                              FAX: (512) 471-6564

with a copy to:

                                Dr. Adam Heller
                       The University of Texas at Austin
                      Department of Chemical Engineering
                              Austin, Texas 78712
                             Phone: (512) 471-8874
                              FAX: (512) 471-8799

                                      -9-
<PAGE>

or in the case of Sponsor to:

                              E. Heller & Company
                      1311 Harbor Bay Parkway, Suite 2000
                               Alameda, CA 94502
                             Attn: Ephraim Heller
                             Phone: (510) 749-5411
                              FAX: (510) 749-5401

13.4  This Agreement shall be governed by, construed, and enforced in accordance
with the internal laws of the State of Texas.

13.5  Sponsor acknowledges that this Agreement and the performance thereof are
subject to compliance with any and all applicable United States laws,
regulations, or orders, including those that may relate to the export of
technical data, and Sponsor agrees to comply with all such laws, regulations and
orders, including, if applicable, all requirements of the International Traffic
in Arms Regulations and/or the Export Administration Act, as may be amended.
Sponsor further agrees that if the export laws are applicable, it will not
disclose or re-export any technical data received under this Agreement to any
countries for which the United States government requires an export license or
other supporting documentation at the time of export or transfer, unless Sponsor
has obtained prior written authorization first from the U.S. Office of Export
Control or other authority responsible for such matters.

                                      -10-
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement No. UTA98-0296 to be
executed by their duly authorized representatives.

THE UNIVERSITY OF TEXAS AT AUSTIN      SPONSOR

By:/s/ Juan M. Sanchez                 By:/s/ Ephraim Heller, /s/ W. Mark. Lortz
   ------------------------------         --------------------------------------
        Juan M. Sanchez
       Associate Vice President
Title: for Research                    Title: Vice President, President & CEO
      ---------------------------             ----------------------------------

Date: May 04 1998                      Date: 4-27-98, 4/27/98
      ---------------------------            -----------------------------------

                                      -11-
<PAGE>

                                 ATTACHMENT A
                               RESEARCH PROGRAM

E. Heller & Company shall sponsor research on "Enzyme Electrodes" and biosensors
at the University of Texas at Austin.  The research will be led by Professor
Adam Heller.  The research will address:

     .    Novel biosensors including but not limited to biosensors for DNA
     oligonucleotides, immunoreagents, glucose and lactate.
     .    The physical chemistry, biochemistry, polymer chemistry,
     electrochemistry, materials science, engineering, synthetic chemistry, and
     enzyme engineering for such biosensors.

The objectives of the research will include, but will not be limited to,
electrochemical and other biosensors.  Examples of subjects to be studied are
the:

     .    Design of novel enzyme electrodes of enhanced stability, lesser oxygen
     dependence or higher current density;
     .    Novel electrode structures;
     .    Characterization of materials used in enzyme electrodes;
     .    Characterization of enzyme electrodes;
     .    Miniaturization of enzyme electrodes; and
     .    Electrical connection of reaction centers of enzymes to electrodes.

                                      -12-
<PAGE>

                              E. HELLER & COMPANY
                               ENZYME ELECTRODES

                               THREE-YEAR BUDGET

<TABLE>
<CAPTION>
                                       Year 1            Year 2            Year 3            Total
<S>                                    <C>               <C>               <C>              <C>
Salaries                                12,984.           12,984.           12,984.           38,952.

Fringes 27                               3,506.            3,506.            3,506.           10,518.

Materials & Supplies                    10,000.           10,000.           10,000.           30,000.

Equipment                               10,000.           10,000.           10,000.           30,000.

Indirect costs                          13,510.           13,510.           13,510.           40,530.

Total                                  $50,000.          $50,000.          $50,000.         $150,000.
</TABLE>
<PAGE>

                                   EXHIBIT B
                                   ---------

                              [SEE EXHIBIT 10.10]
<PAGE>

                                   EXHIBIT C
                                   ---------

                              [SEE EXHIBIT 10.11]

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