JOINT DEVELOPMENT AGREEMENT

 

                           JOINT DEVELOPMENT AGREEMENT

 

         This   JOINT   DEVELOPMENT    AGREEMENT    ("Agreement")   is   entered   into

effective as of the "Effective Date" (as defined below), by and between INMEDICA

DEVELOPMENT   CORPORATION,   a Utah corporation   ("InMedica"),   CHI LIN TECHNOLOGY

CO.,   LTD.   (formerly   known   as Chi   Lin   Plastics   Industrial   Co.,   Ltd.),   a

corporation   duly organized and existing under the laws of the Republic of China

("Chi Lin"), MICROCOR, INC., a Utah corporation ("MicroCor"), and WESCOR INC., a

Utah corporation ("Wescor"). The "Effective Date" shall be the date on which the

last of the   above-named   parties   executes   this   Agreement as evidenced by the

dates set forth on the signature page hereof.

 

                                     RECITALS

 

         InMedica   is a   medical   products   research   and   development   company.

Through   its   subsidiary,   MicroCor,   it has   developed   a method for   measuring

hematocrit   non-invasively   (without   drawing   blood)   and has   applied   for and

received   four (4) patents   from the U.S.   Patent and   Trademark   Office.   As of

December 12, 1995,   MicroCor's   application   for a patent   entitled   "Method and

Apparatus for   Non-Invasively   Determining   Hematocrit"   was allowed by the U.S.

Patent and Trademark Office,   and such patent issued on June 18, 1996, as Patent

No.   5,526,808 with a term of 17 years and an expiration   date of June 18, 2013.

MicroCor has been issued three additional patents, Patent No. 5,642,734,   Patent

No.   6,128,518   and Patent No.   6,766,191,   each of which claims   priority   from

October 4, 1990, the date of the first patent's filing, and each of which has an

expiration date of October 4, 2010.

 

         Pursuant to a Development,   Licensing and Manufacturing Agreement dated

May 10, 2001 (the "2001   Agreement"),   Chi Lin and InMedica   pursued   additional

development   on   the   non-invasive    hematocrit   technology.    The   methods   and

procedures to measure hematocrit   non-invasively,   including without limitation,

the patents and technologies incorporated in the patents and patent applications

described above and the development work pursued by Chi Lin and/or InMedica, are

collectively referred to herein as the "Hematocrit Technology."

 

         InMedica   is   a   publicly   traded   corporation.   Chi   Lin   is   a   major

shareholder of InMedica,   owning one-third of the issued and outstanding   shares

of   InMedica's   common   stock.   MicroCor is a privately   held   corporation   with

5,000,000   shares of common stock (the "MicroCor   Stock")   authorized   under its

Articles   of   Incorporation   and no other   class or series of stock   authorized.

InMedica   and Chi   Lin   own all of the   issued   and   outstanding   shares   of the

MicroCor Stock (147,101   shares),   with InMedica owning 117,681 shares (80%) and

Chi Lin owning 29,420 shares (20%). In order to facilitate   further   development

of the Hematocrit   Technology described in this Agreement,   InMedica and Chi Lin

propose to   transfer,   assign,   or license   their   respective   interests   in the

Hematocrit Technology to MicroCor.

 

         Wescor   employs or has access to   researchers   and engineers to develop

medical devices,   equipment and products based on the Hematocrit Technology (the

"Products"),   and to conduct   clinical   trials of such products with the results

thereof to be submitted to the U.S. Food and Drug   Administration (the "FDA") to

obtain   clearance for marketing in the United   States.   It has the financial and

managerial   assets   and   experience   to be capable of   managing   the   process of

developing and manufacturing the Products.

 

         The   parties   desire to enter   into this   Agreement   with the intent of

accomplishing   the following   purposes (as more fully described   below):   (1) to

transfer to MicroCor all rights relating to the Hematocrit   Technology now owned

by InMedica;   (2) to license to MicroCor all rights   relating to the   Hematocrit

Technology   now   owned by Chi Lin;   (3) to   provide   for the sale to Wescor of a

portion of the shares of the   MicroCor   Stock owned by InMedica and Chi Lin; (4)

to assign   to Wescor   the   rights   and   duties of   managing   the   operations   of

MicroCor; (5) to assign to Wescor the rights and duties to continue, or to cause

MicroCor to   continue,   the   development   of the   Hematocrit   Technology   and to

thereby   earn   additional   shares of the   MicroCor   Stock in phases upon (a) the

completion   of a working   prototype   of the   Products   capable   of   meeting   FDA

requirements,    (b)   the   completion   of   clinical   trials   for   such   Products,

submission of the results   thereof to the FDA, and obtaining the FDA's clearance

to market such Products, and (c) manufacturing and initial introduction into the

U.S.   market of such   Products;   (6) to provide for the granting of an option to

Wescor   to   purchase   the   MicroCor   Stock   held by   InMedica   and Chi Lin   upon

completion   of the   final two   phases   (described   in (b) and (c)   above) of the

development of the Products; (7) to provide for the granting of a right of first

refusal to Wescor in the event MicroCor or its shareholders   receive a bona fide

 

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offer to acquire MicroCor or its assets; and (8) to provide for an option on the

part of InMedica and Chi Lin to purchase   Wescor's   MicroCor   Stock in the event

the exercise of the option   granted to Wescor is deemed to be at a price that is

too low.

 

                                    AGREEMENT

 

         In   consideration   of the   foregoing   recitals,   the   mutual   covenants

described   herein and other good and   valuable   consideration,   the   receipt and

sufficiency   of which are hereby   acknowledged,   the   parties,   intending   to be

legally bound, hereby agree as follows:

 

         1. Ownership and Licensing of Hematocrit Technology.

 

                  1.1   Transfer   of   Hematocrit    Technology.    InMedica   hereby

         transfers,   assigns and conveys to MicroCor all of its right, title and

         interest   in   and to   the   Hematocrit   Technology   and   any   derivative

         thereof,    including,    without    limitation,    ownership,    licensing,

         marketing,   sales, distribution and manufacturing rights. The foregoing

         transfer, assignment and conveyance is intended by the parties to cover

         all of the rights,   title and   interests of InMedica in the   Hematocrit

         Technology and any derivative   thereof,   whether such rights,   title or

         interests are held jointly or separately by InMedica,   and whether such

         rights, title or interests are in and to a part or whole of any element

         of the Hematocrit   Technology.   The obligation of InMedica to transfer,

         assign and convey as described in this Section 1.1 shall   include,   but

         not be limited   to, the   obligation   to cause any   agents,   independent

         contractors and research partners (including Medical Physics, Inc., and

         Billings & Associates)   to transfer,   assign and convey to MicroCor any

         such   rights   in   the   Hematocrit    Technology,    including   rights   to

         government grants. The parties acknowledge and agree that no royalty or

         other   compensation   is due or payable   to   InMedica   arising   from the

         Hematocrit   Technology or any Product   developed   therefrom,   except as

         expressly   set   forth   herein in   Section   6.   Upon   execution   of this

         Agreement,   InMedica acknowledges and agrees that the 2001 Agreement is

         hereby   superceded   and   terminated   and   that all   obligations   of the

         parties thereunder have been performed, waived, fulfilled, or otherwise

         relieved.

 

                  1.2 License of Hematocrit Technology. Chi Lin hereby grants to

         MicroCor,    its   successors   and   assigns,   an   exclusive,    worldwide,

         royalty-free right and license (the "Chi Lin License") in and to all of

         its right,   title and interest in and to the Hematocrit   Technology and

         any derivative   thereof,   to make, have made, use, sell, offer to sell,

         and import   Products and to practice   methods covered by or included in

         the Hematocrit Technology for the life of any protectable rights in the

         Hematocrit   Technology.   MicroCor   shall have the right to   sublicense,

         assign or transfer   the Chi Lin License to third   parties.   The Chi Lin

         License is intended   by the parties to cover all of the rights,   title,

         and   interests   of   Chi   Lin   in   the   Hematocrit   Technology   and   any

         derivative thereof,   whether such rights,   title, or interests are held

          jointly or   separately by Chi Lin, and whether such rights,   title,   or

         interests   are in   and   to a   part   or   whole   of   any   element   of the

         Hematocrit   Technology.   Chi Lin agrees   that it shall take all actions

         reasonably necessary to maintain the rights included within the Chi Lin

         License and to diligently and vigorously defend and protect such rights

         from infringement,   improper use, depreciation,   or other loss of right

         due to the acts of third   parties or the public in general,   including,

         without limitation,   pursuing   appropriate patents and other applicable

         protections;   provided,   however,   that   any   and   all   reasonable   and

         appropriate   costs and expenses   incurred in the defense and protection

         of such rights, including but not limited to legal fees, shall be borne

         by MicroCor if Chi Lin obtains   MicroCor's prior written consent before

         incurring   any such   costs and   expenses,   which   consent   shall not be

         unreasonably   withheld   in view   of the   cost   involved   and in view of

         MicroCor's products, business and marketing practices, and business and

         marketing   plans.    Notwithstanding   the   foregoing,   Chi   Lin   has   no

         obligations   to take any action to protect or defend any right included

         within the Chi Lin   License if   MicroCor   does not   consent to bear the

         costs and expenses to be incurred in such defense and   protection.   Chi

         Lin further   agrees that it shall take no action,   with   respect to the

         rights included within the Chi Lin License,   that would have the effect

         of negatively impacting the right of MicroCor to use exclusively,   such

         rights.   In the event Chi Lin or MicroCor learns of any event,   any act

         of a third party, or any action or proceeding,   whether such event, act

         or action has occurred,   been   commenced or is being   threatened,   that

         would negatively   impact the rights included within the Chi Lin License

         (a   "Negative   Action"),   then such party   shall   give the other   party

         written   notice   of such   Negative   Action.   Chi Lin   agrees   to retain

         counsel   acceptable   to   MicroCor,    at   MicroCor's   expense   and   with

         MicroCor's prior written consent,   to take all reasonable and necessary

         steps to protect or defend   against such   Negative   Action.   If Chi Lin

 

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         fails to retain   counsel   or to take   other   reasonable   and   necessary

         protective   and   defensive    actions   within   five   (5)   business   days

         following   the   date   MicroCor   delivers   written   notice   to   Chi   Lin

         requesting   such   actions,   MicroCor   shall have the right,   at its own

         expense,   to take such actions in the name of Chi Lin or in   MicroCor's

         own   name,   as may   be   appropriate.   Nothing   herein   shall   authorize

         MicroCor   to settle such   Negative   Actions   without the prior   written

         consent of Chi Lin, if by any such   settlement   Chi Lin is obligated to

         make any monetary payment, to assume any other obligation, to part with

         any property or any interest therein,   to be subject to any injunction,

         or to grant   any   license   or any   right   included   within   the Chi Lin

         License.   Notwithstanding the foregoing,   Chi Lin has no obligations to

         take any action to protect or defend   against   any   Negative   Action if

         MicroCor does not consent to bear the costs and expenses to be incurred

         in such defense and   protection,   nor does Chi Lin have any obligations

         to take any   action to defend   against   any   action,   threat,   claim or

         proceeding   alleging   that the Products   have   infringed   any patent or

         other intellectual   property right of any third party due to any causes

         other   than   the   rights   included   within   the   Chi Lin   License.   The

         obligation of Chi Lin to license the rights included within the Chi Lin

         License shall   include,   but not be limited to, the obligation to cause

         any agents,   independent contractors,   and research partners (including

         Medical Physics,   Inc., and Billings & Associates) to similarly license

         to MicroCor any such rights. The parties acknowledge and agree that the

         rights included within the Chi Lin License do not include any rights in

         new   developments,   discoveries or other   intellectual   property rights

         developed or   discovered as a result of future work done by MicroCor or

         Chi Lin, their agents,   independent contractors,   and research partners

         after the execution of this Agreement pursuant to any government grants

         concerning the Hematocrit   Technology,   and that all such developments,

         discoveries and intellectual property rights shall be the sole property

         of MicroCor.   The rights included   within the Chi Lin License   include,

         without   limitation,   any rights   still   remaining   under any   licenses

         granted   to it under   the 2001   Agreement   to sell and   distribute   the

         Products   in   "Asia,"   as   defined   in   Section    6.2.4.    The   parties

         acknowledge   and agree that no royalty or other   compensation is due or

         payable   to Chi Lin   arising   from   the   Hematocrit   Technology   or any

         Product   developed   therefrom,   except as expressly set forth herein in

         Section 6. Upon execution of this Agreement,   Chi Lin   acknowledges and

         agrees that the 2001 Agreement is hereby   superceded and terminated and

         that all   obligations of the parties   thereunder   have been   performed,

          waived, fulfilled, or otherwise relieved.

 

         2. MicroCor   Finances and Capital   Structure.   InMedica   shall take all

reasonable   action, or cause MicroCor to take all reasonable   action, as soon as

is reasonably   practicable before or upon the execution of this Agreement to (i)

terminate any agreements,   resolve any disputes, pay any liabilities and perform

any   obligations of MicroCor   existing as of the time   immediately   prior to the

effectiveness   of this   Agreement   such that,   after the   transfer   described in

Section 1,   MicroCor's   only   assets   and   liabilities   shall be the   Hematocrit

Technology and the related rights and duties described in or reasonably   arising

from this   Agreement;   (ii) effect a   restructuring   and split of the issued and

outstanding   shares   of the   MicroCor   Stock   so   that   immediately   after   such

restructuring   and split   the   total   outstanding   shares   of   MicroCor   will be

2,500,000   shares   with   InMedica   owning   2,000,000   shares   and Chi Lin owning

500,000   shares   of the   MicroCor   Stock;   and   (iii)   recall   all   certificates

representing   issued and   outstanding   shares of MicroCor Stock and re-issue new

certificates to the holders of such shares in the new share amounts described in

the   preceding   clause (ii) and include on such new   certificates   a conspicuous

reference to the existence of this   Agreement and the fact that it restricts the

transfer of the shares and affects the management of MicroCor.   All certificates

representing   shares   of the   MicroCor   Stock   issued   during   the   term of this

Agreement   shall   include   a   conspicuous   reference   to the   existence   of this

Agreement   and the fact that it restricts the transfer of the shares and affects

the management of MicroCor.   Chi Lin shall reasonably cooperate with InMedica to

the extent necessary to accomplish the purposes described in this Section.

 

         3. Stock Restrictions. During the term of this Agreement:

 

                  3.1. Transfers Prohibited. Without obtaining the prior written

         consent of all parties   hereto,   each of   InMedica,   Chi Lin and Wescor

         shall    be    prohibited    from    transferring,    conveying,    pledging,

         hypothecating or otherwise assigning, and each of InMedica, Chi Lin and

         Wescor   hereby   covenants   and   warrants   that it shall   not   transfer,

         convey, pledge, hypothecate or otherwise assign, any part or all of its

         interest   in any   shares of the   MicroCor   Stock,   whether   now held or

         hereafter   acquired,   to or for the benefit of any party or third party

         except as expressly provided herein. The provisions of this Section are

         subject to the provisions of Section 3.4.

 

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                   3.2.   Newly   Authorized   or Issued Stock   Prohibited.   Without

         obtaining the prior   written   consent of all parties   hereto,   MicroCor

         shall be prohibited   from   authorizing or issuing,   and MicroCor hereby

         covenants and warrants that it shall not authorize or issue, any shares

         of   MicroCor   Stock or any   shares of any other   class or series of the

         capital   stock of   MicroCor to or for the benefit of any party or third

         party except as expressly provided herein.

 

                  3.3.   MicroCor   Board   Composition.   During   the   term of this

         Agreement, regardless of the number of shares of MicroCor Stock held by

         the   parties,   the Board of   Directors   of   MicroCor   shall   consist of

          exactly   five (5)   directors,   three   (3) of whom   shall be   chosen   by

         InMedica, one (1) of whom shall be chosen by Chi Lin, and the remaining

         one (1)   director   shall be chosen   by   Wescor.   InMedica,   Chi Lin and

         Wescor   shall   take   all   necessary   action,   in   their   capacities   as

         shareholders   of MicroCor,   to accomplish   the foregoing   provisions of

         this Section.   Only upon the written   consent of InMedica,   Chi Lin and

         Wescor, may the size or composition of MicroCor's Board of Directors be

         changed during the term of this Agreement.

 

                  3.4.   Right of First   Refusal.   The provisions of this Section

         3.4 shall apply in the event the parties have received an offer for the

         acquisition   of MicroCor   that   InMedica and Chi Lin have   approved and

         intend to accept (an "Acquisition Offer"). An Acquisition Offer must be

         a bona fide offer from a qualified   third party to (i)   purchase all of

         the outstanding   MicroCor Stock, (ii) purchase all or substantially all

         the assets of MicroCor,   or (iii) merge or otherwise   combine   MicroCor

         with one or more entities upon the consummation of which the holders of

         MicroCor   Stock   immediately   prior thereto would hold less than 50% of

         the   shares of the voting   stock or other   ownership   interests   in the

         surviving   entity.   The   value   equivalent   in the case of a merger   or

         combination or where the   consideration is other than cash as set forth

         in the   Acquisition   Offer   must be   supported   by a   fairness   opinion

         rendered by a recognized business valuation expert. Upon the receipt of

         an   Acquisition   Offer,   InMedica and Chi Lin shall give Wescor written

         notice (the "Acquisition   Offer Notice") thereof and of their intent to

         accept the Acquisition Offer.   InMedica and Chi Lin hereby grant Wescor

         a right of first   refusal (the "First   Refusal   Right") to purchase all

         (but not less than all) of the MicroCor Stock held by both InMedica and

         Chi   Lin.   Any   First   Refusal   Right   shall   exist   from   the date the

         Acquisition   Offer Notice is delivered to Wescor and shall expire sixty

         (60) days thereafter.   To exercise a First Refusal Right, Wescor shall,

         prior to its expiration,   give InMedica and Chi Lin written notice (the

         "Exercise   Notice") of Wescor's   intent to exercise   the First   Refusal

         Right. The terms of such First Refusal Right shall be as follows:

 

                           3.4.1.    Purchase    Price.    The   purchase   price   of

                  InMedica's   and Chi Lin's   MicroCor   Stock shall be calculated

                   as: (x) the total   number of shares of MicroCor   Stock held by

                  InMedica    and   Chi   Lin   divided   by   the   total    number   of

                  outstanding   shares of MicroCor   Stock,   (y) multiplied by the

                  purchase   price   (or its   value   equivalent   in the   case of a

                  merger or combination or where the consideration is other than

                  cash) set forth in the   Acquisition   Offer,   (z) multiplied by

                  90%.

 

                            3.4.2.   Purchase   Terms.   Terms   for   payment   of the

                  purchase   price   shall be, at   Wescor's   option,   either:   (i)

                  twenty percent (20%) of the purchase price paid within 60 days

                  following the delivery of the Exercise Notice, and the balance

                  paid   in   equal   monthly   payments   over   twelve   (12)   months

                  (beginning   one month   following the 20%   payment),   with such

                  balance bearing interest at an annual rate of two percent (2%)

                  plus the Prime Rate;   or (ii)   payment   terms that are no less

                  favorable   to InMedica   and Chi Lin than they would be for the

                  acquirer   as set forth in the   Acquisition   Offer.   As used in

                  this   Agreement,   the term "Prime   Rate" shall mean the "prime

                  rate" as   reported   in the   Wall   Street   Journal   on the date

                  closest to the date the installment payments begin.

 

                           3.4.3. Merger   Alternative.   As an alternative to the

                  payment of the purchase   price,   InMedica,   Chi Lin and Wescor

                  agree to   negotiate   in good   faith to attempt to agree upon a

                   merger of InMedica, MicroCor and Wescor. In such a merger, the

                  value   attributed to MicroCor   shall be the purchase price (or

                  value equivalent) in the Acquisition Offer without reducing by

                  multiplying   by 90% as   described   in   clause   (z) of   Section

                  3.4.1; the respective values attributed to InMedica and Wescor

                  shall be   established   by a   fairness   opinion   rendered   by a

                  recognized   business   valuation expert, as to whom none of the

                  parties has a reasonable objection.

 

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                           3.4.4.   Agreement Terminated.   In the event the First

                  Refusal Right is exercised, this Agreement shall be terminated

                  except   for the   royalty   provisions   described   in Section 6,

                  which shall survive.

 

                  3.5 Disclosure of Potential Acquisition Transactions.   Each of

         InMedica, Chi Lin and Wescor covenant and agree that during the term of

         this   Agreement   if it intends to solicit an offer or if it receives an

         offer   or other   indication   of   interest   from a third   party   that is

         reasonably   likely to   develop   into a serious   offer or   agreement   to

         purchase or acquire a substantial   portion of the assets of MicroCor or

         of the   MicroCor   Stock,   or to   combine   or   merge   with   MicroCor   (a

         "Potential   Acquisition   Transaction"),   then it shall   give the   other

         parties   to this   Agreement   notice   of   such   solicitation,   offer   or

         interest as soon as is reasonably   possible and shall   continue to give

         such   other   parties    notice   of   changes   or    developments    in   the

         negotiations   concerning such Potential Acquisition   Transaction.   Such

         notices   shall   include   details   as to the   terms   of   such   Potential

         Acquisition   Transactions.   The   parties   agree that if a party   hereto

         shall   fail to   give   the   notices   required   under   this   Section   the

         Potential Acquisition Transaction shall not be entered into without the

         written   consent of any party who did not receive the required   notice.

         The parties   acknowledge   that during the term of this   Agreement   each

         party is permitted to solicit offers from and   communicate   interest to

         third parties concerning Potential Acquisition   Transactions,   although

         the consummation of such transactions can only be accomplished pursuant

         to the express   terms set forth in other   sections   of this   Agreement.

         Nothing in this Section shall be   interpreted to give a party any right

         to   enter   into a   transaction   that is   otherwise   prohibited   by this

         Agreement.

 

         4. Wescor Purchase of MicroCor Stock.

 

                  4.1. From InMedica. InMedica hereby sells to Wescor and Wescor

         hereby   purchases from InMedica   300,000 shares of MicroCor   Stock.   As

         partial   consideration   for such   purchase   and sale,   Wescor shall pay

         InMedica   $300,000 as follows:   (i) $30,000 upon the   execution of this

         Agreement,   and (ii) 18 monthly payments of $15,000 with the first such

         monthly payment due and payable on the first day of the month following

         the Effective Date and each successive monthly payment due on the first

         day of each successive month until all 18 payments are made.

 

                  4.2.   From Chi Lin.   Chi Lin hereby sells to Wescor and Wescor

         hereby   purchases   from Chi Lin 75,000   shares of   MicroCor   Stock.   As

         partial   consideration for such purchase and sale, Wescor shall pay Chi

          Lin   $75,000   as   follows:   (i)   $7,500   upon   the   execution   of   this

         Agreement,   and (ii) 18 monthly   payments of $3,750 with the first such

         monthly payment due and payable on the first day of the month following

         the Effective Date and each successive monthly payment due on the first

         day of each successive month until all 18 payments are made.

 

                  4.3.   Special   Provision   for   Repayment   of Loan to InMedica.

         InMedica   and   Wescor   acknowledge   and agree   that   Wescor   has loaned

         InMedica certain sums of money which remain   outstanding as of the date

         this   Agreement is executed (the "Wescor   Loans").   InMedica   shall pay

         Wescor 20% of each installment   payment   (including the initial payment

         due upon   execution)   due from Wescor to InMedica   under Section 4.1 as

         partial   performance of its repayment   obligations of the Wescor Loans.

         At InMedica's   election,   InMedica may direct Wescor to pay only 80% of

         each such installment payment in satisfaction of InMedica's   obligation

         under this Section.

 

         5.   Management of MicroCor;   Issuance of New Stock;   Options to Acquire

Remainder of MicroCor.

 

                  5.1. Management Rights and Duties of Wescor. InMedica, Chi Lin

         and Wescor,   as the current and future   (pursuant   to the terms of this

         Agreement) majority shareholders of MicroCor, agree that upon execution

         of this   Agreement   Wescor shall assume the   management   of MicroCor as

         described in this Section 5.1.

 

                           5.1.1. Rights and Duties. Wescor shall have the right

                  and   obligation   to   manage   the    day-to-day    operations   of

                   MicroCor,   including the hiring and firing of its officers and

                  employees   and    contracting    for   employees   or   independent

                  contractors.   Wescor   shall   use its   best   efforts   with   all

 

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                  reasonable   speed and   efficiency to develop or cause MicroCor

                  to   develop   the   Products   as   described    herein.    Wescor's

                  obligation   to fund   the   expenses   of   MicroCor's   operations

                  ("Wescor Funding Obligations") shall be as follows: (i) Wescor

                  shall not be responsible for funding   expenses   related solely

                  to    manufacturing    or    sales    and    marketing    operations

                  ("Manufacturing   and   Sales   Expenses");   (ii)   except   to the

                  extent    that    expenses    are    reasonably     includable    as

                  Manufacturing and Sales Expenses,   Wescor shall be responsible

                   for and shall   contribute   funds to MicroCor   to pay   expenses

                  incurred by   MicroCor   for   research   and   development   of the

                  Products   ("R&D   Expenses"),   including,   but not   limited to,

                  costs   related to   development   of the   Prototype   (as defined

                  below),   costs   related to obtaining FDA Clearance (as defined

                  below),   and R&D   Expenses   related   to First   Production   (as

                  defined   below).   Notwithstanding   the fact that Wescor has no

                  obligation to fund   Manufacturing   and Sales Expenses,   Wescor

                  agrees to exercise its commercially reasonable best efforts to

                  arrange   for the   financing   of the   Manufacturing   and   Sales

                  Expenses and of any royalty payment   obligations under Section

                  6 ("Wescor Financing Commitment"),   subject to approval of the

                  Board of MicroCor. In arranging for any such financing, Wescor

                  shall   not   be   obligated   to   loan   any   funds   itself   or to

                  separately guarantee or provide separate security for any such

                  loans which are arranged for MicroCor by Wescor.

 

                            5.1.2. Board Authority. MicroCor's Board reserves the

                  authority to approve or disapprove   actions by MicroCor (or by

                  Wescor on   MicroCor's   behalf)   (i) to   acquire   or dispose of

                  capital   assets,   or to incur capital   expenditures or debt if

                  such actions would involve in the aggregate   more than $20,000

                  during any   12-month   period;   (ii) to   contract   with a third

                  party to perform part or all of the   manufacturing,   marketing

                  and selling   functions   necessary to accomplish   the intent of

                  this   Agreement;   or   (iii)   to   assign,   transfer,    license,

                  sub-license,   pledge as collateral,   mortgage,   hypothecate or

                  otherwise encumber part or all of the Hematocrit Technology or

                  any other intellectual   property interest owned by or licensed

                  to MicroCor.   MicroCor (or Wescor on MicroCor's   behalf) shall

                  not   take   any   action   described   in the   preceding   sentence

                  without first   delivering   to all members of MicroCor's   Board

                  written notice of its intent to take such action.   If no Board

                  member o