Research And License Agreement

RESEARCH AND LICENSE AGREEMENT


THIS AGREEMENT is made and entered into effective as of September 23, 1988 by and between Hypertension Diagnostics, Inc., a Minnesota corporation, having offices at 1313 Fifth Street S.E., Minneapolis, Minnesota 55414 (the "COMPANY") and the Regents of the University of Minnesota, a Minnesota nonprofit corporation, having an office at 100 Church Street, S.E., Minneapolis, Minnesota 55455 (the "UNIVERSITY").


RECITALS


WHEREAS, UNIVERSITY possesses certain information, knowledge and intellectual property rights relating to the Technology (as hereinafter defined);


WHEREAS, UNIVERSITY desires that such information, knowledge and devices be developed and utilized in the public interest and is willing to enter into a development and license agreement for those purposes;


WHEREAS, COMPANY desires to collaborate with the UNIVERSITY in the development of such information, knowledge and devices and to obtain a license to manufacture and sell products and provide services utilizing such information and knowledge;


NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the parties agree as follows:


ARTICLE I. - DEFINITIONS


A. "Technology" shall mean any knowledge, information, know-how software, and
devices, whether patentable or not, in the possession of the UNIVERSITY at
the time of execution of this


Agreement specifically relating to diagnostic, therapeutic, monitoring and
related uses of arterial compliance (an arterial compliance index) and
arterial impedance (an arterial impedance index) developed by or under the
direction of either Dr. Jay N. Cohn, Professor of Medicine and Head of the
Cardiovascular Division, University of Minnesota Medical School ("Cohn")
or Dr. Stanley M. Finkelstein, Associate Professor of Laboratory Medicine
within the Division of Health Computer Sciences, University of Minnesota
Medical School ("Finkelstein") or both. "Technology" shall not include
any knowledge, information, know-how, software or devices relating to
arterial compliance and arterial impedance developed under the direction
of either Cohn or Finkelstein or both in the course of a project
concerning the pulmonary artery in humans and dogs and the femoral artery
in dogs pursuant to that certain Donation Agreement between UNIVERSITY and
Medtronic, Inc. dated October 30, 1987, as amended and supplemented.
B. "Improvements" shall mean any development, modification, alteration or
improvement of any kind of the Technology, whether patentable or not,
including improvements of a device or method incorporating the Technology,
that (i) UNIVERSITY develops through the direction of either Cohn or
Finkelstein or both within five (5) years of the date of this Agreement,
(ii) results from research conducted by UNIVERSITY relating to the
Technology and funded by COMPANY regardless of when such research occurred,
(iii) UNIVERSITY and COMPANY develop jointly, or (iv) COMPANY develops
solely. "Improvements" shall


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not include any improvement or development of the Technology made by the
UNIVERSITY which is the result of funded research under an agreement with
a third party (other than the United States government) that grants rights
in such improvement or development to that third party, provided that
COMPANY has been given not less than 60 (sixty) days' prior written notice
of the intent of the UNIVERSITY to enter into such agreement and an
opportunity of first refusal to enter into an agreement on substantially
equivalent terms. Nothing herein shall be construed to limit the right of
either Cohn or Finkelstein or both to seek and obtain private or federal
or state government funding in order to conduct research relating to the
Technology, provided that the terms of such funding do not violate the
terms of this Agreement including, without limitation, the license granted
under this Agreement.


C. "Subject Patent Application(s)" shall mean any patent application in the
United States or in a foreign country that covers all or any portion of
either the Technology or Improvements or both made solely by the UNIVERSITY
or jointly by the UNIVERSITY and COMPANY.


D. "Subject Patent(s)" shall mean any patent that issues on a Subject Patent
Application.


E. "Licensed Product(s)" shall mean any manufactured product or service that
(i) incorporates the Technology or Improvements, or (ii) is covered by a
Subject Patent. "Licensed Product(s)" shall not mean any manufactured
product or service that incorporates only Improvements developed solely by
COMPANY.


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F. "Net Sales" shall mean the gross amount invoiced for sales, leases or other
dispositions of Licensed Product(s) by COMPANY, its Affiliates or its
sublicensees less (i) all trade, quantity, and cash discounts actually
allowed, (ii) all credits and allowances actually granted on account of
rejection, returns, billing errors, or retroactive price reductions, (iii)
duties, and (iv) excise sale and use taxes, and equivalent taxes.


G. "Affiliate(s)" shall mean any present or future domestic or foreign
corporation which shall be at the pertinent time owned or controlled,
directly or indirectly by COMPANY.


ARTICLE II. - RESERVED


ARTICLE III. - INVENTIONS AND PATENT APPLICATIONS


A. Title in the Technology and Improvements developed solely by the UNIVERSITY
and jointly by UNIVERSITY and COMPANY shall rest solely and exclusively
with the UNIVERSITY, subject to the license grant of Article IV. Title in
Improvements developed solely by COMPANY shall rest solely and exclusively
with COMPANY, subject to the license grant of Article IV. Any Improvement
developed by any employee of


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UNIVERSITY (including, but not limited to, Cohn and Finkelstein) while
working at non-UNIVERSITY facilities that results from any work performed
under any consulting agreement between COMPANY and that UNIVERSITY
employee, shall be deemed developed solely by COMPANY. Any Improvement
developed by any employee of UNIVERSITY (including, but not limited to,
Cohn and Finkelstein) while working at UNIVERSITY facilities, whether or
not the Improvement results from work performed under any consulting
agreement between that employee and COMPANY, shall be deemed developed
solely by UNIVERSITY.


B. Each party shall promptly disclose to the other party any Improvements
conceived or reduced to practice by the first party. COMPANY shall
promptly disclose to UNIVERSITY any Improvement made solely by the COMPANY,
subject to the confidentiality provisions of this Agreement.


C. The UNIVERSITY shall file and prosecute Subject Patent Application(s) and
maintain Subject Patent(s) in the United States, at its own expense. If
UNIVERSITY in good faith determines not to file and prosecute any Subject
Patent Application(s) and maintain Subject Patent(s) in the United States,
COMPANY shall have the right to file and prosecute Subject Patent
Application(s) and maintain Subject Patent(s) in the United States, at its
own expense. Thereafter, UNIVERSITY shall have no right to royalties for
Licensed Product(s) that use only Improvements or inventions that are the
subject of such Subject Patent Application(s) and Subject Patent(s)
obtained by COMPANY at its own expense.


D. The UNIVERSITY shall, upon request of COMPANY, file and prosecute Subject
Patent Application(s) and maintain Subject Patent(s) in such foreign
countries as COMPANY requests. COMPANY shall reimburse the UNIVERSITY for
all reasonable out of pocket expenses incurred by the UNIVERSITY for
COMPANY


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requested foreign filing, prosecution and maintenance. Such expenses
shall not include any salaries or benefits of employees of the UNIVERSITY.
COMPANY may credit all reimbursements it makes to the UNIVERSITY under
the obligation of this paragraph against royalties owing the UNIVERSITY as
a result of sales of Licensed Product(s) in the country where filing or
prosecuting Subject Patent Application(s), or maintaining Subject
Patent(s) gave rise to the reimbursed costs.


E. In the event that the UNIVERSITY notifies COMPANY of its intent to file
Subject Patent Application(s) in specified countries other than the United
States of America and COMPANY does not desire to have Subject Patent
Application(s) filed or prosecuted, or does not desire to have Subject
Patent(s) maintained, COMPANY shall promptly notify the UNIVERSITY. No
such notice may be given by the UNIVERSITY less than six months from the
date such an applications is filed in the United States of America, or less
than three (3) years following the execution of this Agreement if filed
only in foreign countries and not in the United States of America.
Subsequent to this notice, such application(s), patent(s) issuing on such
applications and such patent(s) as COMPANY does not desire to be maintained
shall no longer be considered Subject Patent Application(s) or Subject
Patent(s). The UNIVERSITY, upon such notice, may file or prosecute such
patent applications or maintain such patent(s) at its sole option and
expense.


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F. COMPANY agrees to cooperate with the UNIVERSITY in connection with the
filing and prosecution of Subject Patent Application(s). Patent counsel
shall be chosen by the UNIVERSITY subject to the approval of the COMPANY,
which shall not be unreasonably withheld. UNIVERSITY shall consult with
COMPANY on all major decisions involving filing and prosecuting Subject
Patent Application(s) and maintaining Subject Patent(s). The UNIVERSITY
shall keep COMPANY promptly apprised of developments in the filing and
prosecution of Subject Patent Application(s). This appraisal shall include
providing COMPANY with a copy of the applications and all correspondence
relating thereto. The COMPANY shall have a right to consult directly with
patent counsel concerning the prosecution of Subject Patent Application(s),
but the UNIVERSITY shall be solely responsible for directing patent counsel
provided that all decisions concerning foreign Subject Patent
Application(s) and foreign Subject Patent(s) are approved by COMPANY.


ARTICLE IV. - LICENSE GRANT AND COMMERCIAL EFFORTS


A. Subject to the terms and conditions herein, the UNIVERSITY hereby grants to
COMPANY and its Affiliates and COMPANY hereby accepts an exclusive,
worldwide license under the Technology, Improvements, and the Subject
Patent(s), with a right to grant sublicenses, to make, have made, use,
lease and sell Licensed Product(s). Notwithstanding this license grant,
the UNIVERSITY retains a nonexclusive and nontransferable right to


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use solely for educational and research purposes the Technology or
Improvements made solely by the UNIVERSITY or jointly by the UNIVERSITY
and COMPANY. COMPANY hereby grants and the UNIVERSITY hereby accepts a
nonexclusive, nontransferable and irrevocable license to use solely for
educational and research purposes any Improvements made solely by COMPANY.
The license grant from UNIVERSITY to COMPANY is subject to any rights
retained by the United States Government in the Technology, Improvements
and Subject Patent(s) that are set forth in 37 C.F.R. Section 401 (1987),
due to the fact that the United States Government has funded UNIVERSITY
research related to the Technology.


B. COMPANY and Affiliates shall have the right to grant sublicenses to others
with respect to any rights conferred upon COMPANY under this Agreement,
provided, however, that any such sublicense shall be subject in all
applicable respects to the provisions contained in this Agreement, and
further provided that COMPANY shall give the UNIVERSITY an opportunity to
review and comment on any sublicense prior to its execution. COMPANY shall
not be responsible to the UNIVERSITY for the payment of royalties due with
respect to sales made by sublicensees (other than Affiliates) that are not
actually received by COMPANY, if the COMPANY has made a good faith, best
effort attempt to collect payments for sales.


C. COMPANY shall use all reasonable efforts to effect commercial sales of
Licensed Product(s) as soon as practicable and to maximize these sales,
consistent with sound and reasonable


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business practices and judgment. In addition, within two (2) years of the
date of this Agreement, COMPANY shall (i) conduct or cause to be conducted
clinical trials of the Technology, Improvements and Subject Patent(s) on a
minimum of 200 subjects and (ii) use its best efforts to develop
noninvasive Licensed Product(s). COMPANY shall provide the UNIVERSITY
with brief written reports of COMPANY'S efforts to effect
commercialization. COMPANY shall provide these reports quarterly
beginning with the first full calendar quarter following the execution of
this Agreement and at the same time that it provides reports required by
Article V.


D. COMPANY shall sell Licensed Product(s) at a fair and reasonable price, to
be determined by COMPANY in its sole discretion, and shall refrain from
making any false or misleading claims in its advertising or otherwise.


E. COMPANY shall not use the names of the UNIVERSITY nor of any UNIVERSITY
employees in any manner associated with promotion of a commercial product
without prior written approval from the UNIVERSITY and such employees.
COMPANY sha ...